The UK’s beverage industry is facing unprecedented volatility, putting long-standing marketing strategies to the test. Already contending with ESG mandates, duty rates and tightening regulation, alcohol brands are now facing another corker: extended producer responsibility (EPR) for packaging.
EPR increases producer responsibility for a product’s packaging lifecycle, pushing businesses toward more sustainable choices. When such fundamentals change, brands must reconsider how to present their products. Marketers play a central role in this transition, shaping how brands adapt and compete in the years ahead.
Rising costs
EPR is arriving amid significant economic headwinds. From employer National Insurance hikes to a 3.66% rise in alcohol duty, the cumulative pressure on margins is considerable. Inevitably, a significant proportion of these costs will be passed on to consumers already feeling the pinch from inflation and a tough economic backdrop.
The most immediate challenge for marketers is communicating price hikes delicately. In a cost of living crisis, this is no mean feat. While it may feel tempting for beverage brands to reduce marketing budgets to protect margins, this would be a huge mistake. History shows us that those who invest in marketing during periods of flux secure long-term growth – especially when marketing strategies are carefully considered and practices are executed effectively.
Caution is key to success
It’s no secret that brand loyalty can be easily undermined, particularly if customers feel blindsided by changes, so erring on the side of caution is wise. Given the financial pressures consumers face, marketing teams must ensure cost fluctuations are communicated thoughtfully and clearly.
For both alcoholic and non-alcoholic brands, preparation is key. Short-term transparency may feel uncomfortable, but clear communication pays off over time. Bring customers on the journey and inform them of changes in advance and the rationale behind them – for example, the transition to more eco-friendly packaging. Doing so allows customers to plan for this change while also showing they are a valued member of the brand’s community.
Shifting the narrative from ‘price hikes’ to ‘value for money’ is another strategy that can help. Putting greater emphasis on attributes such as sustainability, quality and durability can help legitimise a more premium price point, while still positioning a brand as a responsible and forward-thinking business. Brands that get this messaging right are far more likely to retain loyal customers.
Conscious communication
The cost of sustainability has led many brands to rethink eco-friendly choices, but EPR is poised to reshape the landscape. The legislation strongly incentivises recyclable packaging, encouraging brands to rethink traditional formats. Given nearly a third (30%) of UK consumers are now willing to pay up to 10% more for a sustainable item compared with a non-sustainable equivalent, it’s an apt consideration to make.
EPR unlocks opportunities for creatives and marketers to collaborate on packaging that not only ticks the regulatory boxes, but communicates a shared commitment to positive change through collective action. This is beyond simple compliance; it’s a strategic opportunity to strengthen marketing capabilities and future-proof operations in sustainable marketing.
Brands that invest in building their marketing team’s capabilities will lead the charge of driving change, yet it’s vital for marketers to remember that engaging environmentally-conscious consumers brings higher expectations. To mitigate risk, marketers must align closely with the UK’s guidance on environmental claims, as recent rulings against household brands serve as a clear warning that any hint of exaggerated or unsubstantiated claims across the entire product lifecycle has serious implications.
Marketers’ time to shine
EPR marks a pivotal moment for the retail sector, and marketers are uniquely positioned to lead the transition. Instead of seeing the legislation as just another regulatory hurdle, marketing professionals should view it as a competitive edge.
In a landscape where consumer expectations, environmental scrutiny, and cost pressures continue to rise, marketers have the opportunity to guide their organisations toward meaningful, measurable impact. Those who invest in building practical skills, deepening sustainability knowledge, and strengthening marketing capability will be best placed to turn compliance into profit.
Mark Dodds is chair of the CIM Food, Drink, and Agriculture Group
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