Drinks producers preparing for the launch of the UK’s first deposit return scheme are to have their fees slashed in a bid by the scheme’s administrator to tackle huge concerns over costs ahead of the rollout in August.
Circularity Scotland (CSL) revealed today the costs to some producers would be cut by as much as 40%, with the charges for every type of metric in the scheme being “very significantly” reduced.
It has also dramatically cut the upfront fee it was asking producers to pay to cover the potential cost of unredeemed deposits.
The move follows the Scottish government’s announcement last month that DRS would be significantly scaled back because of a decision to allow tens of thousands of smaller retailers the option of opting out of the scheme, which is expected to hugely reduce the number of return points.
CSL, which has faced a twin backlash from producers and retailers over the cost of the rollout, said the “pragmatic” step by the Scottish government had significantly cut the projected cost of DRS and therefore the costs that would have to be borne by drinks producers, which it said would be of particular benefit to SMEs.
It also claimed the move would stop costs being passed on to consumers in the way of higher prices.
Once DRS launches, all drinks producers and retailers selling single-use drinks containers will be required to take part in the scheme. Consumers will pay a refundable 20p deposit, which will apply to all single-use PET plastic, aluminium, steel, or glass drinks containers ranging in size from 50ml to three-litre containers.
Under the review, producers will pay 2.21p per plastic item as opposed to 3.17p. The cost of aluminium will come down from 3.42p per item to 2.03p and glass from 4.45p to 4.10p.
Producers will also see a major reduction in the upfront costs they are being asked to pay to provide cash flow for the scheme to operate. In August they were told they would have to pay 2.4 months’ worth of deposits and producer fees immediately before the start of the scheme, which was greeted as a hammer blow to SMEs.
Small brewers in Scotland alone estimated they faced a £1.5m cost in the first year of the scheme.
Earlier this month, the Scottish government revealed tens of thousands of smaller retailers would be able to opt out of the scheme, amid fears over the soaring costs.
CSL CEO David Harris described today’s announcement as a “big win” for industry.
“The trigger of the government revising the guidance last month has given us an opportunity to get stuck into revising the costs to producers and that’s an ongoing process,” he told The Grocer.
“A key part of the success of DRS is that it is cost-effective. We put a fee out there in August a year ago ahead of go live, which was based on a set of assumptions and as we get closer, we have an opportunity to review those estimates.
“That’s why we’ve been able to give what we believe is a much better offer to industry.
“We’ve recognised that an expensive DRS is not a successful one and that we must deliver on those costs.
“It’s not just the cost to producers because those fees will ultimately find their way down the chain.
“We told industry we were listening; we understood their concerns and we will keep working to find solutions.”
Emma McClarkin, CEO of the British Beer and Pub Association, said: “We welcome the decision from Circularity Scotland to reduce day-one cash requirements and the year-one producer fees ahead of the implementation of the DRS in Scotland next August.
“However, with only eight months remaining until the proposed go live date, there remains several key areas that need urgent resolutions from the Scottish government to ensure a smooth implementation of the scheme. Notably around the charging of VAT on deposits and the issue of online takeback.”
Registration for the scheme starts in January and producers must be registered by 28 February.
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