On August 16th 2023, the Scottish government is set to go live with a Deposit Return Scheme (commonly referred to as DRS.) If it does go live, it will mean that people who have purchased something (between 50ml and 3L) from a Scottish producer or retailer like my myself will be able to claim back 20p per item back that they return. I will have to charge you 20p extra per item at the point of sale, which will be returned to you when you recycle your items. This scheme will apply (in Scotland) to glass bottles, PET plastic (only) and cans.
Why are independent retailers not so supportive of this scheme?
In theory, this is a great idea. I want to make it very clear that I am not against the concept of a deposit return scheme, because as a whole, we as a nation are not recycling enough, and the DRS should incentivise recycling. Everyone I have spoken to in the trade is very much for a recycling scheme; but at the moment we really don’t believe that this scheme, as it stands right now, will work.
A lot of emphasis has been put on DRS being an “industry lead scheme” however after a very awkward round table I attended at the beginning of March I can with great confidence say that no one I know in the trade has ever been consulted on this. This industry is more than the Tennents and Coca Cola’s of this world. These are the companies that are commonly reported as being supportive of this scheme, but it’s important to note that at least Coca-Cola, with more than 500 brands, sells more than 100 billion plastic bottles every year. This equates to 200,000 bottles a minute. They also employ around 700, 000 people. I am just one person, trying to run a business.
Impact on small businesses?
Fortunately, due to the size of BLUDGE, I am exempt (for now) from being a return point. This means that I don’t have to accept bottles back and refund people’s 20ps. If this is overturned (as we expect it might be later down the line) I would need to partner with a bigger company near to me to accept returns, or, shell out around £300,000 for a Reserve Vending Machine or “RVM”. If I don’t do that (probably won’t…) I would need to employ a person solely dedicated to handling DRS returns and refunds, as it’s already a hoor of a job 1) running a business and 2) also working full time at a different job on top of that. This poor person would be in charge of logging all the returns, registering new products, sending and receiving forecasts as well as potentially sticking 100s of thousands of barcodes onto backless labels.
At the moment every importer pays duty on every bottle that comes into the UK. Duty is essentially a “bad for you” tax, which has just increased so yes, thanks to Brexit you can save 11p on a pint in a pub, but it will add a MINIMUM of 44p per bottle in my shop over 12.5%, and even more over 14%. But back to DRS… These bottles are then held in tax free bonds, until they are bought by a wholesaler or released to the public. Then we pay VAT (an additional 20% of the cost) on every bottle released from the bond. Right now there is free movement of trade within the UK - i.e. I can take a palette of wine out of a bond in Glasgow and sell it down to London, or vice versa whilst only paying VAT. From the 16th of August, any palate that I buy in as a Scottish retailer we will have to pay an extra 2 fees - 20p per bottle on the average number of bottles purchased over the last three months by us, and a producer fees set up cost, which is £365 a year. This will have to be accounted for, forcing the price of a bottle up. People who are importing (as I had one day hoped to do) will have to pay a “producer” fee on top of this - as they are “introducing recyclable materials in Scotland”. Many (actual) producers in the EU have already said that they will stop selling to Scotland, with re-labelling and extra paperwork proving too much hassle, and fair enough. In fact, some Scottish companies are going to stop selling in Scotland!!
What will change for Scottish companies?
Every bottle brought into Scotland after 16th August will have to have a Scottish barcode, from a specific barcode supplier. A general or unregistered bar code will not be acceptable if you want to return your items via a reverse vending machine. I will also have to start sending forecasts to each one of my suppliers which covers a six month period, as well as keeping a tally of every bottle that I send to England that won’t be reclaimed in Scotland. It also means that if a person with an English postcode buys wine from a Scottish company, they will (in theory) get the wine for 20p less than someone with a Scottish postcode. This will incur an extra cost either to me as a business having to refund every English sale 20p per bottle, or an upfront cost in coding a website to recognise every Scottish postcode and automatically adding 20p per bottle on every sale. Does that make sense? Grammatically I mean, I know it doesn’t make sense in the wider scheme of things…
UK wide scheme?
As it stands, the rest of the UK scheme will not be recycling glass and will actually be a “nationwide-except-Scotland scheme.” Unless all our wines will now come in cardboard boxes, there’s no way that I as a wine business will be able to sell easily to the rest of the UK as well as Scotland. One Dundonian beer company has decided that it will only sell to the rest of the UK, meaning that some Scottish communities will not be able to support their local businesses. This is actually an illegal trade barrier, but it was painfully obvious at the March roundtable that Circularity Scotland does not care.
The contract for collecting the waste did not go to a tender - Biffa (an English based company) were given the contract without a vote. Since the beginning of 2023 they have been bought over by an American company due to funding. Biffa will be in charge of collecting Scottish waste, but will also dictate the schedule on which they do it. Not only is this inconvenient if you suddenly receive a huge take back of empty bottles, but also is anti-competition for more local companies who collect waste. Our council recycling bins will also become more limited, but of course, without a cut in council tax!
Where do we stand just now?
The deadline for producers to sign up passed on February 28th (in this context a producer applies to someone who makes a product in Scotland and someone who imports into Scotland.) Lorna Slater, the minister who has been pushing for this scheme since 2019, has been slated in the news recently when it was discovered that less than 86% of Scottish producers had not signed the agreement and paid their initial fees. Around 664 businesses had signed up, which the government have predicted would be responsible for over 90% of the waste produced.
There are daily blows to the industry at the moment, with the aforementioned duty increase, the previously moaned about Alcohol Advertising Ban, and now this. I know that shouting “It’s not fair” into the void is childish and not helpful but like… it isn’t fair. I’ve worked in this industry for 7 years now, throughout COVID where we were deemed essential, and in just a few months it seems as though the industry is on its knees, hogtied. Scotland has for a long time been an innovative nation, with worldwide recognition for brewing and distilling (obviously not so much in the winemaking side of things, but that will probably come thanks to climate change, and I must stand up for my brewery and distillery brothers and sisters.) This will be a catastrophic blow to the industry if we do not align ourselves with the rest of the UK scheme, which at the moment is the only way that this scheme will work.
I’m not even sure what we can do about it at this point, or even if the above information will be correct in a week's time. All I know is that if you think the independents are under-prepared (we are) wait until this hits the on-trade, that’s a whole other storm for another blog, and so few of them even realised…
If you made it this far thanks for reading and apologies. Thanks for supporting your indies (where-ever they may be) and please consider buying a bottle from BLUDGE. I’m actually normally quite the happy-go-lucky scamp, but it’s been a stressful start to 2023.