The Scottish Government is planning to charge an extra 20p on single-use plastic and glass bottles and aluminium cans next year under a new Deposit Return Scheme. Jason Caddy takes a look at what it will mean to you.
Ten green bottles sitting on your bar, ten green bottles sitting on your bar, and if one green bottle should accidentally fall…who’s going to pay for it? That’s the question we’re asking ahead of the publication of the regulations governing a Scotland-only Deposit Return Scheme (DRS) which means that everyone purchasing drinks in bottles, single-use plastic containers, and aluminium cans must pay a 20p deposit per container – and that includes the licensed trade.
It’s been suggested that licensees needn’t pass the cost on to the consumer – but is that likely given that you could incur losses through breakages or by bottles and cans going walkabout if you don’t?
The way it will work is that you will have already paid the deposits to your wholesaler/provider at the first transaction. For example, if you order 1000 bottles, this equates to £200 worth of deposits. All deposits go to the as yet to be formed Scheme Administrator, the body that will oversee the implementation of the scheme, and when all the empty bottles and cans are returned to the Scheme Administrator, the deposits will be refunded to the licensee.
But there’s no provision for breakage in this model – and it’s this that threatens to impact your cashflow. Your business is going to have to wait what could be up to three months before you get your money back. Not to mention having to ‘police’ and ‘housekeep’ the scheme by making sure all of the bottles and cans are collected and stored. Josh Kee from Glasgow’s Oran Mor reckons that on an average weekend they could be looking at over 1000 empty bottles and cans.
Licensees will receive a handling charge for storing and packaging and separating. We don’t know if the deposit will carry VAT or not.
Making Scotland greener by incentivising recycling is what’s behind this of course, but it ignores the fact that licensees already have waste management contracts and are happy to recycle.
Who’s going to be in charge of it?
Overseeing all of the operational arrangements of the DRS, like collection and return of the deposits, as well as the collection of all the cans and bottles that you’ll have to store, will be the as yet to be established Scheme Administrator. This will be a not-for-profit organisation ( funded apparently by the cash raised from deposits that are not reclaimed and from the sale of recycable material which sugests that they aren’t expecting a 100 per cent return). The Scottish government says the scheme is not their responsibility and expects the drinks industry to run and police the scheme which is why The Scotch Whisky Association, The Scottish Wholesale Association, and The Scottish Beer and Pub Association are all in discussions with Scottish government ministers about right now as part of an advisory group.
But the effectiveness of Scheme Administrator, which is modelled on an EU model has been called into question by Colin Smith, Chief Executive of the Scottish Wholesale Association because quite simply trading arrangements in the EU differ from our own.
He said, “The market in Europe is different to the UK market. We have a more fragmented wholesale market whereas Europe has a direct supply route. Our wholesalers supply many smaller independent pubs, for example, so when you try to apply this model based on a direct route and overlay on a fragmented market it could be unworkable.”
Trial and error
A trial by Zero Waste Scotland, the results of which should be published imminently, has thrown up some major concerns for Willie Macleod, UKHospitality’s Director for Scotland.
He said, “We are waiting for the results back from Zero Waste Scotland of a pilot DRS scheme in which three businesses participated, including a hotel with a busy bar and restaurant, and I know that they had a problem with storage because the empty bottles and cans took greater handling than is required at present. As well as storage implications, there were also concerns expressed that the containers provided weren’t adequate for the job. “
“In fact, the longer we’re involved in this the more we need to know. There is still a lot of detail to emerge. We have concerns about the government’s plan to make it operational in quarter one or two of next year, at the same time as the proposed tourist tax, which would be overload for businesses.”
Willie is also concerned that licensees will need on-going business support. He explained, “There are also going to be issues further down the line and I’ve been in discussions with other trade groups about how we can assist with things like accounting and IT systems.
And if you have a waste management contract already in place, the DRS must work in tandem with it rather than replace it. Willie Macleod explained, “When Waste Scotland regulations came in last September, governing the separation of paper, plastic, glass and metal, most hospitality businesses entered into waste management contracts. Now, certain aluminium, glass, and glass must be disposed of under the DRS system. But some items that are made of the same materials but are not the scope of DRS, like catering size cans and plastic jars and marmalade containers still need to be recycled, so they still require a separate waste management contract.”
What do licensees think?
Michael Bergson, owner of SoHo Glasgow Bars & Restaurants, says, “We are fully behind recycling but I hope that this scheme isn’t going to create another cost on top of rates, recycling and wages going up. We want a vibrant bar scene like Dublin and Berlin, but is this going to hinder this if I have to charge customers an extra 20p on a bottle of beer – there’s a tipping point for both customers and businesses. I fear that this could lead to some business closures. Plus if customers start abandoning bottles for pints, they take longer to pour and this has a staffing cost impact.”
Alan Tomkins, who owns Vroni’s, Blue Dog and Urban Bar Brasserie, Glasgow, comments, “Funnily enough I was discussing this with one of my suppliers this morning and although we must embrace this, I can’t help but feel that the licensed trade is going to have to absorb some of the cost of breakages, etc., or even pass on this cost, or part of the cost, to the customer.”
David Hall, of Vespa, Edinburgh, told DRAM, “Off the top of my head, my initial reaction is if I was absorbing costs as a result of this scheme, I would build it in rather than add it on. The additional costs facing licensees are relentless and we need to protect margins.”
Donald MacLeod, Hold Fast Entertainment, “What next? Are we going to have to have security around bins to stop bin rakers? I’m sick to the back teeth of extra charges and penalties that are strangling of business. It’s an absolute joke.”