The Circularity Scotland conference on the deposit return scheme took place last month – with more than 600 people in attendance. The communication for the trade will start in the New Year but, for now, this is a guide to what is planned – simplified. It seems very unlikely that it will be delayed despite industry pressure to do so. Scotland will become the first of the UK’s nations to implement a DRS scheme and it is the only one to include glass. The conference featured a keynote speech from Lorna Slater MSP, the Minister for Green Skills, Circular Economy and Biodiversity, who is responsible for introducing the scheme. Ms Slater reiterated that there would be no delay to introducing the scheme on 16th August, 2023.
What is the Deposit Return Scheme – DRS?
From August every single-use drinks container sold in Scotland – be that plastic bottles, cans, aluminium or glass – will be subject to a 20p deposit. This will then be refunded to consumers when they take back the container to their local shop or one of tens of thousands of return points across the country. If you sell any of these single use drinks containers, you have to become part of DRS – it is mandatory not optional. The 20p deposit applies to all drinks containers from 50ml miniatures right up to 3-litre kegs. Drinks producers and wholesalers have been impacted already and have had to invest substantially. It is being rolled out by the Scottish Government, and the Scheme Administrator is the newly created non-profit body – Circularity Scotland which is being funded by industry – so far more than £100m has been invested in it.
Circularity Scotland has been created to ensure the smooth roll-out and successful operation of Scotland’s Deposit Return Scheme – it was not involved with the legislative process. Its role is to bring together key operational partners right across the drinks supply chain from producers and importers through to hospitality, wholesale and retail businesses and work with them to ensure the scheme is designed and implemented effectively and support everyone in meeting their legal obligations. The scheme is designed to be self-financing with administrative costs covered by revenues from recovered materials and unredeemed deposits and a small producer fee.
The organisation will also manage payments from producers, and return point operators, and track the containers across the scheme. It will also collect the returned containers from return points across Scotland and will subsequently process and sell the returned material. It is also the body that markets and communicates the scheme. Until now the communication has been with producers – of which Scotland has about 4,000.
However it is not just applicable to Scottish businesses either; any business importing and selling containers on the Scottish market must take part. Now the focus will be on hospitality and retailers. From June it will be directed towards consumers, who know very little about the scheme at the moment.
Hospitality operators buy single-use drinks containers from wholesalers and they will be charged the refundable 20p deposit on every single-use drinks container whether a can or a bottle of wine, by the wholesaler. This will have a direct impact on cash flow.
The deposit will only be returned once Biffa, the official logistics provider, has picked up the bottles and verified the quantity. An exact timeframe has not been given but it could range from 7 days to 14 or longer. Hospitality businesses can choose whether to pass the deposit on to consumers – If deposits are passed onto consumers, then businesses will need to operate as an open return point.
However, many are looking to not pass the deposit on and operate as a closed loop hospitality site where drinks containers are consumed on site and stored for collection by Biffa.
Operators choosing to operate as an open return point would be required to take returns from all consumers and pay them back their deposit, as well as store said items until collected by Biffa. This is unlikely to be the preferred option for licensees but we have now been told exemptions will apply for some operators who do carryout. The details are not yet available.
There are already Environmental Health exemptions – for instance if operating as a return point you would risk a breach of any of your environmental health obligations and your premises could be reasonably altered to avoid risking breach in operating a return point. Return point operators will receive a handling fee designed to cover the costs of the time, equipment and additional storage space needed to operate the scheme.
If your bottles are currently crushed this will not be allowed from 16th August – although bottles can be returned broken, they cannot be returned crushed! PET and aluminium cans must also remain uncrushed.
Circularity Scotland has appointed Biffa to be the scheme’s official logistics service provider. It has the task of collecting all bottles, cans and plastics from every hospitality operator in Scotland as well as all the other designated operating return points – this is expected to number more than 30,000. Operators will not be charged for this uplift, but will have to provide Biffa with information such as how many drinks containers they will be recycling, and days when uplifts are not possible i.e. when closed.
They will also have to store the containers until uplift either in lockable bins or non-lockable bins. There are ongoing discussions regarding how the information will be verified either by weighing, epos systems, an app, or by counting.
From March when all hospitality businesses are expected to be registered – Biffa will start assessing operators needs before coming up with a schedule for pickup.
SEPA is the body that is tasked with policing the new legislation. At the conference it’s spokesperson said, “Advice and guidance is our main route to compliance.” They want to encourage a “culture of compliance” and will adopt a risk and evidence-based approach that aims to “target action where it is needed and ensure the achievement of measurable outcomes”.
Fines will be levied with consistent non-compliance, particularly significant, deliberate offences.
Zero Waste Scotland
Zero Waste Scotland is also involved in an advisory capacity. People can seek advice from them.
Currently, Zero Waste Scotland estimates that only around 45% of recyclable drinks containers are recycled, with the rest ending up as waste and litter. The Deposit Return Scheme aims to ensure that 90% of all drinks containers are captured and recycled, preventing billions of bottles and cans each year from blighting the Scottish countryside and harming wildlife.
Stephen Montgomery, spokesperson for the Scottish Hospitality Group said, “The hospitality sector in Scotland of course wants to play its part in Scotland’s race to a greener economy and its net zero target, however, given the catastrophic events of the last few years, the on-trade hospitality is not ready for this. There are many issues which are needing to be resolved, with the primary issue being cash flow. Yes there is an extra 20p per item, however that is not the only charge which will be falling at the cost of the hospitality sector. There will also be a producers element to be added, so we could be looking at anything between 26p to 45p per bottle, meaning a possible £10.80 on a case of 24.
Credit terms with our supply chain may also now be changed, which will also cause major issues, and of course, there is still the issue of VAT to be settled. All this comes at a time which is peak trading for the sector in summer, where a political gain has taken over from a pragmatic approach. It would have been a better approach if it had been a 4 nations scheme, which would have taken away the fraud issue and the problems around differing barcodes, or if the scheme had started small, for example in supermarkets, and then expanded it out further as issues had been rectified. In doing that, it would have given hospitality a bit more time to recover.
Steve Annand, Sales and Marketing Director at Wholesaler Inverarity explains, “There are still a lot of questions to be answered regarding how the scheme will be implemented but we are preparing for its impact as best we can.
“Unfortunately, the increased administration costs, potential label changes and producer fees, an unrecoverable charge to manufactures allowing them to place containers on the market in Scotland , will undoubtedly lead to increased prices for customers. Producers fees are still to be finalised by indications are they will be between 5p – 7p per container. There is still a bit of a misunderstanding that it’s just about the 20p deposit, its not.
“Producers and wholesalers cannot afford to absorb all the costs of implementing a Deposit return scheme and the associated costs will be passed on in the cost of the product with the 20p’s charged on a separate line on invoices. Increased costs will flow through the supply chain from Producer to wholesaler, wholesaler to retailer and retailer to consumer. Even in “Closed loop” hospitality the price to consumers for drinks products sold in containers will inevitably increase.
“There is also still a huge communication piece required to increase the understanding of DRS across the Scottish licensed trade and allow everyone to get to grips with the impacts on their business.
“Most importantly, every single Pub, Bar, Restaurant, and Hotel in Scotland will need to change the way it handles and store drinks containers to ensure they can recover deposits- glass will have to be returned in Bins provided by the schemes nominated logistics provider – even if they currently have a company that uplifts them, from August they will have to work with Biffa. They will also have to return cans and PET in bags. There is no charge for the glass bin uplift but there is a charge for bags and security tags and cans and PET will not be accepted if crushed, damaged, or flattened as the bar code on every container needs to be scanned upon return.
“As a consequence of DRS we anticipate there will be a move towards not only draught beer and draught soft drinks, but an increase in draught wine, and water on tap. This will be more viable in a post-deposit world.”
“We as wholesalers are responsible for charging the 20p deposit on all containers we sell but we are not directly responsible for uplifting returns or paying back the deposit. That will come via Circularity Scotland, the scheme administrator .”
Update on revised fees can be found here