Circularity Scotland announce £22 million support for producers

David Harris

Circularity Scotland announced earlier this week that there will be £22 million of cashflow support measures to help Scotland’s brewers, distillers, importers and drinks manufacturers prepare for the introduction of Scotland’s deposit return scheme.

The £22m of extra support means that, for lower sales volumes, there are improved payment terms and up front charges have been removed along with easier labelling to remove the administrative burden. The package is particularly designed to help SMEs, who have previously voiced concerns about the impact of the scheme on their business’ cashflow.

To address these concerns, Circularity Scotland is removing the day one and month one charges for all producers, up to a threshold of three million units per year. It is also providing two month credit terms on deposits and fees up to the same volume threshold to reduce the working capital impact on all producers.

The three million unit threshold has been established to ensure that the thousands of smaller scale producers selling in Scotland benefit more proportionately from the cashflow support. This will help companies like craft brewers, wine importers and craft spirit producers. The two month credit terms will be made available to all producers, regardless of their size, ensuring all producers within the scheme are treated equally.

Circularity Scotland has also confirmed that it will be offering the option to use self-adhesive barcode labels for producers placing less than 25,000 units per year of a specific product on to the Scottish market. This will provide a simple and straightforward administrative solution for independent producers and importers for whom the cost of changing packaging to introduce new barcodes could be prohibitive.

David Harris, Chief Executive of Circularity Scotland said, “Circularity Scotland was established by industry to meet their obligations under the deposit return scheme as efficiently and cost-effectively as possible. This announcement is further evidence of how we are continuing to innovate and identify additional ways to mitigate the pressure on businesses. We know that smaller producers in particular have been concerned about the cashflow impacts of the scheme, and these measures will address those concerns.

“Circularity Scotland has successfully secured over £100m of third-party funding to establish the infrastructure of the deposit return scheme, with only minimal up-front funding from the very largest producers. This funding approach allows producers both large and small to benefit on equal terms from this investment in world-class infrastructure and leading-edge technology and only pay their share of the costs once the scheme is in operation.

“We have already announced reductions in producer fees of up to 40%, while also being able to offer the highest return handling fees of comparable schemes anywhere in the world. These additional support measures further demonstrate our confidence in being able to deliver ongoing operational efficiencies once the scheme has gone live. We are committed to ensuring that the deposit return scheme works for Scotland, is cost effective for business and helps protect our environment for generations to come.”

Circular Economy Minister Lorna Slater said, “This is a big and welcome change that that responds directly to many of the concerns that have been raised, particularly those from smaller producers like craft brewers. It addresses initial cash flow challenges, and provides a pragmatic and simple solution to the issues raised around barcodes for smaller product lines. This is a package that gives businesses the clarity and confidence they need to be part of Scotland’s deposit return scheme.

“Over the last few months I have been meeting industry regularly to listen to their feedback and this industry-led solution has been designed in direct response to its concerns. I remain committed to a pragmatic approach to implementation between now and the 16 August. By working together we can lead the UK in delivering a deposit return scheme which will increase Scotland’s recycling rates from around 50% to 90%, cut emissions, tackle littering and address public concerns about the impact of plastic and other waste.”

Responding to that announcement, UKHospitality Scotland Executive Director Leon Thompson said, “This late move is symptomatic of the entire Deposit Return Scheme process where decision-making has not been timely or understanding of business need.

“Frankly, with one week to go before registration for producers is set to close, this is a desperate attempt to boost the number of businesses signing up to be involved in the Deposit Return Scheme.

“UKHospitality Scotland members have been reporting that suppliers are highlighting a number of drinks brands and products that will not be available in Scotland after 16 August. This is bad news for those producers and our businesses who will not be able to offer the same range of drinks to customers.

“This also highlights that producers are thinking very carefully about registering with Scotland’s Deposit Return Scheme, with its financial costs and liabilities. With hospitality businesses continuing to invest time and money in preparing for DRS, it is critical that Circularity Scotland is transparent on how many producers are currently registered.

“Four and half thousand producers have been identified by Circularity Scotland. However, there is speculation that the number of those registering are sitting well below this figure.

“It is hard to see how the scheme can operate without a critical mass of producers involved.”




Category: News
Tags: Circularity Scotland, David Harris, deposit return scheme, Lorna Slater