Deposit return scheme risking thousands of businesses

Trade associations are pleading for a ‘grace period’ for Scotland’s deposit return scheme (DRS) to ‘save thousands of small producers’.

On 16 August 2023, Scotland is due to become the first country in the UK to implement a DRS. The initiative will see consumers pay a 20p deposit when buying a drink in a single-use container made from polyethylene terephthalate, glass, steel or aluminium, sized between 50ml and three litres.

The 20p deposit will be refunded by the drink’s producer when the container is returned for recycling at one of 30,000-plus return sites.

To comply with Scotland’s DRS, drinks producers must register with the scheme by 28 February 2023.

With a few weeks to go until the deadline, a group of trade bodies have written an open letter to Scotland’s minister for green skills, circular economy and biodiversity, Lorna Slater, asking for an 18-month legal grace period for smaller producers, or many products will no longer be available in Scotland from 16 August and ‘prices will substantially increase’. The letter also asks Slater to amend the rules for online takeback.

The trade bodies include the Scotch Whisky Association (SWA), the Society of Independent Brewers, the Wine and Spirits Association, and Scotland Food and Drink.

A joint statement from the bodies said: “There are now only a few weeks left to save thousands of small producers that will be banned from selling bottles and cans in Scotland from August.

“They lack the finances and resources to meet the scheme’s requirements on time, and need an 18-month legal grace period in the regulations and the option to opt in.

“Without this certainty, it’s likely that consumers will lose out through reduced consumer choice and increased prices.”

‘Fundamental unanswered questions’

In December, Slater indicated that the regulator Sepa (Scottish Environmental Protection Agency) would accept a “proactive and managed approach towards compliance”.

Colin Smith, chief executive of the Scottish Wholesale Association, said: “A grace period will allow them to overcome the significant challenges they still face trying to get ready to go live with DRS because there remain fundamental unanswered questions on key issues such as VAT, price-marked packs, IT system requirements, and what happens to stock in bonded warehouses.

“In addition, our request for a de-minimis on SKUs below a 50,000-unit-per-annum threshold would protect the availability and choice of a wide range of unique or limited low-volume SKUs that many wholesalers and their customers stock. This differentiates their offering versus their competitors.”

The January issue of The Spirits Business explored the pros and cons of the DRS, which has divided industry opinions.