The cost of a bottled liquids is soon set to rise as the government’s Extended Producer Responsibility (EPR) packaging levy comes into force this year. To combat the extra cost, many breweries are considering switching to cans.
Defra, the Department for Environment, Food and Rural Affairs, is introducing the packaging tax to fund recycling. The EPR shifts the cost of household recycling from councils back onto the companies using the packaging.
Recent figures show that the EPR packaging levy will see an increase on the price of products packaged in glass. The biggest rise will be 12.2p a bottle for spirits.
Figures this week from the environmental solutions company Valpak shows that a huge cost will be faced by the companies with spirits at the top, followed by wine, then water and soft drinks in glass bottles, which will see a 6.6p per unit rise.
Defra’s estimates of the EPR fees for glass have varied widely. Its original summer estimate suggested it could be as much as £330 per tonne, but the September iteration fell to a maximum suggested fee of £115 per tonne and now the latest estimate has shot up again to £240 per tonne.
Defra has said it expects 80 per cent of the costs of EPR to be passed onto the consumer. The first invoices are set to land on the desks of producers and retailers in October.
A leading elderflower cordial and soft drinks maker claims that EPR will cost the company £750,000, wiping up to 80 per cent off its profits, The Times reported.
It is also feared due to additional cost by the EPR scheme, breweries will be forced to switch from glass to cans.
According to British Beer & Pub Association chief executive Emma McClarkin, the revised estimates for glass are an extremely "worrying step in the wrong direction".
'Government must be clear-eyed that these proposed higher additional costs on brewers would land an extra £160million, or 5p per glass bottle, on the sector.
"This could force some brewers to leave the glass bottle market.
"Given the incredibly narrow margins UK brewers operate to, as they make an average of 2p per bottle of beer, this means they will be forced to pass on extra painful costs to the consumer if they want to carry on making their product," McClarkin said.
British Glass chief executive Dave Dalton said, "We believe the cost could be even higher once additional supply chain costs and VAT are added."
"The bottom line is that the Government's packaging Extended Producer Responsibility scheme is putting thousands of jobs at risk in a sector that employs 120,000 in its supply chain - potentially shattering the UK glass sector."
Producers of soft drinks in plastic bottles and cans are exempt until 2027 as they have lobbied to be covered by a different deposit scheme.
Ian Howell
www.asiantrader.biz
