Drinks producers using glass bottles fear that they will bear an unfair share of the cost of the Extended Producer Responsibility (EPR) scheme, due to come into effect in the autumn.
From 1st October, businesses with an annual turnover of £1m or more producing more than 25 tonnes of packaging waste a year will be expected to cover its collection, recycling, and disposal. While PET and metal are exempt pending the establishment of England’s Deposit Return Scheme (DRS) in 2027, glass will face immediate charges.
The Food & Drink Federation (FDF) has estimated that EPR will cost businesses £1.1bn in its first year, telling FFD that it supports the scheme,“as an opportunity for the UK to develop a world-class recycling system and a circular economy for packaging”. It has, however, made its backing conditional on committments to recycling infrastructure improvements and for fees collected to be ringfenced for recycling.
Meanwhile, drinks makers selling products in glass bottles told FFD that they will either need to absorb the cost of EPR or put their prices up. They argued that as other materials than glass are exempt, many will be forced to shift to cans at their own cost.
Will Fugard, founder of organic beverage brand, Gusto Drinks, said EPR punishes businesses already committed to sustainability.
“We’ve been ahead of the recycling game for a while. We use the highest percentage of recycled glass, we don’t have plastic on outers, we put a lot of money and effort into being on the right side of the argument when it comes to packaging waste. So it’s frustrating to have this heading towards us.”
Belvoir Farm boss Pev Manners echoed this sentiment. Despite using real ingredients and applying sustainable practices, he said his business was being targeted for using glass. Under the new rules, it will be liable to pay £240 per tonne of waste, a rate which could be adjusted upwards in June.
“To give you an idea, on a 750ml bottle, which weighs 450g, that’s 11p on the glass alone,” he said, to which are added fees for the box and cap. Meanwhile, producers using PET and aluminium still only have to pay VAT. “To me, it’s staggering that EPR does not include plastic and cans,” he said.
“PET is hardly recycled at all in this country, 58% is incinerated, leaving microplastics all over the countryside – whereas glass is 80% recycled and could be more if they got their act together on recycling.”
While the £1m turnover threshold was ostensibly set to protect small businesses, Fugard pointed out that according to Defra’s own definition of an SME, “a small business is up to £5m in revenue – so they’ve put in a sort of protective area, as it were, but it doesn’t touch the sides.”
Many producers, like cider maker Healey’s – who is, incidentally, putting some of its drinks in cans to offset a £700,000 bill – face six-figure EPR costs. Others, like Belvoir, are looking at bigger tax burdens than their annual profits. “Last year, our declared books on Companies House showed a profit of £900,000,” Manners said. “This is £1m of extra cost. So we have to hand it on.”
Belvoir will likely switch to selling more canned drinks, while Gusto is still considering the move. Both will ramp up exports as EPR won’t apply abroad. But here in the UK, Fugard said the tax would be “whoppingly inflationary”, fearing the impact this will have on retailers’ decisions.
“We’re already seeing speciality retailers and cafés going back to putting Coke and Fanta in their fridges because they’re worried about margin. They’re moving away from brilliant speciality products already.”
The FDF, Fugard and Manners have also raised concerns that EPR could generate tax revenue that isn’t put towards recycling. Manners said he had it “on good authority” that Defra is already allocating funds before improving infrastructure.
“It just wants money for local authorities. They’re collecting it from wherever they can get.”
Fugard still has hope that Defra might temper its approach. “All we’re asking for is a little bit more nuance and accommodation in food policy,” he said.
“The solution for this is simple. It’s about creating a level of exemption for SMEs so that we can thrive and do what we’re good at: innovate, bring out new products and export our products all over the world.”
“Tax the big players who are in a much better position to pay those taxes by dint of their scale. What this legislation does is it really harms businesses that don’t have that scale play, that very big multinational scale play.”
This article first appeared in the March edition of Fine Food Digest
