Navigating the Future of Recycling: Challenges and Solutions for the UK Soft Drinks Industry
In 2023, the UK soft drinks industry sold more than 15 billion litres of drinks, packaged in bottles, cans, and cartons. As producers, our members put this material on the market, so it’s also their responsibility to ensure that it is recycled and reused as effectively as possible. That’s why, as the trade body for the soft drinks industry, we have been spearheading the creation of a UK-wide Deposit Return Scheme (DRS) for plastic bottles and metal cans, while also supporting the introduction of an effective Extended Producer Responsibility (EPR) for other types of packaging.
BSDA members have long supported the introduction of an industry-led, interoperable DRS run on a not-for-profit basis to help reduce littering and increase recycling. Our industry spent a lot of time, money and resource preparing for the introduction of a DRS in Scotland before it was delayed. Undeterred, producers are now actively working towards a go-live date of October 2027 for schemes across the UK.
While we are encouraged by recent progress made across the Four Nations on most aspects of an aligned DRS, a unified and consistent scheme is critical, and, therefore, it’s disappointing that – at the time of writing – the Welsh Government continues to be an outlier in calling for the inclusion of glass within scope. This decision risks scheme failure, poorer environmental outcomes, and harm to SME producers as well as Welsh businesses and consumers.
We will continue to offer our full support to ensure the delivery of an aligned DRS and, to this end, we urge the Welsh Government to reconsider its approach to help unlock the way to an interoperable DRS that benefits the environment, consumers and industry alike.
With the earliest date for the appointment of a DMO fast approaching, we are also urging the UK Government to provide clarity about the requirements of an application. It should also review HMRC’s intention to levy VAT on unredeemed deposits. At an estimated cost of £180m per year, this will divert resources from essential elements like consumer awareness and have a material impact on the success of the scheme.
Meanwhile, EPR, in which a producer’s responsibility for a product is extended to the post-consumer stage of a product’s life cycle, is due to come into effect next year, with glass bottles in scope everywhere except Wales.
For glass bottles and cartons, an efficient and effective EPR scheme can enhance recycling rates and reduce waste by holding producers accountable for recycling costs. While this is already spurring innovation in product design, the current implementation of EPR threatens to undermine what should be a successful introduction of the scheme. Producers are facing enormous commercial uncertainties to their businesses from:
- The lack of any understanding on what EPR fees will cost them;
- The proposed structure of EPR that classes non-household waste as household waste.
EPR fees are due in October 2025, but the exact costs remain unknown, preventing businesses from planning ahead. With budgets for next year being prepared, the Government’s continued lack of clarity on fees is increasing uncertainty in an already volatile economic climate.
At a time of significant cost pressures for businesses, it’s appropriate that packaging destined for non-household waste streams, such as hospitality venues, hospitals, and schools, is exempt from EPR fees.
However, the way household waste is currently defined means this grace isn’t extended to the businesses that need it most – namely, SMEs. To be exempt, packaging must be designed specifically for business use and have a clear paper trail. Smaller- and medium-sized businesses have limited manufacturing capabilities, so produce the same product for both the on and off trade. They also rely almost exclusively on wholesalers to sell it, and businesses in this sector rarely inform suppliers about where their products end up and how much of them are sold to exempt and non-exempt premises.
When EPR comes in, this packaging will be wrongly classified as household waste, unfairly costing SME soft drinks producers hundreds of thousands of pounds which risks putting them out of business.
The abovementioned issues need to be resolved as a matter of urgency to avoid, among other things, potential, unavoidable price rises for consumers.
