Business owner speaks out on bottle return scheme: 'We are flailing'

The head of one of the drinks producers signing up at the last minute to Scotland’s deposit return scheme has said he did so “trusting in the powers that be not to progress anything too detrimental to Scottish business”.

Alloa-based Williams Bros, which turns out roughly eight million bottles and cans of beer annually, was among the 650 producers yesterday confirmed to have signed up by the February 28 deadline. This was despite serious reservations of owners Scott Williams and his brother Bruce, who have been running the business for more than 30 years.

“We are flailing about, basically,” Scott said last week of the company’s preparations for DRS. “The information keeps changing.”

Scheme administrator Circularity Scotland yesterday hailed what it called “a fantastic start” for the country’s DRS, which is scheduled to launch on August 16. It noted that the 650 firms enrolled account for more than 95 per cent of the total volume of products included in the scheme, the equivalent of more than two billion single-use aluminium, plastic and glass drinks containers annually.

Read more: Hundreds of drinks producers sign up to Scotland's deposit scheme

Noting that registration remains open to allow others to enrol, Circularity Scotland chief executive David Harris said: “I would encourage those producers who have begun their registration to complete it as soon as possible and can assure those producers who have yet to sign up, that we have people on hand to support them through the process.”

It has been suggested there could be quite a few yet to go. Colin Smith, chief executive of the Scottish Wholesale Association, said collective data compiled by Circularity Scotland through its own market research and various membership trade bodies indicate there are something in the order of 4,500 producers currently supplying drinks into Scotland, meaning that many smaller operators have yet to step forward.

“Don’s get me wrong, 80% of the volume of containers on the market come from the top suppliers that you would expect – Coca-Cola, Heineken, C&C, and so forth,” Mr Smith said, “but that 4,500 is made up of a lot of SME producers.

Highland Spring, which bottles approximately 500 million litres of water from its main facility in Perthshire every year, has said it is 'unlikely' to be able to absorb all the costs of the DRS scheme (Image: Highland Spring)

“Indeed, [Circularity Scotland] were saying half of those 4,500 they believe will be importers, so that is people like our members who are importing wines...and other smaller businesses such as entrepreneurs who are bringing in different-flavoured Fanta or fine wines from Chile or France, or different spirits from all over the world, to give choice not just to the Scottish consumer, but to also satisfy the tourists that come to Scotland.”

Mr Williams said it remains unclear whether his brewery, which employs 70 people, will initially be exempt under last-minute changes announced on February 21. These included the removal of so-called “day one” and “month one” charges for all producers up to a limit of three million units per year, effectively excluding all small producers from payment of these fees.

Circular economy minister Lorna Slater also reaffirmed yesterday that she is considering a grace period of at least a year for smaller producers. Mr Williams said he is uncertain whether Williams Bros will qualify as a “small producer” as it is unclear whether beer that it produces on behalf of others under own-label contracts will be counted against the company’s annual total.

Read more: Deposit Return Scheme executive warns of higher prices for consumers

Drinks manufacturers that are not exempt will pay 2.03p per aluminium container, 2.21p per plastic bottle, and 4.1p per glass bottle to Circularity Scotland. This is completely separate from the 20p deposits that will be repaid once a container is returned through the DRS system.

Registered producers are also required to barcode and track every container they put on the Scottish market. Those that continue using a UK-wide barcode that is not specific to Scotland’s DRS will pay a further surcharge of 1.133p on all containers sold in this country.

“It’s just an added cost to our business,” Mr Williams said. “Producers are all pretty much down to our bare bones in terms of margin, so therefore if it’s going to cost us 4p or 5p per bottle more to transact from August, then we will have to pass that price on to the consumer.”

Williams Bros turns out roughly eight million bottles and cans of beer annually (Image: Williams Bros)

Mr Williams also highlighted the uncertainty on VAT charges, which will be applied to the 20p deposits on all containers that are not returned through DRS. Producers are ultimately responsible for paying this, and will have to wait weeks or months before discovering how many of their containers have made it through the system.

“What will happen is that manufacturers will have to take an educated guess on what they think their exposure might be and then either cost that in, or take a hit on it for a year and wait and see what it actually is, and then cost it in on another round of price increases,” he said.

Tomorrow:
Hospitality operators ask: “What is DRS there to solve?”