Yesterday marked one year before the Scottish government intends to launch the deposit return scheme (DRS), yet small brewers face too many unanswered questions to start preparing.
Independent brewers were hoping for clarity yesterday as the scheme administrator, which will run DRS, announced the producer fee — a key element of the cost for small brewers.
Its announcement will add at least 10p to the shelf price of a bottle of beer, in addition to the 20p deposit. This will be a very unwelcome addition to the costs that hard-pressed consumers are already facing, says the Society of Independent Brewers (SIBA), and is worse as it is being caused as a direct result of the Scottish government actions.
SIBA’s Scottish director, Jamie Delap, said: “Independent brewers supplying Scotland have told us that they will either stop selling in Scotland or reduce their brands. This means that Scottish consumers face a dramatic fall in choice, as well as significant price increases, as the cost of living crisis continues.”
In addition to the producer fee, the scheme administrator also announced that producers would have to pay 2.4 months of deposits and producer fees immediately prior to the start of the scheme. This could mean that small brewers will have to find in the order of £1.5 million to fund the scheme at a time when they still have substantial debts from Covid and are struggling with huge increases in energy and other costs.
Other important elements remain unanswered, such as how the online takeback service — where empty containers are collected by people’s doorsteps — will work, or how it can be delivered. Currently, there is no way for any retailer to continue selling beer online under DRS. Serious questions also remain over VAT and labelling.
“Scottish brewers have been trying to make the plans for DRS to work, but as it’s currently designed it represents an existential threat to small independent brewers,” Jamie added. “We need the Scottish government to reconsider their plans otherwise this scheme will not achieve what everyone hopes it will, nor help us to reach net zero.”
Emma McClarkin, chief executive of the British Beer & Pub Association, said: “With just one year to go before Scotland’s deposit return scheme is set to start operating, there is a lot of work still to be done. Establishing producer fees is critical so producers can plan ahead and assess the impact on their businesses. Unfortunately, this will put even more financial pressure on both brewers and pubs at a very difficult time as they battle with soaring energy costs and labour shortages.
“The combination of a deposit and additional producer fees — themselves very significant amounts — will particularly impact products such as beer sold in smaller single-serve containers, often as part of multipacks.
“The Scottish Government have shown that they are mindful about the cost of doing business and have supported calls for a range of measures, but they need to be acutely aware that the producer fee is just one of [many] costs attached to a DRS.
“Labelling, new IT systems, staff training, security, storage, and fraud risks will all come with significant expenditures. There also remains several elements still to be finalised, such as VAT treatment and the online takeback model, that with just a year to go is causing significant concerns among businesses.”
She added: “We are committed to working alongside the Scottish government and other stakeholders to deliver the best possible DRS, but without wider relief to the costs of doing business, currently we risk losing many of Scotland’s brewers and pubs before DRS even starts.”
