An extended producer responsibility scheme (EPR) is being launched in the UK, but brands argue they will be unfairly charged thanks to a ‘flawed’ plan.
*This feature was originally published in the October 2024 issue of The Spirits Business magazine.
The spirits sector has taken great strides to reduce its packaging, with brands revealing lighter bottles and ditching secondary packaging as part of their efforts to reduce their impact on the environment. However, producers in the UK face a new challenge in the form of the extended producer responsibility (EPR) scheme, which seeks to make those who introduce packaging into the market responsible for its entire lifecycle, ensuring that product design incorporates considerations for disposal and recycling.
In August, the UK’s Department for Environment, Food and Rural Affairs (Defra) released the first indicative base fees for the EPR scheme, which will come into effect in 2025. But members of the drinks industry have branded it as being more expensive than expected and lacking in certainty.
Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), says while the trade body was pleased further work is being undertaken to refine the indicative fees, particularly for glass, for many businesses the detail will come too late.
The 2025/26 base fee rates vary depending on the material. Aluminium packaging fees range between £245 (US$328) and £655 per tonne, while glass costs, calculated using a separate methodology, are estimated to be between £130 and £330 per tonne.
“EPR fees are due from 1 April 2025, and many businesses will have already negotiated contracts and set their prices for the next financial year,” Beale says, adding that although the drinks industry had been waiting months for an indication of the EPR fees, the publication of provisional fees “will do little to reassure obligated businesses or provide a basis on which to plan”.
Delay the plan
Beale believes the plan has “not been thought through”, and should be delayed. It is challenging for the WSTA to advise its members about the costs of the scheme, and how it overlaps with existing programmes, such as the long-delayed deposit return scheme (DRS), he adds.
Beale wants a “volume-based scheme” rather than one based on weight, which would benefit the drinks industry because of its reliance on glass. “Anyone putting glass packaging on the market will end up paying for 30% of the entire scheme,” he warns. “If you treat glass in a particular way, it disproportionately affects our industry, rather than anyone else.”
He also says there has not been enough consultation from the drinks industry, and the government hasn’t provided “enough evidence to have made some of the decisions they’ve made”.
Meanwhile, Ian Bray, the CEO of UK mixer producer Fentimans, warned that the current proposals would “lead to the death of Fentimans”, and result in the collapse of small businesses. He said in a statement: “Fentimans will always support sustainable practices and the principles behind the EPR scheme. However, in its current form, the EPR proposals unfairly impact glass when compared to other packaging materials such as plastic and aluminium, and we believe urgent intervention is needed.
“The current indicative EPR base fees, calculated based on the weight of packaging materials, place a disproportionate burden on the glass industry compared to other materials. These fees are much higher than we expected, and implementation without revision will be devastating for our business, and will lead to investment being diverted outside the UK.”
Bray also pointed to the incoming DRS scheme in October 2027, which excludes glass, adding that while plastic and aluminium are part of the DRS proposal, they would “not be subject to EPR fees in the meantime, meaning they benefit from an additional two years without waste-policy costs, which will further incentivise material switching”.
Like the WSTA, Bray called for a delay to “avoid the decimation of soft drinks in glass”, and bring it in line with the introduction of DRS. He said: “We are urging Defra to adopt a units-based approach to avoid jeopardising the glass industry; EPR in this current form is not a material-neutral policy.”
Another point of contention is how to determine when packaging is not classed as household waste. Hospitality businesses typically dispose of packaging commercially, and the EPR proposal could see them being charged twice by paying a commercial waste fee and incurring an EPR charge.
Kate Nicholls, chief executive of UKHospitality, says: “At a time when hospitality businesses are facing rising costs in almost every area of their business, a double penalty of being incorrectly levied an EPR fee and paying for commercial waste disposal is the last thing the sector needs.
“We understand that tracking packaging is complex, but there needs to be a clear and simple route for both wholesalers and hospitality businesses to demonstrate when packaging is non-household. It’s unfair to expect hospitality businesses to pick up the bill twice, just because an issue is complicated. Empowering the supply chain to help provide data-driven solutions, as part of a simpler, clearer process, would be a sensible way to avoid double-charging.”
A simple route
In a letter to Steve Reed, the Defra secretary of state, UKHospitality called for the introduction of a simple route for demonstrating packaging is non-household, and consequently exempt from EPR charges. The trade body also asked that the supply chain (such as wholesalers) be allowed to calculate the proportion of packaging provided to hospitality customers.
The letter said: “The current household-waste definition ignores the complexity of tracking packaging sold by third parties such as wholesalers, requires evidence that will be difficult and costly for the hospitality industry to bring together, and mandates packaging to be designed solely for business use.
“This approach is unfair, and inflationary, and will mean thousands of tonnes of packaging will be paid for twice – singling out the hospitality industry for additional costs. It also penalises businesses with limited manufacturing capabilities, including many SMEs, which produce the same product for both the on- and off-trade. As designed, companies will need to pass these costs onto the supply chain and customers.”
Beale is hopeful the government will respond to several of its key requests for the scheme, including delaying its introduction.
“There was an impact assessment produced, but we think that’s pretty flawed,” he says. “Things like labelling, it sort of says most labelling will happen in the UK or is based on the idea that most labelling happens in the UK. So there are huge costs associated with that. But that’s nonsense. It just isn’t true.
“It also assumes that DRS will be introduced in all four nations of the UK in 2024, and will be the same year that EPR will be introduced. And we definitely know that isn’t true anymore, so that’s flawed.”
Beale is also calling for a consultation on modulated fees, which are to be introduced in 2026, warning it “needs to happen quite soon or [EPR] just won’t work”.
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