Everything you need to know about the Deposit Return Scheme

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DRS

Plans for a Deposit Return Scheme (DRS) have been in the pipeline for years in the UK.

The idea is a pretty simple one: require consumers to pay a small cash deposit when they purchase a drinks can or bottle. When they return the empty packaging to be recycled they get their deposit back.

According to campaigners lobbying for such a system, this small financial incentive could help cut down on the proportion of packaging that simply gets chucked in a rubbish bin.

Plastic bottles and cans account for around 40% of litter in the UK with 38.5 million plastic bottles used each day, according to a motion tabled by Green MP Caroline Lucas all the way back in 2016 when calls for a DRS were first ramping up.

Five years on though, are we any closer to a DRS actually being introduced? How might it work? And what do brands need to do to prepare?

The timeline

Let’s look at the timeline first so we can understand when this new scheme will begin to affect brands and prioritise accordingly.

In short, the DRS has been full of delays, pushbacks and moving goal posts making it hard for brands to know when they need to start implementing, or at least exploring, new ways of working due to the potential affects of this scheme.

In 2018, then environment secretary, Michael Gove confirmed that a DRS would be introduced by the government due to it being ‘absolutely vital we act now to tackle this threat and curb the millions of plastic bottles a day that go unrecycled.’

However, despite high levels of support, a lack of consensus over exactly how the scheme would work – coupled with COVID-19 – has led to what critics have called ‘embarrassing’ delays. There is even speculation that the UK Government might recommend an alternative hybrid solution entitled a Digital Deposit Return Scheme (DDRS).

In July the House of Lords signalled their disapproval at the lengthy delays and called for DRS to be rolled out by 2023.

In Scotland the timeline looks slightly different. An independent review is currently ongoing into whether it is unreasonable to expect a scheme to be up and running by next year (an initial plan being July 2022) with experts saying 2023 looking more likely. Ideally, this would result in the whole of the UK introducing the scheme in unison.

How would it work?

Let’s dive into exactly how the process of the scheme could determine the course of action from brands.

A second consultation launched in March holds some clues as to what they have in mind:

  • The scheme will be overseen by a Deposit Management Organisation (DMO) accountable for its success. One suggestion is a 90% target collection rate within three years of its roll-out.
  • It would capture PET plastic bottles, glass bottles, and steel and aluminium cans. It could be either an ‘all in scheme’ capturing drinks containers up to 3L in size, or focus on on-the-go drinks containers under 750ml in size and excluding those sold in multipacks.
  • All retailers that sell drinks containers ‘in this scope’ will be obligated to accept returns by hosting a return point. This will likely be via reverse vending machine or manual return points. They may be compensated for any costs involved by the DMO.
  • The important bit – brands may be required to comply with new mandatory labelling conditions that make it easier to identify ‘in scope’ containers
  • The proposed deposit is up to 20p per container.

If an ‘all in scheme’ was adopted (capturing all size containers) it’s estimated that the annual cost to business would be £323m.

However, who bears this cost could depend on the outcome of adjacent discussions around Extended Producer Responsibility (EPR). This could see producers being required to meet the costs of managing packaging waste and collection services.

How could brands be affected?

So, we have a (loose) timeline and we have identified the overarching methods that would be used to launch the scheme. If all goes ahead, undoubtedly drinks brands will be affected by the proposed DRS.

Here is what we think you should be considering in order to keep a step ahead and avoid disruption and supply chain inefficiencies.

How will the scheme be managed?

It is likely that the operational management of the new recycling network will fall to both producers and retailers. That is why in January 2021, a coalition of retailers and brands announced their plan to set up a private management company that would oversee the day-to-day running.

Our suggestion

For brands it could be worth designating a DRS specialist within the team to swot up on exactly what this management might look like, stay abreast of developments, and connect with other drinks producers and retailers in a similar position.

How might direct to consumer sales channels change?

If the scheme comes into effect, brands will likely be expected to provide a means for returning drinks containers even where not sold via a third-party retailer.

Our suggestion

For the D2C channel this could mean setting up a takeback service that collects containers from a consumer’s doorstep . It’s worth considering how such a service could be integrated into your current supply chain.

Could containers be taken out of scope?

Though pretty broad when it comes to which materials will be captured, some brands could benefit from considering alternatives not ‘in scope’ if positioning, pricing and profitability allows. For example, if PET plastic is currently used, bio-based polymers such as PHAs or and polyethylene furanoate (PEF) might be an option.

How do drinks brands manage outside the UK?

There are 38 other countries around the world with a DRS in place. Could you connect with brands that sell into these markets to understand what lessons might be taken from their experience?

These are just a few questions that brands may want to consider.

The roll-out of a DRS scheme might be more than two years away, but with responsibility likely to fall to producers themselves, it is critical to start thinking about its potential impact now.

There’s a lot to think about in relation to the DRS and at Young Foodies we can offer advice on not only this new scheme, but also all aspects of your supply chain.

If you have any questions or would like to chat through any concerns you have, get in touch with our team today and we can help you.

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