Brewers await clarity on extra charge for deposit scheme
The Society of Independent Brewers (SIBA) said independent brewers were hoping for clarity on Tuesday (16 August) as the scheme administrator, which will run DRS, announced the producer fee – a key element of the costs 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 SIBA said.
The Scottish Beer & Pub Association (SBPA) warned producer fees must be finalised so the sector can work out what it means for them and plan accordingly.
SIBA said: “This will be a very unwelcome addition to the costs that hard-pressed consumers are already facing and is worse as it is being caused as a direct result of the Scottish government actions.”
Fall in choice
SIBA Scottish director Jamie Delap added: “Independent brewers supplying Scotland have told us they will either stop selling in Scotland or reduce their brands. This means 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 announcement, the scheme administrator also said producers would have to pay 2.4 months of deposits and producer fees immediately prior to the start of the scheme. SIBA said this could mean small brewers will have to find £1.5m 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. 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,” Delap 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’.”
Producer fee just one aspect
SPBA chief executive Emma McClarkin said: “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 has shown it is mindful about the cost of doing business and has supported calls for a range of measures but it needs to be acutely aware the producer fee is just one of a myriad of 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 on-line takeback model, that with just a year to go is causing significant concerns among businesses.
“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.”
The scheme, which is set to go live on 16 August 2023, will reduce emissions by an average of nearly 160,000 tonnes of carbon dioxide a year – the equivalent of 109,000 return flights from Edinburgh to New York, according to Zero Waste Scotland.
