Global Brands managing director Julian Atkins explains what impact the new legislation will have the sector.
EPR is a new regulation that shifts the full cost of managing packaging waste from local authorities (previously funded via council tax) to producers, with fees based on the type and weight of packaging materials used. Fees will apply from 1 April 2025.
The fees, paid by businesses, will be passed to local authorities to cover costs of collecting, managing, recycling and disposing of household packaging waste.
However, the current plans pose significant challenges for the drinks industry and will inevitably have a large impact on pubs – at a time when the increase in the national minimum wage, increased employers’ national insurance contribution (NICs) costs and reduced business rates relief are already creating a storm for businesses.
No distinction between on and off-trade
The Department for Environment, Food & Rural Affairs (DEFRA) states EPR fees will apply to ‘household waste’ – meaning any waste that is expected to end up in kerbside collections.
However, a key issue with the current policy is DEFRA makes no distinction between on-trade and off-trade volumes. Instead, the legislation currently includes all packaging waste that is supplied to the pub and hospitality sector through the wholesaler route – meaning 100% of on-trade waste must incur EPR fees.
Yet, this approach fails to account for the fact most venues already have their own commercial waste streams in place. It basically results in excess charges for pubs and hospitality.
Another issue with the current policy is that it results in unfair charges for glass products, which too will inevitably result in higher costs for pub operators.
The levy takes a hybrid weight and volume-based approach, meaning the cost for glass is much greater than other materials, due to its weight. In addition to this, plastic bottles and cans are exempt from the scheme as they will fall into the DRS scheme, which isn’t due to come into force until October 2027.
Less able to absorb costs
While EPR fees came into effect from 1 April, DEFRA will not be publishing what these final fees are until summer 2025. This means drinks producers have no way to properly account for the additional costs to their business, making them less able to absorb unexpected costs and ultimately forcing producers to increase their prices for customers, as the impact of cost rises will be felt along the supply chain.
There are a number of questions that remain to be answered around the details of the EPR scheme and it’s my view that more needs to be considered with regards to the disparities between on versus off-trade waste recycling, clarity around the weight and volume based approach to EPR – and better education across the supply chain on the impact in terms of cost to businesses.
For this reason, Global Brands is actively engaged in discussions with DEFRA, voicing concerns about the impact on the industry and exploring potential solutions – such as delaying EPR, or failing that, the increase in costs for pubs and hospitality this April so businesses aren’t hit with a double whammy.
At a time when businesses are already being hit hard by increasing employers’ NICs, minimum wage increases and a reduction in business rates relief, this is yet another blow for the industry, which quite simply cannot be squeezed from any more directions.
