Drinks industry bosses have urged Scotland’s new first minister Humza Yousaf to commit to introducing the UK’s first deposit return scheme (DRS) in August, or risk seeing more than £100m of investment go down the drain.
A raft of manufacturers including AG Barr, Britvic and Coca-Cola urged the new leader to make the scheme a “top priority” as the new SNP leader.
Sources added the industry was “waiting with bated breath” for Yousaf’s next move, with the former health secretary having signalled he would allow a one-year exemption to the scheme for smaller producers, a move which major companies have warned would risk collapse of the entire scheme.
All of the candidates to replace Nicola Sturgeon signalled they would either delay, scrap or reduce the scale of DRS, with green minister Lorna Slater having mooted the idea of allowing smaller firms a “year’s stay of grace” last month.
David Harris, CEO of scheme administrator Circularity Scotland, said the political uncertainty heaped on the scheme was in danger of undermining the work it had done since it was set up at the start of 2021, starting from scratch to become a company with a projected turnover of £650m.
“More than £100m of investment [has been] secured, by a company which had no assets, had yet to file accounts, and is not intended to make a profit. This has been achieved with 5% of the funding from members as loans, no state funding and the benefits of this investment is available to all producers,” he told the Zenith Global Soft Drinks Conference.
“We secured this funding on the commitment industry has made when signing the membership agreement establishing Circularity Scotland, and that commitment was made in good faith believing the Scottish government stood behind the scheme they had created.
“We have to repay the investment, and in order to do so the scheme needs to go live. We must also not underestimate the investment of time, reputations and livelihoods many people are making, to deliver the scheme for industry.”
Nearly 20 major drinks companies signed a letter for the new FM to prioritise making DRS happen, also including PepsiCo, Innocent and Suntory.
Sources told The Grocer if smaller producers were allowed to opt out of the scheme en masse, they risk being delisted by the major supermarkets, amid the prospect of chaos with products sitting on the shelves free from deposits alongside those having to pay.
The row has also heightened fears about the rollout of DRS in the rest of the UK, with further doubts added when the Westminster government threatened to block the launch because of fears it will add to inflation.
DRS became one of the main topics of the debate in the leadership election run-up, with Scotland’s finance minister Kate Forbes, who was a narrow second in the race and is tipped by many to remain in government, calling for the scheme to be put on hold, warning it could cause “economic carnage” for smaller drinks producers.
“On behalf of the British Soft Drinks Association, and our members we wish to congratulate the new first minister,” said BSDA director general Gavin Partington, adding “DRS has to be a top priority”.
“Like all responsible producers, we have spent the past three years getting ready for the launch of DRS, working closely with the Circularity Scotland, to ensure we are able to meet the unique implementation challenges of the Scottish system,” said Stephen Moorhouse, VP and general manager at Coca-Cola Europacific Partners GB. “We remain committed to the current timescale, but the Scottish government’s clear and full support for DRS is critical if the scheme is to launch successfully in August.”
However, whilst drinks giants called for DRS to go ahead, the scheme still faces huge opposition from retailers and alcohol producers.
Trade associations including the Scottish Wholesale Association, the Society of Independent Brewers, the Wine & Spirit Trade Association, the Scotch Whisky Association and Scotland Food & Drink have called for delays to the scheme, and warned otherwise many products would be unavailable on Scottish shelves when DRS is due to start on 16 August.
Earlier this month Ewan MacDonald-Russell, deputy head of the Scottish Retail Consortium, said it was “ increasingly difficult to believe” the scheme could land well in the summer.
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