Circularity Scotland has announced £22m of cashflow support measures to help Scotland’s brewers, distillers, importers and drinks manufacturers prepare for the introduction of Scotland’s Deposit Return Scheme (DRS).
The support package is particularly designed to help smaller businesses, which have previously voiced concerns about the impact of the scheme on their business’ cashflow.
To address these concerns, Circularity Scotland is removing the day one and month one charges for all producers, up to a threshold of three million units per year.
It is also providing two month credit terms on deposits and fees up to the same volume threshold to reduce the working capital impact on all producers.
The three million unit threshold has been established to ensure that the thousands of smaller scale producers selling in Scotland benefit more proportionately from the cashflow support.
This will particularly help companies like craft brewers, wine importers and craft spirit producers. The two month credit terms will be made available to all producers, regardless of their size, ensuring all producers within the scheme are treated equally.
Circularity Scotland has also confirmed that it will be offering the option to use self-adhesive barcode labels for producers placing less than 25,000 units per year of a specific product on to the Scottish market.
This should provide a simple and straightforward administrative solution for independent producers and importers for whom the cost of changing packaging to introduce new barcodes could be prohibitive.
David Harris, chief executive of Circularity Scotland, said: “This announcement is further evidence of how we are continuing to innovate and identify additional ways to mitigate the pressure on businesses.
“We know that smaller producers in particular have been concerned about the cashflow impacts of the scheme, and these measures will address those concerns. “
Circularity Scotland has secured more than £100m of third-party funding to establish the infrastructure of the DRS, with only minimal up-front funding from the very largest producers.
“We have already announced reductions in producer fees of up to 40%, while also being able to offer the highest return handling fees of comparable schemes anywhere in the world,“ stated Harris. “These additional support measures further demonstrate our confidence in being able to deliver ongoing operational efficiencies once the scheme has gone live.”
Circular Economy Minister Lorna Slater said: “This is a big and welcome change that that responds directly to many of the concerns that have been raised, particularly those from smaller producers like craft brewers.
“It addresses initial cash flow challenges, and provides a pragmatic and simple solution to the issues raised around barcodes for smaller product lines - this is a package that gives businesses the clarity and confidence they need to be part of Scotland’s deposit return scheme.
“Over the last few months I have been meeting industry regularly to listen to their feedback and this industry-led solution has been designed in direct response to its concerns,“ continued Slater. “I remain committed to a pragmatic approach to implementation between now and the 16 August.”
There are three elements to the cashflow support:
- Providing two months credit terms on deposits, producers fee and retained EAN/barcode fees for all producers.
- Removing the ‘day one’ charge for those producers who choose not to introduce Scotland specific barcodes.
- Removing the ‘month one’ charge on deposits and producer fees for all types of products.
The three elements of support are provided up to a threshold of 3,000,000 single use drinks containers (known as scheme articles) put on the Scottish market per year.
This level has been established to ensure that the thousands of smaller scale producers selling in Scotland benefit more proportionately from the cashflow support.
The credit terms will be made available to all producers, regardless of their size, to ensure that Circularity Scotland maintains its principle that all producers are treated equally.
UKHospitality Scotland executive director Leon Thompson responded: “This late move is symptomatic of the entire Deposit Return Scheme process where decision-making has not been timely or understanding of business need.
“Frankly, with one week to go before registration for producers is set to close, this is a desperate attempt to boost the number of businesses signing up to be involved in the Deposit Return Scheme.“
Colin Wilkinson, managing director of the Scottish Licensed Trade Association, commented: “We still have serious concerns that the scheme currently being proposed will increase costs for the consumer and reduce the amount of choice available.
“Many key questions remain unanswered and Minister for Green Skills, Circular Economy and Biodiversity, has been unable to tell us how many producers - so far - have signed up for the scheme.
“At a meeting this morning attended by Ms Slater, she indicated that she was unaware of how many producers had registered with the scheme – nearly 4,500 producers need to register by the end of the month to allow their products into the Scottish marketplace.
“In addition, today’s announcement doesn’t mention a grace period to allow those producers/importers to physically prepare – our view is that this is crucial given there are still so many unanswered questions around the decisions they still need to make.”
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