Prepare as Best You Can for the Deposit Return Scheme

WJM Partner Colin Millar discusses the legal obligations of those trading in the alcoholic beverage sector ahead of the launch of Scotland’s Deposit Return Scheme.

With the delayed Deposit Return Scheme set to go live on 16 August in Scotland, there are a number of concerns and considerations that those involved in the alcoholic drinks trades should be aware of.

Under the scheme, consumers will pay a 20p deposit when they buy a drink that comes in a single-use container (glass, plastic, steel, or aluminium). This will be refunded when they return the empty container to one of the tens of thousands of return points being installed across the country.

The DRS is one of the many ways the Scottish Government is aiming to improve recycling and significantly reduce litter, however, the proposed scheme has been criticised by many who claim it is more burdensome than similar proposed initiatives in the rest of the UK.

There are slight differences between the schemes proposed for Northern Ireland, England and Wales which are due to be implemented in 2025. For example, England is likely to exclude glass bottles from its scheme, instead focusing on plastics, on the basis that recycling rates for glass are already high.

This has caused some confusion for traders and producers who operate across the UK. For someone putting products on the market in Scotland, there will be an additional administrative burden. This will impact costs and potentially labelling.

Some argue that if Scotland had delayed by a year or two there could be a far more “streamlined” arrangement across the four UK nations, removing the need for producers who sell in the UK to tailor their products just for Scotland or pay more under the Scottish scheme to use UK wide labelling.

In addition, smaller producers have also expressed concern that the scheme will disproportionately impact their businesses, putting too much of a strain on them in terms of administration and compliance.

Smaller retailers have also raised concerns that they don’t have the same financial resources or infrastructure as larger supermarkets to install the machinery, known as reverse vending machines, (RVM) which are sophisticated pieces of equipment that can identify customers’ drinks containers and refund deposits once the container has been scanned and validated. Importers and manufacturers also have to consider producer fees as well as the costs of administration of the system.

One of the key things our specialist drinks sector specialist team will be advising clients on is their obligations under the new Deposit Return Scheme for Scotland Regulations 2020, which will of course depend on where they sit in the supply chain. Even at an early stage, we have been looking after clients’ changes to agreements with customers, or changes to their terms and conditions to allow for additional information, particularly on the reporting side, because a big part of the scheme will entail keeping track of bottles that go into circulation to enable the Scottish Government and SEPA to monitor the operation and impact of the scheme.

Most producers will need to understand not just their legal obligations, but also to what extent they should pass their costs on to customers. We have conducted a detailed analysis of specific issues for clients set to be impacted by the DRS, including the basic obligations to Circularity Scotland – the body responsible for the smooth operation of Scotland's new Deposit Return Scheme – and the legal requirement to accept returns of empty drinks containers, as well as paying the deposit on drinks sold.

It remains to be seen whether the scheme is implemented in August without further delay, but our advice to clients is to assume it will be going ahead as planned and to prepare accordingly.

Our new specialist team will be working closely with clients facing these kinds of issues over the coming months to ensure they are fully informed of any developments in the industry and can navigate matters as smoothly as possible.

 

This article first appeared in The Scotsman