The Deposit Return Scheme

From 16 August 2023, people in Scotland will pay a deposit of 20p when they buy a drink in a single-use container and will get the deposit back when they return the empty bottle or can.

The Deposit Return Scheme is aimed at helping tackle climate change by reducing litter. The scheme is set to cut C02 emissions, increase recycling and save money tackling the indirect impacts of litter. Although the benefits of this new scheme are undeniable, the scheme will impose a variety of new obligations on businesses who sell drinks in single-use containers.

Products
All drinks, including soft drinks and alcoholic drinks, are included in the scheme if made from the following materials:

• PET plastic – e.g. most bottled water and many fizzy drinks
• Steel and aluminium – e.g. many fizzy drinks and canned beer
• Glass – e.g. bottles of wine or premium soft drinks

Only containers between 50 ml and 3 litres in size are included. No other type of container is included. The exclusion of HDPE plastic (which is used for most milk bottles) means that very few dairy items will be included in the scheme. However, milk or milk-related products contained in PET and glass bottles or cans will be included.

For Producers
You will be responsible for making sure the bottles and cans your drinks come in are collected for recycling. For products designed in the UK, the “producer” is the owner of the brand, and for products imported into the UK, the “producer” is the importer. For drinks that are filled and sealed at the point of sale, the “producer” is the seller.
The responsibility for collecting the bottles and cans for recycling can either be done by you, or the you can nominate the scheme administrator (Circularity Scotland Ltd) to attend to this on your behalf. It is anticipated that most producers will nominate the scheme administrator. Dealing with the collection and recycling yourself will impose further obligations and responsibilities on your business. We are awaiting further information on how the scheme will operate for producers handling the collection of drinks containers themselves.
When putting drinks on the market, you will be required to maintain a record of the number of each type of container placed on the market for the ease of the scheme administrator should they need to make any enquiries.
You will be required to pay a small fee, depending on the number of containers you put on the market, to fund the service of the scheme administrator. The scheme administrator will be the point of contact for retailers and hospitality, collecting returned cans and bottles.
In addition to the administration fee, you will pay a registration fee of £365. Producers with an annual turnover of less than £85,000 and producers who will and seal drinks at the point of sale are exempt from the registration fee but will still pay the administration fee. Registration for drinks producers with SEPA opened on 1 January 2023.

For Retailers

If you sell drinks as a retailer, you will be required to accept the return of empty drinks containers for recycling. This includes online retailers of drinks.
When selling drinks, you will be required to charge the 20p deposit, make it clear that the appropriate drinks containers are part of the scheme, display the deposit value separately from the product price and display information on how to redeem the deposit in-store.

As a retailer of drinks, you will then be required to become a return point and must:
• Register as a return point with the scheme administrator (now open)
• Accept scheme containers returned by consumers
• Redeem the deposit for each container returned
• Retain the empty drinks containers for collection by a scheme administrator
• Provide a complaints procedure and contact details for making such a complaint, as well as contact details for SEPA

You will be able to accept the return of all bottles and cans covered by the scheme even if not sold by you provided the bottle or can is empty and clean.

It is anticipated that most producers will appoint the scheme administrator to fulfil their obligations, meaning you, and other retailers, will benefit from dealing with one centralised operator. For every container returned to you, the scheme administrator will pay a handling fee to the retailer to cover costs associated with taking part in the scheme including extra shop space, staff time, or investment in reverse vending machines.

It is important to note that retailers selling own brand drinks will be defined as producers under the scheme and so the above obligations for producers will also apply.

You can apply to Scottish Ministers for an exemption from acting as a return point if:

1. You offer on-site consumption only
2. You are a duty-free shop
3. There is an alternative return point located within reasonable proximity and the return point has agreed to accept returns from you
4. If the exemption is granted, your consumers would still have reasonable access to a return point locally
5. There is no reasonable way for you to operate a return point without risking a breach of legal obligations or safety.

For Hospitality

For any drinks sold for off-site consumption, you, as a business in hospitality, will charge a deposit and will operate a return point. For any drinks sold for on-site consumption, and are in containers covered by the scheme, the you can choose whether or not to charge the 20p deposit and operate a return point or not, as the container is not expected to leave the premises.

Similar to retailers, if you are acting as a return point, you will receive a handling fee from the scheme administrator.

When selling drinks for on-site consumption, the handling fee will be limited to the cost of materials used for collection and storage of containers at the return point. For hospitality businesses that sell drinks exclusively for consumption on-site, the fee will only cover any additional costs associated with participation in the scheme and will be on a case to case basis.

Registration with SEPA for hospitality businesses wishing to operate a return point is now open.

Enforcement

SEPA is the enforcement agency under the regulations. Its enforcement powers include being able to question staff of producers, operators and administrators, to request documents and to make test purchases.

Issues Still in Consideration

Scottish Ministers are currently considering a grace period for small businesses to adjust to the changes the scheme will bring. In particular, businesses such as craft breweries have raised concerns over increased production costs in relation to use of new barcodes specifically for Scotland. We are yet to hear if a grace period will be set and who will be considered a “small business”.

It has recently been considered that the deposit scheme would become a legal trade barrier between Scotland the rest of the UK where drinks would be sold for higher prices than in other parts of the UK. This week, the Scottish Government has applied for an exemption from the UK Internal Market Act to allow the deposit return scheme to begin in August 2023 ahead of the rest of the UK, which is set to start a similar scheme in 2025. It may be several months before we find out if the exemption is granted. Without it, Scotland would be confined to drinks made within Scotland.

Despite these issues still being in consideration, the Scottish Government is encouraging producers, retailers and those in hospitality to sign up to the scheme in preparation for its launch.

This is a new and complicated area of regulation. If you wish advice in relation to your obligations under the new deposit return scheme then please contact John Grant (jg@wjm.co.uk) or Steven Docherty (sd@wjm.co.uk)