Container Deposit Scheme Raises Alarm Bells

11 September, 2017 by djackson

This column was submitted by Terry Mott, the CEO of the Australian Liquor Stores Association for the September issue of National Liquor News.

In June I wrote the column, ‘Love it or hate it –a Container Deposit Scheme (CDS) is about to get underway in NSW’.

Advertisement

In July the NSW Environment Protection Authority (EPA) appointed the Scheme Coordinator ‘Exchange for Change’ to manage the scheme and ‘Tomra Cleanaway’ as the Network Operator to establish approximately 500 collection points plus 800 reverse vending machines.

The true cost of the system may effectively be a new Government Tax on consumers of between $4 and $5 per carton at retail and suppliers are likely to begin increasing their prices on 1 November to build the deposit refund float.

Government and industry now have an urgent task to educate the consumer on the expected real impact on retail prices.

The final price impact will include a 10 cents deposit, plus the recovery costs of setting up and coordinating the logistics, transport and handling, to ensure the containers are recycled, plus managing the cash flow.

However, this may be netted back by recovery rates and cost efficiency of the system – so market forces will of course finish up dictating the timing of and how much or how little, is passed onto consumers in final retail pricing.

The recent ALSA – Australian Retail Drinks Conference 2017 in Canberra raised the alarm bells for many retailers who were unaware of the likely impact of the CDS. And the need to begin now in educating their customers on the costs that this NSW Government initiative is likely to have and which containers are affected, as it applies to all beverages containers between 150ml and three litres in volume, with some exceptions – details in the EFC Presentation on the ALSA website.

The increased price will impact on sales by decreasing the disposable dollars of our customers as well as being a minefield for the trade to manage, to ensure they cover these new costs.

A key issue for retailers is that the EPA focuses on the first change of ownership in NSW. Therefore a retailer may be classed as a supplier and be required to enter into a contract with Exchange for Change, by 1 October, register online now with EPA for container approvals and place a refund mark on their products.

Please check your own business model, as if products are unique to your store, or if you directly import the product, or you buy the product in other states and you organise the shipment to your NSW store, or you sell the product online and ship it into NSW from other states, you may be classed as the supplier.

Information sessions are getting underway with LSA NSW running a major event in Sydney on 27 September. NSW liquor retailers are invited to register with LSA NSW to attend and learn about the new scheme and the education tools being developed for your shoppers.

The NSW CDS Tax is complex, so it is important that we begin to educate consumers on the impacts of the scheme, otherwise they will jump to the conclusion that retailers and industry suppliers are taking excessive price hikes.

Check the ALSA and LSA website – www.lsansw.com.au – for session timing and location or call ALSA to register and attend an event.