Lion to halve NSW CDS charges

05 February, 2018 by Andy Young

Lion has told its customers that it is halving its NSW Container Deposit Scheme (CDS) charges over the coming months, as a result of a refund from Exchange for Change (EFC).

In a letter to customers last week, a copy of which has been seen by TheShout, Lion said the refund came as a result of the CDS redemption rates being lower than EFC had forecasted when it started sending out invoices to suppliers on 1 November last year.

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In the letter, Lion said: “Exchange for Change has advised that far fewer containers were collected and redeemed in December than it originally forecast. As a result EFC has today refunded amounts invoiced to suppliers, including Lion Beer Australia (LBA), which did not prove necessary to fund the actual costs of the scheme.”

Lion added: “As previously communicated, LBA has committed to pass on to our customers only the costs that we are required to bear through the CDS.

“To honour this commitment, LBA will halve its CDS charge to customers from 12 cents per container to six cents per container from Monday 5 March 2018.”

EFC has advised that it has reduced its forecast recovery rate for the scheme down to 67 per cent, which will mean its invoicing rates for March will be nine cents per container. Lion’s reduced charges for its customers will off-set the over-recovery for the first three months of the scheme.

TheShout has contacted the other major brewers with Coopers and Asahi declining to comment on its pricing and CUB saying that it was unable to respond within the timeframe for publication of this story.

TheShout has also spoken to a number of retailers who have all stated that in an effort to stay competitive in a tough market place they will be passing the reduced rate on to consumers.

The Executive Director of the Liquor Stores Association NSW & ACT, Michael Waters, told TheShout that the EFC refund highlights just how much of a debacle the CDS has been.

“Despite promotions from the government of a successful launch and tremendous take-up for the scheme, there is no doubting it has been nothing short of a debacle,” Waters said.

“Now over two months in, and there’s still much confusion and frustration amongst consumers and industry; a significant shortage of collection points across the state, with over-the-counter collection points pulling out left, right and centre; and return rates far less than anticipated.

“February’s invoice to suppliers included the first ‘true-up’ for the December period, with a reduced forecast recovery rate of 67 per cent, and around $27m returned to first suppliers through the scheme.

“What’s crazy is that NSW has for many years enjoyed a sophisticated kerbside recycling program, which captured 60-70 per cent of beverage containers, and here we are now paying around $1bn for a new scheme that’s forecasting to achieve a very similar result.”

“LSA takes this opportunity to remind retailers, manufacturers, suppliers and wholesalers, that the NSW Government has commissioned the Independent Pricing & Regulatory Tribunal (IPART) to carefully monitor and report on the impact of the implementation of the CDS on beverage prices until December 2018,” Waters told TheShout.

IPART has been commissioned to monitor and report on the impact that the scheme has on beverage prices over its first 12 months.

As part of that review IPART will monitor the market impacts on consumers resulting from the scheme as well as the “performance and conduct of suppliers in the container beverage industry”. The tribunal said that for its report suppliers may include “manufacturers, wholesalers, distributors and retailers of beverages”.

IPART said that it will provide the Government with a progress report in April and in its detail of its special review IPART said: “NSW Fair Trading is also targeting retailers and distributors who wrongly use the CDS as a reason to increase prices.”