NSW retailers prepare for CDS price increases

30 October, 2017 by Andy Young

The price rises that will go on to all containers eligible for the New South Wales Container Deposit Scheme (CDS), will kick in this week.

In order for the CDS to have funds and to be ready to operate for the community on 1 December, suppliers are being invoiced in advance of the commencement of the scheme, with those invoices being issued on 1 November.

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In August, Scheme Coordinator, Exchange for Change, revealed its estimated range of fees for the first three months. These start at 13.54c and go down to 10.94c for aluminium, 14.07c down to 11.36c for glass, and 13.78c to 11.13c for PET. These estimated costs exclude GST.

Exchange for Change, has said that it is committed to a low-cost and effective scheme, which keeps the costs to businesses funding the scheme as low as possible, while also making sure that there are enough funds to pay consumers’ 10c deposit per container.

The estimated costs for the first three months are based on redemption rates of similar schemes in other states and subsequent invoicing by Exchange for Change will reflect actual redemption rates.

Exchange for Change said that any discrepancy between the estimates and actual data will be rectified with suppliers in early 2018. Ongoing, fees will be based on validated running costs and redemption rates for the 10c deposit paid and costs of returning containers via the scheme for recycling.

The group added: “Costs of running Return and Earn will change over time, as the scheme is established and consumers take up the opportunity to get cashback on eligible containers. The key factors affecting the fees are the numbers of containers returned (redemption rates), the type of material returned and the method by which they are collected – either via consumer collection points or traditional kerbside rubbish collection.”

TheShout has approached suppliers for details of the prices they will be charging their customers from 1 November to create the funds for running the scheme.

Coca-Cola Amatil (CCA) told TheShout that it will be applying a 13.59c plus GST cost on every container which is part of the CDS. That figure is the same that the company applies in South Australia, where a CDS has been operating since the 1970s.

A spokesperson for CCA said: “Return and Earn will begin invoicing all first suppliers (including Coca-Cola Amatil) from Wednesday, 1 November. Coca-Cola Amatil will match this date and apply the additional charge arising from the CDS to orders from that date.

“It is not our preference to increase prices, however it is important that our customers understand these additional charges arising from the CDS are a direct consequence of NSW Government policy.”

Lion, Asahi and Carlton and United Breweries all told TheShout that the prices they will be charging are “commercially in confidence”, so they will not be declaring them publicly, although each supplier has communicated the price to its customers.

Earlier this month the Liquor Stores Association NSW (LSA) provided its members with key communication materials ahead of the scheme starting and the impending price rises. These materials will help retailers communicate to consumers what the cost of the scheme will be and the price increases that will occur as a result.

LSA Executive Director Michael Waters said: “Any price increase will ultimately be up to individual retailers and will depend on their cost pressures and competitive situation however the true cost of running the government scheme covers the 10c refund per eligible container, plus handling and administration fees.

“The fact of the matter is, this scheme has been rushed through – we’ve been urging the NSW Government to get a public education campaign up and running, but they clearly don’t want the community to know what the real cost impact on the average consumers’ hip pocket will be.”

Overall many industry experts TheShout has spoken to have been highly critical of a lack of communication by the NSW Government as to what the price impact of the CDS will be for consumers.

One source told TheShout: “The Government clearly wants this to be a positive environmental message rather than a consumer impact one, but that’s really not helpful. There’s no information on why the charges are starting a month before the scheme or on all the work the industry has done to try and keep the costs down.

“Consumers will no doubt end up thinking that either retailers or suppliers are greedy for starting to charge early, and the Government has not done anywhere near enough communicating about this.”

TheShout understands that Lion and CUB’s pricing will be within the range announced by Exchange for Change in August. The Scheme Coordinator also said that there are uncertainties around the extent to which consumers may stockpile eligible containers in advance of the CDS commencing on 1 December.