Can and plastic bottle suppliers to German brewers and carbonated drinks manufacturers have seen their production ravaged by a controversial one-way deposit scheme. Jonathan Baillie reports
Rexam and Ball Packaging Europe have this month hit out at the “highly damaging effect” of the controversial German deposit on one-way beverage containers.
Since January 2003 German consumers buying non-reusable cans and plastic bottles have had to pay a Eurocent 25-50 deposit on each pack. The tax has dramatically hit some drinks’ sales by not only forcing one-way beverage pack buyers to pay a premium, but also to return packaging to the point of sale to reclaim their deposit. Consequently, some retailers have withdrawn the containers from sale, in turn hammering the profitability of converters and raw material suppliers.
Rexam’s 2003 full year results reveal that, as a direct consequence of the tax, it lost volumes in Germany equivalent to 1.4bn beverage cans, with a net £20M reduction in profits.
Beverage packaging, in its own words “the engine” driving it forward, accounts for 83% of Rexam’s ongoing sales and underlying profits.
In his report to the accounts chairman Jeremy Lancaster said the company had “acted resolutely” to mitigate the loss caused by the tax, mothballing its Gelsenkirchen can plant in Germany’s Ruhr Valley and rescheduling production at its Berlin factory, where production has largely switched to refillables.
Ironically, the weakened German demand for Rexam’s cans was reversed elsewhere in Europe, where its markets saw a 5% increase.
Fortunately for Rexam, plummeting one-way container demand was partly offset by the reverse for its refillable and plastic and glass bottles. Overall, 2003 group sales reached £3.18bn, compared with £3.16bn in 2002, while pre-tax profits were £5M, against a loss of £87M the previous year.
Another can manufacturer hit hard by the deposit system is Ball Packaging Europe (BPE), which had to close its Runcorn can plant last autumn, citing substantial oversupply in the European beverage market and the “uncoordinated introduction” of the one-way deposit.
In the past year, reports head of PR Sylvia Blomker, BPE’s German can production has fallen by over 50%, as large retailers like Aldi, Lidl and Rewe have “virtually de-listed” cans. Consequently, two of its key German can plants have had to scale down production.
“Our Environment Minister Jurgen Trittin has proposed replacing the current deposit with one on ‘environmentally-unfriendly packaging’,” explains Blomker. “However, nobody knows what will and won’t be designated environmentally-friendly.”
Earlier this year the State of Hesse proposed replacing the current tariff with a quota split 60% towards refillable containers and 30% to recycled one-way packs. Blomker explains: “Trittin’s year-old proposal is still awaiting approval from the German second chamber, but Hesse’s plan is a relatively new one and the jury is still out on it.”