European beverage can makers and raw materials suppliers are becoming increasingly dismayed at developments in the German market.

June is normally a good month for drinks sales but last month saw four leading retailers ‘delisting’. They are removing canned drinks from their shelves.

The move comes among growing confusion, following the introduction of a deposit system on one-way packaging – non-returnable cans and bottles.

While there are significant uncertainties about the future structure of the deposit system, retailers are opting to delist rather than face fines for failure to set up returns systems, which would require major investment. There is also the unclarified question as to whether it complies with European law on competition.

Sales of beverage cans had already fallen by 50% since the new legislation came into force in January.

Delisting will bring a further slump in the market and short time working will no longer be enough to compensate for the lost sales. The shutdown of beverage can lines can no longer be excluded.

In the German can industry alone some 1200 jobs are under acute threat but several thousand jobs in the beverage and packaging industries are also in jeopardy.

“Beverage can manufacturing plants in Germany have been particularly badly hit but the beverage can industry is a global business,’ says MPMA director Tony Woods. “Crown Cork & Seal’s plants at Sofreb in France and Carlisle in the UK, both of which supply the German market, have also felt the immediate effects of events in Germany.

The deposit system was introduced to encourage German consumers to buy beer and soft drinks in returnable packaging in the form of glass or PET bottles. It was part of older legislation, which said that a deposit system would be introduced if returnable packaging’s share of the market fell below 72%.

At the time it seemed unlikely that this would happen. Buying beer in bottles and returning them to the local brewery for refilling was after all part of the German culture.

The growth in popularity of drinks in cans and non-returnable plastics and glass bottles has been such that returnable packaging fell below the market share quota.

In March 2002 the German government announced that the deposit system would come into force in January 2003. Since the March 2002 announcement there has been much controversy and debate about the soundness and legality of the deposit system.

“It is ridiculous to legislate against beverage cans because they are 100% recyclable. Recyclability has long been a high priority in Germany and the recycling rate for metal packaging has been over 80% for some years,” says Tony Woods.

“Cans for beer and soft drinks are a huge success story with consumers. Today, people are very aware of environmental issues and, increasingly, choose packaging with sound environmental credentials.They also want convenience and choice which is exactly what the can offers.

“What we are seeing in Germany is an attempt to distort the market. The effects of this policy have been exacerbated by the fact that the legislation has been imposed without any sort of infrastructure to make it work.

“It’s very important that we understand what has happened in Germany and learn from it as there are growing concerns that this unsound and ill-thought-out approach could spill out into other countries, especially the UK, with disastrous consequences.”

Apart from far-reaching cost reduction measures, Ball Packaging Europe has cancelled significant investment projects in Germany, in turn financially affecting over 80 regional suppliers to the company including craftsmen, transport companies and suppliers of paints and lacquers.

In the UK about 1800 people are employed directly in the beverage can industry, which is also a major user of steel and aluminium, paints and lacquers, transportation and many other services.