Germany forced to can deposit system

- Last updated on GMT

Related tags: Member states, European union, Germany

European regulators have forced Germany to rethink its
controversial - and commercially damaging - deposit system for
one-way packaging, ruling that it contravened regulations on the
free movement of goods between EU member states. But it could take
drinks producers and packaging manufacturers a long time to recover
from the impact of the much-maligned system, writes Chris
Jones.

Germany has one of the most sophisticated recycling networks in the European Union, but the decision last year to expand this to include one-way (i.e. non recyclable) packaging had a devastating effect, in particular on beverage producers who are by far the biggest users of this kind of packaging, be it cans or plastic bottles.

The problem stemmed primarily from the fact that the deposit system on one-way packaging was introduced without the necessary infrastructure (the existing system is run through a nationwide network of standalone recycling points), obliging any consumer wishing to reclaim their deposit to return the container to the store where it was bought - placing an enormous burden on the retail sector.

The supermarkets' response was simply to stop selling all one-way containers - a move which saw entire ranges of soft drinks and beer disappear from their shelves almost overnight.

The German government responded by making it easier for consumers to reclaim their deposit by allowing cans or bottles to be returned to any store, provided that outlet stocked cans and bottles of the same size and type. But since retailers can refuse to take back other types of empty packaging, the result has been the development of a mosaic of different return systems that are not compatible with each other - a far cry from the smoothly operating system for recyclable materials.

The Commission said that while it recognised the environmental benefit of charging a deposit and of taking back packaging, the principal problem with the German system was that it "constitutes a disproportionate barrier to the free movement of packaged beverages from other member states"​.

This was particularly pertinent for imported drinks, the Commission said, given that, for reasons mainly related to long distance deliveries, some 95 per cent of the drinks imported into Germany were in one way packaging.

Internal Market Commissioner Frits Bolkestein said that there had been several discussions between Brussels and Berlin in an attempt to resolve this case without the need for a ruling, but that the Germans had not done enough to convince the regulators that their suggestions for revising the system would be enough to solve the problem.

"The EU Packaging Directive specifically requires member states which introduce deposit and return systems to ensure that this is done in a way which does not create barriers to intra-EU trade. Experience from other member states has shown that a deposit system can be introduced without disrupting trade within the Internal Market,"​ the Commissioner said.

Germany now has two months to scrap the system or come up with an acceptable alternative or face further sanctions from the European Court of Justice, but the damage to the German drinks trade, and to packaging manufacturers, is likely to take longer to heal.

Rexam, the world's biggest can manufacturer, said that the Commission's ruling was "a positive step towards the resolution of the situation"​, a relatively mild response from a company which lost 1.5 billion cans in Germany last year and saw £18 million shaved off its profits as a result.

German brewers have also been badly affected by the system. Richard Weber, head of the German Brewers Association pointed out earlier in the year that "most brewers sell 80 per cent of their beer within 150 kilometres of the brewery. If they have to collect their own empty bottles, they cannot afford to sell beer outside of their region because transportation costs are too high."​ To say nothing, of course, of the impact of having their products delisted by the retailers as a result of the system.

There is as yet no indication as to whether the Germans will comply with the EU ruling, or indeed what the possible alternative might be, although a number of suggestions have been put forward by industry associations.

The Association of European Steel Producers (APEAL) has suggested replacing the current 72 per cent reuse quota currently used in Germany with a 90 per cent combined rate of reuse and recycling for all drinks packaging, a solution which is both ecologically and economically sound.

According to the association, the majority of Germans would be happy to see the current system scrapped, with more than 75 per cent of consumers feeling that the previous system (whereby one-way drinks packaging was sorted for recycling at home) was more than adequate. APEAL claims that the system has cost a drop in industry turnover of €1.2 billion and a loss of €50 million in beer tax revenue alone.

Related topics: Markets

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