Refund scheme a big burden for small WA breweries

The price of a carton of beer will go up $4.20, jobs would be threatened and small WA breweries face financial pain if forced into a container deposit scheme.

The State Government has proposed a 10c refund be available for every bottle (plastic or glass) and can between 150ml and three litres sold in WA.

South Australia has had the scheme for more than 40 years and New South Wales plans to implement a similar program in December. However, the NSW system has been described as shambolic with most linked to the scheme still confused about how it will work.

WA Environment Minister Stephen Dawson put out a white paper on the proposed local scheme two months ago and the window for public submissions closed last week. The WA Government wants the CDS to be implemented in January 2019.

One major issue for those affected by CDS is that the scheme is being pitched as a “recycling” program when it is really an anti-litter exercise. And the public is being sold the merits of being able to get back 10c for each vessel or $2.40 per 24-item carton.

But the price of the carton will have to jump by another 75 per cent because those who will be forced into CDS – soft drink, beer, alcopop and energy drink manufacturers – will also have to fund the cost of a scheme.

For instance, in the NSW scheme, which is proposed in the WA white paper, the cost to a brewery for a regular stubbie would be 14c – 10c for the refund and 4c to help fund the program.

There will also considerable resources each small brewery will have to commit in administering its part in the scheme, GST needs to be added and retailers will then add on their percentage for margins. And each beer in every brewers’ stable attracts a $80 bill to be registered for CDS.

Some members of the WA Brewers Association believe the extra cost to comply with CDS could be as high as 18c per vessel. And WABA has called for a $250,000 rebate to be available to WA breweries that produce less than one million litres of beer a year. That would include Colonial, Mash, Nail, Black, Bootleg, Eagle Bay etc.

Considering most small WA breweries’ beer is more expensive than the major operators the extra cost of a carton could deter local sales.

And the other concern for WABA is that the NSW scheme is managed by a group involving CUB, Lion, Coca-Cola Amatil, Coopers and Asahi – the major brand competitors to WA’s small businesses. The group has conceded it is responsible for 75 per cent of the products that will be affected by the scheme.

One of The Greens’ upper house MPs in NSW described putting the group in charge of the scheme was akin to putting the fox in charge of the hen house.

Because the reporting procedures required under the scheme the CDS manager would have access to sensitive information, such as how much package production each WA small brewery does each month.

In its submission to the white paper, WABA stated –

• (Our association) supports recycling, however, we are concerned the scheme inadvertently captures and unnecessarily penalises vulnerable small brewers whose products do not form a major part of the uncontrolled litter stream.

• The scheme will likely add over $4 to a carton to small brewers’ products, which will harm sales as consumers seek out cheaper alternatives offered by the major brewers. Fast moving consumer goods display high price/volume elasticity, meaning sales will be impacted.

• Many consumers who do not understand why their beer has become so much more expensive will likely migrate to cheaper alternatives, such as pseudo craft products offered by the major brewers and private label supermarkets. This effectively rewards major brewers with increased sales even though it is known that they are the major contributors to the litter problem.

• Wine producers and spirit producers will be exempted from the scheme, which means relative to beer, these known substitute products will become cheaper. The exemption granted to wine and spirit companies under this proposed legislation is based on the premise that wine and spirit containers do not contribute to the uncontrolled litter stream in any major capacity.

• WABA’s believes unlike bulk cheap beer, the premium and artisanal crafted products our members produce do not form any major part of the uncontrolled litter stream either, because it is predominantly consumed at home, in bars, and responsibly in moderation by a subset of consumers who are unlikely to litter. The litter from small brewers is contained effectively already by curb side collection (home) and existing glass recycling bins (bars and hotels), and therefore should also be exempt.

• WABA’s position is that it is an oversight that beer from small brewers has been bulked together with those of Macro brewers selling cheap beer, and whose products can regularly be seen littering the environment.

• Further to this, small brewers whose products are predominantly sold and consumed in urban areas (low cost to collect and recycle areas), will be subsidising large brewers whose products need to be collected and returned from remote communities and cities in northern WA (high cost to collect areas).

• WABA recognises that an exemption for some beer products and not others would form confusion with consumers in the marketplace, and therefore WABA is arguing for a $250,000 rebate instead. This rebate effectively provides an exemption for small brewers to support the growing industry and small business, while allowing the government to roll the scheme out as planned.