SWA calls for Deposit Return Scheme grace period

Scotland’s thousands of small producers lack the financial resources and capacity to meet the current deadlines for the deposit return scheme (DRS) according to a leading group of trade associations.

The Scottish Wholesale Association, along with the Society of Independent Brewers, the Wine and Spirits Association, the Scotch Whisky Association and Scotland Food & Drink warn that without urgent changes by the Scottish Government to give small producers a legal grace period, where small producers can opt into the scheme, many products will no longer be available in Scotland from 16 August and prices will substantially increase.

In an open letter to Minister for Green Skills, Circular Economy and Biodiversity Lorna Slater, the trade groups highlight the continued lack of clarity on how the scheme will work and the action that small producers need to take to prepare.

The government’s own Gateway Review last year found that producers needed 12 to 24 months to prepare once “meaningful decisions” have been reached, yet these are still not known with only a few weeks left to register with the scheme administrator ahead of the legal deadline on 28 February.

The letter signed by the groups calls on Ms Slater to introduce an 18-month grace period in the regulations and that without action small businesses will be “disproportionately impacted by the scheme’s requirements”.

The minister recently agreed to reopen the regulations and this provides a window of opportunity to agree and formalise the legal support they need while ensuring that DRS is launched on time with the vast majority of containers included.

In December, Ms Slater indicated that the regulator Sepa (Scottish Environmental Protection Agency) will accept a “proactive and managed approach towards compliance”, yet without a legal footing this will create further uncertainty for small producers, the trade groups argue.

The letter states that “without a standardised, agreed and legal basis set out in regulations, there will be additional confusion in an already impossible situation. It will be very difficult for Sepa to agree different timetables for each of the thousands of small producers impacted by the scheme”.

In a joint statement, the trade associations said: “There are now only a few weeks left to save thousands of small producers that will be banned from selling bottles and cans in Scotland from August. They lack the finances and resources to meet the scheme’s requirements on time and need an 18-month legal grace period in the regulations and the option to opt in.

“Without this certainty it’s likely that consumers will lose out through reduced consumer choice and increased prices.”

The SWA has been collaborating with the Society of Independent Brewers, the Wine and Spirits Association, the Scotch Whisky Association and Scotland Food & Drink to explore ways to protect wholesalers that are importers and/or producers via a grace period.

SWA chief executive Colin Smith (pictured top) said: “A grace period will allow them to overcome the significant challenges they still face in trying to get ready to go live with DRS because there remain fundamental unanswered questions on key issues such as VAT, price-marked packs, IT system requirements, and what happens to stock in bonded warehouses.

“In addition, our request for a de-minimis on SKUs below a 50,000 unit per annum threshold would protect the availability and choice of a wide range of unique or limited low-volume SKUs that many wholesalers and their customers stock. This differentiates their offering versus their competitors.”

Meanwhile, Mr Smith, who spoke to First Minister Nicola Sturgeon at last week’s Business in the Parliament 2023 conference at Holyrood, said: “I had the opportunity to discuss with Nicola Sturgeon the challenges facing the industry around DRS and also the ongoing significant costs of doing business. I stressed the DRS challenges facing us but also our commitment to finding workable solutions ahead of going live in August.

“The theme of the conference was ‘Sustainable Recovery: Maximising the Opportunities of the Next Decade’ and while our members are committed to becoming more sustainable – and many are already implementing excellent initiatives – it is difficult for many to focus on sustainability issues when they are faced with so many current and more pressing challenges.”