Changes to the NSW Container Deposit Legislation

Headlines: New carton charges of $3.30 (ex GST) for NSW Container Deposit Legislation.

What you need to know about Container Deposit Legislation and how it will impact your promotional business when on-selling custom branded beverages.

Firstly, what is Container Deposit Legislation (CDL)?

The Container Deposit Legislation Scheme is designed to reduce environmental littering by encouraging people to collect and return containers for recycling, and is part of a goal to reduce litter volume by 40% by 2020. The scheme has been operating in South Australia and Northern Territory for many years and a 10 cent refund is provided for each bottle returned to one of the many collection depots located across the state and territory. The costs of the scheme are pushed through to the customer and are designed to change consumer behaviour and encourage recycling by offering a refund.

This will effect relevant products in Brewtopia’s range include spring water, beer and cider. Wine is excluded from the scheme in all states.

An EPA approved recycling symbol is included on all eligible beverage labels currently being distributed in SA and NT. Below is the example of the label design template for Brewtopia. The “B” is a covert reference to Brewtopia, so depots know the personalised label is registered and approved. A new barcode will be required for the NSW program.

•   Note that there is a 2-year delay on label changes but in time our labels will be adapted to incorporate the NSW EPA approved recycling symbol as well as a barcode, which is mandatory for NSW. This will require a wrap-around label.

The NSW Government along with The NSW Environment Protection Authority (EPA) is currently preparing for the introduction of a Container Deposit Scheme commencing 1 December 2017 called the Return and Earn Scheme.

The NSW EPA have appointed a Scheme Coordinator. Exchange for Change is a consortium of five major beverage companies - Coca-Cola Amatil, Asahi, Lion, CUB and Coopers. They have also appointed a Network Operator Tomra - Cleanaway.

Brewtopia will be required to enter a Supply Agreement with the Scheme Coordinator by 1 October 2017. Brewtopia as the First Supplier will be required to supply the Scheme Coordinator with Brewtopia’s overall sales data including sales for the previous 12 months in number of bottles sold by bottle type (PET and Glass).

The Scheme Coordinator will use Brewtopia’s overall sales data to determine our market share and advise the cost of our administration and handling fee.

The NSW scheme will be made up of the refund/deposit of 10 cents plus a handling fee starting at 3.78 cents per bottle, totalling 13.78 cents (ex GST). This equates to $3.30 per carton of 24 bottles (ex GST). Note that these figures may change once program commences and costs become clearer.

Key Points:

Ø   Relevant products in Brewtopia’s range include spring water, beer and cider. Wine is excluded from the scheme in all states.

Ø   The NSW Government is introducing a Container Deposit Legislation scheme,effective 1 December 2017. This means that CDL charges will apply to all beverage containers distributed into NSW from this date. For SA and NT deliveries, Brewtopia includes a CDL charge per carton as a separate line item on the order and like GST it is collected and then returned to the Government through the monthly reporting and payment cycle. We expect it will work in the same way for NSW and other states in due course. We are currently investigating what we can absorb in relation to the NSW program given the program costs are significantly higher than SA/NT.

Ø  The recycling logo is an approved logo and the container needs to be registered with the barcode to apply this to the label. It cannot just be applied to the artwork as a text item if the container is not registered. Any beverages purchased through Brewtopia will have blanket coverage.

Ø   The QLD Government has also just passed legislation to introduce their own CDL Scheme in July 2018.  This will be modelled on the existing schemes to ensure some consistency.

Ø  Western Australia has announced their intention to introduce the CDL Scheme in 2019.

Ø   Victoria has no plans to introduce CDL at this stage. No advice at this stage for ACT and TAS.

Ø   We are pushing for a consistent recycling symbol for all participating states to ensure 1 label design is in place by the time the 2-year label transition period is over.

Ø   The scheme in NSW and QLD will operate in a similar way to the CDL Scheme already in place in both South Australia and Northern Territory. Brewtopia does have recycling arrangements in place in both SA and NT and is therefore approved to distribute beverages in both locations with approved label templates.

Ø  Beverage suppliers must apply to the EPA for the necessary container approvals in a form approved by the EPA and an application fee will apply. Note that Brewtopia will do this on your behalf to provide our customers with blanket coverage. Brewtopia will also pay the necessary fees.

Ø  This legislation is being managed at a state level (rather than Federal) and therefore there will be differences in the way each scheme will be managed.

Ø  The scheme is legislated and therefore ALL suppliers selling beverages, even for promotional purposes, are required to comply to avoid penalties.

Brewtopia is moving through the registration process with the EPA in NSW and QLD and will manage this program on behalf of our customers shipping into SA, NT, NSW and QLD. This will ensure we maintain a streamline process for our customers and avoid you having to directly register with the EPA, establish your own recycling arrangements and manage the associated administration and reporting. We apply a small charge of $25.00 per order to help us manage our administration costs. All state programs will operate with a slight difference so we will need additional resources for this.

We recognise that this is a major shift for the industry but all beverage players will be impacted by this and therefore the overall market will need to adjust pricing accordingly.

We are currently investigating resource requirements to manage this given there will be 5 programs by the end of 2018. However, we do not want to push the administration burden onto our customers and we are committed to managing the program on your behalf.

Further details will follow as costs are finalised by the Scheme Co-ordinator.

Jessica Simes

General Manager

Brewtopia Pty Ltd