The support package from Circularity Scotland will help to alleviate the administrative and financial pressures producers will face when the Scottish deposit return scheme (DRS) goes live on 16 August.
The measures announced will mainly assist SMEs, who have been particularly vocal about the impact the scheme will have on their businesses.
Cash flow support will apply to businesses putting less than three million in-scope single-use drinks containers on the Scottish market per year. This is to ensure the £22m budget benefits smaller producers liable in the system to a greater extent. The measures include:
- There will no longer be a ‘day-one’ charge for producers electing not to apply a Scotland-specific European Article Number (EAN)/barcode
- There will also no longer be a ‘month-one’ charge on producer fees and deposits on all in-scope containers
The second suite of measures in the support package concerns credit terms and are applicable to all producers, regardless of size. Every producer will be entitled to two months' credit terms on deposits, producer fees and surcharges on ‘retained’ (non-Scotland specific) EAN/ barcode fees.
There will also be improved payment terms for lower sales volumes, simpler labelling options for niche products and small producers and the removal of upfront charges. For instance, those placing less than 25,000 units per year on the Scottish market will now have the option to use self-adhesive barcode labels, as opposed to changing their packaging formats entirely.
Mitigating the pressure on businesses
Circularity Scotland, the Scottish DRS Scheme Administrator, was procured from the private sector and has secured over £100m of funding from third parties to support the scheme.
The announcement will likely particularly help the cash flow of businesses such as craft breweries and distilleries, who may otherwise have chosen to no longer participate in the Scottish market.
Producers will welcome this announcement, given industry concerns over the scheme and the lack of clarity and preparedness. With that said, Circularity Scotland has made quick progress since their approval to be scheme administrator last year in ensuring infrastructure and communication channels are in place ahead of implementation.
David Harris, Chief Executive of Circularity Scotland has said “Circularity Scotland was established by industry to meet their obligations under the deposit return scheme as efficiently and cost-effectively as possible. This announcement is further evidence of how we are continuing to innovate and identify additional ways to mitigate the pressure on businesses. We know that smaller producers in particular have been concerned about the cashflow impacts of the scheme, and these measures will address those concerns.”