German recycling scheme costs Rexam
a dramatic loss of business in the country. The system, which
requires customers to pay a deposit on cans and bottles used only
once, has meant that capacity in Germany's beverage can market has
been halved.
"We lost 1.5 billion cans in Germany last year, and this impacted our profit by £18 million," said group communications director Per Erlandsson. "The recycling scheme in Germany has created chaos, and has hit cans more than any other form of packaging."
Germany's recycling scheme was introduced on 1 January 2003. It stipulates that one-way containers must be returned for a deposit of between 25 and 50 cents. This is part of the country's strategy to achieve EU recycling targets, something that Germany is obliged to reach.
But the problem for Erlandsson is that when the scheme was introduced, no form of collection was put in place.
"If you bought a container in Hamburg and went by train to Frankfurt, you couldn't return it," he told FoodProductionDaily.com. "Customers can only return a container to the shop in which they bought it. As a result, many retailers have delisted one-way containers."
Erlandsson also believes that the tariff on one-way containers such as cans is misguided. "Cans are heavily recycled in Germany as it is," he said. "Over 85 per cent of cans in the waste stream are recycled. We are pro-recycling - for example I think that the systems in Scandinavia work very well - but a scheme like this simply cannot be introduced without a collection system put in place."
The EC has taken Germany to court on the issue, on charges that the scheme is anti-competitive. But the legal process is likely to take up to two years.
"I think this is a political issue," said Erlandsson. "Germany has a coalition government between the reds and the greens, and I think the greens wanted this. It could also be to protect the country's local brewing industry - there are over 1,000 brewers in Germany and each uses their own bottles." However many brewers in Germany have also seen falling sales as a result of the new recycling scheme, and there is strong domestic opposition to the measures.
Chief executive Rolf Borjessön is quoted by Reuters as echoing Erlandsson's sentiments, describing the recycling scheme as "creating a lot of chaos".
He said that the total German market for cans used only once - which is estimated to represent between 7.5 billion and 8 billion units - has fallen by about 3.5 billion.
However, Rexam insists that the situation in Germany has been offset elsewhere in Europe. Price and volume increases in US beverage cans have helped the company report satisfactory end-of-year results. Total beverage packaging operating profit rose 2 per cent from £270 million to £276 million.
Rexam also returned to pre-tax profit on lower exceptional items. It made pre-tax profit of £5 million in the year to 31 December 2003, compared with a restated 2002 pre-tax loss of £87 million. The 2003 profit was struck after net exceptional costs of £166 million, primarily reflecting a charge for goodwill previously written off to reserves on Healthcare Flexibles, sold last year.
