Deposit, Regulations and Shortage of Bottles – Not an Easy Job for the Breweries
In the summer, German breweries feared they would not be able to supply their customers with beer because of the threat of a shortage of beer bottles. In the end, however, there were enough. However, the question of supplying enough glass bottles remains unresolved because new difficulties await due to the planned packaging regulations to be issued by Berlin and Brussels.
The cry for help and the warning from German breweries in July 2023 were loud and clear, as they had been in the summer of 2022. The industry saw a cold front approaching the catering industry and customers. It warned that the number of beer bottles in the following weeks might not suffice. As a result, breweries would not have been able to produce and deliver enough beer. But the supply problems did not materialize, with the German Brewers’ Association (DBB) citing the longer periods of rain in the summer as the reason, as well as consumer restraint in the retail and catering sectors. Last year, the difficulties were based particularly on the increased energy costs; the German Glass Industry Association cited an increase of 500 percent in May 2022 compared to 2021.
According to the DBB, some breweries were unable to process all orders due to the lack of bottles. However, the Russian war of aggression against Ukraine also played a significant role, as glassworks from Ukraine and Russia stopped supplying bottles, says Holger Eichele, Chief Executive of the association. At the same time, he says, manufacturers in Europe have reduced production because of high raw material prices. According to the association, prices of the bottles increased by 140 percent between January 2022 and May 2023.
A second major factor in the thinned-out supply of bottles and crates were the longer intervals between purchases, according to Eichele. As a result, customers were less likely to return empties to supermarkets. There were then also demands from some breweries for higher deposit rates, which at eight cents per beer bottle are significantly lower than the 15 cents per glass bottle for mineral water. With a deposit of 25 cents, they expect the bottles to be returned more quickly. According to the DBB’s calculations, an increase of seven cents on around four billion returnable bottles would result in additional costs of around 280 million euros. With a deposit rate of 25 cents, the costs would be 680 million euros. This would put small and medium-sized breweries at risk of overextension.
Now, however, the DBB, in cooperation with the Association of Private Breweries, has founded a working group for the preservation of the returnable system.
Protests Against Planned European Regulation
However, breweries also have to contend with planned new packaging regulations to be issued by the EU and the German government. The EU Commission wants to introduce Europe-wide rules according to which all packaging must be labeled. By 2030, all packaging should be able to be reused or recycled in an “economically justifiable” manner. After the first draft of the regulation became public there were loud protests from associations, the Commission reacted quickly and clarified some points. The existing reusable systems are supposed to stay protected, but the DBB still sees deficits, they say there is no clear definition of the criteria. In addition, the administrative burden for the existing systems would be high. According to the association, it is in close contact with politicians in order to find solutions together. “We operate the largest and most successful returnable system in Europe,” the DBB says. A view that the Commission obviously shares as Brussels says: “The deposit system in Germany is a success.”
Further Braking Point Feared
But in addition to the plans in Brussels, the breweries also see another problem coming their way in Germany. The Federal Environment Ministry wants to increase the reusable quota with a new packaging ordinance; and the association also expects this to lead to a significant increase in demand for glass. The ministry sees problems with the planned reusable quota of 70 percent, which is clearly undercut with 41 percent. The DBB states a quota of 80 percent for the industry. One problem area, it says, is the general obligation to take back returnable bottles. There is a danger that the discounters, with their large number of outlets, could “determine the rules of the game.” According to the association, there is also a lack of manufacturing capacity for bottles, as well as storage space, trucks, drivers, and deposit machines.
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