Lidl Sees PET Cycle at Risk
4/14/2023 Brands Design Retail Sustainability Article

Lidl Sees PET Cycle at Risk

Politicians at national and European level want to expand the reusable system for beverages. The Schwarz Group now fears that a listing obligation could disrupt Lidl's bottle cycle. Schwarz also relies on a new study according to which Lidl's system may even be ecologically better than classic reusable bottles.

Bottle to Bottle: Lidl has closed the loop Bottle to Bottle: Lidl has closed the loop

The Schwarz Group, which includes Lidl, has invested hundreds of millions of euros in the production and recycling of PET bottles. The balance sheet of the Schwarz subgroup, in which the two recycling factories are held, shows just under 120 million euros in tangible assets at acquisition prices alone. The retailer has geared its entire range of water and soft drinks to this single-use cycle.

Now the company fears that an amendment to the Packaging Act could economically kill off its own system if reusable containers have to be offered at the same time. “A supply and return obligation would inevitably be associated with considerable economic and ecological transformation costs for the entire economy,” explains Lidl board member Wolf Tiedemann in Lebensmittelzeitung. “The focus of consideration should be on costs and benefits for the environment as well as for the national economy.”

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For the Schwarz Group, which covers almost 20 percent of the single-use PET market with its closed-loop system, this would be tough from a cost perspective because of the high investments in the bottle cycle “in the current difficult economic environment for all market participants.”

The eco-balance would also deteriorate. This is because: “Circulation bottles are demonstrably at least on a par with comparable reusable systems in terms of climate and environmental impact,” explains Tiedemann. The efficiency of the Lidl system affects CO₂ emissions. Parallel operation of disposable and reusable bottles would negate this efficiency.

According to a study commissioned by Schwarz from the Ifeu Institute in Heidelberg, the CO₂ emissions per liter of mineral water are only just over half the average of the classic glass reusable sparkling water crates – if the customer reaches for the 1.5-liter bottle. It pays off that the Neckarsulm-based company has decentralized its fountain operations: there are five bottling sites spread across Germany. “Our distribution structures make a significant contribution to the ecological optimization of our beverage packaging,” says Tiedemann.

Mandatory offering of beverages in reusable bottles would have a major impact not only on Lidl and Kaufland. On the sales floor, a reusable supply would lead to a significant drop in productivity, a manufacturer who bottles disposable and reusable beverages told the Lebensmittelzeitung: 240 1.5-liter bottles fit on one pallet space. That is 360 liters. With returnable crates, only 180 liters of water fit on the same area. In the back of the store, the same space has to be reserved for empties. “Returnable containers are a cost-intensive issue,” says the beverage manager. It is also clear that “the eco-balance of reusable containers tips over a certain distance.” That's why all retailers are dealing with this issue.

A study by the consulting subsidiary of the Berlin DIW, which Schwarz commissioned, provides figures on this: It would cost retailers around 3 billion euros alone to implement the 70 percent target industry-wide. In addition, 879 hectares of retail and logistics space would be needed, as well as 1 billion additional truck kilometers – that's about 1.5 percent of the nearly 70 billion truck kilometers that were driven annually in Germany at last count, according to the Federal Highway Research Institute.