Business / Unst gin producer adds to concern over deposit return scheme
A SHETLAND drinks producer has voiced its concern over the Scottish Government’s proposed deposit return scheme – saying it may negatively affect its business.
Debbie Strang of Shetland Reel, which is known for its range of gin, said the scheme would increase administration costs and potentially impact sales outside of Scotland.
She also warned that the company may have to stop selling miniature bottles of gin because they would no longer be viable.
The Scottish Government has increasingly come under fire for its proposed deposit return scheme, which is due to start in August.
A deposit of 20 pence would be added to single-use drinks containers, including those made of plastic, aluminium and glass.
The customer can get their 20 pence back by returning the empty container for recycling.
The scheme, which has already been delayed, aims to improve recycling rates, increase the quality of recycling materials and reducing litter.
Scotland is aiming to be the first nation in the UK to roll out such a scheme.
But critics of the proposal say it will place extra pressure on small businesses, with some calling for a delay to the scheme’s introduction.
Strang said the Reel team – which is based in Unst – is in favour of doing their bit for the environment, but said the deposit return scheme needed more work.
She said one key factor was not knowing whether the 20 pence deposit will be subject to VAT. The Scottish Government says it should not, but it is a reserved matter to Westminster.
“We’ve been asked to sign up to a scheme, and businesses wouldn’t ever do this, without knowing the full financial implications,” Strang told Shetland News.
“That’s a big issue. I was on a call where one company mentioned that whether VAT was on or not could make a difference to them on a yearly basis of up to 50 000 pounds cash flow, not knowing where it was at any one time, if it’s in the VAT system.
“These are big sums of money, despite we’re only talking about 20 pence.”
Another concern for Shetland Reel is the proposed need to have different barcodes and labels for goods which are sold outside of Scotland.
Strang said the company holds some stock in Glasgow to allow for quicker export.
She said if the company had two pallets of gin held in Glasgow, “depending on what order comes in, I may not be able to fulfil it because I haven’t got the right label on the bottle”.
“With the situation at the moment, people are ordering from us because they love the idea of our location and everything we stand for, but they still want their order fulfilled a couple of days later,” Strang added.
“This scheme would take that away completely.”
The impact on small drinks producers has been regularly mooted, and for the Unst gin company it means that miniature bottles may have to stop.
The proposals will see drinks producers pay a deposit for each item they place on the market, with a scheme administrator then invoicing the company.
For instance if a producer puts 10,000 bottles on the market they will pay £2,000 in deposits.
A wholesaler will then pay 20 pence for every bottle they purchase. The retailer will pay the 20 pence too, before the customer pays it at the till – at which stage every business has their deposit money back.
“Twenty pence is the deposit ‘per bottle’, even for a miniature, a 50ml bottle,” Strang said.
“Miniatures sell for between five and six pounds. There’s no margin in those. We do it because it’s a good promotional tool and people get to taste our gin either as wedding favours, or tourists just picking up a small miniature.
“It will not be worth doing – we will stop doing miniatures. We’ve calculated that the 20 pence that we would have to put on the unit, it will cost us another eight pence to administrate this scheme, so it’s not really 20 pence.”
She said many in the industry ‘“just hope that common sense will prevail, and a delay would be put in place” to the scheme, adding that she would like to see the scheme brought in at the same time as the rest of the UK.
Scottish secretary at Westminster Alister Jack has encouraged the Scottish Government to hold off to allow the whole of the UK to introduce a deposit return scheme together.
The SNP’s own Fergus Ewing MSP has also called on first minister Nicola Sturgeon to pause the “disaster of a scheme before it becomes a catastrophe”.
But Scotland’s circular economy minister Lorna Slater said this morning (Tuesday) that it is “all systems go” for the scheme to go live on 16 August despite significant concern from the industry and within the political sphere.
She told BBC Radio Scotland: “Our scheme is very similar to successful schemes around the world that do, as you say, increase recycling but also do that really important piece to reduce litter on our streets.”
Slater added that the government is working through solutions to concerns from small businesses and importers.
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