23 June 2023

German brewers ponder whether to hike the deposit on beer bottles and crates

Germany | Brewers are in a quandary: Shall they hike the deposit on beer bottles and crates in view of rising costs for new ones, even if it means coughing up millions of euros during the transition? Or shall they keep things as they are in order not to rile their consumers?

Proponents of a deposit hike argue that replacing beer bottles and crates with new ones costs much more than the current deposit of EUR 0.08 (USD 0.09) per bottle and EUR 1.50 per crate. Because of the small levy, there is also too little incentive to turn them in, leading to recurrent bottle shortages, especially during the summer months. A higher deposit, they say, would bring the bottles back faster.

Industry bodies beg to differ. According to the German Brewers Association, a deposit increase would be very difficult to implement and extremely costly for the breweries. Moreover, everybody on the value chain would need to agree to it: brewers, bottlers, wholesalers, retailers, and consumers.

The devil is in the detail

The biggest challenge is how to manage the transition. Most brewers think a cut-off date or deadline wholly impractical. After all, nine out of ten returnable bottles are usually out in the market rather than in the brewers’ warehouses. They think it highly feasible that consumers will start hoarding their empties before the cut-off date so that they can reclaim the higher deposit.

Considering that there are currently up to four billion returnable beer bottles and more than 200 million crates in circulation in Germany, brewers would need to build hundreds of millions of euros in provisions to be reimbursed to consumers at new deposit rates. If the deposit were hiked to, say EUR 0.15 per bottle, those with a calculator reckon that the transition would cost breweries a total of EUR 280 million. If it were hiked to EUR 0.25, the cost would balloon to EUR 680 million.

The German Brewers Association has serious doubts as to whether the empties will be returned more quickly if the deposit were increased. In a consumer survey, only one in five respondents said they would turn them in more quickly.

Finding themselves stuck in a rut, German brewers have set up working groups to discuss a deposit hike. However, since this is a recurring topic, it would not be the first time that they will have to admit defeat vis à vis the complexities of the German returnable bottle system.

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