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Industry leaders say reduced glass recycling costs have saved businesses

Published:  24 March, 2014

Senior figures in the wine trade say steps to cut exorbitant charges for glass recycling could save some companies from going out of business. 

Senior figures in the wine trade say steps to cut exorbitant charges for glass recycling could save some companies from going out of business.  

Last week the government announced it was going to reduce the amount of glass required to be recycled from 81% to 75% to help cope with a shortfall in the number of recycling companies compared to the amount of waste glass. The alcoholic drinks trade makes up  70% of all glass on the market, with wine accounting for 34%, beer 29% and spirits 9%. When it comes to PRNs, the 'notes' that firms must buy to show they are complying with recycling, producers pay 40% of the cost and retailers 48%.

The reduction has been welcomed by the trade, although Direct Wines' group chief executive Simon McMurtrie said the price reductions would need to be significant in order to make a material difference. The Wine & Spirits Trade Association said the changes could save the wine and spirits industry £38 million.

Mark Lansley, managing director of Broadland Wineries, told that the firm had regularly paid about £60,000 annually towards the cost of recycling glass bottles in the UK via PRN notes. "Each year we budgets and predicted how many PRNs we would have to buy. But in late 2011/12 the price, which was £15 per tonne for a glass PRN, started to escalate to £80 per tonne in a calendar year.

"We couldn't buy them, and when we could it was at an exorbitant cost. As an SME we do our budget and set up contracts with suppliers, but to suddenly have to pay five or six times as much, that caused us significant problems. With all the other things we buy we allow for a swing of 10 to 15%, but not 500 to 600%."

Lansley said the problems were allegedly caused by two or three companies issuing PRNs that weren't recycling anything, which meant the actual capacity for recycling was much smaller than perceived. When the number was reduced to reflect the number of companies actually trading, this pushed prices up exponentially. "You are legally obliged to buy them. In theory the price could have gone up to infinity," Lansley said.

According to Lansley, PRN price rises caused many companies in the sector "enormous problems", and could even have resulted in some going out of business altogether, until the WSTA intervened. It set up a forum of producers, retailers, glass manufacturers, recycling firms and government bodies to tackle the issue.

Lansley said the trade body did a "fantastic job in pulling the disparate bodies together".

Direct Wine's McMurtie said: "We are continuing to work with the government to make sure that the changes that they are proposing result in the real reduction in costs to the industry that they are promising that they will do." 

He added that the firm's glass recycling costs rose 500% in the last two years, costing hundreds of thousands of pounds more than it had budgeted or expected. He said that while all potential reductions were welcome, they would need to substantially reduce in order to help the business materially.