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Drinks trade saves £51m on glass recycling

Published:  02 February, 2015

The wine and spirits trade has saved an estimated £51 million in glass recycling fees per year in the last year, after a WSTA-led campaign sought to bring spiralling costs down.

The trade body is now looking to boost transparency around market prices for Packaging Recovery Notes for glass recycling to ensure the trade does not pay over the odds again by publishing up to date prices on its website.

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%.

In 2012, following a renegotiation of recycling targets, prices for PRNs began to rise from around £10-£20 per tonne to £75 at the end of the year. They remained high, reaching a peak of £85 per tonne, into 2013 before the Department for the Environment revised glass recycling targets downwards. This meant the recycling rate for obligated businesses came down from 81% to 75% in 2014 - it will rise to 76% in 2015 and 77% from 2016 onwards.

GraphGraph showing spiralling PRN prices from 2011 to 2015

Defra estimated that the readjustment would see PRN prices return to just under £32 per tonne and the price falls seen over the last year 12 months have supported that. In the last three to four months, glass PRN prices have settled at about £20 per tonne and forward prices until October 2015 for the next compliance year (April 2015 - March 2016) are stable at £20 per tonne, although forward traded volumes are relatively small. 

Chief executive of the WSTA, Miles Beale, said: "The staggering spike in price of Packaging Recovery Notes for glass recycling was a real problem for the trade, costing it an estimated £51 million. The WSTA worked hard with others to ensure the Department for Environment made changes to correct the PRN market, which has seen the price drop significantly. But we want to do more to improved transparency in the market prices, which is why we are publishing weekly average spot prices on our website as well as offering a price matching service and access to alternative providers, ensuring the trade doesn't pay over the odds for recycling."

The drinks industry has remained critical of the lack of transparency over pricing, which has undermined confidence. In an effort to overcome this problem, the WSTA is launching a dedicated web page that will provide weekly updates of average PRN prices, so that its members can compare when buying the PRNs.

Spot prices as published on the WSTA websiteSpot prices as published on the WSTA website

The £51 million saving was based on a PRN value of £80 per tonne - based on the 81% rate of recycling required by Defra. The costs of a reduced recycling rate (75%) and a PRN value of £20 per tonne gives a cost to industry of just over £15 million per year. Taking it to £51 million based on a total wine and spirits glass throughput of just over a million tonnes a year (against a total glass throughput of 2.4 million tonnes p/a).