Soft drinks, fruit juice, and bottled water may hit a commercial roadblock by next year if the NSW Government has its way with its “Cash for Cans” Scheme that will eventually push up prices of soft drinks. As prices go up, obviously demand will be hit.
The NSW state is mulling a container deposit scheme, from July 2017 under which commercial drink containers, between the size of 150 ml and 3 litres will be redeemed 10¢ at prescribed depots, The Sydney Morning Herald reported.
Beverage manufacturers such as Coca-Cola Amatil, Asahi, Schweppes, Carlton & United Beverages and Lion Co will foot the administration costs.
Aiming for litter-free cities, NSW is planning large-scale collection depots, reverse-vending machines, and pop-up sites to process containers carrying the label of Container Deposit Scheme, reports Telegraph.
Certainly, the prices will jump. The Australian Beverage Council said the scheme would cost manufacturers at least 13¢ per container.
Noting that it is studying the implications of the NSW Government’s decision, Coca-Cola Amatil spokesman said: “Given (that) the scheme will not be implemented for some time, there is no immediate impact for the company.”
However, analysts assert price increase will boomerang and hit commercial volumes of all carbonated soft drinks. “This is negative for all beverage suppliers,” noted Deutsche Bank analyst Michael Simotas. According to research findings, when there is a 10 percent price rise, the demand would fall in double rate– 22 percent.
Amatil said it is watching whether other states would consider the container deposit scheme. South Australia launched container deposit scheme in 1977 and the Northern Territory started in 2011. Queensland is expected to start in 2018.
A legal challenge was mounted by Coca-Cola Amatil and others against Northern Territory for its “cash for cans” scheme in 2012. Despite claiming breach of Commonwealth law, the Territory government went ahead with the plan after seeking immunity from the central law.
Only wine and spirits containers will be exempt from the scheme as they are consumed at home. However, the scheme is unlikely to cheer the recycling industry as low commodity prices have reduced the profit from collecting paper, metal and plastic waste from households.