Breweries are being crushed by extreme packaging costs, says the British Beer & Pub Association (BBPA), with an additional £21m piled onto businesses throughout 2022 alone.
A 111% increase in packaging recycling costs has been suffered by brewers in the past year, due to the rocketing costs of packaging recovery notes (PRNs). This is a certificate producers are obliged to buy to prove the equivalent amount of packaging material they use has been recovered or recycled by an accredited waste management company.
Waste reporting data from 2022 clearly indicates the volatile and uncapped PRN market has led to price increases for producers to rival what they are experiencing with energy costs and inflation. This came on top of rocketing prices during 2021, themselves doubling from pre-pandemic costs in many instances.
With government reforms on the PRN market that seek to address the lack of transparency and extreme volatility not due to be implemented until 2024, producers risk being lumped with similar huge and unpredictable costs throughout 2023, as the market remains at the mercy of uncapped prices and a total lack of transparency.
With the brewing and pub industry already under enormous pressure from extreme inflation, disruption throughout supply chains, an unprecedented energy crisis, and with significant tax rises and additional regulatory burdens on the horizon, intervention is urgently required. The BBPA is calling on the government to act as soon as possible to mitigate further extreme costs being piled onto businesses.
Emma McClarkin, chief executive of the BBPA, said: “2022 was a year full of challenges, and without some form of intervention 2023 is likely to be much the same for our industry.
“Extreme PRN costs had a huge impact on our sector last year, compounding significant increases in 2021, and yet they continue to go uncapped and, to a large extent, unnoticed by government. This is a market that is out of control and silently damaging many of our much-loved brewers’ businesses.
“When combined with the additional costs of a deposit return scheme and extended producer responsibility reforms these businesses will soon have to deal with, it is evident the financial and administrative burden on the sector will be soon become too much for many who are also tackling staff shortages, vast energy prices, and inflationary cost pressures. We need intervention from government on PRNs now, not in a year’s time.”
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