Sue Mitchell
31 July, 2017
AFR
Coca-Cola Amatil and arch rivals Asahi, Carlton & United Breweries, Coopers, and Lion will oversee the introduction of a container deposit scheme in New South Wales after winning roles as scheme coordinators.
The New South Wales Government announced on Monday that Exchange for Change, an industry joint venture consisting of Coca-Cola Amatil, Asahi, CUB, Coopers, and Lion, had been appointed scheme coordinator for the container deposit scheme, which comes into effect on December 1.
The appointment is the first good news for Coca-Cola Amatil after a series of setbacks at the hands of Woolworths, which has refused to stock CCA’s newest sugar-free Coca-Cola variety and plans to shrink the number of Mt Franklin bottled water products it stocks in supermarkets.
Exchange for Change will be responsible for financial management and auditing of the container deposit scheme.
Beverage industry players believe Exchange for Change members stand to make money from unclaimed deposits and handling fees – as CCA and Lion currently do in South Australia – offsetting some of the impact of the scheme on sales and volumes.
Under the scheme, consumers who return eligible containers to approved collection depots or reverse vending machines will be entitled to a 10¢ per container refund.
The 10¢ refund will apply to every container between 150 millilitres and three litres, apart from plain milk, pure juice and wine bottles.
Prices for beverage containers between 150 millilitres and three litres (excluding plain milk, wine and spirits) are expected to rise about 20¢ to cover the 10¢ refund as well as handling fees of 5¢ to 6¢ per container and retail margins.
Cut volume by 2.5pc
Analysts estimate the price rise will lead to a fall in commercial beverage volumes, which are already under pressure from changing consumer preferences.
Bottlers are factoring in an average 5 per cent decline in volumes, with the greatest impact in low-value products such as private label water and multi-packs of beer and soft drinks. The price of a 24-can carton of beer or Coca-Cola, for example, would rise by $4.80.
JPMorgan believes that if CCA passes on 100 per cent of the cost it could reduce volumes by at least 2.5 per cent and earnings in Australia by 14 per cent, while Macquarie Equities believes earnings could fall by between 1.7 per cent and 8.3 per cent, depending on cost recovery.
CCA has yet to comment on the impact of the CDS on its volumes and earnings.
“The cost of the CDS will be subject to factors including, but not limited to, the container redemption rate, the mix of redemption between collection points and material recycling facilities and the mix of packaging type,” Coca-Cola Amatil said on Monday.
The NSW Government has also announced the appointment of TOMRA-Cleanaway as the scheme’s network operator. TOMRA-Cleanaway will be responsible for establishing and managing a network of collection points across NSW, including reverse vending machines.
Follow us: @FinancialReview on Twitter | financialreview on Facebook
Subscribe to our free mailing list and always be the first to receive the latest news and updates.