Coke to pass on can deposit scheme costs

PRASHANT MEHRA
August 18, 2017
Australian Associated Press

Beverage giant Coca-Cola Amatil says it will recover costs of NSW’s new container deposit scheme (CDS) from customers by raising prices, but is uncertain about the impact of this on future earnings.

Under the drink container deposit scheme, which is expected to go live in NSW from December, anyone who hands in eligible drink bottle containers at designated sites across the state would get a 10 cent refund.

Beverage suppliers will pay for the refunds as well as the scheme’s administration, with the costs tipped to be passed on to consumers in a hike in soft drink prices. 

The scheme aims to halve the number of bottles and cans thrown away in parks, beaches and waterways. 

Coca-Cola Amatil said, based on 2016 estimates, it accounts for about 25 per cent of the 3.5 billion eligible containers that used by the entire industry in NSW.

“Coca-Cola Amatil intends to recover the fees of the CDS by passing these through to customers,” the company said in a statement on Friday.

“The recovery of the fees by Coca-Cola Amatil will constitute an additional charge being added to our pricing to customers.”

The drinks maker said, at this early stage, it does not have a reasonable basis to provide a meaningful estimate of the impact to future earnings as a result of the introduction of the scheme.

Analysts have previously estimated that passing on the cost of the scheme to customers would reduce Coca Cola Amatil’s volumes by about two per cent and earnings in Australia by around 10 per cent, 

Coca-Cola Amatil is among major beverage companies that will oversee the NSW government’s incoming container deposit scheme.

Its partners in the industry joint venture – dubbed Exchange for Change -include Asahi, Carlton & United Breweries, Coopers and Lion.