Some drink producers feel the squeeze even with $2.5k grant for container return scheme

SINGAPORE - Drink producers said they still feel the squeeze even with a government grant announced on Jan 20 to defray the cost of complying with a national recycling scheme for bottles and cans.

Some small producers also said the grant would be insufficient to avert a price increase of at least 20 per cent.

On Jan 20, the National Environment Agency (NEA) said it would give beverage producers

a one-time grant of up to $2,500 to defray their compliance costs.

The grant is valid until September 2027 and can be used to offset product registration fees, producer fees and the cost of pasting scheme-compliant stickers on beverage containers.

The recycling scheme is funded by fees that producers – companies that manufacture, import and distribute drinks – have to pay each year. On top of the producer fee, other compliance costs include a one-time registration fee of $500 and a 10-cent deposit for each drink container put on the market.

Importers also need to pay for deposit marks and barcode stickers, which they have to manually paste on imported drinks. This allows local consumers to scan the containers and get their 10-cent refunds at the more than 1,000 return points scheduled to be fully operational by April 1.

Beverage producers can obtain barcode stickers only from the three local vendors accredited by the scheme’s operator, Beverage Container Return Scheme (BCRS) Ltd. The cost of the stickers ranges from three cents to 18 cents, depending on the quantity and size.

A wholesale distributor of kombucha told The Straits Times that the grant is “insignificant” compared with the costs of adding stickers to the 800,000 cans it imports yearly. The cost of the stickers would amount to around $24,000 a year, excluding the manpower required to paste the stickers.

The company’s sales director, who declined to be named, said it may have to increase its price by 70 cents as a result.

“We understand the concept behind needing to recycle the containers. But as smaller importers, we are at a disadvantage. With costs trickling down, foreign businesses won’t even bother bringing their drinks to Singapore,” he said.

Mr Andrei Ng, sales manager of Itrade Beverage, said the grant of up to $2,500 would cover only a third of the cost of printing the scheme-compliant barcodes.

“It is not sufficient to sustain businesses or prevent price increases in the long run,” said Mr Ng, noting that ongoing costs include business administration and accounting expenses.

He added that it was still unclear how drinks producers can claim back the fees for damaged drinks that cannot be sold and have to be discarded.

Mr Lim Jialiang, founder of beer distribution company Watering Hole, said the grant is a “temporary band-aid” covering a few months’ worth of sticker costs.

“Ultimately, this scheme will pass costs on to consumers, and this will mean that some parallel import business models no longer make sense,” he said.

Beverage producers that opt to stick with the international barcodes affixed on drinks imported to Singapore will need to pay a refundable security deposit. The security fee for selling 100,000 containers with such barcodes will be $28,000.

A beverage trader, who declined to be named, said he is unsure why he needs to pay the fees when all the beverages he imports to Singapore are exported to other countries.

“My customers overseas now have no reason to buy from me at a higher cost when they have other options,” he said.

On Jan 21, NEA clarified that the beverage container return scheme applies to beverages supplied to the Singapore market and intended for local consumption. 

“Any products destined for export - including those produced locally for overseas markets, goods imported for re-export, and supplies for outbound travel channels - are exempt from the scheme,” added the agency. 

Mr Eugene Tan, head of special projects at Wanin Industries, said the company had chosen, for efficiency, to redesign its packaging to incorporate the barcode rather than pasting stickers.

While he acknowledged that the grant helps to offset the initial costs of transitioning to the scheme, he hopes the grant can also offset packaging redesign and printing costs.

“We also propose a regular review of the scheme as an industry. This would ensure the scheme remains cost-effective, adapts to market changes and continues to benefit the entire beverage ecosystem in a business-friendly manner.”