Breweries crushed by extreme packaging costs
The sector has suffered a 111% hike in packaging recycling costs over 2022 due to the rocketing price of Packaging Recovery Notes (PRNs), a system dubbed “frankly unsustainable”.
PRN is a certificate producers are obligated 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 shows the uncapped PRN market has led to price hikes for producers to rival what they are experiencing with energy costs and inflation. This came on top of rocketing prices during 2021, which doubled from pre-pandemic costs in many instances.
British Beer & Pub Association chief executive Emma McClarkin said 2022 was a year full of challenges and without some form of intervention 2023 was likely to be much the same for the industry.
She believed extreme PRN costs had a huge impact on our sector last year, compounding significant increases in 2021, yet they continued to go uncapped and to a large extent unnoticed by Government.
Out of control
“This is a market that is out of control and silently damaging many of our much-loved brewers’ businesses,” she added.
Government reforms on the PRN market are seeking to address the lack of transparency and extreme volatility are not due to take place until 2024.
This means producers risk being lumped with similar huge costs throughout 2023.
McClarkin continued: “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 with staff shortages, vast energy prices and inflationary cost pressures.
“We need intervention from Government on PRNs now, not in a year’s time.”
Unsustainable system
Carlsberg Marston’s Brewing Company chief executive officer Paul Davies said the UK brewing sector was having to grapple with a broken system for packaging sustainability that was “frankly unsustainable”.
He continued: “The fragile recovery our sector has achieved following the grave challenges of the past few years is threatened by the massive increase in PRN costs we have experienced, with the grim possibility prices could go up even further.
“Carlsberg Marston’s Brewing Company shares our industry’s strong sense of responsibility to work towards greater sustainability. To achieve this, we urgently need action from Government to build a system that is fair to everyone involved.”
