Will the new EU directive push supermarket prices up?

There is growing concern over the upcoming European packaging regulation, which will significantly impact supermarkets and other large retail establishments.

Europe’s Packaging and Packaging Waste Regulation, which aims to replace the 1994 directive, has raised alarm bells among distribution companies.

This regulation mandates that stores with over 100 square metres of sales area must ‘recover’ all reusable packaging free of charge.

Notably, this includes implementing a ‘package return system’ for beverages like soft drinks, beer, spirits, and water, excluding wine. This new obligation will introduce financial and logistical challenges for retailers.

Navigating new packaging rules

Maria Martinez, Sustainability Head at the Spanish Association of Distributors, Self-service, and Supermarkets (Asedas), highlights the benefits of the proposed regulation but warns of its practical challenges.

‘Many things are not going to be able to apply,’ she states, advocating for a more adaptable approach in line with the European Parliament.

She emphasises the need for technical studies and impact analysis, especially considering the varied geographic and demographic realities across Europe.

The retail industry is also grappling with the proposed deposit or fee system for the ‘container return system’.

According to Martinez, this involves withholding a deposit from each customer until the container is returned, necessitating further work to ensure its neutral functionality.

A closer look at sustainability and costs

Lidl, with a 6.1 per cent market share in Spain, supports the system based on their international experience.

The company sees it as an effective way to achieve over 90 per cent selective collection rates for PET (Polyethylene Terephthalate, a type of plastic commonly used for making bottles for beverages) bottles.

However, they acknowledge the need for a life-cycle analysis and consensus among all stakeholders, including the public sector.

Conversely, Francisco Jesus Diaz Cadenas from the Diaz Cadenas Food Group, operating 16 supermarkets in Andalusia, views the implementation as a multifaceted cost.

‘It represents a cost at all levels: factory, cleaning, management, placement and organisation of the bottles,’ he says. Diaz Cadenas fears these costs could ultimately impact consumer prices and internal management processes.

Educational and collaborative approaches

Diaz Cadenas suggests an alternative approach, akin to their current system for cardboard and plastic, where customers deposit packaging in a designated area for collection by a specialised company. This would require educating consumers about the new system, ensuring a smooth transition.

The upcoming regulation presents a complex challenge for European retailers, balancing environmental sustainability with practical implementation and cost considerations. As negotiations continue, the industry seeks a flexible and collaborative approach to meet these ambitious goals.