This article is excerpted with minor edits from a section of the report Reduce, Reuse, Refill! published by the Washington-based Institute for Local Self-Reliance in April 2002. The full report is posted on our web site (www.solidwastemag.com). The study primarily addresses management systems for single-serve beverage-containers (soft drinks, water, beer, etc.) in different countries, and the results of different life-cycle analyses. (Also, please read the editorial “Message in a Bottle” on page 4, which addresses these issues.)
Once a beverage-container refilling system has been established, bottlers can earn a return on their investments. For bottlers, the essential cost savings from refilling come through “trippage.” To attain the trippage required to reap these cost savings, bottlers depend on consumers’ returning their empty bottles. In almost all refilling systems that exist, consumers return their bottles to stores. Therefore, the success of any refilling system depends on the cooperation of retailers. Because retailers would much rather stock beverages in one-way containers, inducing their cooperation is easier when their costs of handling bottles are addressed.
Bottlers: The reuse of containers several times rewards bottlers more than any other actor in the packaging chain. Although a refillable container initially costs the bottler more than its one-way counterpart, the cost per-filling of the refillable container is less. To illustrate this point, consider the typical costs of 500-ml beverage containers in Europe that are shown in the table.
The table shows that the cost-per-filling of the refillable PET bottle making 20 trips is 0.007 Euro, which is about one-tenth of the cost-per-filling of the one-way bottle. The cost-per-filling of the refillable glass bottle making 20 trips is 0.005 Euro, which is about one-twentieth of the cost-per-filling of the aluminum can.
Comparing one-way to refillable containers requires examining not only the costs of the containers themselves but also the costs of labor. A study involving 1-liter juice containers — cartons, one-way glass bottles, and refillable glass bottles — concluded the following:
— Refilling glass bottles costs less than packaging juices in cartons, the least-expensive one-way packaging option that the study considered.
— The most expensive option is one-way glass bottles.
— For refillable glass bottles, 50 per cent of the cost of production is labor, and only 20 per cent is packaging. Most of that 20 per cent involves caps and labels.
— For production with one-way containers, more than 50 per cent of the cost is packaging.
The findings of this study may suggest that the extra labor costs incurred by refilling can be offset by the reduced packaging costs. Another cost comparison, one which in- vestigated the bottling and distribution of soft drinks in refillable and one-way PET bottles, found that the cost-per-filling is about four cents less for the refillables.
Production rates are another important aspect of the economics of packaging beverages. Because filling machines for one-way PET bottles can be used for refillable PET bottles, the production rates for refillables will match the rates for one-way bottles of the same size if empty refillable bottles enter the filling line at the same rate that new one-way bottles do. If that filling line originally processed 2-liter one-way bottles, however, then processing 1.5-liter refillables on it will result in a slower rate per unit volume.
Retailers: Selling beverages in refillable containers is expensive for retailers, who are stuck with managing a deposit-return system for the containers and with almost no inherent way to make profits from such a system. For the retailer, half of the cost involves managing a deposit-return system and the other half entails storage space for both full and empty containers. Deposit-return systems not only occupy valuable retail space but also incur labor and other operating costs. Automatic take-back machines, which are widely used in Europe, can minimize or eliminate labor costs. In spite of automation, however, retailers who sell beverages in refillables still have bottle-handling costs. In some European countries, the beer and soft-drink industries compensate retailers for the costs of stocking beverages in refillable containers and for the costs of handling empty containers. Such arrangements have worked well in markets with only a few large bottlers and a few large retailers.
Finland’s breweries, mainly the four largest, deliver beverages directly to stores, retrieve the empty bottles, and pay them a handling fee of 0.15-0.17 FMK per bottle. The stores’ actual handling costs range from 0.08 FMK to 0.30 FMK per bottle. Instead of receiving a handling fee from the bottler, the retailer could keep part of the consumer’s deposit as a handling fee. Another example of bottler-retailer cooperation is found in Denmark, where brewers and soft-drink bottlers recently established a non-profit organization to provide technical assistance to retailers and to administer the payment of bottle-handling fees to retailers.
Deposit-return systems for refillable containers can cut costs for retailers. Brewers Retail, Inc., (BRI) also known as The Beer Store, is Ontario’s leading beer retailer. BRI and Ontario brewers together operate a deposit-return system for refillable bottles which facilitates the recovery of almost all secondary and transport packaging. BRI’s recovery operations reduced its waste disposal costs from a peak of C$1,500,000 in 1992 to only C$129,000 in 1994. By recovering almost all of its post-consumer packaging — plastic bags, beer cans, and even bottle caps — in addition to its secondary and transport packaging, the Ontario beer industry has earned a noteworthy reputation for its packaging stewardship.
Systemwide: Cost-benefit analysis (CBA) studies can provide the best cost comparisons between refilling and non-refilling beverage packaging systems. In 2001, the consulting firms RDC-Environment and Pira International completed a CBA study for the European Commission (EC), who intended to use the findings to set new recovery targets for the EC Directive on Packaging and Packaging Waste. This study compared 330-ml refillable glass bottles with one-way glass bottles of the same size by considering the costs of container manufacture, filling, distribution, retailing, and waste management under certain assumptions. The study concluded that refillable glass bottles cost less than one-way glass bottles whenever the distance from the bottling plant to the warehouse is less than 125 km with 20 trips for the refillable bottles and a 91 per cent recycling rate for the one-way bottles. The study modeled various scenarios with similar results.
The results of this comparison suggest that refilling can be less expensive than recycling in settings in which industry legally or voluntarily assumes responsibility for its packaging waste.
Benefits to Society
Refilling can put more money in people’s pockets by reducing the prices of beverages, cutting the public costs of waste management, and increasing employment.
Consumers: Although refilling can cost less to beverage companies, they may not necessarily pass the cost savings to the consumer. Marketing strategies rather than production costs often affect beverage prices. Some evidence and opinion suggest that consumers generally pay less for beverages in refillable containers. This conclusion was reached by a 1976 U.S. EPA study and by a survey conducted by the National Environmental Law Center in 1992. Moreover, an Austrian consumer information association says that the price-per-liter of soda pop is usually less in refillable bottles than in one-way bottles.
Anecdotal evidence further indicates that beverages in refillable containers cost less to consumers. In Norway, without taxes or deposits, the cost-per-liter of lager in 330-ml refillable glass bottles
is 0.51 Euro less than the cost-per-liter in 500-ml cans. This price advantage for refillables affects a significant portion of Norway’s beer market, where 91 per cent of beer is lager, about 30 per cent of beer is sold in 330-ml refillable bottles, and about 31 per cent is sold in 500-ml cans.
Beer drinkers in New Brunswick, Canada pay one cent per liter less for beer in refillable glass bottles than they do for canned beer. In Latin America, the use of the refillable PET bottle makes soft drinks affordable to more consumers. In Mexico, the price of soda pop in a refillable bottle is about 18 per cent less than the price of the same product in a one-way bottle of the same size. In stores near Mexico City, Coke in a 2-liter refillable PET bottle costs 11 Pesos but costs 13 Pesos in a 2-liter one-way PET bottle. In Argentina, consumers pay 25 per cent less for Coke in a 1.5-liter refillable bottle than for Coke in a one-way PET bottle of the same size. (By reducing the prices of packaged beverages and making them affordable to more people, refilling can increase retailers’ sales of packaged beverages.) Another bit of evidence suggests that refillables may cost more to the consumer. For home delivery from Marcus Dairy of Danbury, Connecticut, a half-gallon of milk costs $2.13 in a carton or a one-way plastic jug but costs $2.39 in a refillable glass bottle. This cost figure for the refillable bottle does not include the $1.75 deposit.
From these bits of anecdotal evidence, the best conclusions that we can draw are the following. Where refillable containers are prevalent, the prices of beverages in refillables are less than or equal to the prices in one-way containers. In markets where refillable containers are rare, consumers may pay more but not much more.
Taxpayers: Refilling not only cuts the costs of packaged beverages but also cuts the costs of waste management. By removing them from the municipal solid waste stream, refilling transfers the costs of managing beverage containers from the taxpayer to the producer. These costs are significant because beverage containers occupy a significant amount of space in city and county trash and recycling collections. Some facts and figures from Canada illustrate the burdens that beverage containers put on taxpayers.
In a typical curbside recycling program in Ontario, PET occupies about 20 to 25 per cent of the volumetric capacity. The significant volume of PET in recycling collections and its low market value contribute to the high costs of managing discarded PET containers. At one time during the mid-1990s, in fact, the provincial auditor reported that collecting PET by curbside recycling was costing Ontario C$1,800 per tonne. Other cost estimates for managing discarded PET containers are $1,100 per tonne for net recycling costs and $400 per tonne for volume-adjusted landfilling costs. With these costs and a 50 per cent recycling rate, the management of 360-million one-way PET soft-drink bottles costs Ontario municipalities about $12-million (Canadian) per year. Local governments would save millions, therefore, if the soft-drink industry used refillable PET bottles.
Because a simple deposit law for recycling one-way containers can also remove beverage containers from the municipal waste stream, the effects of such a law on curbside recycling are like those of refilling. With that thought in mind, let us consider some more facts and figures from Ontario.
According to the City of Toronto’s data, beverage containers occupy about half of the volume of the city’s recycling collections. With a deposit law for all beverage containers, the city’s curbside recycling program could have only one collection day per month instead of nine and thus save C$900,000 per year. With the money saved, the city could hire 21 more police officers if it needed them. Although the numbers would be different for other cities, they could benefit in a similar way from refilling. Rather than reduce recycling programs, counties and cities could use the capacity vacated by beverage containers to collect other materials that make up a significant portion of the waste stream. These materials include yard trimmings and food scraps for composting, electronics, appliances, and building materials. Diverting these materials from landfills can bring additional savings for local governments.
Workers: Refilling also can generate tax revenue by putting people to work. Although the processes for recovering, handling, washing, and inspecting refillable containers are highly automated, refilling often requires more labor than filling one-way containers. Recovering, washing, and processing refillable glass beer bottles employs over 2,000 persons in Ontario. A 1993 study by Andreas Golding, author of the European Commission report Reuse of Primary Packaging, concluded that refilling creates many more jobs than using one-way containers does. Of the 161,000 jobs that were directly connected to the manufacture and filling of beverage containers and to the distribution and selling of packaged beverages in Germany, 73 per cent involved refillable containers. In that setting, 27,000 new jobs would be created by moving completely to refilling. If one-way containers completely overtook refillables, then 53,000 jobs would be lost. One new job in the one-way sector eliminates nine jobs in the reuse sector, according to the European Environmental Bureau.
Guy Crittenden is editor-in-chief of this magazine. The full report Reduce, Reuse, Refill! is posted as a downloadable pdf file on our web site at www.solidwastemag.com