Returnable glass packaging in Eastern Europe: pros and cons
Over the last few years Eastern European consumers have become more educated and aware of ecological issues within packaging, such as biodegradable, ecological, reusable and recyclable packaging. However, in many Easter European countries the reality is that ecological aspects of packaging are more theory than reality. However there is one well-known aspect of ecological thinking which is widely known and applicable in many Eastern European countries – returnable glass packaging.
In most Eastern European countries that have facilities for returnable glass bottles, such as Czech Republic, Poland, and Ukraine, the majority of returnable glass can be found in alcoholic drinks packaging, rather than soft drinks packaging. Whilst returnable glass has a long history in Eastern Europe, many countries are seeing a move towards one-trip bottles. Here Euromonitor International highlights the returnables market in some key Eastern European countries to find out the reasons why.
The high price point of products in returnable glass bottles in the Czech Republic is the main barrier to growth of this pack type. Beverages manufacturers are faced with increasing pressure from retail chains to lower the unit price. This negatively affects usage of returnables as the deposit system increases the final beverage price when being purchased. There is also currently no legislation addressing the returnable system for glass packaging in the Czech Republic and hence manufacturers and retailers are under no obligation to produce, sell or collect returnable packaging. As a result manufacturers tend to avoid using returnable packaging for new product launches and brand extensions.
A further obstacle to good performance of the returnable system is the deposit level. The deposit for returnable bottles is currently CZK3 per bottle (EUR0.12). Thus low price fails to motivate users to make returns, especially when returning only a small number of bottles at a time. Moreover, for smaller retailers collecting used returnable bottles is inconvenient; they require storage space, labour costs and energy consumption. As a result the number of sites accepting returnables has decreased. Currently only hypermarkets (and some supermarkets) in the Czech Republic accept all kinds of glass returnables.
Finally glass bottles are under pressure from cheaper PET bottles. These are not returnable and do not carry a deposit, and can therefore provide a lower unit price for the product.
Poland, similar to Czech Republic, is also facing a decrease in use of returnable glass bottles each year. Here an inefficient returnable trading system is a core reason for the weakening position of returnable bottles. According to the Polish legislation on packaging and packaging waste, all retail units are obliged to accept the return of reusable packaging used for products that are in their trade offer. Stores should accept returnable bottles without requiring the consumer to present any receipt or any other proof of having purchased the product. However this law is commonly violated, which is evident from the cards displayed at many stores with inscriptions such as ‘Returnable bottles will be accepted only after showing product purchase receipt’.
This move by retailers to require proof of purchase before refunding a deposit makes the returnable system inconvenient for consumers, discouraging them for purchasing beer in returnable packaging.
As a result of these difficulties producers, mainly beer manufacturers, have tended to shift to non-returnable bottles which have fewer distribution problems. Moreover, they are lighter, thus more convenient to transport than much heavier returnable bottles. This has resulted in returnables falling from 47% of the alcoholic drinks glass market in 2004 to 41% in 2010.
In the Ukraine manufacturers have offered lightweight non-returnable glass bottles as a convenient alternative to heavy returnable bottles, a move that has been well accepted by consumers. These lightweight bottles, being more fragile, are not suitable for returnable systems and some of these newer lightweight bottles have been banned from the returnable system to prevent accidents during the refilling process.
In addition, increasing collection, transportation and washing costs for returnable bottles have had a negative impact on returnable rate. In the absence of any government support for companies that collect returnable glass bottles, companies have tried to regain losses through offering lower deposits. This further reduces incentives for people to return empty glass bottles to collection points.
There is a further important factor influencing returnable rate for glass bottles. To increase brand differentiation, and in some cases to reduce counterfeiting, manufacturers have developed unique bottle shapes and designs. Whilst this had the benefit on standing out from competitors, these new designed bottles will not pass through the returnable system. This trend had been particularly prevalent in vodka and brandy packaging.