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Malta's biggest beverage firms are saving money with a free recycling scheme

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ECONOMYECONOMIA 18BCRS Ltd. CEO Edward Chetcuti on the recycling change coming to Malta

It sounds hard to believe. Some of the country’s shrewdest business people, all fierce rivals, have joined forces, investing millions of euros to run a recycling scheme, and they are doing it all for free.

What’s the catch?

It turns out that they are doing it to save a lot of money. Malta’s beverage container recycling scheme, which is scheduled to become operational in the coming weeks, will see 10c added to the cost of most beverages, with consumers able to recoup that same charge by depositing empty bottles and cans into new “reverse vending machines”.

The government has entrusted the scheme to a private operator, BCRS Malta Ltd., whose directors form part of Malta’s largest beverage companies.

From Farsons to Marsovin and General Soft Drinks, these are the same people behind Coke, Pepsi, Kinnie, Cisk and Heineken. Edward Chetcuti, the chief executive officer at BCRS, has conceded that although the project has environmental goals and targets, the main motivation for those behind it is financial. 

In an interview with Times of Malta, Chetcuti said that had the big businesses not teamed up to set up the project, the government would have likely engaged a foreign recycling firm to run it. This would have ultimately cost local importers and producers more money. “So that is why it finally happened, the stakeholders came together and said “we can do this and gain from this as a country and as companies because we are doing it for ourselves rather than someone else doing it for us at a profit.” 

He is tasked with “bringing the operation to life” and explained the project - which was meant to launch in April but was postponed to later this year - at an information session in Valletta this week. An engineer by profession, Chetcuti said BCRS is made up of three associations representing producers, importers and retailers in the beverage industry.

Their mission?

To take the recycling of empty bottles and cans from a measly 20 percent to over 90 percent in just six years. It’s a tall order, but Chetcuti says he is optimistic that it can be achieved. 

Wherever the return vending machine concept has been introduced in most parts of Europe, Chetcuti says, it has succeeded. “Estonia, Norway... you name it, so why should Malta be any different?” he asks. 

If they don’t succeed, the company faces penalties – financial, and the potential loss of their operating licence, for which the stakeholders will fork out around a quarter of a million euros each year.

Making the business case

Explaining the business model, Chetcuti said the scheme will make revenues but these should meet the operational costs. Every year 230 million bottles and cans are put on the market.

Polluters – importers and producers – will initiate a 10c deposit by charging it to the catering establishments and retail outlets stocking their product outlet. These will in turn pass that cost on to the consumer who should then return that container back and get the 10c back.

That’s not all.The importer also pays an administration fee for placing each container on the market. This is per item. So, if an importer puts out a plastic container on the market there is an administration fee of 9 mils. If it is glass it is 3 cents 7 mils, and if it is in an aluminium can it is 7 mils.If an importer puts 1,000 containers on the market, they pay 9 mils by 1,000 which is €90. If a larger importer puts 10 million containers on the market, they pay €900,000.

“The more you put on the market, the more you pay,” Chetcuti explained. Each importer and producer will also pay a nominal €100 to get on the scheme. Finally, the scheme has a product registration process which Chetcuti says is needed to ensure the 10c is only paid back to consumers on containers that had originally paid the amount in the first place. “Production registration process is key. The machine will read the barcode to ensure that it is part of the scheme in the first place,” Chetcuti said.

Dangers to smaller players

While it seems integral to the scheme, it was the introduction of a registration fee that stoked controversy in recent months. 

This fee of €100 per product placed on the market would have financially crippled craft importers and producers who regularly added new products to their offering.

The fee was eventually dropped after the smaller businesses wrote to the government to complain. Chetcuti conceded this was an issue. “There are companies that tend to be the larger ones that have, say, 200 products and don’t change them that often. “And then there are companies with a business model that operate on, say, 30 or 40 products, but change them every few months,” he said.

Without this cash revenue the project now has a hole in its finances. He hinted the government would be stepping in but said the matter had not yet been fully resolved. 

Then came the next battle between smaller businesses and the BCRS – data privacy. BCRS wrote to importers and brewers telling them they would have to hand over information about how much they were placing on the market and how much was ultimately being sold. This was to help them keep track the effectiveness of the scheme.But the smaller businesses, wary of the BCRS’s behemoth backers, argue that handing over that sort of information to their competitors would be commercial suicide. “It is a genuine concern. Everyone has a right to be concerned about what happens to their data,” Chetcuti said.

But he said non-executive directors who sit on the BCRS board will not have access to this data.“Chinese walls” prevent that, he argues, and the company has purchased an IT infrastructure with data security mechanisms. Also, the company would face financial penalties if such a data leak were to occur. On BCRS’s funding, Chetcuti said the €17 million invested came from a mix of bank loans and financing from the businesses involved, with absolutely no government financing. So, what happens if this not-for-profit starts to turn a profit? Chetcuti said that if BCRS’s revenues start to outweigh its cost, then a mechanism kicks in to lower fees paid by importers and producers.

 

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ARTICLE WRITTEN BY TIMES MALTA

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