Beer can comeback

German food discount chain Penny, a member of the Rewe Group, is re-introducing beer and soft drinks in recyclable deposit cans. The rollout is already underway in North Rhine Westphalia.

Penny is the first big food discounter in the country to offer beverages in aluminum cans after they nearly disappeared at the beginning of 2003.

Mandatory deposit

Back then, deposits of between 25 and 50 euro cents became mandatory for all beers, fizzy soft drinks and mineral waters packaged in disposable cans or bottles. The system was triggered when the market share of refillable beverage containers fell below the 72 percent level mandated in Germany's 1991 packaging law.

For years, food retailers and manufacturers of one-way beverage containers fought the scheme. Many pointed to a string of flaws, particularly the lack of a clearing system, forcing consumers to return their containers to the store of purchase to collect their deposit.

Prior to 2003, more than eight billion cans of beverages were sold in Germany. But shortly after the deposits kicked in without a clearing system, most food retailers removed one-way beverage containers from their shelves. Although numerous service stations and kiosks at train stations have continued to sell canned drinks, many consumers view their prices as "astronomical."

Since then, German policymakers have amended the packing legislation. Among the key changes: all retailers that sell beverages in disposable cans or bottles must accept containers sold by other retailers and return the deposit. A special clearing house, the Deutsche Pfandgesellschaft, has been set up to coordinate this process.

In addition, the deposit has been set at 25 euro cents per container.

Gain a competitive edge

In the fiercely competitive German food retail market, Penny now hopes to gain an edge by being the first big food retailer to offer an assortment of beer in deposit cans in addition to popular soft drinks such as Coca-Cola and Red Bull. But the company is putting a slightly different spin on its key motive.

"We want to give consumers options," Rewe spokesman Andreas Kraemer told Deutsche Welle. "The can is a robust form of packaging that we wish to offer in addition to glass, PET (plastic bottles) and cartons."

Penny notes that cans have been redesigned to reduce their weight by 30 percent. They also allow beverages to be more easily refrigerated, thus saving energy. Perhaps even more importantly, the recycling rate of one-way containers in Germany has increased from 36 percent in the 1990s to 96 percent today.

Experts agree the deposit charged on one-way recyclable containers has significantly helped reduce littering in Germany and also make better use of resources. "Nearly all one-way beverage containers thrown away today find people willing to collect and return them for the recycling deposit," Peter Feller, managing director of the Federation of German Food and Drink Industries (BVE), told Deutsche Welle.

Even environmentalists agree that Germany has done its homework in this area. "Collection and recycling systems are available today, as well as a deposit scheme," said Juergen Resch, managing director of the German Environmental Aid (DUH) organization. "Everything is now in place for an environmentally-friendly market entry of canned beverages."

Whether rival food discounters Aldi and Lidl or any of the other large German supermarket chains will follow Penny's lead is unclear. All are mum for now. But experts doubt they will stay silent for long.

"If Penny is successful, you can bet the others will follow," Feller said.

Cutting profit margins

But will consumers follow en masse? The 25 euro cent deposit is a cost factor for consumers and retailers alike. Retailers will need to incorporate the fee into their pricing strategies, keeping a close eye on their profit margin, which they can cut only so far.

If the price is right, however, consumers will nibble at offers, and some may even gulp them down.

Consumer Jorgo Thriskos in Dusseldorf welcomes the option. "At home, I'm not going to buy beer in cans – it will still be too expensive and, beside, I prefer glass bottles if I have a choice," he said. "But for a train trip or some event where I don't want to lug around bottles, I'd definitely take cans. They're more convenient."

Convenience, however, is what put throw-away cans and bottles on the radar screen of environmental officials in the first place. Alarm bells had rung at the German Environment Ministry when the level of returnable containers had dropped below the set level in 2002 and showed no sign of bouncing back without government intervention.

So should the ministry be worried now as cans return to the shelves of one of Germany's biggest food retailers? "Of course, we will observe this development but we are not concerned," an Environment Ministry spokesman said, pointing to the current deposit and return system and the overall high level of beverage container recycling in the country.

Rewe's Kraemer agrees that much has changed in Germany since canned beverages became increasingly popular several years ago, resulting in government action. "There will be demand for cans," he said, "but whether we will ever reach the pre-2003 level is questionable."

Author: John Blau
Editor: Sam Edmonds