United Kingdom: 'Net Zero tax' reshaping beer industry

Glass beer bottles could disappear from UK shelves due to the government's new 'Net Zero tax,' a policy under the Extended Producer Responsibility (EPR) scheme. Starting in April, the initiative aims to reduce the use of heavier packaging materials, such as glass, by imposing a 5p (USD 0.06) production surcharge per bottle. This cost increase is expected to push many brewers toward aluminum cans, fundamentally altering Britain's beer market.

Classic beer bottle designs, including Newcastle Brown Ale’s pint bottle and the porcelain-topped Grolsch flask, face potential extinction. Even Corona’s iconic lime-in-the-neck presentation might be abandoned. The shift away from glass threatens decades of beer-drinking traditions.

According to Emma McClarkin, Chief Executive of the British Beer & Pub Association, the scheme could add GBP 160 million (USD 197 million) to sector costs. With brewers operating on razor-thin margins of 2p per bottle, she warned the new tax would increase costs for consumers and place unsustainable financial pressure on manufacturers.

The broader implications extend beyond brewers. Dave Dalton, CEO of British Glass, emphasized that the EPR scheme jeopardizes 120,000 UK jobs tied to the glass supply chain. He cautioned that once additional costs and VAT are considered, the financial burden could be even greater.

While the Department for Environment, Food and Rural Affairs defends the initiative, citing expected recycling investments exceeding GBP 10 billion (USD 12.3 billion) and the creation of 21,000 new jobs, industry leaders remain unconvinced. Critics argue that the plan shifts costs unfairly from taxpayers to producers and risks escalating grocery bills by GBP 56 (USD 69) annually per household.

The move highlights the complex relationship between environmental goals and fiscal policies. Tax incentives and penalties tied to decarbonization, such as those under EPR, are becoming central to Environmental, Social, and Governance (ESG) strategies across industries, as detailed in a recent KPMG report.

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