Bottle Bills

The cooler case may feel warmer now than it has in recent years, but don’t blame a faulty thermostat. Blame the fire stoked by environmentalists and beverage industry lobbyists in their fight over bottle deposits.

Battles over disposable packaging are nothing new to the beverage industry, to be sure, but in recent years two things have changed to bring them back onto the public agenda. First, there’s the sheer size of the beverage industry – it has added billions of bottles of water alone into the waste stream in the past decade. The second is a public that hasn’t been this environmentally hyper since the publication of “Silent Spring.”

As a result, modern consumers are on the warpath when it comes to pushing companies to minimize the negative effects their products have on the environment. The public’s interest in bottle bills is spawned by the same “inconvenient truths” as their interest in carbon neutrality and recycling: the fear that society’s waste could, at some point, via global warming or some other environmental disaster, render the world uninhabitable.

To their credit, beverage companies have responded to their Al Gore-educated consumers by publicly exhibiting their own, individual green credentials. Coke and PepsiCo have made commitments to recycling and carbon footprint reduction. Anheuser-Busch is playing up its own environmental bona fides. But as a unified industry, leaders continue to fight bottle deposit initiatives.

“Singling out beverage containers just doesn’t address the problem,” said Tracey Halliday, director of communications for the American Beverage Association.

Still, the industry is starting to have some defections, as environmentally minded (or simply profit-seeking) beverage companies – particularly in the bottled water crowd, which owes much of its success to a marketing approach that stresses its purity and natural aura – are starting to break ranks. Fiji Water, to name one large example, recently stirred the pot by looking to endorse bottle bills and announcing its intent to go carbon negative.

Currently, 11 states use bottle deposits to encourage their residents to recycle beverage containers. Most of those states passed their laws in the 1970s and 1980s before last century’s first environmental movement ran out of steam. But the proposals have returned in recent years: legislators in seven non-deposit states and the U.S. senate are considering what a nickel could be worth to the environment, and legislators in four states with deposits want to expand their programs.

Environmentalists are sounding a call to action in each of those battlegrounds, emboldened by recent victories in Hawaii and the Pacific Northwest. The Aloha state instituted a deposit system in 2005, and Oregon is scheduled to expand its older version in 2009. With that momentum and the current value consumers place on environmentally friendly practices – a recent survey by A.C. Nielsen revealed that more than half of the consumers polled would give up convenience for environmentally beneficial packaging – why shouldn’t retailers and beverage companies embrace bottle bills?

Ask that question and the flamethrowers come out. According to Halliday, deposits levy a discriminatory tax on an industry that produces only 4 percent of waste streaming into municipal landfills.

“(Bottle deposits) only look at one element of the waste stream,” Halliday said. “They’re not addressing the overall problem.”But that characterization didn’t fly with Scott Callan, a professor of economics at Bentley College.

Callan, who co-authored Environmental Economics and Management: Theory, Policy and Applications, said curbside recycling and deposit programs – as long as they’re run effectively – both represent cost-effective tools for policymakers who want to increase recycling rates.

“The consumer pays the deposit and the consumer gets the deposit back at the end if they do the right thing,” Callan said. “I would have to say the impact of that so-called tax is pretty minimal.”

Halliday said the ABA believes that comprehensive recycling programs are better than deposits, and proven to work – especially where deposits are not in effect. The association claims that those nickel deposits actually hurt curbside recycling. ABA materials cited a 1991 study that said deposits deprive curbside programs of revenue by removing valuable aluminum from recycling bins. Callan agreed that was possible, but said policymakers should treat each program as a tool in a toolbox.

But the industry clearly prefers policymakers to make curbside programs their recycling tool of choice, something Coca-Cola demonstrated in mid-February. The cola giant announced its goal to recover and re-use 100 percent of the aluminum used in its cans sold in the U.S. That goal came without timeline, but Coke backed up its commitment at the Daytona 500, stationing an educational trailer to explain the benefits of recycling to NASCAR fans. Coke previously set a goal to recycle 100 percent of their PET plastic bottles and in 2007 supported that goal with $60 million in recycling initiatives. Those efforts included building the world’s largest bottle-to-bottle recycling plant in Spartanburg, S.C. Pepsi has shined up its own green badge by installing the second largest solar power array in the Northwest at their Eugene, Ore. Offices.

While the industry’s biggest players may be in step with the ABA, out at leading luxury brand Fiji, they’re dancing to a somewhat different tune.

Fiji also supports comprehensive recycling programs across the U.S., according to Fiji Brand Manager Clarence Chia, but the nation’s leading imported water company is also looking to support bottle deposits. Chia said Fiji decided to break with the industry as part of their broader efforts to more-clearly define themselves as an environmentally-friendly company, and lead the charge “for all companies in all industries” to be more conscious of the environment.

Fiji publicly trumpeted that charge when Thomas Mooney, Fiji’s senior vice president of sustainable growth, penned an article on the popular news site The Huffington Post suggesting the unthinkable: that the industry should give bottle deposits another look.

“We need to give all consumers the tools and incentives they need to recycle. It makes a difference,” Mooney wrote. “The 11 states that have container deposit laws account for 60% of recycled bottles in the U.S.”

That sentiment was warmly received by Betty McLaughlin, the executive director of the prodeposit lobbying group, the Container Recycling Institute.

“The old model, where everybody runs up to state capitols and locks horns (is) getting old,” McLaughlin said. “It’s not doing anybody any good aside from the lobbyists. It doesn’t really help with recycling and it doesn’t help with climate change.”

McLaughlin has had it with debating the beverage industry about whether there should be bottle deposits. She’d rather debate how deposits should be implemented. A returnable fee helps consumers act responsibly, she said, especially when it comes to RTD beverages – which are usually consumed outside the home. Those containers rarely make it into home-bound recycling bins, she said, but the fees could be the incentive that prevents bottles and cans from landing in the trash or on the side of the road. As for bottles and cans that wind up on the roadside anyway, McLaughlin said, someone else will likely want the deposit badly enough to pick up that container and return it. Especially, she added, if laws catch up with the times in terms of deposit values.

It’s not that McLaughlin doesn’t admit that bottle bills aren’t perfect. Laws in many states cover only soda and beer containers – and not the new bottled water containers that are amping up the waste stream – she said, and deposit rates and handling fees haven’t been updated to keep up with inflation.McLaughlin argues that the nickel should be a darn sight more. A nickel in 1975 would be worth 21 cents in today’s money, but the drop in incentive goes beyond the nickel’s value. During the 70s, vending machines dispensed cans of soda for about 40 cents each. At that price the deposit – taking the total cost of the 12 oz beverage to 45 cents – would account for about 11 percent of the total purchase price. Today, 20oz bottles can sell for $2 or more, and the still-unchanged deposit accounts for about 2.5 percent of that total. That leaves busy consumers with a vanishingly small incentive to hold on to their empty containers, and that diminishing incentive stretches up the supply chain.

Every nickel paid to a consumer for returning an empty container makes a round trip – at least on paper. Consumers hand the store a nickel when they buy the still-sealed beverage. The store, in return, passes that nickel to the distributor. Then the consumer returns the empty container. The store returns the deposit, and the distributor reimburses the store – adding a small handing fee for the store’s time and trouble in dealing with the empty container. But the key word here is small. The laws dictate that stores be paid a handling fee of 1-3 cents per container, which has remained static just as long as the nickel deposit has.

“It’s hard to find someone that hasn’t had a raise in 30 years,” McLaughlin said. That low handling fee has also made it difficult for standalone redemption centers to stay in business.

In New York, the climate for redemption centers could improve if legislators there pass a bill currently active in the General Assembly. The bill would increase the state’s handling fee from 2 cents per container to 3.5 cents per container, and expand the state’s bottle bill to cover a broader range of beverages. That last part makes Jim Calvin nervous.

Calvin, the president of the New York Association of Convenience Stores, said store operators already struggle under the burden of returned beer and soda containers. Their stores are already packed tight, Calvin said, and they don’t need –or want –to handle empty sports drink, juice and bottled water containers.

Store operators have few options, Calvin said, and most can’t afford machines to accept and process containers for them. Even if they could, he said, the noise generated by reverse vending machines make them a prohibitive nuisance in a 3,000 square foot store.

That leaves clerks to handle each return by hand, Calvin said, creating delays in a venue where consumers demand rapid service. It also leaves store operators with the problem of stashing full-sized empty containers at a time when they are trying to increase their fresh food offerings. Calvin said separating empty containers from fresh food – both physically and mentally – poses a problem. Stacks of stinky, moldy, bottles and cans don’t exactly fit with the “fresh” image, he said. “A handling fee of any amount would not eliminate the problem of insufficient storage space or the problem of compromised sanitation,” Calvin said. “It’s a nuisance that convenience store operators deal with because they’re obligated to deal with it under the law.” Calvin said that he’s been happy that convenience stores and their beverage industry allies have been able to defeat the New York proposal in the last four years. He feels like bottle-bill supporters are trying to shove the burden of dealing with returned containers onto retailers. He said he would rather see the state establish a network of redemption centers before expanding the law. He did not, however, have any idea how the state could do that.

McLaughlin called Calvin’s idea impractical. Investors, she said, couldn’t be expected to open a business that would be dependent on not-yet passed legislation, but she said she sympathized with convenience store owners. To a point.

“You can make the decision to sell it or not sell it,” McLaughlin said, and if stores decide to sell beverages –as most do – “they have to accept the responsibility for taking the stuff back.”