ERLIN, March 4 — A new deposit law on cans and
bottles has sharply reduced beverage sales, causing at least a
temporary hardship in a $15 billion industry at a time when
the German economy may be on the brink of a recession.
"It's chaos," said Christian Berner, chairman of
Lekkerland-Tobaccoland, a wholesaler that handles about half
the 1.5 billion canned drinks sold in Germany each year. Mr.
Berner said his company's sales had fallen 30 percent since
the law took effect on Jan. 1.
Makers of cans and bottles are reporting 20 percent to 60
percent drops in sales.
Since Jan. 1, customers have had to pay a deposit on all
carbonated soft drinks as well as beer sold in cans or plastic
bottles. The deposit ranges from 0.25 euro to 0.50 euro a
container (27 to 54 cents), depending on its size, much higher
than the 5-cent deposit in many American states.
The new law is meant to stem the growing popularity of
disposable containers at the expense of refillable glass
bottles, which have been covered by a deposit law for years.
And it appears to be slowly working. Some of the lost demand
for canned drinks has already shifted to refillables, and
industry analysts expect overall sales to return to previous
But for now, the spirit of Oktoberfest is in hibernation.
"We're missing 20 percent of the beer drinkers," said Udo
Frank, a spokesman for Holsten-Brauerei, Germany's largest
beer maker with about 8 percent of the market. Holsten has
scaled back production and reduced working hours for almost a
quarter of its 2,640 employees.
For Germany, where recycling is practically a national
religion, government regulation is plentiful and planning is
prized, the tumult has come as something of a shock.
Supporters of the law say that the beverage industry had
more than enough time to prepare but chose to spend the time
fighting a losing battle against the law. Many companies put
off making the required investments, hoping that a favorable
ruling in a series of legal challenges or a victory by Edmund
Stoiber and his industry-friendly Christian Democrats in
national elections in November would make them unnecessary.
As a result, when Jan. 1 arrived, there was no nationwide
return system in place for the disposable containers, as there
is for refillable packaging. Consumers were faced with having
to return used containers to the store where they were
purchased and show a sales receipt to prove it, or forfeit the
It will be autumn at the earliest before a nationwide
return system will be in place, industry executives say. In
the meantime, beverage retailers like Getränke Hoffmann are
struggling to cope with piles of returned containers. "This is
going to smell pretty bad come summer," said Axel Zahsack, an
employee at a Berlin branch of the beverage retailer, as he
moved sacks of used bottles and cans that had piled up in the
back of the store.
Schmalbach-Lubeca, the largest maker of drink cans in
Germany, may be the company hardest hit by the law. Recently
acquired by the Ball
Corporation, the American packaging conglomerate,
Schmalbach-Lubeca depends on the German market for a third of
its annual sales of 1 billion euros, and those sales are down
60 percent since the law took effect. The company has begun
rotating plant closings and furloughing employees without pay;
even so, it expects to lose 50 million euros in the first
Retailers, who are in the front lines dealing with the new
law's consequences, are watching competitors to make sure they
are complying. Rivals have already filed suit against Wal-Mart
Germany, accusing it of refunding deposits to customers
without requiring them to actually return the containers. In a
statement, Wal-Mart denied the charge.
The growing volume of returned containers represents a new
business opportunity, but who will be able to seize it is
still unclear. In the fall of 2002, investors bid up shares of
Tomra Systems, the Norwegian company that dominates the
worldwide market for "reverse vending machines," devices that
let consumers return containers; Germany is thought to need
some 30,000 of the machines.
But Tomra's stock fell 40 percent on the day in late
January when the German beverage industry selected an untested
new technical standard for handling the returns. Tomra must
now compete with companies like Trautwein Sb-Technik, MRV and
Prokent to develop machines that can accommodate the new
Some retailers, including the huge discount supermarket
chain Aldi, initially reacted to the law by simply refusing to
sell carbonated drinks in cans or plastic bottles. Now Aldi is
slowly reintroducing the products with a small Aldi recycling
logo on the label that allows customers to return them to any
Aldi store without needing to show a receipt. Other chains are
The new deposit law grows out of a 1991 recycling law that
set a ceiling on the percentage of deposit-free containers on
the market. In recent years, growing price competition and
aggressive marketing drove the market share of these
containers up to almost twice the allowed limit.
Many industry executives expect consumers to resume their
past consumption habits once a nationwide return system is
operating and deposit containers can be cashed in conveniently
"We just can't believe that Germans are drinking less beer
just because they have to bring the can back," said Mr. Frank
of Holsten-Brauerei. "At some point, their thirst will be
greater than their irritation."