Ireland’s can filling sectors face up to mandatory recycling regimes
Maybe the most famous canned product made in Ireland –canned Guinness stout. Image: EMSTUDIOSng
By Mark Godfrey in Dublin
A new national mandatory recycling regime announced last November (2022) being introduced by Ireland’s government has local breweries shying away from canned beer formats.
“We wouldn’t consider cans now because the DRS [deposit return scheme] is punitive in its execution,” said Richard Siberry, founder, general manager and head brewer of Roscommon-based Black Donkey Brewing, a craft brewer with nationwide sales.
The scheme, which should operate from February 2024, will add labelling costs for brewers using cans, said Siberry. “You need new labels, new barcodes; if you are exporting you need a different barcode. There are only two printers in Ireland able to do the labelling required, as opposed to 15 who can’t.”
Moreover, he said: “You have to put money aside to fund the DRS: that’s €0.15 per can, which would be €15,000 per week. Any brewery with a shop will be obliged to take cans back, and you can’t crush them as they must be fed into a machine.”
Tom Giddings, executive director of UK-based trade body the Aluminium Packaging Recycling Organisation (Alupro), which has Irish members, and who has also been watching the scheme, said: “While we’re happy that the Irish government’s scheme is producer-led and has a variable rate, we’re disappointed that it excludes glass.
“We believe that a well-designed DRS can offer widespread benefits and, in time, lead to an increase in recycling rates,” he said.
Indeed, said Giddings, best practice from successful schemes operational in other countries (such as Norway, for example) suggest that an ‘all-in’ mechanism for packaging materials is most effective, “resulting in maximum benefit and maximum impact.” As such, experience suggests that glass bottles should be subject to the same targets, at the same pace, as PET (polyethylene terephthalate) and aluminium, to ensure a fair and level playing field.
Giddings had written to Ireland’s environment minister, Eamon Ryan, in 2021, to request a scheme that put variable costs on variable materials so that materials like aluminium would not subsidise a less valuable or harder-to-recycle material.
The experience gained by Irish can makers and fillers may be useful, however, as the European Union (EU) is debating imposing EU-wide rules mandating similar schemes in all member states.
“The indication that DRS will be present everywhere by 2029 is welcome news, so long as the systems are well designed and can add value to the can collection economy… As EU targets loom, we’re confident that cans will compete well under a balanced system,” said Giddings.
As regards the alcoholic product can segment, fillers and their suppliers are also having to contend with another set of restrictions imposing minimum unit pricing requirements introduced in 2022 under the Public Health (Alcohol) Act.
Aimed at preventing retailers from selling slabs of cheap beer cans especially, the law puts a floor of €0.10 per gram of alcohol for sales of alcohol cans or bottles. That said, alcohol sales are rising, with 2022 data released by the Revenue Commissioners showing consumption in Ireland was 10.2 litres of alcohol per capita, up 7.6% compared to 2021. Beer consumption increased by 11.6% in 2022 year-on-year, although consumption of cider – another key canned product – stayed flat.
Ireland is home to a key player in the global beverage can industry: the Dublin-based Ardagh Group, which, in a 27 April briefing by the company, CEO and CFO pointed to “resilient nonalcoholic consumption, with particular strength in the energy [drinks] segment.”
Despite the 2022 increase in sales, Ardagh said the beer market by contrast was weaker, suffering from “consumer inflationary pressure,” with inflation in Ireland being 7.7% in March. Ardagh’s sales growth of aluminium cans in Europe remains sluggish at 2% year-on-year for the first quarter of 2023, said the CEO/CFO briefing, compared to a 4% sales increase in the Americas.
The company, which currently has no can making plant in Ireland, points to environmental regulations as likely to fuel future growth, given the recyclability of metal cans, especially the packaging and packaging waste regulation under consideration in the EU. This increased demand will be met partly on the island of Ireland, with Ardagh planning to open a GBP£140 million ($200m) metal can manufacturing plant in County Antrim, Northern Ireland.
International major, Crown, has transit packaging service centres in Kilkenny and Gorey, in the Republic. Ball Corporation manufactures can ends at its plant in Waterford.
But it is two other events that have really shaken Ireland’s can segment; in recent years, Brexit and Covid-19 have also shaped demand for metal packaging. The pandemic and subsequent cost-ofliving crisis also boosted the fortunes of discount retailers.
Brexit has caused headaches for the import and export of canned products into and out of Ireland – to and from the UK and the rest of the remaining EU. Here, a protest in Cork by Republic of Ireland main opposition party Sinn Féin, a party elected to share power with unionists in Northern Ireland. Image: Sinn Féin
It is the market for canned goods that is most important in Ireland, however. Here, the growth of two large German retail chains, Aldi and Lidl, both stocking significant numbers of canned lines, is important. They went from a combined market share of grocery sales which includes alcohol of 13.6% in 2013 to 25.4% in the 12 weeks to 16 April (2023), according to London-based market research firm, Kantar.
Ireland supermarket major, Dunnes Stores, had a 23% market share of total Ireland grocery spend in the 12 weeks to 16 April.
Visits to Aldi and Lidl stores in Claremorris and Castlerea for this article revealed a larger presence of tinned options than neighbouring outlets of Ireland-based SuperValu, which had a 20.7% market share in the 12 weeks to 16 April. The rise of discounters, (who offer a more limited selection of products than Dunnes Stores and SuperValu, but larger offerings of canned fish, meats and vegetables), is attractive in a country whose grocery prices remain high by EU standards. Last year (2022), the Central Statistics Office found that Irish prices for milk, cheese and eggs were on average 25% higher than the corresponding EU average. In 2022, Ireland boasted the second highest prices in the EU (after Luxembourg), with alcohol prices here just over double the average price in the 27 member states.
Such a discrepancy suggests discounters could grow their market share – with canned goods sales rising accordingly. Food and beverage price annual inflation in March (2023) was 13.1%.
During the Covid-19 pandemic, aluminium packaging volumes grew strongly in Ireland, according to Giddings. “However, due in part to a reduction in the number of people purchasing beverage cans for consumption in the home following the lifting of restrictions [on movement and social distancing], volumes have since levelled off.”
Pandemic lockdowns created trends towards greater pet ownership which boosted the country’s canned pet food industry: Longford-based C&D, part of the bigger ABP Food Group, is one of Europe’s top ten producers.
C&D is a member of FEDIAF, a trade body representing the European pet food industry and one of 120 trade bodies to pen a letter recently to the European Commission protesting at what it said were “unilateral, divergent national packaging requirements” by member states on reuse and recycle targets – an issue likely to be resolved by the reforms under discussion. Market researcher, Euromonitor, predicts the pet food market in Ireland is forecast to reach $146.07m (in retail prices), thus increasing at a CAGR (Compound Annual Growth Rate) of 1.44% per annum for the period 2020-2024.
The impact of Brexit on the Irish can manufacturing and filling sector appears to have manifested itself most strongly in the fish industry. Access to stocks of key species such as mackerel has been limited by a deal which saw Ireland contribute the single largest share (40%) of fish stocks handed to Britain under the deal.
The country’s sole fish canner, Donegal-based Irish Fish Canners, is predominately a co-packing business for market leader John West Foods (part of Thai Union Group). Yet the firm faces a crunch in local supply for its own range of premium quality canned mackerel under the Irish Atlantic Canned Fish brand, according to chief executive officer of the Irish Fish Producers Organisation (IFPO), Aodh O Donnell.
He said at €1.3 billion, the value of the entire Irish seafood sector is 20 times smaller than the value of Norwegian seafood exports. Since Brexit, the UK – along with Norway, the Faroe Islands and Iceland – has been “fishing an unfair share of pelagic species” like mackerel and blue whiting, claims O Donnell. This has left smaller volumes for Irish fishermen who are now being offered buyouts to scrap their vessels under an EU-funded Brexit compensation scheme.
With Brexit otherwise largely having vanished from the media and political agenda in Ireland, the economy has rebounded strongly after the pandemic. The government posted a surplus of €8bn in 2022, compared to a deficit of €6.8bn in 2021, as corporate tax takings surged. The surplus is bigger than the €1.9bn posted in 2019 yet the country also has one of the highest debt to GDP ratios of any western economy, at 48%.
Economist at Dublin stockbroker Davy, Conall Mac Coille, is bullish about Irish consumer spending in 2023: “The rapid pace of jobs growth, rising wages, temporary income supports and a small cut in the savings ratio to 20 per cent have helped households sustain spending,” he said. Mac Coille is projecting Irish consumer spending to grow 2.2% in 2023.
Meanwhile, as Ireland readies the introduction of its DRS scheme, the country will also have to look at implementing other EU requirements to reduce packaging waste.
In a position paper on the EU’s packaging and packaging waste regulation (PPWR) proposal, the Association of European Producers of Steel for Packaging (Apeal) said it “fully supports” an EU Commission objective that all packaging on the EU market be reusable or recyclable in an economically viable way by 2030.
Alexis van Maercke, secretary general of Apeal, in comments for this article, said his organisation also welcomed the introduction of a set of so-called ‘recyclability performance grades’ based on design for recycling criteria – with steel given an ‘A’ grade and harder to recycle plastics labelled as ‘E.’
“Bearing in mind the new PPWR regulations and updated recycling rate calculation methodology, I believe that steel packaging will certainly continue to rise in popularity,” said van Maercke. “Steel is a permanent material that is circular by nature and its magnetic properties make steel easy to collect from any waste stream.”
With Ireland no longer being a primary producer of steel (or aluminium), flows of can-making metals will have to come via recycling and reuse waste streams.
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