Cash for bottles shakes up sector

Liquor companies protest the Environment Ministry’s decision to raise cash payments for used soju and beer bottles starting next year, claiming the products’ retail prices will rise. [JOONGANG ILBO]

The Environment Ministry’s decision to raise cash payments for used soju and beer bottles starting next year faces a slew of challenges, including protests from liquor companies, concerns about bottle supplies and worries that prices could rise as a result.

On Sept. 3, the ministry announced a new cash-for-bottles recycling plan, in which liquor makers would pay more for returned, used bottles.

The refunded deposits, as they are called, will rise from 40 won (36 cents) for a 360-mililiter (1.5-cup) soju bottle to 100 won, and from 50 won for 500-mililiter and 600-mililiter beer bottles to 130 won.

A recycling commission that liquor companies pay wholesale and retail distributors, such as restaurants and department stores, or individual brokers who collect empty bottles, will be raised from 16 won to 33 won for soju bottles and from 19 won to 33 won for beer bottles.

The ministry believes the bigger payments for empties will encourage recycling.

Currently, about 85 percent of nearly nine billion bottles used every year are returned to the makers, according to government data. The ministry expects the rate to rise to 95 percent under the new policy.

“As the cash returns and commissions haven’t been raised for the past 22 years, junk shop owners and consumers didn’t have much interest in returning bottles,” a ministry official said. “The hike will encourage them to return bottles in good condition, and as a result, the liquor makers will be able to reduce their costs of producing new bottles.”

But liquor companies say the government doesn’t understand the industry. At a press conference held Thursday, representatives of the industry said the new measure will hurt consumers because retail prices will rise by 10 percent.

“Under the new policy, we can’t avoid raising retail prices of drinks, as the cash deposits are actually included in retail prices,” said Kim Tae-ho, a manager at the Korea Alcohol & Liquor Industry Association, by phone. “Also, as we have to pay more commissions to the bottle collectors, the pressure on price raising would accelerate. At restaurants, the prices of soju or beer could surge by 1,000 won per bottle.”

The industry claims the average wholesale price will rise about 10 percent for both soju and beer per bottle. At restaurants, prices are expected to reach up to 5,000 won per bottle, they said.

Local supermarkets and convenience stores didn’t welcome the policy, either.

“If the new policy goes through, we will have to deal with an increasing number of people returning bottles, particularly underprivileged elderly collecting bottles for a living,” said the owner of a convenience store in Yeouido, western Seoul. “We don’t have enough space to store them.”

Housewives cautiously welcomed the idea, but raised concerns over a spike in drinks’ prices.

“I will definitely collect empty bottles if the deposit is raised to 100 won,” a 56-year-old housewife in Seoul said. “But if soju prices skyrocket at restaurants, I will not drink much there.”

After news of the plan broke, liquor makers said junk shop owners and so-called “bottle-brokers” - people who buy used bottles from small junk shops and sell them to liquor makers - are already hoarding bottles, waiting for the enactment of the law.

“Our production has shrunk by 10 percent as we are having difficulties in getting used bottles,” said a beer maker. “We are begging local brokers and junk shop owners to sell their bottles.”

BY KIM HEE-JIN [kim.heejin@joongang.co.kr]