Coke to pass on can deposit scheme costs

Coca-Cola Amatil will raise prices to recover fees of NSW's cash for cans scheme but is uncertain about the impact on future earnings.

Beverage giant Coca-Cola Amatil says it will recover costs of NSW's new container deposit scheme (CDS) from customers by raising prices, but is uncertain about the impact of this on future earnings.

Under the drink container deposit scheme, which is set to go live in NSW from December 1, anyone who hands in eligible drink bottle containers at designated sites across the state would get a 10 cent refund.

Beverage suppliers will pay for the refunds as well as the scheme's administration, with the costs tipped to be passed on to consumers in a hike in soft drink prices.

The scheme aims to halve the number of bottles and cans thrown away in parks, beaches and waterways.

Coca-Cola Amatil said, based on 2016 estimates, it accounts for about 25 per cent of the 3.5 billion eligible containers used by the entire industry in NSW.

Under the scheme, the fees will comprise a 10c refund plus an administrative and handling fee, if returned at collection points and reverse vending machines, or only a 10c refund if returned at material recycling facilities.

"We intend to recover the fees of the CDS by passing these through to customers," group managing director Alison Watkins said on an investor call on Friday.

"We aim to recover the fees through an additional charge being added to our pricing to customers."

The drinks maker said, at this early stage, it could not provide a meaningful estimate of the scheme's impact on future earnings.

The scheme starts operating in one of the busiest months for the beverages company.

"The impact will be greater in percentage terms on lower value items," Ms Watkins said, acknowledging that the same amount of fees will be passed through regardless of the pack size or type.

Analysts have previously estimated that passing on the cost of the scheme to customers would reduce Coca Cola Amatil's volumes by about two per cent and earnings in Australia by around 10 per cent.

Ms Watkins said it would take consumers some time to adapt to the scheme, and would require educating them on how a substantial part of any price increases would include the refundable deposit.

"I know the NSW government is funding a lot of advertising and aiming to build awareness," she said.

"We'll be talking with our customers about how we can make sure that we reinforce that point at the point-of-sale."

Coca-Cola Amatil is among major beverage companies that will oversee the NSW government's incoming container deposit scheme.

Its partners in the industry joint venture - dubbed Exchange for Change -include Asahi, Carlton & United Breweries, Coopers and Lion.


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Source: AAP



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