The packaging tax could be ‘catastrophic’ for small food companies, brands warn

Small food companies throughout Great Britain warn that the new government packaging tax could have catastrophic consequences, force price increases, damage cash flows and even get some business companies.

The tax “Responsibility of the Extended Producer” (EPR), announced in December, requires that any company with more than 1 million in annual sales and the use of more than 25 tons of containers to pay rates designed to improve Recycling infrastructure. Compliance costs are expected to reach £ 1.4 billion throughout the sector only in the first year, according to the Food Federation and Drink.

For Nadine Maggi, founder of Sweet Freedom, who produces differentials and natural syrups, the new position is the last straw of what he describes as the hardest commercial environment he has seen in 15 years. The tax will obtain its company with an additional invoice of £ 50,000 this year, in addition to cocoa prices, the highest minimum wages and National Insurance Insurance Costs – Leaving sweet freedom facing its first loss in years.

“This is more difficult than anything I have faced in my entire career,” Maggi said. She has already increased prices by 12 percent due to the increase in the costs of the ingredients, but it is reluctant to increase them again, fearing that it will damage sales. Instead, she is cutting the general expenses and pulling the work outlined in the house.

Stu Macdonald, founder of the Peanut Butter Manilife brand, which leads a campaign for rethinking, said the EPR could be “existential” for many smaller brands. Your company, with annual sales of £ 7 million, expects an invoice of £ 200,000. “If this had happened a year ago, I’m not sure we had survived,” he said.

Macdonald and more than 100 food companies argue that the changes were poorly communicated and will disproportionately affect small and medium enterprises (SME). They claim that many SMEs recently realized their responsibility, although the Department of Environment, Food and Rural Affairs insists that it carried out an “extensive commitment.”

Katie Jewitt, director of operations at Momo Kombucha, a beverage company in southern London, said her business will be affected with more than 100,000 in additional costs next year, delaying her expected balance point in at least 12 months. Momo uses glass bottles, a sustainable but heavy material that attracts higher loads under the new regime.

“There are hundreds of companies that will end,” Jewitt warned. “They simply do not have a concept of how small businesses work in the United Kingdom.”

The feeling is repeated throughout the industry. Liam White, co -founder of the Dr. Will’s Condiments Manufacturer, said it may need to raise additional capital to deal with the additional cost load of £ 35,000. “It joins the cocktail of things that keep you awake as a small business owner,” he said.

Despite the growing pressure, government advisors and compliance experts suggest that companies must prepare for new rules instead of waiting for a break. John Redmayne, managing director of the European Recycling Platform, said: “These regulations will not disappear.”

The Government argues that the EPR scheme will create 21,000 jobs and generate £ 10 billion in recycling investments during the next decade. “We are committed to taking energetic measures against waste and increasing recycling, with the extended responsibility of the producer of being a first vital step for our packaging reforms,” ​​said a spokesman.

However, for many entrepreneurs, the immediate reality is marked: a sudden and expensive burden that threatens to quell growth as well as companies are emerging from the challenges of Brexit, Covid-19 and inflation. “The government talks about economic growth,” Maggi said, “but what they are doing is to quell entrepreneurs and small businesses that drive it.”

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