Most conversations around the UK Deposit Return Scheme focus on compliance in areas such as labelling, fees, and reporting. For producers, this is just the visible layer, or the tip of the iceberg, when it comes to expenditure.
The true costs of the deposit return scheme are spread across the operational, financial, and organisational changes necessary to make it work in practice. You won’t necessarily find these expenses in initial business cases, but they will emerge during the implementation stage.
When you understand these hidden costs and their sources, you can effectively manage them and support a smooth implementation of the scheme by 2027.
In this article, we look at the hidden costs of the UK deposit return scheme for producers and how to prepare before 2027.
What Is the Deposit Return Scheme?
The deposit return scheme is a government-backed initiative designed to increase recycling rates and reduce litter by attaching a flat 20p refundable deposit to in-scope drinks containers.
In the UK, it is planned to launch in October 2027 across England, Scotland, and Northern Ireland, with Exchange For Change acting as the deposit management organisation. Wales is developing its own approach, and producers should monitor Welsh requirements separately.
The scheme applies to in-scope single-use drinks containers made from PET plastic, steel, and aluminium at the point of sale. There are currently no plans to include glass bottles in this scheme for Scotland, England, or Northern Ireland. However, the Welsh Government has signalled that it will accept glass bottles as one of its in-scope containers.
Consumers pay a 20p deposit when they purchase the product and receive it back when they return the empty container through an approved collection point, such as a reverse vending machine or retailer.
For producers, the scheme introduces a new set of obligations. These will include:
- Registering products with the scheme administrator
- Applying the correct deposit value to each item
- Funding the scheme through fees and operational contributions
- Reporting on volumes placed on the market
- Managing data related to returns, recycling, and financial flows
While the principle is simple, i.e., pay a deposit on your metal drinks containers and plastic bottles and get it back on return, the operational reality for producers is far more complex. They need to manage new financial flows, reporting requirements, and customer interactions.
Why the Deposit Return Scheme Is More Than a Compliance Exercise
As further details emerge about the deposit return scheme, many producers are viewing it as a straightforward regulatory process. This framing isn’t quite right, as in reality, it’s a cross-business transformation.
These new obligations will affect systems, processes, and teams across the business. It is in these areas where costs start to rise for producers.
To provide real-world context to this, we can look at how similar schemes have impacted producers. Markets that have already implemented deposit return schemes have experienced the same pressures, often intensified by tight timelines and public scrutiny.
On the launch of Ireland’s scheme, for example, Ciaran Foley, CEO at Re-turn, highlights just how demanding the early stages can be:
“Initially everything had to be done at pace, with a very small inexperienced team, with everything being viewed through a very public lens… The breadth of the challenges experienced were immense.”
This is where the hidden cost becomes most visible. When timelines are compressed and expectations are high, internal change accelerates. So too do the risks of inefficiency, rework, and cost escalation.
Foley also points to the importance of experience in handling that complexity:
“It is a complex world, dealing with multiple stakeholders… to have a team of people who have been through the challenges many times can be the difference between success and failure.”
This level of intricacy needs to be planned for across several key areas of the business. Otherwise, producers risk falling behind once the scheme begins.
1. The Hidden Costs in Data and Systems Changes
At the centre of the deposit return scheme is data. For many producers, that data isn’t quite ready. Several key aspects of data and systems will need to be updated to work under the deposit return scheme.
Reconfiguring ERP and Reporting Systems
Software like Enterprise Resource Planning (ERP) systems will need to be adapted to handle new metrics, including deposits, producer fees, and returns. Reporting capabilities will also need to be built or extended to accommodate the changes. Reconciliation logic is another area to be designed from scratch before being tested under pressure.
None of these changes offers a simple plug-and-play setup. It takes time, specialist input, and multiple iterations to get it right. As these systems support core processes like finance, commercial operations, and supply chain, any changes made will cascade down.
Cleaning and Structuring Product Data at Scale
Producers with large, fragmented stock-keeping unit (SKU) portfolios will be handling a problem that scales quickly. Every additional SKU brings its own data requirements, deposit handling, reporting lines, and reconciliation points.
This will have wide-reaching effects on how products are configured in systems, tracked through the supply chain, invoiced to customers, and ultimately reported back into the scheme. That’s a lot of steps to replicate across hundreds or even thousands of SKUs and can quickly add to the operational burden.
Building and Testing New Reconciliation Logic
Once the deposit return scheme goes live, producers will need to implement and manage an entirely new layer of financial control. This will cover several areas, including:
- Deposits
- Sales volumes
- Fees
- Returns data
- Customer treatment
All of these aspects will need to neatly align. Otherwise, finance teams will face unexplained variances, manual investigations, and control gaps.
2. The Hidden Costs in Financial Processes and Cash Flow
Another area where the deposit return scheme will need careful consideration is the financial processes. Deposits, fees, recoveries, invoice values, and customer payments will all need to be managed carefully to avoid cash flow pressure and control issues. That means extra planning for finance teams to accommodate these upcoming changes.
Managing New Deposit Flows and Working Capital Pressure
The deposit return scheme will introduce new cash movements that might not tie into existing payment cycles. These cash movements can create extra administration if handled poorly.
Small deposits can increase invoice values, while timing differences between charges, recoveries, and remittances can create short-term funding pressure. One of the biggest challenges here is managing the gap between cash in and cash out, while also ensuring customers actually pay their invoices.
Increased Credit Control Effort and Payment Delays
With invoice values increasing and billing getting more detailed, credit control teams will face more queries and disputes.
Customers may wonder about deposit charges, challenge how they have been applied, or delay payment while issues are being investigated. All of that is more work for collections teams, which can slow cash conversion.
Credit limits may also need to be reviewed where the deposit return scheme materially increases invoice totals.
Handling Exceptions, Credit Notes, and Disputes
After go-live, producers should expect a few exceptions while the new processes settle in. Invoice queries, credit notes, reporting issues, customer challenges, and internal escalations are all to be expected in the early stages of rollout.
Although these are expected, producers must be prepared to handle these early issues quickly. A clear process for resolving them can add clarity and confidence. Without clear ownership, handling these issues becomes slow, repetitive, and expensive.
3. The Hidden Costs in Packaging, Stock, and Operations
Packaging and operational changes are often underestimated because they seem straightforward on paper. In reality, they introduce knock-on effects across stock management, production timelines, and day-to-day operations.
Reworking Packaging and Labelling
Existing packaging stock can quickly become obsolete under new guidelines from the scheme. Artwork and labelling will need updates, often on compressed timelines. Redesign cycles accelerate, increasing the risk of errors.
Poor coordination between old and new formats can lead to duplication, confusion in the market, and ultimately write-offs. These costs are easy to overlook early on, but difficult to recover once incurred.
Managing Old and New Stock in Parallel
Producers may need to manage both old and new packaging formats during the transition. This would also mean running the processes for the different packaging at the same time, as well as segregating stock, and applying different handling rules across markets and customers.
Many producers will opt for temporary workarounds for these issues to keep operations moving as normal. However, for every workaround required, more operational capacity is spent, and the risk of errors increases.
4. The Hidden Costs in Customer and Commercial Processes
Across various levels, the deposit return scheme changes the commercial relationship between producers and customers. That means taking a new approach to customer relationships to accommodate the scheme.
Deposits need to be clearly reflected in pricing, invoices, and communications, which means commercial and customer-facing processes must be aligned.
Updating Pricing, Terms, and Invoicing Structures
Areas like trading terms, invoice formats, pricing structures, and customer messaging may all need to be revised and updated. Customers will need to know what is changing, why deposits appear on invoices, and how disputes or exceptions will be handled.
Other aspects, like promotional processes, customer negotiations, and deposit messaging, need to be handled with care and consideration. For example, if the deposit isn’t explained clearly, then customers may view it as a price increase. Or, if promotions aren’t adjusted correctly, margins will become diluted.
Managing Customer Queries and Internal Readiness
Even well-designed systems will fail if the organisation is not ready to implement and use them. This applies across every function interacting with the deposit return scheme. Organisations need to ensure:
- Sales teams can clearly explain the scheme changes to customers.
- Finance teams understand new controls, processes, and reconciliations.
- Customer service teams are equipped to handle queries and disputes confidently.
- Operational teams know how day-to-day processes will change in practice.
Without this level of readiness, issues are likely to emerge quickly after go-live. It takes time to put the right training, communication, and internal ownership in place to handle the realities of the scheme.
Delaying Preparation Increases Costs Beyond Go-Live
Delaying preparation for the deposit return scheme can make implementation more expensive, rushed, and difficult to control. Late planning often leads to rushed decisions, emergency system fixes, higher supplier charges, and less time to test processes, train teams, engage with customers, and resolve issues before launch.
However, the cost of delay does not end at go-live. Producers also need to plan for a stabilisation period after launch, when processes are tested in real operating conditions, and any gaps become more visible.
This may include defect fixing, process refinement, customer adjustment, data issue resolution, reconciliation improvements, and control reviews. Customer queries may also reveal weaknesses in communication or process design.
The producers best placed to manage the deposit return scheme will be those who recognise that go-live is not the finish line. If you prepare early and allow time for post-launch stabilisation, you can then reduce hidden costs, avoid unnecessary disruption, and manage the scheme with greater confidence.
Need Help Preparing for UK Deposit Return Scheme?
The hidden cost of the UK deposit return scheme for producers isn’t found in the headline fees or compliance requirements. It’s embedded in the detail, spanning systems, processes, people, and timing.
Those who treat the scheme as a narrow compliance exercise risk being caught off guard. Those who approach it as a business-wide change programme are far more likely to manage cost, protect margin, and maintain control.
DRS International helps producers understand, plan, and manage the operational impact of deposit return schemes. From systems and data to customer processes, controls, and post-go-live support, our team is here to guide you towards successful implementation.
Get in touch to discuss how we can help you reduce risk, avoid costly rework, and prepare your business for the deposit return scheme with confidence.