RGDATA and Paper Packaging Alliance slam proposed ‘Latte Levy’
New report points to flawed Government Impact Analysis for 'latte levy', leading to higher costs for consumers, environmental harm, and business setbacks
29 June 2023
A groundbreaking report and survey claims the government has significantly overstated the market share of reusable containers in the takeaway hot drinks industry by a staggering 1,462%.
The report comissioned by the Paper Packaging Alliance – of which retailer’s group RGDATA is a member – found that a ban on single-use cups is projected to cause a significant 48.6% decline in coffee sales. International evidence also highlights that transitioning entirely to reusable containers for takeaways will result in a detrimental 260% increase in greenhouse gas emissions by 2030.
According to the new study, the expected behavioural change resulting from the proposed levy will not occur, leading to the sole consequence of heightened expenses for consumers, who will be forced to pay higher prices for their coffee.
The report conducted by Jim Power Economics was specifically commissioned to address the shortcomings in the Government’s Regulatory Impact Analysis (RIA), which was released by the Department of the Environment, Climate and Communications (DECC) late last year.
According to the new research, a major flaw found in the RIA relates to the assumption that reusable cups hold a 25% market share in the takeaway segment. However, a thorough survey conducted across more than 2,200 premises reveals that the actual market share of reusable cups is a mere 1.7%.
As a result, the report states the projected market decline resulting from the proposed levy would be significantly higher than initially estimated, ranging from 5% (as stated in the RIA) to a substantial 19.1% to 23.1% when real market data is incorporated into the RIA report methodology.
Concerns surrounding reusable cups also extend to environmental implications such as amplified CO2 emissions, plastic waste, and escalated consumption of freshwater and energy during the processes of washing, drying, and transportation. The shift to reusable cups would entail a sectorwide expense of €492 million, encompassing dishwashing equipment, drying equipment, additional energy costs, and increased employee expenses, all of which counteract environmental benefits. A prior study supports these concerns, revealing that reusable cups generate 2.8 times more carbon dioxide and consume 3.4 times more freshwater compared to single-use, paper-based alternatives.
Leading the report, economist Jim Power said: “The international evidence supporting a levy on single-use cups lacks persuasiveness and raises doubts about its suitability. Vancouver provides an illustrative example, having introduced fees of 25 cents for disposable cups as part of changes to its Licence Bylaw on January 1st, 2022. However, this levy was ultimately abandoned due to its punitive nature, ineffectiveness, and the fact that coffee cups were compatible with paper recycling streams.
“The essence of this report lies in recognising that circularity entails closing the loop rather than enforcing penalties,” he added. “There are better solutions than unnecessarily levying consumers and negatively impacting the environment and businesses. It is time for Ireland to pause and reflect on what is the correct way forward.”
“Loyal customers will bear the burden of these changes, including the 20-cent increase in coffee prices, which amounts to a 6% surge. With rising interest rates and escalating living costs, this additional strain on consumer spending could have a notable impact on demand, employment, and overall business performance within the sector,” a spokesperson for the Irish Paper Packaging Circularity Alliance (IPPCA) said.