How DRS Will Impact UK Drinks Businesses: Practical Guide

Table of Contents

• Pricing Changes
• Labelling Redesign Requirements
• Logistics and Storage
• IT System Updates
• Cash Flow Impact
• Staffing Considerations for Retailers
• Online Drinks Sellers and DRS
• Preparation Timeline

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Key Takeaways

• Every drinks container price will change — the deposit (expected to be around 20p) must be shown separately at point of sale, requiring updates to pricing, shelf labels, and till systems.
• All in-scope packaging artwork must be redesigned to include the DRS logo, barcode, and deposit amount before the October 2027 launch.
• Retailers need to plan for return points — reverse vending machines, storage space, and collection logistics require significant lead time.
• IT systems must be updated to track deposits as a separate line item through purchase, sale, return, and reconciliation.

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Pricing Changes

The introduction of a deposit (expected to be around 20p) on every in-scope drinks container will ripple through the entire pricing chain, from producer to consumer. Every business that handles these products needs to understand how the deposit flows and how to present it.

Deposit On-Invoice vs Off-Invoice

Producers will need to decide how to present the deposit on their invoices to trade customers (wholesalers, distributors, retailers). There are two approaches:

On-invoice — the deposit is included in the product price on the invoice. For example, if the deposit is 20p, a case of 24 cans priced at £12.00 trade would become £16.80 (£12.00 + 24 x 20p). The invoice clearly shows the deposit component. This approach is simpler for producers’ billing systems but can create confusion if the deposit is not clearly broken out.

Off-invoice — the deposit is listed as a separate line item on the invoice, distinct from the product price. The product remains at £12.00 with a separate deposit charge of £4.80. This approach provides greater transparency and makes it easier for retailers to reconcile deposit charges and refunds.

The DMO is expected to publish guidance on the preferred invoicing approach. Regardless of the method chosen, the deposit must be clearly identifiable at every stage of the supply chain.

Consumer Price Impact

At the retail level, consumers will see the deposit as a separate charge. For example, if the deposit is set at 20p, a drink priced at 99p would show as 99p + 20p deposit = £1.19 at the till. No VAT is charged on the deposit at the point of sale, though unredeemed deposits may attract VAT at the producer level. This simplifies the consumer-facing tax treatment but adds complexity to producer accounting.

The psychological impact on consumers should not be underestimated. Even a 20p addition to every drinks purchase feels like a price increase, even though it is fully refundable. Research from countries with established DRS schemes shows that after an initial adjustment period of 3-6 months, consumer acceptance is high and return rates stabilise at 85-95%.

For producers, there is a strategic question about whether to absorb part of the deposit impact by reducing the base product price. For example, if the deposit is 20p, a drink currently priced at £1.20 that becomes £1.20 + 20p = £1.40 may lose price-sensitive consumers. Some producers may choose to reduce the base price to £1.00, making the total £1.20 including deposit — maintaining the same shelf price while absorbing a margin reduction. This decision will depend on competitive dynamics in each product category.

Promotions and Multibuys

Promotional pricing adds complexity. For example, if the deposit is 20p, a “3 for £3” promotion on cans of beer becomes “3 for £3 + 60p deposit = £3.60.” Retailers and producers need to agree how deposits interact with promotional mechanics. The deposit should remain constant regardless of any promotional discount on the product price — consumers must always pay the full deposit per container and receive it back on return.

Multi-buy and volume deals will need their pricing structures reviewed. Point-of-sale systems must apply the deposit per container, not per transaction or per promotional deal.

Labelling Redesign Requirements

Every in-scope drinks container must carry DRS-specific markings before the October 2027 launch. This requires changes to packaging artwork that affect every product in your range.

Required Markings

The DMO will publish detailed labelling specifications, but based on European DRS schemes and government consultations, the required elements are expected to include:

• DRS logo — a standardised symbol that identifies the container as part of the deposit scheme. This will be a specific design, size, and colour prescribed by the DMO. It must appear on the front or primary display panel of the container.
• Deposit amount — the deposit amount displayed clearly and legibly on the container.
• DRS barcode — a barcode that enables reverse vending machines to identify the container as a valid DRS item and determine the correct deposit refund. This may be an enhancement to the existing EAN/UPC barcode or a separate code. The DMO will confirm the technical specification.

Artwork and Print Implications

Updating packaging artwork is one of the longest lead-time activities in DRS preparation. The process involves:

1. Design revision — integrating the DRS logo, deposit text, and any barcode changes into the existing label or can design. This requires graphic design work and possibly repositioning existing elements to make space.
2. Regulatory review — ensuring the revised design still meets all other labelling requirements (nutrition information, allergens, recycling symbols, UKCA marking, etc.).
3. Printing plate production — new printing plates, cylinders, or digital print files must be produced for each SKU. For products with multiple flavour variants or size formats, this multiplies rapidly.
4. Proofing and approval — colour proofs must be checked and approved before production runs begin.
5. Stock depletion — existing unlabelled stock must be sold through before the deadline, or overlabelling solutions (stickers) must be considered for residual stock.

For a producer with 50 SKUs, the artwork revision process alone can take 6-9 months. Add printing plate production and stock transition planning, and 12-18 months of lead time is realistic.

Transitional Period and Overlabelling

There may be a short transitional period after the launch date during which unlabelled stock already in the supply chain can be sold through. However, this cannot be relied upon — the government may require full compliance from day one.

For residual stock of non-DRS-labelled containers, overlabelling with adhesive stickers carrying the DRS markings is a potential interim solution. However, stickers must not obscure mandatory product information, must adhere securely throughout the product’s shelf life, and must not interfere with barcode scanning. Overlabelling is an imperfect solution and should be treated as a last resort.

Logistics and Storage

The physical infrastructure required for DRS creates significant logistics challenges, particularly for retailers.

Reverse Vending Machines

Large retailers will be required to install reverse vending machines (RVMs). Key considerations include:

• Space requirements — a standard RVM unit occupies approximately 2-3 square metres of floor space. Behind the customer-facing unit, there is a compaction and storage module that requires an additional 2-4 square metres. For stores with constrained floor plans, finding this space may mean relocating existing fixtures or reducing selling area.
• Power and data — RVMs require mains power and a data connection (wired or cellular) to communicate with the DMO’s central system. Electrical infrastructure may need upgrading, particularly in older retail premises.
• Noise and hygiene — RVMs generate noise during the compaction process, which can be disruptive in small stores. Residual liquid in returned containers can create hygiene issues if machines are not regularly cleaned. Drainage provisions may be needed.
• Installation lead time — RVMs are specialist equipment manufactured by a small number of suppliers (TOMRA, Envipco, Diebold Nixdorf, and others). With thousands of UK retailers requiring machines simultaneously, there will be supply constraints. Early ordering is advisable.

Storage for Returned Containers

Returned containers must be stored on-site until collected by the DMO’s logistics partner. Even with compaction by the RVM, the volume of returned containers at a busy supermarket can be substantial. A large supermarket might receive 5,000-10,000 returns per day, generating multiple compacted bags or bins of material daily.

Retailers need to identify or create storage space for these returns, ideally in a location accessible to collection vehicles. Back-of-store areas, loading bays, or purpose-built compounds may be needed. The storage area must be weather-protected to prevent contamination of materials and must meet any fire safety requirements (compacted plastic containers are combustible).

Collection Scheduling

The DMO will arrange regular collections from return points. Collection frequency will depend on return volumes — daily for large supermarkets, perhaps weekly for smaller stores. Retailers will need to coordinate collection access with their existing delivery and logistics schedules.

Missed or delayed collections create problems quickly, as storage areas fill up and machines may need to be taken offline. Robust communication channels between retailers and the DMO’s logistics provider will be essential.

IT System Updates

DRS introduces a new financial flow — the deposit — that must be tracked through every business system that touches product pricing, sales, and accounting.

Point of Sale Systems

Till systems must be updated to:

• Add the deposit as a separate line item on every transaction involving an in-scope product
• Apply the deposit per container, not per product line (e.g. if the deposit is 20p, a case of 12 cans carries 12 x 20p = £2.40 in deposits)
• Exclude the deposit from VAT calculations
• Handle deposit refunds at the till for manual return points
• Print the deposit amount separately on customer receipts

POS software providers will need to release DRS-compatible updates. Retailers should confirm with their POS vendor that an update is planned and schedule the rollout well before launch.

ERP and Accounting Systems

Back-office systems must track deposits through the full cycle:

• Purchase ledger — deposits paid to suppliers (included in goods-in cost or tracked separately)
• Sales ledger — deposits charged to customers
• Deposit refund ledger — deposits refunded to consumers at return points
• DMO reconciliation — deposits and fees paid to/received from the DMO

The deposit is not revenue — it is a pass-through amount that should be recorded as a liability until the container is returned and the deposit refunded or forfeited. Accounting treatment must be agreed with your finance team and auditors, ideally based on guidance from the DMO and relevant accounting bodies.

Stock Management

Product master data must be updated to flag in-scope containers and associate each SKU with the correct deposit amount. For retailers with thousands of drinks SKUs, this is a significant data management exercise.

Stock systems must also distinguish between DRS-labelled and non-DRS-labelled inventory during the transition period, to ensure non-compliant stock is sold through before the deadline.

Barcode and Scanning

If the DRS requires enhanced barcodes or a separate DRS barcode, scanning infrastructure throughout the supply chain must be compatible. Warehouse scanning systems, in-store handheld devices, self-checkout terminals, and RVMs must all read the DRS barcode correctly.

Cash Flow Impact

The deposit mechanism creates a new cash flow cycle for every business in the drinks supply chain.

Producers

Producers pay the deposit (expected to be around 20p) to the DMO for every container placed on the market. For a producer selling 50 million containers annually, this could represent around £10 million in deposit payments if the deposit is set at 20p. While the producer charges the deposit onwards to their trade customers (and ultimately to the consumer), the timing mismatch between paying the DMO and receiving payment from customers creates a working capital requirement.

Additionally, producers pay a per-container fee to the DMO to fund scheme operations. This fee — estimated at 1-4p per container — is a true cost, not a refundable deposit.

Retailers

Retailers collect deposits from consumers at point of sale and refund deposits to consumers at return points. In theory, these flows should balance. In practice, the timing and volume of returns may not match the timing and volume of sales, creating cash flow fluctuations.

Large retailers with high return volumes will be refunding significant amounts of cash daily. The DMO reimburses retailers for deposits refunded, but the reimbursement cycle (likely weekly or monthly) means retailers are out of pocket in the interim.

The handling fee paid by the DMO to retailers for operating return points will partially offset the operational costs, but is unlikely to cover them fully — particularly the opportunity cost of floor space allocated to RVMs.

Wholesalers and Distributors

Businesses in the middle of the supply chain face the most complex cash flow dynamics. They pay deposits to producers on purchase, charge deposits to retailers on sale, and must track the deposit through their accounts without it inflating revenue or cost of goods sold.

Staffing Considerations for Retailers

DRS will create new labour requirements for retail businesses that operate return points.

RVM Maintenance and Emptying

Reverse vending machines require regular attention. Staff must empty the compacted container storage when full, clear jams (which occur regularly, particularly with crushed or misshapen containers), clean the machine’s interior to prevent hygiene issues, and restart the machine after errors.

For a busy supermarket RVM processing thousands of returns daily, this can require 1-2 hours of staff time per day, spread across the operating hours.

Manual Return Points

Smaller retailers operating manual return points will need staff to accept returns, verify containers, count them, and issue refunds. This is labour-intensive and can create queues during busy periods. Staff will need training on which containers are in scope, how to handle disputes, and how to record returns for reconciliation with the DMO.

Customer Service

DRS will generate customer queries — consumers unfamiliar with the scheme, disputes over container eligibility, machine malfunctions, and questions about deposit refund methods. Front-line staff need clear training on the scheme’s rules and how to resolve common issues.

Online Drinks Sellers and DRS

The DRS applies to online sales of drinks in in-scope containers, creating specific challenges for e-commerce businesses.

Charging Deposits Online

Online retailers must add the deposit per container to online orders, displayed separately from the product price. Website and app product listings must show the deposit amount, and checkout systems must calculate the correct total deposit based on the number of in-scope containers in the order.

Returns for Online Purchases

Consumers who buy drinks online cannot easily return empty containers to the delivery driver. Instead, they will return containers to the nearest physical return point (RVM or manual return point at a retail store), regardless of where the drinks were purchased.

This means online-only drinks retailers do not need to operate return points. However, they must still pay the deposit to the DMO and charge it to consumers. The consumer recovers the deposit from any return point, not from the original retailer.

Subscription and Delivery Services

Drinks subscription services and delivery platforms (including rapid grocery delivery apps) face the same obligation to charge deposits. Some may explore collection-on-delivery models, where the delivery driver collects empty containers when delivering the next order. This requires DMO approval and a system for counting, recording, and reconciling returns.

Preparation Timeline

With the DRS launching in October 2027, businesses should work backwards from the deadline to establish a preparation plan.

Now - June 2026 (Assessment Phase)

• Audit your product range — identify every SKU that contains an in-scope container (PET bottles, aluminium cans, and steel cans)
• Assess financial impact — model the cash flow impact of deposit payments, producer fees, and any pricing adjustments
• Engage with the DMO — monitor announcements from the Deposit Management Organisation and register for updates
• Contact your POS vendor — confirm that a DRS-compatible software update is planned and understand the upgrade timeline

July 2026 - December 2026 (Planning Phase)

• Begin labelling redesign — commission artwork updates for all in-scope products. Prioritise high-volume SKUs and products with long print lead times
• Plan retail infrastructure — if you are a retailer, identify locations for RVMs, assess power and data requirements, and begin procurement conversations with RVM suppliers
• Update IT systems — begin development or configuration work to add deposit tracking to POS, ERP, and accounting systems
• Train category and commercial teams — ensure buyers, merchandisers, and commercial managers understand the pricing and promotional implications

January 2027 - June 2027 (Implementation Phase)

• Register with the DMO — complete producer or retailer registration when the portal opens
• Finalise labelling — ensure all printing plates and digital print files are updated. Begin production of DRS-labelled stock
• Install RVMs — complete installation and testing of reverse vending machines. Train staff on operation and maintenance
• Deplete non-DRS stock — sell through remaining unlabelled inventory or arrange overlabelling for residual stock

July 2027 - October 2027 (Go-Live Phase)

• System testing — conduct end-to-end testing of deposit charges, refunds, and DMO reconciliation
• Staff training — roll out frontline training on DRS processes, customer queries, and return point operation
• Consumer communication — launch in-store and online messaging explaining the deposit and how to return containers
• Go live — October 2027. Monitor closely in the first weeks for system issues, customer feedback, and operational bottlenecks

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