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Norsk Resirk: English summary of the Annual report 2005

CONTENT

Introduction

PET is on a roll

What do you feel is your biggest achievement in 2005?
“We passed the magic 80 per cent return rate for PET bottles (plastic). At the same time we achieved a slight rise in can returns, which means that people are sticking to their good habits. In addition, we have made the return system more efficient.”

How have you become more efficient?
“We put synergies with other materials fractions on the logistics side, so that retailers’ cardboard and plastic packaging is handled and shipped along with Resirk’s cans and bottles. We have also invested in machines to further increase our level of automation.”

To achieve good return rates, who is it most important to influence?
– Simply put: those who do not always return their empty packaging. We analyse deposit-refund data to identify products with a low return rate, and can then address certain customer groups in specific places and situations.

What is the most important reason for the high rate of return?
“The fact that the return system has become more widely available, combined with an effective marketing effort. The scope and scale of the measures implemented have produced results, at the same time as our message is positive, but not moralistic.”

How did the battle over the basic levy affect Resirk’s operations?
“If the basic levy on returnable cans and plastic bottles is rescinded, our volume will increase many fold. But we cannot scale up our capacity on such an uncertain foundation. So we are sitting on the fence as an observer to the debate.”

You have been at Resirk for 10 years, what makes the job exciting?
“You would probably call me an entrepreneurial type, who likes building up something new and establishing relations. Resirk has been a pioneering effort, which has led to major changes in the beverage market and had a positive environmental impact.”

What do you do when you are not promoting the merits of recycling?
“Family, boating and staying at my cabin in the mountains. I don’t only talk about recycling when I’m with my family and friends. I don’t go looking in people’s dustbin either. But if I catch someone in the act, as it were, they certainly hear about it!”

What will Resirk achieve in 2006?
“We will improve our results even more. Our aim is for a 95 per cent return rate for cans and PET. We will also be even more cost effective as an organisation by taking care of a bigger part of the value chain, particularly in northern Norway, where we are setting up our own operating facility.”

What are your personal recycling tips?
Recycling bottles and cans is the easiest thing in the world. Return them often, then the empties don’t cause space and hygiene problems at home. Remember the price gets lower the more you return. The levy on cans and bottles is one of the few things that consumers have a direct impact on.

Background

Beer in most cans, water in most bottles
Any importer or producer who wishes to sell beverages in cans or non-refillable plastic bottles with a reduced environmental levy must be a member of Norsk Resirk. A deposit symbol is printed on the packaging, and this is the consumer’s receipt that a deposit has been paid and guarantee that the packaging will be recycled.

223.6 million cans and 61.4 million bottles with a deposit symbol were sold in 2005. This is an increase of 12.4 per cent for cans and a decrease of 0.7 per cent for bottles compared to 2004. The vast majority of cans were filled with beer, while most of the bottles contained water. The increase in the number of cans is probably due to a shift in price competition from beer in bottles to beer in cans. The decrease in the number of bottles is due to producers’ uncertainty with respect government plans for the levy on this type of packaging.

The levy decreases as the proportion of return increases (2006 numbers)
(for details see graph on page 8 - is only in Norwegian)

Environment-friendly and profitable recycling
Norsk Resirk was set up by the beverage industry and retail trade to develop and operate an efficient return and recycling system for aluminium and steel cans, and non-refillable bottles made from PET plastic. The move was prompted by the Norwegian regime of levies on beverage packaging, which rewards systems with a high level of return.

Cans and non-refillable bottles incur an environmental levy, the size of which falls in line with the percentage of packaging returned.

In 2005 producers, retailers and consumers could congratulate themselves with a 93 per cent reduction in the environmental levy on cans and an 80 per cent reduction on non-refillable plastic bottles. The refundable deposit system thereby saved Norwegian consumers over NOK 1 billion in environmental levies.

Deposit scheme

How the system works
Every beverage importer or producer in Norway can include their products in the refundable deposit scheme. Bottles and cans are distributed to shops. The deposit is paid at every stage. Aluminium “canstock” is used to produce new cans, which are supplied to beverage producers and importers. Plastic flakes can be used to make new packaging. Aluminium is processed into the raw materials for new can production. The plastic flakes are mainly used for flower trays, packaging foils and bands. The recycler cleans and sorts the cans and melts down the steel and aluminium for reuse. The recyclable plastic bottles are sorted and milled into flakes.
(Continue on page 11)
When the bottles and cans are sold, the consumer pays a deposit which is refunded when the empty packaging is returned. The consumer drinks the contents of the bottle or can. The consumer returns the empty bottles and gets back the deposit. Empty bottles and cans are delivered to Norsk Resirk’s facilities or regional partners. The empties are counted, processed and prepared for recycling. Norsk Resirk repays the deposit that the shops refund to the consumer. Wholesalers collect empty bottles and cans when they make their deliveries.

Norsk Resirk’s refundable deposit scheme is a partnership between producers, importers and sellers of beverages. Bottles and cans can be returned at more than 9,000 shops in 3,000 reverse vending machines. All those who sell bottles and cans are obliged to refund the deposit, even if they do not have a reverse vending machine.

Research

Collection scheme under the microscope

Eik’s figures for the ecological impact of the scheme are based on the sum of greenhouse gas emissions from all stages in the return and recycling process. “Since the recycled bottles can be used as the basis for new packaging products, thereby replacing virgin raw materials, recycling has a positive impact on the environment, whichever way you look at it,” he adds.

Immortal cans
Similar research has not yet been carried out with respect to beverage cans. However, several studies show that the recycling of the aluminium from which cans are made requires only a fraction of the energy needed to smelt primary aluminium. The metal can, moreover, be recycled more or less in perpetuity without losing strength or changing its fundamental properties. Aluminium does not ‘remember’ is past lives, wrote Frode Westvold in his doctoral thesis at the University of Oslo in 2000.

Recycling

Everything is recycled
Everything Norsk Resirk collects is recycled. Cans are turned into new cans, while bottles replaces virgin PET which can become flower trays, strapping applications as well as other types of packaging. The recycling process is environment-friendly. For example, it takes only five per cent of the energy to recycle aluminium as it does to make new aluminium.

Norsk Resirk sells compressed cans and bottles to recyclers in the international market.

80 per cent of plastic bottles were returned in 2005, while 93 per cent of cans were returned. Cans originating abroad or bought tax-free without a deposit are not included in the figures, but are also collected in and recycled. Around 7,6 million such cans were recycled in 2005.

The research institution Stiftelsen Østfoldforskning (STØ) has compared Norsk Resirk’s system for the collection and recycling of non-refillable plastic bottles with that for refillable bottles. The study was carried out in collaboration with representatives from the entire value chain, from packaging producers to recyclers, and concluded that the two systems were more or less equally environment-friendly.

Consumer

Bottle returns give clean sweep
Five girls sharing an apartment in Oslo have found a good way to pay for the soap, toilet paper and other household consumables they use. Each week they return the remains of the weekend’s partying and the refreshments bought during the week.

In the course of a week soft drinks, water and soda bottles pile up under the kitchen sink, but after a weekend partying other kinds of bottles and cans are more in evidence. They empty the dregs into a bucket when they clean up, since it is a long way to go from living room to kitchen.

Bottles and cans are collected in plastic bags in the kitchen.

Until the cupboard is full
The girls take the empty bottles to the nearest supermarket when the cupboard under the sink starts getting full. “It is often the same person who takes back the empty bottles. In other words the person who has the time and who cannot bear to see the mess. And that person is often me,” says Kathinka Bøllmo, newest member of the all-girl commune. A blackboard hangs in the kitchen, where the girls can write up anything they have run short of around the house. Decisions to take back the empty bottles are often prompted by the fact that they have run short of something. The system works by itself, without anyone keeping accounts.

Soap and toilet paper
Once in the shop, empty bottles are swapped for toilet paper, toothpaste, washing up liquid, soap or other things needed around the house. Some tea and soft drinks are also bought with the proceeds. Sometime the girls are tempted to spend the refund money on new bottles of drink, but that is only if the refund is large and they do not need anything for the house. “We have kept this up since September, and we all decided that it was just as easy to return our empties as to put money into a kitty. How much money comes in from returning the bottles and cans varies during the year, but it is at least enough to buy all our hared items with,” says Kathinka.

No more kitty
Although the amount of money varies, everyone agrees that returning the empties is a good investment both for themselves and the environment. “It’s a brilliant solution for us, “since we don’t have to keep putting money in a kitty to buy the stuff that we all consume, says Kathinka. “That the levy payable also comes down is just an added bonus.”

Return schemes

Four return schemes
In addition to Norsk Resirk’s refundable deposit scheme for cans and non-refillable plastic bottles, Norway has three other return systems for beverage packaging.

Non-refillable glass bottles are collected by Norsk Glassgjenvinning and recycled. More on:

• www.glassgjenvinning.no

Refillable glass and plastic bottles are collected through the Norwegian Brewers refundable deposit system. The bottles are sorted, washed and refilled. More on:

• www.rentpack.no

Drinks cartons are collected by Emballasjeretur and recycled.

• www.emballasjeretur.no

Producer

Fruit squash with a refundable deposit
Around 8.5 million squash bottles with a refundable deposit pour out of the Lerum plant in Kaupanger every year. Logistics manager Jan Audun Larsen would have liked that figure to have been higher.

Lerum have been supplying the Norwegian people with fruit squashes and jams for almost 100 years. On a good day almost 30 fully loaded truck-and-trailer units roll out of the company’s production facilities in Sogndal and Kaupanger. Up to 70 million litres of squash, juice, soft drinks and water are produced in Kaupang every year.

Protecting the environment
With 180 employees, 13 production lines, an in-house bottle moulding plant and a vast warehouse for frozen berries, logistics manager Jan Audun Larsen has quite a jigsaw puzzle to manager. He oversees the in-house moulding of the bottles before they are labelled and the refundable deposit mark added.

It is important for both Lerum and consumers in general that a massive 80 per cent of the bottles are returned and recycled. “We use natural ingredients from fruit and berries in our products, and we have always been concerned with protecting the environment, which provides us with our raw materials,” says Larsen.

Cheaper products
He also thinks that consumers are environmentally aware, and that they choose recyclable plastic bottles with a refundable deposit when they have the chance.

The rise in the return rate for PET has also led to a NOK 2.20 reduction in the levy on each bottle. “This benefit goes directly to our customers,” Larsen points out. He sees many advantages to using recyclable plastic bottles compared with the traditional reusable bottles.

Anti-competitive
Larsen is indignant over the fact that the authorities have decided to retain the basic levy on recyclable plastic bottles while reusable bottles are exempt, despite the fact that both regulatory agencies and researchers have stated that the Resirk system is at least as eco-friendly as reuse. “Favouring reuse over recycling prevents us competing on a level playing field,” he says. “Few producers are interested in starting to use glass bottles. The levy therefore prevents new entries into the market and product development.”

Consumption

Import

Spanish invasion
It is not the Spanish Armada, but Spanish beer that is flowing in over the border just now. Helge Olsen of Brewery International thanks Resirk for the fact that the cans are getting steadily cheaper.

Brewery International is one of Norway’s largest importers of beer and cider. The company was started in 1992, two years before the import ban was lifted. Today, Brewery International supplies thirsty Norwegians with products from all over Europe. San Miguel flows in from Spain, Beamish Irish Stout arrives from, well exactly. Australian Fosters comes from licensed bottlers in the UK, Hurricane energy drink muscles in from Germany, while the Finns supply us with sauna-tested Lapin Kulta. And this is just a taste of Brewery International’s extensive product portfolio.

“We have seen a huge increase in sales of San Miguel over the past year. The increase is largest for draught beer, but cans are not far behind,” says marketing manager Helge Oslen.

Dependent on Resirk
Without the Resirk system each can would be more than NOK 5 more expensive, and practically impossible to sell. “Given the Norwegian system of taxes and duties, the Resirk scheme is the be all and end all for us,” says Olsen, who thinks it is easy to register new products with Resirk. Just as easy as it is to get the manufacturers to print the Norwegian refundable deposit symbol on their labels. They are used to different bottle return schemes in their export markets.

Bigger in Sweden
Around 100 international beer brands are available in Norway, but they have a combined market share of only three percent, compared with 20 per cent in Sweden. This is partly due to the fact that Sweden has a different tax policy with regard to cans and recyclable plastic bottles, while the state-owned wine and spirits monopoly, Systembolaget, lets imported beers compete on price with domestic brews. Olsen’s personal favourites are San Miguel, Lapin Kulta and Kronenburg. “They have a rounder, less bitter aftertaste than Norwegian beers,” he says, though he has nothing but praise for the beer of his youth, Ringnes.

Hangover cure
New products are coming onto the market all the time. After a long period with water and energy drinks, what are known as functional beverages are starting to take off. “These are alcohol-free drinks with various health promoting properties, ranging from vitamin supplements to diet drinks. We will shortly be launching a drink called Outox, which aims to cure that morning-after feeling,” explains Olsen. Functional beverages have been a success in the USA and Britain for some time.

(Continue on page 27)
When producers and importers register their company and their products with the Resirk scheme, they are joining an approved return scheme for their cans and plastic bottles. This contributes to lower the environmental levy on such packaging. The environmental levy has been reduced by several kroner during the last few years due to the high level of return.

Recyclable products to be included in the Resirk scheme, must be registered at Resirk no less than six weeks before the the product is due to be launched in the Norwegian market. Shortly explained this involves completing a form and providing Norsk Resirk with examples of the packaging. The right to use the Resirk deposit symbols is gained when the product is approved.

The registration procedure is described in detail at www.resirk.no
You can also have the information sent to you by contacting Norsk Resirk at +47 22 12 15 20.

Membership

Producers and importers who are members of Norsk Resirk

Collection

Bottle return champion
The return vending machines installed at the Coop Obs! supermarket in Lade, Trondheim, are the busiest in the entire country. In 2005 the store collected over a million cans and recyclable plastic bottles.

The flood of returned empties is so great that the supermarket has set up a separate collection centre with three reverse vending machines and direct access from the car park. Since the collection centre was opened in May 2004 the supermarket has taken back 6.9 million units – including the breweries’ reusable bottles. “Our collection centre is run almost like a separate company,” says grocery sales manager Randi Eggen.

Holiday rush
Staff at the soft drinks and dairy department work on a rotation basis, with bottle and can returns every fourth week. The collection centre is manned by at least one person for as long as the supermarket is open. At peak times on Saturdays, staffing is doubled. “The busiest times of the year are always the first weekend after the New Year and the first week after the main summer holiday. But the constitution day celebrations and Whitsun weekend also produce a lot of empties,” says shopworker Kristian Schjølberg.
He enjoys his week at the collection centre, even though it can be a bit lonely sometimes. “That’s why we have a few ‘lady friends’ on the wall,” he grins.

Advanced sorting
Coop Obs! has recently invested in two new reverse vending machines. Together, the machines can deal with thousands of bottles and cans every single day. Behind the scenes, the returned cans and recyclable PET bottles are compressed and sorted into huge cardboard boxes, which are then taped up and sent to Resirk for recycling. Reusable plastic bottles disappear into a vast, specially constructed silo, which can take large quantities of bottles before they must be stacked into cases. The silo is designed such that the working height can be adjusted, so that sorting the bottles does not give staff members a stiff back. In addition, the collection centre has two lines for glass bottles.

Busy customers
“Before we installed the new machines, we were getting a lot of wine bottles and jam jars. Once, we even got an ice cream tub and spoon! But now all that kind of thing is rejected automatically,” explains Schjølberg. Beside the reverse vending machines there is a hole in the wall were customers can throw their plastic bags. But this proved to be a bit too complicated. The bags ended up on the floor. The solution was to put out some big cardboard boxes. Coop Obs! at Lade is not only Norway’s national champion when it comes to collecting empty bottles and cans, it is also the country’s largest supermarket, with 60 employees
and an annual turnover of NOK 420 million.

Norway’s smallest refunder
You don’t need to be flooded with empties every Saturday to be part of the Resirk system. Aker Kværner’s offices at Lysaker filled half a sack in 2005. When one of the restaurants started selling water and iced tea in returnable plastic bottles last year, management decided the right thing to do wast to join the Resirk system. “We think that being able to return the empty bottles in an environment-friendly way is a major advantage,” says team leader Turid Burgener.

Communication

Rhodes trip from bottle return
In 2005 Ruth Pedersen (80) won a trip to Rhodes for herself and her entire family after taking part in a summer campaign that asked participants to ‘return their best ever holiday memories’. Thousands of people wrote down their best memory on a coupon, put it in a returnable plastic bottle, and returned both the bottle and the memory. Two lucky winners were chosen: Ruth Pedersen and Bodil Storås. Ruth is taking her husband, daughter, son-in-law and three grandchildren on a dream holiday to Rhodes.

Narvestad cleared up
A campaign aimed at supermarket staff was launched in 2005 to help make the handling of empty bottles and cans more efficient. Caretaker Roy Narvestad, a familiar figure from the popular television programme ‘The Flats’, was recruited as backroom consultant and played a key role in the campaign. Shops throughout the country were sent a backroom pack, with a training film, information poster and activities. An effective return system boosts a shop’s bottom line and helps reduce the environmental impact of both transport and recycling. The campaign won the Norwegian Retail Award 2005.

Keeping a high profile
In 2005 Norsk Resirk staged several consumer campaigns linked to peak periods for beverage consumption.

Easter: People who go away for Easter sometimes forget to return their empties to the same extent they normally do. Adverts, radio commercials and media coverage were used to communicate the message that it is easy to return your empties – even up in the mountains. Resirk also worked with the Red Cross to collect the deposit locally.
Summer: This is the peak season for beverages. A wide range of initiatives ensured that the return message was kept hot, including adverts, boards, radio commercials and media coverage. Road and boat patrols visited campsites and marinas.
Christmas: High beverage consumption and shops shut for the holidays makes returning empties extra difficult around Christmas and the New Year. Poet and singer Odd Børretzen reprised his role in TV and newspaper adverts, which showed the refundable deposit label as a constellation in the night sky. An astronomer was recruited to guide the public across the heavens via star charts and MP3 sound files. ‘A place in eternity’ was the campaign’s slogan.
Sponsored youth: Last year Norsk Resirk sponsored the Norwegian Rock Scissors Paper Association. The game has become a craze among schoolchildren. Resirk helped to arrange local tournaments and a Norwegian Championship in Oslo. The message was that the game was ‘as easy as returning your empties!’. A total of 8,000 youngsters competed for a place on the national team. The winners travelled to Toronto in October and won a prestigious collateral tournament. Partners: Resirk works closely with
the LOOP waste return foundation on activities aimed at schools (see www.loop.no). Resirk has also supported the ‘Friends of the Environment’ project staged by Keep Norway Clean and the Ski Schools’ Association (see www.holdnorgerent.no).

Operations

The Recyclers
Norsk Resirk’s facility at Alnabru in Oslo is reminiscent of a family company. Since 2004 the employees have been part of the Resirk family. The facility at Alnabru in Oslo is the heart of the Resirk system. This is where shops and wholesalers from all over the eastern counties send their empty cans and PET bottles. This is where the returned empties are weighed, compressed into huge bundles and prepared for recycling. Good weather means more work for the team at Alnabru. In the summer consumers down far more beverages in cans and plastic bottles than they do in the winter. In the high season, the facility produces up to 450 bundles a week. Each bundle weighs 300-350 kg, corresponding to 7-8 truckloads. “In the winter the day starts with a now-clearing session around six o’clock,” says Trond Ivar Hansen, recently recruited operations manager. The first truckloads of empties start rolling in around eight. Some come in sacks, others in huge containers. Everything is fed into the increasingly automated processing plant. The facility even has counters which are called PET’o’meters. In addition the plant destroys canned products that have passed their sell-by date. “A lot has changed here since the facility was simply a plastic shed, and most of the work was done manually,” says Tor Åge Olsen. Previously, the staff were contracted in from an external company. However, when Norsk Resirk took over the whole operation itself in 2004, they became regular Norsk Resirk employees. “Things have got a bit more structured since Norsk Resirk took over,” says John Øystein Sollie. Odd Sverre Olsen is the longest-serving employee at the facility. He quickly brought his son, Tor Åge, on board. Then Tor Åge’s girlfriend, May Christin, joined the team, followed finally by his little sister, Lill Jeanette. All four come from Søndre Land in Oppland, spending the week at a bedsit on site and returning home at the weekends. With John Øystein from Raufoss, Jeanette from Hadeland and Roy Gunnar from Eidsvoll, it is only Rudi who can be said to be more or less local. But even Osloers are reckoned to be part of the Oppland crew. “We have a great atmosphere here.” says John Øystein.
(Continue on page 40)
Retailers and industry are equal partners in Norsk Resirk through their various business organisations:
(see graph)

The board of directors

The team work between the Board and the administration benefits the consumer Board chairman Halfdan K. Olafssøn and Resirk’s other directors make it a point to involve themselves in the details of operations, and are looking forward to the day when one or more women are elected to join them.
What have Resirk’s results meant for its owners?
“Resirk has created an efficient system to reach its goals, while keeping costs down. The volume of canned beverages has risen sharply – at its peak it accounted for 50 per cent of the beer market. Resirk helps its owners keep consumer prices down.”
What were you most satisfied with last year?
“I am pleased that we gained Norwegian Pollution Control Authority’s acceptance for our calculation of the return rate for PET bottles and cans. Company management did a very good job there. And I am pleased with the way Resirk has taken over and further developed the operating facilities at Alnabru in Oslo.”
How much involvement does the board have in day-today operations?
“The composition of the board means we have a high level of expertise with respect to operations and logistics. It is therefore natural that we are interested in the details. I think company management benefits from having a board with practical insight.”
What is the most enjoyable thing that happens at board meetings?
“We are a good humoured bunch, who can have a good laugh at even the most mundane affairs. Nevertheless, the most inspiring moments are when we reach the goals we have set ourselves, and when we can explore new business areas in search of fresh ways to cut costs to the benefit of the consumers.”
When will we see a woman on Resirk’s board?
“We hold elections every year, so it depends on the candidates our owners put forward. It would be nice to have one or more women on the board. I think it could freshen things up and give us additional qualities.”

Economy

Environment-friendly and cost-effective operations are the objective – not profit (42)
Environment-friendly and cost-effective operations are the objective – not profit Norsk Resirk’s aim is to operate environment-friendly and cost-effective return systems. Its revenues derive from an administration fee, unrefunded deposits and the sale of collected materials. The administration fee is paid by importers and manufacturers for each can and bottle sold. The company also retains any deposits paid in by producers but not refunded to consumers because the packaging has not been returned. The sale of the collected materials to recyclers is the third source of revenue.
Because unrefunded deposits are a source of revenue, Norsk Resirk makes more money when the return rate is low. But this does not mean that its owners receive a dividend. Any profits are used to further develop the collection system and increase its efficiency, e.g. by increasing the marketing effort and through product development or a reduction of the administration fee. When the return rate is high, revenues fall. The administration fee payable by the producers must then be increased, but this increase is smaller than the gains afforded by a cut in the levy on bottles and cans. A higher return rate is therefore still profitable for producers, retailers and the consumer.
The largest factor on the cost side is, naturally, the refunding of deposits, followed by the handling fees paid to the collection points, transport, marketing and administration.

Deloitte
For full report see copy of REVISJONSBERETNING FOR 2005

PROFIT AND LOSS ACCOUNT
For full results see table in original on page 44

Since Resirk was in 2005 engaged in some business activities not directly related to refundable deposit operations (cans and PET). The company’s total revenues will deviate slightly from the total of the two individual systems (can and PET). The company’s financial statements have been audited by Deloitte & Touche, which also audits and approves the system used to collect return data from the reverse vending machines.

Norsk Resirk’s administration (original on page 46)

Stuff´s contacts (original on page 47)