January 10, 2018

The Latte Levy: Ludicrous or Long Overdue?

2.5 billion disposable cups are used every year in the UK – and that’s the conservative estimate. Of these, less than 1% are recycled.

Enter the latte levy: a 25p fee for using a takeaway cup.

This at-point-of-purchase tax is currently under proposal in the UK. But will it really have the impact we’re looking for? Who are the winners and losers in this situation? And how would it affect the coffee industry as a whole? Let’s take a look.

You might like Creative Ways to Reuse Your Coffee Grounds!

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Only 1 in 400 to-go coffee cups are recycled in the UK. Credit: Ross Varrette

Why a Latte Levy?

87% of British consumers try to recycle to-go coffee cups, but less than 1% of those arriving at one of the UK’s three appropriate recycling centres. So, what’s happening to all the cups that are being sent for recycling but aren’t making it?

The vast majority of disposable coffee cups cannot be recycled in the standard paper or mixed recycling bins that you’ll find on the street. This is because they are made of 95% paper fibres and 5% polyethylene lining – and while both elements are recyclable, they need to be separated first.

With only three British centres capable of separating the tightly bonded materials, the odds are slim of to-go coffee cups being reused (although the UK’s two most widespread chains, Costa Coffee and Starbucks, have appropriate in-store recycling bins).

This leaves two solutions to the coffee cup issue: change the cups or switch to reusable ones. And the Environmental Audit Committee, made up of British Members of Parliament (MPs), has opted to recommend the second option (with a potential ban on paper cups by 2023 if they’re not yet easier to recycle).

It’s worth mentioning that there are efforts to make recyclable to-go cups, such as Frugal Cups, which have their polyethylene lining only lightly attached to the paper. However, these are not widely in use.

What’s more, in the UK, many paper recycling centres won’t take paper that’s been “contaminated” by food and drink – whether that’s to-go cups or anything else.

The committee has noted that attempts to encourage consumers to stop purchasing to-go cups through discounts have resulted in just 1–2% of consumers bringing a reusable one to the coffee shop. The latte levy, they hope, will be more effective.

So what will happen to the 25p? Under the committee’s proposal, it would be invested in improving recycling facilities.

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Conservative estimates state that 2.5 billion to-go cups are used in the UK every year. Credit: Tim Wright

Charging for To-Go Cups: Will It Work?

It’s clear that something needs to be done about the UK’s disposable coffee cup usage. And the committee points out that the recently introduced plastic bag charge (a minimum of 5p per plastic carrier bag) resulted in an over 83% reduction in use within one year.

If similar success were seen with coffee cups, that would reduce our 2.5 billion cups to just 425 million. While it’s still a significant number, this would represent a huge improvement.

However, carrying a reusable cup is more inconvenient than a carrier bag. Moreover, while shopping is often a planned activity, it seems likely that a significant portion of to-go coffee purchases is the result of impulse buys. City commuters may know that they purchase a coffee at the train station – but what about Saturday shoppers, sightseers, and the like?

Bradley Steenkamp, Director at Horsham Coffee Roaster in West Sussex, says, “As a coffee shop owner, 25p seems excessive and doesn’t fully tackle the problem. If someone is out for the day and wants a coffee, it’s unlikely they will always have a cup with them. They will spend the money anyway!

“The focus should be on better recycling and promotion and enforcement of compostable cups. A small additional charge would be fine but some of that money should go back into the business with a requirement to use compostable and biodegradable cups.”

On the other hand, coffee consumer Julio Guevara says, “In my opinion, it’s both up to the cup’s producer and the consumer to take responsibility for the trash. So either paying for a ‘latte levy’ or bringing my own cup is something I would certainly do.”

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Some coffee shops double-up their to-go cups when running low on sleeves, doubling the environmental impact. Credit: Drew Coffman

Why Should The Coffee Industry Pay When Others Don’t?

Some feel that the coffee industry is being scapegoated. Disposable cups are only 0.1% of total UK Waste (and 0.7% of packaging waste).

Dillon Jabez Fearns, independent barista and coffee-lover, tells us, “It singles out coffee and that’s unfair. Food containers and disposable cutlery also contribute. The levy of 25p is too much and would be better if reduced, applied to all disposable food containers, and revenue ring fenced for better street recycling.”

He’s not the only one to feel this way. Coffee-lover Greg Cox, despite being a reusable KeepCup owner, says “When I see the amount of assorted fast food wrappers littering the streets of any town, and most roadside verges, I can’t help wondering if the coffee consumer is being unfairly targeted by this proposal?”

On the other hand, there are practical reasons why coffee cups might be easier to target than food. Not all food is made in-store, unlike coffee. Many food items might need packaging for transportation from the warehouse to the café, so it doesn’t make sense to penalise the consumer. It’s also a lot easier to bring one reusable cup to work than it is a whole dinner set (and, given that these cups have a lid, a lot less messy too).

And of course, just because there are other offenders in the UK’s waste disposal system, doesn’t mean we should avoid tackling some of the “easier” challenges – such as to-go cups, plastic water bottles, and single-use carrier bags.

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KeepCup is just one of many brands of reusable cups on the market. Credit: Ana Valencia

Coffee & The Environment: A Close Relationship

If it’s almost impossible to separate the polyethylene layer from the paper coffee cups, it’s even harder to separate the coffee industry from the issue of environmental sustainability. Some of the major challenges facing coffee producers today are reduced land, thriving pests, and inconsistent weather – all of which are exacerbated by climate change.

Learn more! What Are The Main Challenges Faced by Coffee Producers?

Even if paper cups are recycled, they still have an environmental footprint: trees were cut down to create them. Petrol was used to transport the raw materials, as well as take the used cups to the recycling centre. Manufacturing and recycling require energy.

So isn’t it fitting that, as we enjoy sipping on our daily coffee, we also share the responsibility for ensuring sustainability across the entire supply chain?

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Coffee in glass jars: Bar Nine offers a discount when the glass is brought back for a new drink. Credit: Nate Dumalo

But Who Should Pay: Café Owners, Consumers – Or Someone Else?

One of the most widely debated issues over the latte levy has been the question of who should pay. As this BBC video makes clear, many believe it should be the café owner:

Similarly, while the Environmental Audit Committee proposes a 25p latte levy, they mention that coffee houses could choose to absorb it.

With Pret a Manger already offering a 50p discount for reusable cups – reducing their organic filter coffee to just 50p – and Starbucks and Costa Coffee giving a 25p one, coffee shops could feel under pressure to pay for the latte levy out of their own profits.

Yet Angelo Sportelli, a Sales and Support Manager for a Somerset-based coffee roastery, says, “For me, the ‘shouldn’t be passed on to the customer’ opinion is deeply wrong. At the end of the day, nowadays there are so many options for reusable cups… Plus, gross profit on coffee, when using quality beans, milk and equipment, is already pretty low. Adding on an extra cost would be extra weight on an already difficult balance.”

Even if the latte levy were absorbed by the coffee shops, would it really be them who pays the full fee? Or would they be forced to pay their baristas less? Or even negotiate lower prices with their suppliers – something that could, in turn, make its way all along the supply chain to the coffee producers?

Jeffrey Sachs, economist, senior UN advisor, and director of the Earth Institute at Columbia University, has already proposed that coffee prices be raised by just 5¢ a cup so that producers’ incomes, which are already often less than a local living wage, can be doubled. In light of this, should we really be trying to reduce costs by 25p a cup?

What’s more, if coffee shops absorb the latte levy, there will be no incentive for coffee consumers to use reusable cups – and there will be even less funds available for those cafés to invest in recycling and sustainability schemes.

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Reusable cups come in a range of styles and sizes, operating as a fashion accessory as well as a cup. Credit: Ana Valencia

How Will This Affect The Coffee Industry?

Despite all the compelling reasons behind a latte levy, there’s no doubt that it will have an impact on consumer spending habits. Consumers who don’t have their cups on them may be tempted to skip their morning coffee and instead have one at the office, putting a dent in the UK’s fast-growing café industry.

The UK’s plastic bag charge is only mandatory for shops with more than 250 employees. Since the latte levy proposal is modelled on the plastic bag charge, some hope that independents will find themselves exempt from it and will perhaps even find themselves with a competitive advantage compared to high street brands. Others point out that there is no guarantee of this.

Café owner Alex Williams tells us, “[The latte levy] is a tricky one and definitely something that is needed to help bring an end to wanton waste that comes with takeaway coffee cups. We go through hundreds a week and this is just one café in one city… However, this drastically affects margins for takeaway coffee so how we deal with that is yet to be decided.

“Definitely having a huge drive on selling [reusable cups] is going to be a way, perhaps offering further discounts for people bringing their own cups and making sure service is efficient and quick so that people feel like they can afford the time to drink their coffee in-house so they don’t feel the need to take it away. Wishy washy [ideas], yes, but we’re still figuring it out.”

Positive communication about the benefits of reusable cups, more explanation about the impact on the environment, and even just more awareness of the fact that less than 1% of to-go coffee cups actually get recycled – this may be the key to nudging consumers to invest in their very own portable coffee mug.

What’s more, should the latte levy become law, we can expect reusable cup manufacturers to benefit from increased profits. Hopefully, we’ll even see a greater variety of quality options on the market.

And with to-go cup design currently forming part of most coffee shops’ marketing efforts, we might see cafés being forced to become more inventive with their branding.

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87% of British consumers say they try to recycle their takeaway cups. Credit: Marion Michele

The latte levy is still just a proposal, but it’s brewing plenty of contention in the UK. It offers the potential for a more environmentally friendly industry as well as business growth among reusable cup manufacturers – albeit at the expense of the consumer, who even if they don’t pay the tax will have to invest in a cup.

While we welcome the focus on our environmental footprint, we need to make sure it is truly sustainable: for café owners, consumers, and everyone in the supply chain. What we don’t want to see is fewer people buying coffees that have become more expensive, simply because they aren’t inclined to invest in a reusable cup.

Pricing, marketing, and understanding consumer behaviour: it’s a delicate balance. For now, we’ll be keeping an eye out for pilot studies, including this one being conducted by Starbucks.

Liked this article? Check out Creative Ways to Reuse Your Coffee Grounds!

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