‘The timing quite literally could not be worse’: Coffee retailers warn trouble brewing over ‘latte levy’

The forthcoming “latte levy” on disposable drinks cups will hit small companies hard, potentially putting thousands out of business “overnight”, the Government has been warned.

Aimed at slashing disposable cup use in lieu of reusable alternatives, the proposed 20 cent consumer charge is part of the Government’s move toward a circular economy.

However, newly published industry submissions from household-name coffee retailers and suppliers show considerable pushback and fears of detrimental commercial consequences.

Butler’s Chocolate Cafe, employing about 450 people nationwide, was among the stronger critics claiming “the timing quite literally could not be worse” in an era of business cost inflation.

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“This levy could literally put thousands of stores out of business overnight,” its submission claimed.

As with many of the 41 individual submissions, Butler’s noted a post-Covid market recovery in which businesses have faced record levels of inflation, spiralling input costs, rent pressures and commercial rates, and a 400 per cent surge in electricity costs. Several noted independent moves toward the use of more sustainable cups.

The Government’s Waste Action Plan for a Circular Economy views such environmental levies, similar to that on plastic bags, as key in encouraging “more responsible behaviour” and assisting in the phasing out of single-use products.

What has come to be known as the “latte levy” would see customers buying hot drinks in a single-use disposable cup charged 20 cent at the point of sale. But to the frustration of many operators, this includes compostable, biodegradable and recyclable cups. Reusable cups are exempt.

The Department of the Environment believes millions of single-use cups sent to landfill or incineration every year to be “an entirely avoidable waste”.

In 2022, it has pointed out, a survey by Irish Business Against Litter (IBAL) found a continued prevalence of disposable coffee cups.

Despite the motivation, businesses in the sector believe the levy to be a blunt, often misdirected instrument.

Bewley’s Tea and Coffee said, with the proposed levy on its way, it had observed some vendors opting to use cheaper paper cups with higher levels of plastic.

“We believe that the unintended consequences of the cup levy will actually increase the amount of plastic of which is being disposed,” it said.

In terms of practicalities, it explained small businesses offering supplementary coffee, and relying on impulse transactions, required single-use cups. “Of the 4,500 businesses we serve in Ireland, we estimate up to 1,000 will be impacted negatively.”

Coca-Cola pointed out the levy would add 8 to 10 per cent to the price of a hot drink which, together with a forthcoming increase in VAT from 9 to 13.5 per cent, would represent a substantial additional charge.

“The imposition of a levy, particularly during a cost-of-living crisis, will significantly impact on [business] competitiveness and on the business environment in which they operate,” it said. “This point speaks to the question of timing and the need to maintain the levy at a reasonable rate.”

Ibec’s Food Drink Ireland similarly complained about the timing while Musgrave, which supplies SuperValu and Centra among other retailers, said the Government should “step up” in its provision of composting waste infrastructure and education. Its Frank and Honest brand, it noted, has used compostable cups exclusively for the last five years.

“It does not make sense that, under current proposals, recyclable and compostable cups will also be levied,” said Retail Excellence, the industry group.

Insomnia Coffee, one of the country’s most recognisable outlets employing about 500 people, noted unspecified research the levy would result in “a minimum of 8 per cent lost footfall”.

As with other contributors, it also quoted a lack of public support as reflected in a 2022 Ireland Thinks Poll showing 63 per cent of respondents believed the Government should prioritise recycling and composting facilities rather than imposing levies.

It also quoted a 2021 RBB Economics Study claiming a switch from single to multiple-use systems increased business operating costs by 270 per cent.

“Each time a reusable cup is used, a washing cycle is needed, and this cycle consumes more energy and water than the production, use and end-of-life of a single-use paper cup.”