Packaging legislation – costs, customers and reconfiguration

New environmental legislation is bringing increased costs and a demand for packaging redesign. Kate Loosmore, Head of Compliance Services at the UK’s largest compliance scheme, Valpak by Reconomy, explains whether your business is liable and how to navigate the new system.

Tackling the environmental impact of packaging is a big task for any brand, but the luxury market faces even greater challenges. When it comes to luxury goods, customers are looking for assurance that the product is a premium piece of merchandise, and packaging plays a pivotal role in the narrative.

As well as protecting the product, packaging gives companies a chance to reinforce brand values and to build a relationship with the customer. As a result, brands go to a lot of trouble to ensure that the whole experience around packaging – from purchase to unboxing – prompts a feeling of joy.

Historically, this desire to create a customer experience has sometimes led to ‘quality’ becoming synonymous with quantity. Understandably, brands have also favoured complex packaging materials that offer rich colours or elaborate finishes. New legislation, however, coupled with greater awareness of the potential damage to the environment, is driving a rethink around how we approach product protection.

Under new packaging reforms such as Extended Producer Responsibility (EPR) for Packaging and the Plastic Packaging Tax, brands will be charged with improving the recyclability of packaging, or including a greater percentage of recycled material into packaging products. Costs are rising steeply, so all brands will need to identify ways to alleviate the burden. Packaging reduction or redesign offer valuable ways to reduce costs and meet the goals of the legislation.

How much will costs rise?

Under pEPR, brands will be held responsible for funding the collection, sorting and recycling of waste packaging from households. Reporting requirements began in October 2023, with the first EPR fees coming into play in October 2025.

Costs are expected to rise from £350 million to more than £1.7 billion per year. In addition, a greater demand for data will require greater staff resources. Across industry it is evident that many packaging producers are struggling to engage with EPR reporting. As with any new system, the rules and understanding take time to settle, and many producers are uncertain whether they need to report data, and what that involves. Valpak is experiencing unprecedented volumes of queries from our members – last year we answered more than 19,000 calls to our contact centre.

Plastic Packaging Tax aims to build a market for recycled plastics. Those businesses which fail to include a minimum of recycled content in plastic packaging incur a tax of £217.85 per tonne. Unlike the data reporting requirements for pEPR, which call for data to be ‘as accurate as reasonably possible’, Plastic Packaging Tax leaves no ground for ambiguity. Brands must be able to prove conclusively that they have met the demands of the tax, or they will be charged accordingly.

EPR key facts

Packaging EPR applies to any business with a turnover of more than £1 million that handles over 25 tonnes of packaging materials.* These companies must report twice a year on the volume of packaging materials placed on the market and pay a fee to cover recycling costs.

Some businesses are not required to pay fees but must still report on the volume of packaging placed on the market in each of the UK nations.

In addition, all brands – regardless of size – will need to label packaging with a binary ‘recycle’ or ‘do not recycle’ label by 1 April 2027.

Valpak has been represented on Defra’s Advisory Committee on Packaging for 22 years. As the UK’s largest compliance scheme, Valpak’s database includes over 50 million SKUs and we have applied our data to produce more than 450 forecasts for pEPR and deposit return schemes (DRS).

To give an idea of the new scale of data reporting under pEPR, we have compared existing requirements with incoming legislation. In accordance with the 2007 regulations, businesses were asked to complete 119 data points; under pEPR requirements, large producers will now be asked to fill 520 fields. As the system develops, we expect the data requirement to rise to over 1,000 fields. This, coupled with the need to report twice a year instead of just once, adds a new layer of complexity to data reporting. With fees rising significantly, the need for accurate data also increases.

Eco-modulation

Under eco-modulation, those using materials that are difficult or expensive to recycle will face an even steeper hike in costs from 2026. The official list of non-recyclables is yet to be released, but shortlisted materials include items such as glass with attached ceramics and paper and card with ‘too much’ embossing.

Reducing costs

Brands looking to cut compliance costs under EPR have two main options – to reduce the volume of packaging used, and to eliminate non-recyclable products. Fees are based on weight, so lightweighting products or cutting out non-essential packaging both represent quick wins.

At Valpak, we regularly apply the information in our database to benchmark packaging performance against the industry average and ‘best in class’. Using a traffic light system, we model cost savings across a range of products to show potential EPR cost savings. Comparative lifecycle assessment is also used to demonstrate the pros and cons of different options.

For example, our research shows that by reducing the volume of glass and shifting away from hard-to-recycle plastics, EPR costs for the market average for glass fragrance packaging could be reduced by almost 42 per cent.

Making the changes needed under the new packaging reforms may present a daunting challenge, but the tools and knowledge to navigate the route are on hand. While packaging for luxury brands typically includes a high proportion of difficult-to-recycle materials, we know that customers are ready to embrace change. Switching to more environmentally-friendly alternatives can help to strengthen the customer relationship, while also significantly reducing costs.

*To find out whether your business is obligated, visit: https://www.valpak.co.uk/epr-drs/epr-for-packaging/epr-for-packaging-obligation-test/