Tesco and Sainsbury's to Pay Customers for Bottle and Can Returns

What the deposit return scheme changed

Tesco and Sainsbury's are among the large supermarket chains that will pay customers a small deposit back when they return empty drinks bottles and cans, as part of a UK-wide deposit return scheme for drinks containers. Shoppers pay a small deposit on top of the drink price at the till, then get that money back by returning the empty container, typically through a reverse vending machine in store or a collection point.

For supermarkets, this means installing and running the collection infrastructure, whether that is machines that take back containers or staffed collection points, alongside the till and stock changes needed to track deposits. It is a similar model to schemes already running in several European countries and in Scotland's earlier attempt at a deposit scheme.

Why it matters for retailer stocks

Supermarkets in the UK already operate on thin margins, so any new mandatory scheme that adds equipment, maintenance, and staff time to handle returns is a genuine, if modest, added cost. The scheme is designed to be funded largely through the deposit and producer fee system rather than coming straight out of retailer profit, but the upfront cost of installing machines and the ongoing running and maintenance cost still falls on the stores that host them.

There is also a customer-facing angle. Reverse vending machines and return points can support footfall, since shoppers already have a reason to visit the store to reclaim their deposit, and stores that make the process easy may see a small habit-forming benefit from more frequent visits. That is a soft positive that is hard to quantify against the hard cost of running the scheme.

Which stocks, and why

Tesco and Sainsbury's are named directly and are the two companies on this market with meaningful UK grocery floor space that will need to roll out collection infrastructure. Asda and Morrisons are also named in the reporting but are not listed on the London Stock Exchange, so they sit outside this market's coverage. The effect on Tesco and Sainsbury's earnings looks limited in isolation given the scale of their overall grocery revenue, but it adds to the list of ongoing compliance and packaging-related costs UK retailers have absorbed in recent years.

What to watch

The scheme's exact launch date, deposit amount per container, and how the cost is split between retailers and drinks producers are the details that will determine how much this actually costs supermarkets like Tesco and Sainsbury's to run. Commentary in Tesco and Sainsbury's trading updates on packaging and compliance costs would be the clearest sign of how material this ends up being for their margins.