How can coffee roasters and cafés manage latte levy costs?

Janice Kanniah
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June 16, 2023
An image of a barista in a cafe pouring milk into a latte in a takeaway coffee cup in an article on how coffee roasters and cafés can manage latte levy costs and takeaway cups

Sustainability experts, consumers, and specialty coffee leaders have written at length about single-use items, such as disposable coffee cups, and their impact on the environment. In recent years, a significant proportion of the public has become aware the majority of “recyclable” or “compostable” options are rarely collected and processed properly. This usually means end up having as negative an impact on the planet as traditional plastic cups.

Governments are aware that encouraging recycling is simply not enough, and many have focussed on pursuing other initiatives. These include encouraging cafés and restaurants to sell reusable cups, transition to home compostable cups, or integrate a cup deposit programme. While these options offer a solution to discourage the use of disposable cups, they have varying levels of success. 

The fact remains that for many customers, using takeaway coffee cups available in-store remains the most convenient option. To tackle this, many governing bodies are instituting a small charge on disposable cups — colloquially referred to as a “latte levy.”

What exactly is a latte levy? And how can businesses make the transition as seamless as possible without alienating customers or increasing costs? 

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Why are governments instituting latte levies?

Despite their general unsuitability for recycling or processing, disposable cups show no signs of becoming less popular. The global disposable cup market was valued at $14.82 billion in 2021 and is set to exceed $22.08 billion by 2028. While most of this demand comes from coffee drinkers, it is a group that has been experiencing increased awareness of the negative impact of single-use plastics.

As a result, municipalities across North America, Europe, and the Asia-Pacific region are incentivising the use of reusable cups in cafés in exchange for consumer discounts or free goods. Major coffee store chains are switching to using compostable cups and offering collection bins for them on-site. Other initiatives gaining traction include offering limited-use cups that customers can use and return for disinfection and reuse.

While these initiatives show promise, they will take time to scale up. In the meantime, customers are still using and discarding massive volumes of disposable cups. For instance, in Japan, Greenpeace reports 91 000 such cups are thrown away hourly — with just nine retailers responsible for 370 million cups in 2020 alone. In Ireland, the figure is lower but no less alarming at 22 000 cups an hour or 3700 tonnes of waste annually.

The majority of disposable paper cups are often lined with plastics or bioplastics and these layers must be separated before processing. For this to happen, consumers must dispose of the cups in a separate bin to avoid contamination with other waste streams. It is important to note only a few facilities can separate these layers, and the process is costly, with few incentives for businesses to do so.

When you consider less than 10% of the world’s plastic that is collected for recycling is actually recycled, it is apparent that further measures are needed.

An image of a barista handing a consumer two takeaway coffee cups, ripple wall coffee cups, in an article on how coffee roasters and cafés can manage latte levy costs and takeaway cups

How do latte levies work?

With governments around the world setting targets for reducing their waste production, latte levies have become popular. Research shows consumers respond better to having some freedom of choice when making tough decisions, instead of outright bans on certain behaviours. Instituting a latte levy involves charging a small but significant fee for the use of takeaway cups. Behavioural psychology suggests people are more likely to respond to a levy charge than a gift offered to reward certain behaviour.

Similar schemes have been used to get people to stop using disposable plastic bags typically offered when they purchase groceries. In the UK alone, the government started charging customers £0.05 per plastic bag. In less than a year, this decreased the use of plastic bags by over 80%. It is hoped this initiative will curb takeaway cup use significantly over the next few years.

An image of a compostable takeaway coffee cup, custom-printed takeaway coffee cup in an article on how coffee roasters and cafés can manage latte levy costs and takeaway cups

How could a latte levy impact roasters and cafés?

For the most part, businesses have been on board with efforts to curb the use of disposable cups use. They understand this is what customers expect, which makes it a good business decision and one that appeals to the public. 

However, some businesses have had concerns about how this could affect their bottom line. Disposable plastic or lined cups are affordable and easy to find, while reusable ones require labour, electrical power, and water to clean between uses. Then there is the concern that customers will react negatively to being asked to pay extra to use a disposable takeaway cup. Ignoring the issue isn’t an option either, as single-use packaging is likely to be phased out entirely in the future.

The best way to manage latte levy costs is to avoid waiting for it to become mandatory before making the change. Roasters and café owners can conduct an analysis of what the potential costs of switching to reusable cups or a latte levy would be, as well as how customers would react. This will help businesses establish what costs to can expect and how well customers will receive the news.

Roasters and café owners can also determine if certain workarounds exist, such as offering home compostable cups or arranging for their collection and processing. For example, some organisations, such as TerraCycle, offer branded and dedicated bins that businesses can order and then send back once filled. The organisation then arranges for waste to be disposed of correctly.

Whether your business has plans in place to address the latte levy or you aren’t sure to proceed, starting with a knowledge of where your cups come from and how they should be processed, is the first step in making any changes. MTPak Coffee offers a line of eco-friendly takeaway coffee cups that include compostable and recyclable options. Our range of takeaway coffee cups is made from recyclable and sustainable materials such as bamboo fibre, PET, and kraft paper, with an environmentally friendly PLA lining, which is a plant-based bioplastic made from renewable resources.

Our cups are available in four sizes: 4 oz, 8 oz, 12 oz, 16 oz, 18 oz, 22 oz, and 24 oz. In addition to being strong, waterproof, lightweight, and 100% compostable, our cups can be custom-designed using innovative digital printing technology.

For more information on sustainable takeaway cups, contact our team.

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