An opportunity to re-enter the ‘dual system’ market
Lünen. REMONDIS has re-entered the ‘dual system’ market after a four-year break following its acquisition of all shares in Duales System Deutschland Holding GmbH & Co. KG (‘DSD – Der Grüne Punkt’). The purchase must still be approved by the monopolies commission.
Having shut down its own packaging compliance scheme, EKO-PUNKT, in 2014 (the year the ‘dual system’ was undergoing a crisis), REMONDIS has re-entered this consolidated market as it believes there are now good opportunities to increase packaging recycling rates, especially against the backdrop of the new Packaging Law. The move to set up an impartial central office, which is responsible for checking that all sales packaging placed on the German market is licensed properly, should mean that the market is both fair and well organised in the future. Indeed, this is a must if the ambitious recycling rates set out in the Packaging Law and due to come into force in January 2019 are to be met. The market has clear rules and this impartial office will make sure that collection contracts will be awarded in an open and non-discriminatory way. It alone will decide who wins the contracts to collect light sales packaging and glass.
“This improvement to the overall framework conditions puts REMONDIS on a level playing field with the other competitors in this market and will make it possible for it to grow its business abroad. All around the world, politicians are talking about plastics recycling. DSD’s global standing will help open up new opportunities here, too,” commented Ludger Rethmann, REMONDIS Board Chairman.
Originally founded as a non-profit company, the packaging compliance scheme, Duales System Deutschland, now employs approx. 220 people and generates a turnover of 490 million euros. It is one of nine ‘dual systems’ operating on the market for licensed waste packaging, which has an overall volume of around 900 million euros. A number of new companies have entered the ‘dual system’ market over the last few years, which has resulted in the company not only losing a good three-quarters of its original turnover but also changing hands several times.
Today, DSD’s annual results are well below the figures generally generated by medium-sized private sector firms operating in the industry and indeed below those of medium-sized public sector businesses, such as those owned by the City of Dortmund.
DSD no longer dominates the market as it did in the past. The two large French companies, SUEZ (turnover: €15.9bn / workforce: 90,000) and Veolia (turnover: €25.125bn / workforce: 168,000), have both been operating their own ‘dual system’ packaging compliance scheme for a long while now, as do a number of medium-sized recycling firms who together own their own compliance scheme. Even Chinese companies have a considerable share of the market via their German associated company, ALBA / Interseroh.
The Schwarz Group (Lidl/Kaufland) is the latest new player to enter the recycling market. It has an annual turnover of €96.9 billion (2017) – thirteen times that of REMONDIS – and employs 400,000 people, considerably more than the number of people working in the whole of the industry. In 2018, the Schwarz Group’s subsidiary, GreenCycle, took over the company Tönsmeier, the fifth-largest recycling firm in Germany – acquiring a volume of sales three times bigger than all of the acquisitions made by REMONDIS in 2016 and 2017. Recently, the Schwarz Group also entered the ‘dual system’ market as one of the biggest competitors by transforming its subsidiary SDL Sigma GmbH into the new PreZero Dual GmbH.
The decision of Chinese investors to purchase shares in the Scholz Group (€1.634bn turnover), EEW (€541m turnover) and Alba/Interseroh (€1.28bn turnover) over the last two years has led to a further diversification of the market as well.
The increase of digitisation has also added momentum to the market besides the changes mentioned above. A number of firms belonging to the Schwarz Group, for example, offer online platforms for business customers and a contract platform for ‘dual system’ companies and their customers.
Thanks to its acquisition of DSD, the REMONDIS Group will be able to offer its customers even more services in the area of packaging licensing and so help fulfil their wish for more closed-loop systems and improved product designs with recyclable packaging.
Most of the other EU member states still need to introduce packaging compliance schemes similar to the German ‘dual system’ as do countries beyond Europe, such as Russia and China. If REMONDIS is to be able to operate on these markets as a reliable and expert partner, then it must also play a role on its own packaging recycling market. DSD, which REMONDIS originally helped found as a non-profit organisation, is both well-known and respected abroad. Purchasing DSD, therefore, should also provide REMONDIS with opportunities to grow its business outside Germany.