Germany: Lidl is now making money with waste

Waste separation is a top priority at Schwarz Group (owner of discount retail chain Lidl and supermarket chain Kaufland). The discounter explains to its customers what they can and cannot throw in the yellow bin. Waste consultants, educators and consumer advocates give tuition in waste separation in front of selected Lidl and Kaufland stores.


Much waste comes from Lidl and Kaufland

The discreet discount group from Neckarsulm near Heilbronn (Germany) seems to be aware of its great responsibility. A good every tenth sales packaging in stores comes from a Lidl or Kaufland store. Disposal costs a lot of money. The Lidl parent company had to pay license fees of an estimated 85 million euros (US$ 102million) per year in the past. The new packaging ordinance is likely to drive the fees even higher. Every trading company that brings packaging into circulation must have its plastic volume licensed under a dual system such as the "Green Dot" company DSD or Belland Vision and pay money for it so-called license fee. In return, the dual system operator collects the waste and ensures optimal recycl


Lidl founded its own dual system

In order to save these costs, the Lidl parent company, the Schwarz Group, is now entering the waste disposal business and organizing its packaging waste itself from now on. Since 2020 the Lidl subsidiary PreZero has been operating its own dual system. The discounter can now even take money from manufacturers and other retailers to recycle their plastic waste. Until now, of course, PreZero has mainly collected and separated the in-house packaging waste in the Lidl and Kaufland stores. The potential is great: In 2020 PreZero already had a turnover of 700 million euros (US$ 840million) over a third more than in the previous year.


Takeovers of several waste disposal companies

The Swabians now cover the entire waste chain from organizing collection in a dual system to sorting and Recovery. The Schwarz Group has taken over the fifth largest private German waste disposal company, the Tönsmeier Group, as well as the recycler Sky Plastic and has invested hundreds of millions in new sorting systems for plastic waste thanks to the merger of the two French disposal giants Suez and Veolia, which together account for a good 50 billion euros (US$60 billion), the Lidl Group has taken another big step in the waste disposal market. PreZero took over parts of Suez's waste disposal business in Germany, Poland, Luxembourg and the Netherlands for 1.1 billion euros (US$ 1.3billion). And recently the discounter giant announced further expansion in Europe. The Schwarz Group is buying the waste disposal business of the Spanish construction company Ferrovial in Spain and Portugal for a similar amount.


Number three in the German waste market

With sales of more than two billion euros (Ferrovial not yet included), the Lidl Group is now number three in the German waste disposal market and has even overtaken the Alba Group. Only Remondis and the French Suez are even bigger. Why is the discounter bustling in the garbage business? Lidl is probably less concerned with the environment than with economic considerations. "We have to give waste a value," said Lidl boss Gerd Chrzanowski in 2019. The future CEO of the Schwarz Group sees waste disposal as a strategic business area of ​​the group. The company's aim is to continue to recycle the packaging of its own private label brands and to build up a kind of circular economy. Because the new packaging ordinance stipulates ever higher recycling quotas. By 2022, 63% of the plastics that end up in yellow bags, yellow bins or recycling bins will have to be recycled. In 2019, the share was still 58.5 percent. Lidl dreams of a circulatory system for recyclable plastic granulate. PET bottles, detergents and other plastic packaging are to be made from recyclates several times. In some cases it already works: According to the Schwarz Group, the self-made PET non-returnable returnable bottles of the Lidl and Kaufland own private label brands are already made entirely of recycled plastic, with the exception of the lid and the label.


With the entry into the garbage business, the clever discounter Swabians brought a lot of movement into the market. The ex-monopoly DSD lost its market-leading position and is now number two behind Belland Vision, which belongs to the French Suez Group, with a market share of just 15%. Composite packaging makes recycling difficult There are currently eleven dual systems. Not all of these will surely survive, predicts Olaf Pusch, Managing Director of Recycling Dual. His company has just received approval for a nationwide take-back and recycling system for packaging. Behind Recycling Dual is a brand new player, Smurfit Kappa, the largest manufacturer of paper and cardboard packaging in Europe. The landscape of dual systems is likely to continue to consolidate as more and more packaging manufacturers enter the market. At the same time, the large private waste disposal companies such as Alba, Suez and Remondis are trying to expand their influence. After Remondis was not allowed to take over the "Grüner-Punkt" company DSD for antitrust reasons, the German market leader acquired a dual system, namely the Eko-Punkt brand, at the second attempt.


However, many market participants doubt whether more plastic waste will be recycled and more recyclates will be used thanks to the Lidl offensive. "Composite packaging makes high-quality recycling more difficult," complains Axel Schweitzer, head of the fourth largest German waste disposal company, Alba. The films made of several layers glued to one another are currently practically not materially recyclable. Waste experts recommend that the hardly recyclable plastic trays disappear from the market and should be replaced by more environmentally friendly alternatives.


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