Two of South Africa’s largest listed retail groups, Pick ‘n Pay and Shoprite, have announced reductions in the prices they are charging consumers for plastic bags.
The news comes after discussions between retailers and the Minister of Environmental Affairs and Tourism in July that had apparently resolved disagreements within the industry over new legislation requiring use of thicker bags for recycling purposes, but not explicitly mandating charging consumers for the previously no-cost bags.
As a consequence of the new legislation in June, which saw consumers having to pay for their plastic bags for the first time ever, plastic bag sales have plunged by 80% and jobs have been lost in the local plastics industry. However, some retailers such as Mr. Price Group have resisted charging any price for their plastic bags, thus causing controversy.
In a statement late Monday, Pick ‘n Pay Managing Director Nick Badminton said the group would cut the price of its 24-litre plastic bags to 17 cents from 46 cents, and that of its 12-litre bags to 12 cents from 31 cents, as of 12 August. This had been achieved through an agreement with the plastics industry on a lower cost price of bags, and by redirecting bulk and cash discounts from its Plastic Payback campaign directly into the cost price of the bags.
The move would still retain a value for plastic bags, thus benefiting the environment, Badminton said, while helping retain jobs in the plastics industry, promoting consumer rights and adding to transparency in the industry. The company had also decided to deduct the original cost it had incurred for issuing free plastic bags (15 cents per bag) as a subsidy for consumers.
”The new cost price of a bag to Pick ‘n Pay will be 32 cents for a 24-litre bag, which, with the 15 cent subsidy, will bring the cost price to consumers down to 17 cents,” he explained. ”The consumer will now be able to see the cost price of the plastic bag, less the cost the company used to incur for free bags, marked clearly on their till slips.”
Because Pick ‘n Pay had experienced a sharp drop in plastic bag usage, the balance of the savings realised would still be put into lowering food prices through its ”Plastic Payback Food Subsidy,” Badminton added.
Shortly after Pick ‘n Pay’s announcement, Shoprite CEO Whitey Basson said the rival food retailer would also cut the price of its plastic bags — to 15 cents and 12 cents respectively.
”Under the circumstances, we find Pick ‘n Pay’s unilateral action to reduce the prices of their plastic bags suspicious and contrary to their declared interaction of protecting the environment.
Consequently, I question their business ethics and view this as simply another marketing gimmick. As the lowest price food retailer in South Africa, we have no alternative but to cut the prices of our bags as well.”
Basson said that all the major South African retailers had met with Minister of Environmental Affairs and Tourism, Mohammed Valli Moosa, two weeks ago in an attempt to resolve the problems regarding the protection of the environment and safeguarding jobs in the plastics industry.
”Following this discussion I personally received a phone call from (Pick ‘n Pay CEO Sean) Mr Summer’s office requesting that we undertake not to use the plastic bag issue to score price points against each other … However, we trust that Minister Moosa, who initiated this campaign, will act in terms of the objectives that he wishes to achieve.” – I-Net Bridge