German trade association sues Munich gin distillery for violating national DRS rules

Munich-based gin distillery, The Duke, has been sued by the “Verband Sozialer Wettbewerb” (VSW), the German trade association that monitors industry compliance, for breaking the country’s DRS rules for non-alcoholic beverages. After two court proceedings, The Duke lost the case and had to pay around €68,000 (US$79,500) in damages.

Germany’s “Pfand” DRS does not require alcoholic beverages like wine and spirits to have a deposit, but according to The Duke, it is unclear whether this applies to non-alcoholic counterparts. The deposit applies to regular non-alcoholic beverages such as water, juices, and soda packaged in plastic, glass, or metal containers.

The Duke was sued by the VSW for not including a deposit on its non-alcoholic gin beverage, “Entgeistert.” The VSW claimed that as the drink is non-alcoholic, its bottle is required to be part of the nationwide Pfand system. 

Maximilian von Pückler, co-founder and CEO of The Duke, tells Packaging Insights: “The Duke has been unfairly treated, as no other companies have faced the same scrutiny, arguing that multiple companies exempt non-alcoholic counterparts from DRS requirements due to unclear rules.”

Meanwhile, Ferdinand Selonke, managing director at the VSW, counters that the association’s action against The Duke was a “standard case of mandatory deposit,” as non-alcoholic counterparts are not spirits, and are therefore subject to standard deposit requirements.

In response to the lawsuit, the gin distillery began selling its non-alcoholic gin in deposit-free stoneware bottles.

Unfair treatment or following the rules? 

As a result of the lawsuit, The Duke now sells its non-alcoholic gin in deposit-free stoneware bottles (Image credit: The Duke).Von Pückler argues that The Duke is “the only German company forced by a lawsuit to fulfill the deposit requirements.”

“We demand equal rules for all companies. Without exception, no company in Germany has implemented this deposit. That is a severe competitive disadvantage.”

However, Selonke tells us that the case was simple. “The product in question is not a spirit, as the distillery repeatedly and incorrectly claims, but simply a non-alcoholic juniper-based beverage in disposable packaging. This is regularly subject to the deposit requirement.”

He also explains that The Duke lawsuit is not an isolated case. For nearly two years, the VSW has taken action against other companies that offer non-alcoholic beverages.

Unclear legislation

The dispute was resolved through two court proceedings, both of which had contrasting decisions. At the regional court, a judge recognized the ambiguity of the Pfand law and ruled in favor of The Duke. 

In the appeal case, a different judge ruled that The Duke had to charge a deposit because there was no explicit exception for non-alcoholic spirits. The Duke accepted the final outcome, including the fee for damages. 

Selonke explains that Von Pückler was initially reprimanded for offering a non-alcoholic beverage in disposable packaging without charging a deposit.

However, Von Pückler refused to “cease the objectionable practice” or provide the requested cease-and-desist declaration despite the VSW warning. As a result, Selonoke explains that the association was forced to take legal action. 

Von Pückler highlights that he did not accept the VSW’s initial letter of compliance because he could not have imagined they would lose the case, as the law is “absolutely uncertain.”

Regulatory loophole or standard case?

Von Pückler argues that while Germany’s Pfand system is largely successful, the different materials and drinks categories should be examined more closely. He believes that a deposit for non-alcoholic beverages is economically unviable. 

According to the VSW, for two years the association has sued companies that offer non-alcoholic beverages without deposits.He says: “As so-called ‘non-alcoholic spirits’ are still a niche product, though rising demand, establishing a fully developed deposit scheme would not be sensible for economic and ecological reasons.”

“Furthermore, it would be highly confusing for customers when spirits are deposit-free, but non-alcoholic spirits are not.” 

Selonke also attests that Germany’s Pfand system is successful, including the deposit for non-alcoholic beverage containers. He notes that non-deposit beverage packaging litters parks, gardens, and forests in German cities. 

“DRS requirements and compliance are an appropriate means of protecting the environment, conserving resources, and promoting social cohesion.”

He highlights that the Pfand legislature has gradually expanded deposit requirements recently, with exceptions for certain alcoholic beverages, wine, milk, juice, and diet drinks.

“The Duke product in question was therefore not a ‘loophole’ that the legislature had inadvertently overlooked, but rather a standard case of mandatory deposit.”

Business impact

For The Duke — a company of roughly 20 employees — the impact of the lawsuit was “dramatic,” explains Von Pückler.

“We had to remove our product from retail shelves. Surely they wouldn’t implement a new deposit scheme for non-alcoholic spirits just for us? That is why we need publicity to change the laws, as the German deposit laws were created when there didn’t exist such a thing as non-alcoholic spirits. It simply needs to be adapted to the new reality.”

According to Von Pückler, The Duke also suffered from falling sales and high procedural costs — including those of the opposing party.

He argues that the VSW lawsuit exposes small businesses’ vulnerability, detailing the ease with which associations with “questionable motives” can issue warnings. Von Pückler advocates for transparent and fair legislation that protects small businesses.