Denmark's new Government has finally agreed to lift a 20-year-old ban on canned beer and soft drinks. This brings to an end the legal battle instigated by the European Commission against the country for breach of the European Union's packaging directive.

Denmark was the only EU country to have banned the use of aluminium beverage cans, for environmental reasons. Beverages have instead been sold in recyclable glass and plastic bottles. The previous government, headed by the Social Democrats and defeated in November elections, strongly opposed aluminium cans and had consistently ignored the Commission's call to lift the ban.

While the ban will be lifted on 23 January, retailers will be required to charge a deposit of DKr1.5 (US$0.18) per can. The same charge is applied to bottles and, the Environment Ministry said, and will ensure that customers return the empty cans to shops.

In a statement to journalists, Pia Ahrenkilde-Hansen, spokeswoman for EU Environment Commissioner Margot Wallstrom, said "We very much welcome this initiative by the Danish government.  The Commission has for years argued there is no contradiction in this particular case between maintaining a very high level of protection of the environment and actually enabling packaging to move freely across borders,"

While Danish brewers expect imports of beer to rise, analysts say the small domestic market is unlikely to be affected to a marked degree.

"Competition will become fiercer and it will reduce Carlsberg's market share, but not dramatically," Jyske Bank analyst Ulla Mouritsen said.

Carlsberg with a market share of around 70% and Denmark's second-biggest brewer Bryggerigruppen, are both ready to supply canned beers as soon as the ban is lifted.

Foreign beers currently account for under 2% of the Danish beer market and this is not expected to rise beyond 5%.

 "We've seen only a few foreign brewers in Denmark. The market is not very attractive, it is small and dominated by one big player, which makes it difficult to enter and the ban on canned beers has been an obstacle," Mouritsen said.

Annual beer consumption in Denmark totals around 545 million litres, making Denmark Europe's number five in beer consumption per capita.