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Demise of the Keg?

Retailers say keg laws turn off customers

July 13, 2008
By RICHARD NILSEN, The Leader-Herald

While extending New York's keg law set to expire in November, the state Legislature made a significant change - a reduced deposit.

Enacted in 2004, the keg deposit law required beer retailers to collect a $75 deposit and affix a registration label to the keg. Deposits are returned to customers if kegs are returned undamaged within 90 days of purchase. Last month, the state Legislature dropped the deposit to $50.

While local retailers say they are happy with the reduced deposit, they are not happy with the paperwork involved. The bill continues the requirement for beer kegs to be labeled with a registration deposit tag.

Article Photos

The Leader-Herald/Richard Nilsen

Luke Heroth of Fort Plain, left, helps Marc Hughes of Midtown Discount Beverage in Johnstown put beer kegs in Herot-h’s vehicle Tuesday.

According to a statement in support of extending the bill from the state Assembly, "A one year-extension of the statute will afford additional time to continue to evaluate the efficaciousness of its provisions."

State Sen. Hugh T. Farley, R-Niskayuna, said the original bill was passed to help curb teen drinking parties.

"After it was passed, we got calls from consumers who said they just wanted a keg in their rec room and would go through less than a keg per month," Farley said. "Also, distributors felt it hurt their market."

Farley said there also were complaints from retailers near the state border who said the laws drove consumers over the state lines to buy kegs.

"There are a lot of things that go into one of these bills," Farley said.

At Midtown Discount Beverage in Johnstown Tuesday, owner Marc Hughes was exchanging empty kegs with full ones for Luke Heroth of Fort Plain.

"I have my own tap, so at least I don't have to pay rental on that," Heroth said.

But whether the deposit was $75 or $50 per keg was of little interest to Heroth, because he said he never expected to see his money back.

"I always exchange my empty for a full one," he said. "Since I always have a keg checked out, I'll never see my money back."

Hughes said he hasn't seen the paperwork on the new, lower keg deposit, so he continues to collect a $75 deposit until he hears an official word otherwise.

"I am surprised the state lets us keep the deposit if the keg isn't returned in 90 days," Hughes said. "In that case, the state doesn't get anything."

Hughes said he didn't mind the deposit, although it added to the initial cost of a keg for his customers. What he minded was the accompanying paperwork, having to put a label on the keg and acting as an agent for the state.

"Sometimes it seems like I'm just collecting taxes for the state," he said.

At TJ's Discount Beverage on Elmwood Avenue, in the town of Johnstown, Bob Neelis said he had heard of the reduced deposit, but hadn't gotten notification either.

"I haven't gotten the official word on it yet," Neelis said.

He agreed with Hughes on the paperwork issue.

"Checking paperwork and handling deposits is a hassle," he said. "It's really too much work to do for kegs."

Neelis said less than 5 percent of his beer sales come from kegs.

"There's a lot of money tied up in deposits," he said. "I'm not sure it's worth it."

At Abraham's grocery, on North Main Street in Gloversville, Ed Abraham Jr. said he discontinued keg sales since the deposit law went into effect four years ago.

"We used to average 20 kegs on a weekend 15 years ago," Abraham said. "But with the deposit added and paperwork, keg sales really fell off."

He said 30 and 36 packs of beer have largely replaced kegs in sales and were a considerably lower initial cost to the consumer.

"With the $75 keg deposit, $30 for the barrel, $40 tap rental and cost of the beer itself, it could come close to $200," Abraham said. "Add to that the paperwork in triplicate and the interest for my customers waned."

Abraham said a keg log had to be kept in the store, and it seemed like the state wound up with more of the proceeds than the retailer.

"It wasn't worth it," he said. "It's a lot more work to sell packaged beer. A 36-pack is easier and the liquid volume is the same."

Abraham said the additional regulations with kegs were part of his decision to discontinue carrying kegs.

"We specialize more in craft beer now," Abraham said. "There area lot more micro-breweries out there, and we have more variety."

Richard Nilsen is a general assignment reporter and can be reached at ga@leaderherald.com.

 
 

 

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