Beer Keg Deposit Increase Comes to Head for Some Bars

The use of a container deposit system has proven to be a workable yet at times contentious approach to minimizing financial pain associated with container loss.  The deposit system makes return of the container more likely, but can be a source of frustration to customers if it is structured to tie up money in deposits on an ongoing basis as empty containers are returned and full ones delivered. And of course, when containers are not returned due to loss, theft or other reason, that deposit money is permanently lost, another unpopular outcome.

The issue of container deposits recently came to a head in Houston, Texas, when a popular distributor raised its keg deposit from $50 per keg to $60.

In response, two bars have indicated they will stop purchasing kegged beer from Silver Eagle,  the distributor involved.  Brands involved in the situation include Houston’s Saint Arnold, Karbach and 8th Wonder, as well as national brands, including Firestone-Walker and Sierra Nevada. One bar owner noted that at $60, the deposit has doubled in just a few years, emphasizing that because there are always kegs coming and going, the deposit system can tie up thousands of dollars on an ongoing basis.

One bar owner typically has 70 to 100 kegs on hand from various distributors. After running out of those supplied by Silver Eagle, he does not plan to purchase more unless the deposit hike is rescinded, expressing concern that deposit might climb to $100 or $200 per keg if left uncontested.

For its part, Silver Eagle Distributors stated in an email that the increases in the deposit fees were just an act of passing along an increased deposit charge from the brewer. It called deposit fees a standard operating procedure in the industry.

Another distributor, Ben E. Keith Beverages, which carries such brands as Real Ale, Alaskan and Odell’s, stated that it had no current plans to increase its deposit. It had raised the deposit fee to $50 in February, however, in response to a previous Silver Eagle increase. It was noted that most kegs are interchangeable; a bar owner could take a keg purchased from Ben E. Keith and return it empty to Silver Eagle to receive the higher credit amount.

The article also touched on the topic of theft and loss. “It’s easy money (for thieves),” one operator commented. “You can easily sell it off as a keg or you can sell it off as scrap.”

The resistance, notes the article. leaves the breweries in an uncomfortable spot because they want to maintain good relations with distributors and retailers.

It seems to me that if the issue is how much money the bars have tied up in keg deposits, surely the breweries and distributors could extend a free float time period or only charge for kegs not returned within a reasonable time, to unshackle customers from that financial burden – if in fact this is the key issue.

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