2005 - Scrap Yards & Kegs

Sent: Wednesday, July 20, 2005 3:08 PM
Subject: Re: Scrap yards and Kegs

This is in response to Neil Witte's e-mail about his kegs going to scrap yards. We also have suspicions of this happening locally, but no proof. How much does a scrap yard get for a stainless half-barrel? If it is more than the "standard" $12 deposit, we're all in trouble. I've always had a beef with what (in my opinion) are artificially low (but traditional) keg deposit amounts (currently $10 per quarter-bbl, and $12 per half-barrel in Oregon). I assume these dollar values were set after Prohibition was repealed, and probably represented the replacement value of kegs in those days. Steelhead is a small producer, which means we buy cooperage in small quantities. Sometimes with shipping, new kegs can cost us $100 +/- to replace.

We've basically solved the problem with our Dock Sales kegs: $70 cash or credit card for deposit - no checks allowed. (And we run the credit card charge. When they return the keg, we run a refund credit on the same card.) If we don't get the keg back, at least we've got $70 in hand. (Plus $30 for the tap deposit, for a total deposit of $100.) Eugene is a university town, and this cash or credit card deposit system was the only way we could get our kegs back. You'd be shocked at the number of people who went ahead and PAID that $100 on their credit card, and then forgot they paid it, and didn't remember they paid it until we called them and dangled the refund in front of them for incentive. They usually brought back the keg & tap within a week once we called them. Our Dock Sales keg-return ratio is "the good news". Our Distributor Sales keg-return ratio is "the bad news".

Do any breweries out there collect the replacement value on kegs that the distributor has lost? We wish we could! Somewhere out there are over 150 of our kegs, and we have no idea what people are doing with them. We suspect some have been sold to the local stainless scrap yard.

It will require a group effort with all small (and hopefully large) beer producers buying into the program of raising the dollar value of keg deposits. We would absolutely love to see ALL keg deposits go to $70 or $100, but that would be an industry-wide (and nationwide) move, and possibly the wholesaler and retailer organizations would fight us all the way. As far as I'm concerned, having an artificially low deposit system falls in the category of "give-aways" to wholesalers and retailers, which is mostly illegal in most states.

In my opinion, this would be an excellent initiative for the BA and other national brewer organizations to pursue. (And would save us even more money than the BA's last initiative of reducing our "Brewer's
Report of Operations" paperwork filing requirements from monthly to quarterly!)

This is a hot-button issue for lots of small brewers. Thanks for helping us get it out in the open for discussion, Lew & Neil. Are there any other brewers/breweries out there that would like to see the "standard" keg deposit values raised to $100 per keg?

Cheers, Teri

2009 Update:

New keg prices are up to $150-200 each. Oregon has gone to a $30 deposit per keg, regardless of keg size. This is a step in the right direction, but it certainly won't stop a homebrewer from cutting a hole in the top of some brewery's keg to create a $30 stainless steel homebrew kettle! FYI: That's a BIG loss to any small brewery.