Schenectady County

Bottle label rule could reduce beer availability

In recent years, Yuengling beer has become a common sight at bars and beverage stores throughout the
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In recent years, Yuengling beer has become a common sight at bars and beverage stores throughout the Capital Region.

But now, the Pennsylvania-based brewery is threatening to pull its beer — mostly pilsners and lagers — out of New York.

At issue is a new state law that requires all bottled products sold in the state to carry a New York-specific UPC code for bottle deposit and redemption purposes.

The law, which will go into effect on June 1, was part of the Bigger Better Bottle Bill, which also expands the state’s bottle deposit law to water bottles. The old law applied only to carbonated beverages.

Now brewers throughout the state and country are contacting legislators to voice their concerns about the new UPC code requirements. They say the cost of implementation will be prohibitive, particularly for small breweries, because it will require companies to maintain a separate inventory of product for New York and create a special New York label.

“There’s massive concern,” said David Katleski, president of the New York State Brewers Association. “It’s going to negatively affect every brewer in New York and out of state.”

Large domestic brewers will have an easier time complying with the law, he said, because they have deeper pockets.

David Casinelli, the chief operating officer for D.G. Yuengling & Son, the oldest operating brewing company in the United States, said that developing a separate New York inventory will be “cumbersome, costly and prohibitive. A smaller company like us would have to consider pulling our product from the state.”

He called the June 1 deadline unrealistic.

John Sheehan, a spokesman for the Adirondack Council, a group that supported passage of the bottle bill, said the new law requires businesses to make adjustments.

“Somebody is going to have a problem with it,” he said. “These are things the system is going to have to work out.”

He said that breweries will need to segregate New York product and that “there are going to be some start-up blips.

“This is relatively minor,” Sheehan said. “It’s something that can be handled without going back and changing the law.”

He said the bill is necessary because “water bottles have become a significant source of litter.”

cascade of nickels

The new law requires that 80 percent of the nickels collected as deposits on bottles but not redeemed be returned to the state. That money would be invested in environmental programs such as recycling, parks and pollution prevention.

The remaining 20 percent of unclaimed deposits will be kept by the beverage industry.

The new UPC code is supposed to prevent people from collecting a deposit refund in New York for bottles they bought in states that did not charge a deposit.

Recently, the Brewers Association, which represents brewers throughout the U.S., and the American Homebrewers Association e-mailed an action alert asking “New York beer activists” to contact their state legislators about the UPC change.

“This is bad for the state of New York, bad for small brewers everywhere and perhaps worst of all for New York residents who are craft beer drinkers,” the e-mail said. “Access to the wide range of beer you currently enjoy will be severely limited in the future should this requirement remain on the books.”

Bob Craven, general manager at Olde Saratoga Brewing Co., received a copy of the action alert.

The brewery’s Olde Saratoga line of beers is only distributed in New York, but another line of beers produced at the brewery, Mendocino, is distributed to 25 states on the East Coast.

“We’d have to segregate our New York Mendocino supply,” he said. “The logistics are kind of incredible. We’d have to figure out how many beers for New York and how many for everybody else.”

Nick Matt, president of F.X. Matt Brewery in Utica, which makes the Saranac line of beers and soft drinks, called the UPC code requirement “costly and terribly inefficient. If every state in the union required this, interstate commerce would grind to a halt.”

Matt said the new law could reduce the availability and variety of beer in New York if smaller brewers pull or cut back on the product they distribute to the state.

“Some products will never be available in New York as a result,” he said. “It could make it so you could never get certain Sierra Nevada or Sam Adams products.”

Saranac is available in 20 states, although half of its product is sold in New York. Matt said the company might decide not to distribute products that sell better out of state in New York.

“We might conclude that we only need one inventory,” he said.

He estimated that it would cost F.X. Matt Brewery “hundreds of thousands of dollars” to handle two separate inventories.

“That’s the expensive part,” he said. “New York state should be concerned. This is a native New York business that they’re putting a whole other level of cost on.”

Matt said he had a lot of concerns about the bottle bill and predicted that the cost of beverages would increase significantly.

He questioned another provision of the bill that raises the handling fee for each bottle from 2 cents to 3.5 cents.

“Somebody is getting a windfall out of this, and the consumers are going to pay,” he said.

Katleski said he recently attended the Craft Brewers Conference in Boston and brewers from all over the country were talking about the UPC code requirement.

“Brewers don’t want to distribute in New York because of laws like this,” he said.

Other groups have voiced concerns over the bottle bill, including the Food Industry Alliance of New York State and the Retail Council of New York State.

changes possible

Lawmakers have said they are considering revising the bottle bill to address the concerns of bottlers and retailers.

Travis Proulx, a spokesman for Senate Majority Leader Malcolm Smith, said legislators are still deciding what, if any, changes are needed and whether the bar code requirement should be delayed or dropped. “The people who are raising these issues are the same people who have been opposed to the bottle bill on its merits,” he said.

American craft brewers are “small, independent and traditional,” according to the Brewers Association, and typically produce less than 2 million barrels of beer annually.

Sales of craft beer have steadily grown over the past year. From 2007 to 2008, sales by craft brewers were up 5.8 percent by volume, according to the Brewers Association. Since 1999, craft beer’s share of the U.S. beer market has risen from 2.43 percent to 4 percent.

When the state’s original bottle bill was passed in 1982, non-carbonated drinks such as bottled water made up a small fraction of the beverage market, according to the New York State Department of Environmental Education. Today, non-carbonated water makes up more than 23 percent of the market.

The state estimates that since 1982, the bottle bill has reduced roadside litter by 70 percent, recycled 90 billion containers and saved more than 52 million gallons of oil.

Categories: Schenectady County

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