Beer kegs are tapping the wallets of East Lansing partiers, with the price of a deposit on half- and quarter-barrel kegs tripling to $30.
The $30 deposit fee is an attempt to ensure the return of empty beer kegs to the breweries that fill them. The change was put into effect May 11 by the Michigan Liquor Control Commission.
An inexpensive keg of beer - with deposit and tap fees - now costs about $120.
"That's too much money for a college student," said Anthony Kowalewski, a food industry management junior. "That, with the tap (deposit) - that's more than the beer," he said.
The MLCC was approached by breweries, including Anheuser-Busch and Bell's Brewery Inc., in December 2005. Representatives from the breweries were concerned about the loss of thousands of kegs that were not returned to the stores they were purchased from, said Ken Wozniak, executive services division director for MLCC.
Kegs are capable of more than holding beer. They can be used as furniture, floats for boat docks and grills. They also have been taken to scrap yards, where someone can turn a profit from a keg's metal. If the steel market is right, a keg can be worth more than its deposit.
"What they were trying to do was change the system so the kegs would come back to them, and there was no question this was happening," Wozniak said.
The MLCC never examined the frequency of keg loss, he said, adding that the commission recognized it as a something that needed to be addressed.
"We accepted it as a problem, but there's no way we can directly verify it," Wozniak said. "We have to take their word for it ultimately."
In 2005, Bell's representatives proposed increasing the cost of a keg to $90, stating the fee should ensure the return of the keg.
Larry Bell, president of Bell's, based in Kalamazoo, said the commission should have increased the price of deposit to a least $50, because it costs a brewery more than $150 for a new keg.
Although he declined to say how many kegs haven't been returned to Bell's, he said the number is between 1,000 and 10,000, adding that he has photos of his company's kegs in scrap yards.
Bell, one of the brewers who spearheaded the deposit price raise, is unhappy with the increase.
"The scrap value of the keg is already more than $30, so the value of the law is moot because they took so long to pass it," he said.
Richard Hyatt, a scale worker at Friedland Industries, 405 E. Maple St., in Lansing, said the metal scrap yard used to have a lot of people bring kegs, but that has changed recently.
After the company was visited by breweries upset about scrap yards accepting kegs, Friedland Industries revised its policy. Instead of paying full price for the weight of a keg, a person is paid $6, creating an incentive to return the keg.
Tom Schoolcraft, owner of Select Metals Recycling, 5455 S. State St., in Ann Arbor, said he does not buy empty kegs with a brewery label.
"It's not my property to buy, and it's not their property to sell," he said.
For people who manage to sell an empty keg to a scrap yard, they can make anywhere from $11-$40 on an empty half-barrel, depending on the price of stainless steel, which most kegs are made of.
In effect for less than a month, the deposit fee increase is having an impact in East Lansing, said Mitch Mackowiak, sales team leader for M & M Distributors, a supplier of beer and wine to East Lansing bars, liquor stores and restaurants.
Mackowiak has noticed more cases of beer being sold and a decline in the sale of kegs since the increase.
It's a financial burden for college students to shell out about $70 in deposit fees for a keg and tap, he added.
"It will really impact me when the students are back in full force," Mackowiak said.
Ryan Beene can be reached at beenerya@msu.edu.
