Beer brewers battle over lost kegs

Both craft beer makers and their corporate counterparts are increasingly concerned about disappearing kegs, which are giving their industry a multimillion-dollar hangover.

By Jason Notte Mar 4, 2013 3:53PM

File photo of beer kegs (Monty Rakusen/Cultura/Getty Images)

The adversarial relationship between large, established beer brewers and their small, "craft" counterparts is as much about the ideology behind the beer as it is about what's in the bottle or cans.

It's broadly palatable light lager versus more complex styles, it's embraced familiarity versus constant experimentation, it's sprawling distribution networks versus word of mouth, it's a global marketplace versus local markets.

Then again, sometimes it's just about simple business.

Those broader conflicting concepts tend to inflate just about any squabble between large and small brewers into David-and-Goliath narratives. When small Tennessee brewer Calfkiller got into a tussle with Anheuser-Busch InBev (BUD) over old kegs that Calfkiller says A-B wanted back, Calfkiller took to its Facebook page and tapped out a lengthy screed about how its tiny operation was being bullied by the big, bad brewer.

Though the plan worked and Calfkiller kept all its kegs -- even giving A-B a rare “thank you, Budweiser” from a craft brewer on Facebook (FB) a few days later -- it's a prime example of the kind of beer battles brewers should be avoiding.

Kegs are a touchy subject throughout the beer industry regardless of the size of the brewery sending them out. When kegs leave a brewery's loading dock, they do so as property of a brewery that's basically on loan to the folks taking them. The $20-or-so deposit a buyer puts down on the keg isn't its official value -- which can reach beyond $120 for an empty half-barrel -- but a means of making sure those kegs are returned.

In Anheuser-Busch's case, those kegs have metal stamping on them that clearly marks them as property of Anheuser-Busch InBev and instructs those in possession of them to send them back home through proper channels as quickly as possible. Basically, if a frat decides to eat $20 to give themselves a piece of furniture for a semester or a group of overnight campers doesn't feel up to hauling a keg out of a canyon with them early in the morning, that deposit will go to whoever steps up and returns it.

Some kegs get lost along the way. They're sold for scrap at $25 to $35 more than their deposit price or have their stamping hammered out or plated over to be sold in the secondary market. With A-B claiming that it doesn't sell kegs, as it did in the Calfkiller case, the brewery is free to come collect any keg that still has a stamp on it and is reported back to an A-B distributor. Though a small brewer may have bought the old kegs in good faith, they basically just received stolen property.

Craft brewers themselves have been on A-B's side of the equation and haven't liked it very much. CNBC discovered that keg thefts are becoming increasingly common, with the Beer Institute reporting that 300,000 kegs a year are stolen, costing breweries $30 million to $50 million. That includes brewers like New Belgium Brewing Co. in Fort Collins, Colo. -- considered the third-largest craft brewer in America behind Sierra Nevada and Samuel Adams brewer Boston Beer Co. (SAM) -- which began using radio frequency devices to keep track of kegs four years ago.

More on moneyNOW

Tags:

BeerEconomyTotal fail

< Back to moneyNOW