Stolen kegs have beer makers feeling tapped out

updated 2:52 p.m. ET July 2, 2007

MILWAUKEE - Tap it, don’t scrap it.

With metal prices rising, beer makers say they expect to lose hundreds of thousands of kegs and millions of dollars this year as those stainless steel holders of brew are stolen and sold for scrap.

The beer industry is coupling with the scrap metal recycling industry to let metal buyers know they can’t accept kegs unless they’re sold by the breweries that own them. They’re also pushing for legislation that would require scrap metal recyclers to ask for identification and proof of ownership from would-be sellers.

The beer industry’s main trade group, the Beer Institute, noticed the problem in the past few years as it saw more brewers reporting missing kegs, resulting in an industrywide loss of up to $50 million a year, said Jeff Becker, president of the Beer Institute.

“It really got people’s attention because that’s a significant flow of our kegs that we’ll never see again,” Becker said. “We know some of it’s very innocent but some of it’s not.”

The theft problem is twofold, he said. Some average keg-buying customers opt to forgo their deposits, which can sometimes range from $10 to $30, because they can cover that expense, and then some, if they sell to scrap dealers.

He could not say how much kegs go for, because prices change locally. But given prices metal trading prices in the past year, a keg could fetch from $15 to $55 or more at scrap yards.

But he said thieves know metal prices are on the rise and are on the prowl for kegs. They often find empty kegs unsecured — in alleys and anywhere else restaurants, bars or distributors might store them — and sell them at scrap yards.

While only about 12 percent of the nation’s beer is sold in kegs each year, it costs brewers as much as $150 to replace each keg, so the thefts have a big impact. In the past few years, breweries have collectively lost about 300,000 kegs a year, Becker said, out of an estimated 10.7 million in circulation.

The Fourth of July, when many Americans rent kegs for their parties, is the nation’s biggest beer-drinking holiday, ahead of Memorial Day, Labor Day and Super Bowl Sunday, the Beer Institute reports.

Craft brewers are anxious to solve the theft problem because as much as 40 percent of their business is tied up in keg sales, triple the industry average, said Ken Grossman, founder and owner of Sierra Nevada Brewing Co.

His company, based in Chico, Calif., expects to lose at least 3 percent of its kegs each year and often must wait months for replacements because it orders in smaller batches.

The thefts couldn’t come at a worse time because the craft beer segment has outpaced growth in the domestic market, he said.

“If you can’t meet the need, you’re not going to grow much anymore,” Grossman said.

Milwaukee-based Miller Brewing Co. said it has millions invested in kegs, which typically last 20 years. Wholesalers and distributors are being encouraged to let their customers know to keep their kegs in more secure areas, said spokesman Julian Green.

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