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April 10, 2009

Business News - Local News

Bottle law will cut distributors’ revenue, add fees

Beverage distributors say they’ll be forced to raise prices as much as $1 a case to cover fees outlined in the state’s new recyclable bottle and can law.

State leaders expect to collect $115 million a year in revenue under a new bottle law that requires beverage distributors to give up 80 percent of their unclaimed deposits for recyclable containers.

It will cost Queensbury distributor Saratoga Eagle Sales & Service Inc. tens of thousands of dollars that the company uses each year to help pay for two full-time employees to recycle beer and soda bottles.

That’s not the worst part, according to area beer and soda wholesalers.

Changes to the bottle law, approved last week, also will force distributors to pay 36 cents more per case—a 75 percent increase—to the grocery stores, beverage centers, restaurants and bars they sell to.

“It’s going to change things drastically,” said Christoper Bartyzle, president of Bartyzle Inc. beer distribution company in Amsterdam.

He is delaying plans to hire more drivers and warehouse workers, fearing the new bottle law will hurt sales by forcing him to raise his prices.

The law also will require bottled water containers to carry a five-cent deposit for the first time in New York.

Bartyzle Inc. stopped carrying bottled water last year in anticipation of the change.

“We weren’t selling enough water to make it worth it,” he said. The reason for that is because distributors who sell a container with a deposit also are responsible for recycling the redeemed bottles and cans.

Jeff Vukelic, president of Saratoga Eagle, says that he will have to decide if it makes sense for his business to continue selling bottled water now that he will have to pay the same handling fee that he pays on beer and soda.

“It’s like paying for the privilege to collect more garbage,” Vukelic said.

Earlier this year, Vukelic estimated that he paid close to $1 million a year in handling fees prior to the state’s decision to increase the fee by 75 percent.

The law, which is scheduled take effect June 1, also will require bottlers to use a New York-only barcode to help the state track deposits.

“I don’t know how that is going to work,” Vukelic said.

“I think you are going to see a lot of business pull out of state,” he said, referring to some bottlers who may find it too expensive to manufacture labels to be used strictly in New York.

The bottle law is going to force distributors around the state to increase their prices, said Steve Harris, president of the New York State Beer Wholesalers Association.

Lawmakers also are beginning to realize that June 1 may be too soon for the industry to adopt all the provisions of the new law.

“They certainly are coming to the realization it might not be physically or humanly possible,” Harris said.

Some suppliers say it could take 18 months for them to be ready, he added.

Bartyzle, the Amsterdam distributor, also is frustrated about a new provision of the law that will require distributors each to set up an interest-bearing bank account where all bottle deposits will be held.

The state is expected to monitor those accounts to determine what the state’s new 80 percent cut of unredeemed deposits will be.

The interest also is expected to be funneled to the state.

The mechanics of that provision still are being sorted out, according to a spokesman for the state Department of Taxation and Finance.

Bartyzle, who is the third generation to operate his family’s distribution business, said the state is making it less likely that the company will be passed on to a fourth generation.

He’s thinking a lot harder these days about encouraging his daughters to choose another line of work.

“In this environment it’s getting tougher,” he said.

http://albany.bizjournals.com/albany/stories/2009/04/13/story12.html?b=1239595200^1809072


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