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April 29, 2009

Watertown Daily Times

Pepsi bottler fears cost increases with new law

OGDENSBURG — After 67 years in business, officials at the Ogdensburg Pepsi-Cola Bottlers feel their hardest days may be ahead of them, thanks to the state's "bigger, better bottle bill."

Officials at the plant estimate the bill will mean an additional $400,000 in handling fees and costs to implement the new regulations.

The bill, passed April 3, was signed into law as part of the state's 2009 budget. The bill adds water bottles and wine cooler containers to the list of items, including beer and soda bottles, that can be redeemed for a 5-cent deposit and increases the handling fees for bottle distributors from 2 cents to 3.5 cents.

"We're not doing any layoffs," Chief Financial Officer Michael C. Looney. "We're in business to make a profit and we've got to pass on our costs to stay in business."

How those costs will be passed on to the St. Lawrence County consumer is being debated within the company, but officials are looking at raising prices, starting recycling surcharges and cutting the volunteer and charity work the company does, Mr. Looney said.

The plant at 1001 Mansion Ave. employs nearly 50 people and distributes Pepsi products, including iced tea, water and iced coffee across the county.

"Until we know for sure exactly what all the problems we're going to deal with are, we don't know how we're going to handle it," Scott M. Wright, route supervisor and sales manager, said.

According to Mr. Looney, the largest costs will come from the 1.5-cent increase in handling fees paid to retailers and redemption centers on bottles that are returned to the plant.

The increased fees equal around 65 cents for each case, Mr. Looney said.

"The 65 cents doesn't include everything. A dollar is not out of the realm of additional costs per case," Mr. Looney said.

The law also requires that distributors set up an interest-bearing account of unclaimed deposit money, of which the state will take 80 percent. This money previously was kept by distributing companies to offset the cost of the redemption program.

The added regulations mean new accounting procedures and invoices for clients, which will raise costs further, Mr. Looney said.

"We're trying to keep business as usual. We've just got to figure a way to do it," Mr. Looney said. "We can't absorb hundreds of thousands in costs so we've got to pass it on. Albany doesn't have the nerve to call this a tax, so they're using us to go out and do it."


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