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April 9, 2009

Times-Union

Bottle law bigger; is it better?
"A complicated little set of rules" concerns retailers

ALBANY — A part of New York's expanded bottle law that was designed to guard against fraudulent redemptions is instead throwing retailers a sharp curve ball.

And they say it threatens to disrupt their distribution systems and add heavy new costs.

The new requirement is that redeemable containers carry a specific New York-only UPC bar code, which is used to electronically scan prices at checkout. It's among a number of lesser-known details in a law touted mainly for extending the state's 5-cent container deposit to water bottles.

"I think there are a lot of retailers who might be in for a bit of a surprise here," said Ted Potrikus, director of government relations at the Retail Council of New York State, an Albany-based trade group. "This is a complicated little set of rules."

The so-called bigger, better bottle bill was signed into law Tuesday by Gov. David Paterson. Most provisions take effect June 1.

Among other things, the law also:

Increases the 2-cent handling fee that retailers can keep to 3.5 cents.

Requires more large retailers, with stores over 40,000 square feet, to install what are known as reverse vending machines.

Requires distributors and bottlers to pay 80 percent of unclaimed deposits to the state.

Two of the region's largest grocery chains are eyeing the New York-specific UPC code requirement with concern.

Mona Golub, vice president of marketing at Rotterdam-based Price Chopper, said the separate codes likely would require the company to set up discrete handling, storage and distribution systems and add workers to carry out the changes.

The process "would be quite laborious and is, in fact, entirely unanticipated on our part — and frankly impractical," Golub said.

"If you just think about it from the perspective of our own brand alone, for the volume of Price Chopper 24-pack water that we do, to be working out of two slots and keeping the distribution of bottled water separate — and to ask our suppliers to do separate labels and separate runs of bottled water — it's really ludicrous," she said.

Maine-based Hannaford Bros. already has experience handling deposits and returns for a wider variety of containers, including water, in its home state. But not even Maine requires a separate UPC code for containers redeemed for deposit there, said company spokesman Michael Norton.

The idea behind the separate UPC code, say those familiar with the legislation, was to prevent people from collecting deposit refunds in New York for bottles they bought in neighboring states, such as Pennsylvania or New Jersey, that did not charge a deposit.

Brewers also will need to establish separate labeling and distribution for beer to be sold in New York.

"We're going to have to change our labeling, and that's going to be a costly factor in the equation," said David Katleski, president of the New York State Brewers Association, who operates Empire Brewing Co. in Syracuse.

Michael Rosen, senior vice president of the Albany-based Food Industry Alliance of New York State, predicted the requirement will drive up the cost of products sold in New York and prompt some smaller brewers to bypass distribution in the state.

Lori Severino, a spokeswoman for the state Department of Environmental Conservation, said a lag in the requirement for registering separate bar codes until June 1 is intended to give businesses time to comply.

But retailers say there's little chance they will have enough time to implement all the mandated changes with the big growth in returns they expect. An estimated 3.2 billion water bottles are sold annually in New York.

The Retail Council's Potrikus pointed out that many of the beverages intended for sale in the next few months already are in the supply stream. And it takes time to set up all the mechanisms for duplicate products to be sold only in New York.

"It's not like flipping a switch," he said.

Cathy Woodruff can be reached at 454-5093 or by e-mail at cwoodruff@timesunion.com.

http://www.timesunion.com/AspStories/story.asp?storyID=788490&category=BUSINESS


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