Thieves target beer kegs for scrap metal

Modern Brewery Age,  March 20, 2006  

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AP--Boulevard Brewing Co. brewmaster Neil Witte has an unusual job to do these days: combing through scrap metal. "There's one!" he shouted on a recent afternoon, as he tugged a shiny, 30-pound cylinder from the mountain of stainless steel at a local junkyard. Last year, Mr. Witte recovered more than 100 kegs in this same lot that had been stolen from his employer, Boulevard Brewing Co. Around him were dozens of steel kegs stamped with the logos of Miller and Anheuser-Busch and various Mexican and European brewers. They all suffer from the problem of kegs with legs.

A global boom in the market price for commodities, including steel and aluminum, has sent scrap-metal prices soaring. And that has created a tempting target for criminals world-wide in everyday objects that contain metals--from light poles along highways to lowly beer kegs.

With beer kegs, the crime spree began in the United Kingdom, where more than 250,000 wobbled out of circulation last year, according to the British Beer and Pub Association. Last fall, thieves scaled a chain-link fence and made off with 430 kegs in a single night from a storage yard belonging to Empire Distributors Inc. in Charlotte, N.C. The empty kegs had contained Sam Adams, Sierra Nevada and Pyramid brand beers. "I don't know why they didn't just ram the fence down," says Hank Bauer, Empire's sales manager. Empire is now locking its kegs in a warehouse to keep them safe.

Kegs are a tempting target, not only because they contain quality stainless steel, nickel and chrome, but also because they are easy to carry and can be readily found in storage sheds, behind liquor stores, or right under the counter of a neighborhood bar. For microbrewers, which sell about half their beer on tap in brew pubs, keg pilferage from their customers' taverns is so bad that even bartenders can't be trusted. Warren Dibble, chief financial officer of Boston's Harpoon Brewery, suspects that some tavern owners are letting employees sell empties on the side "as part of their compensation."

Just a few years ago, scrap yards paid only about $5 a keg. But prices are as high as $21. The cost of a new keg, meanwhile, has also tripled, to about $90. That's a headache for specialty brewers like Boulevard Brewing. The 40,000 kegs in Boulevard's inventory represented more than 20 percent of the brewer's fixed assets in 2004.

In 2005, when keg theft started to plague the brewer, Mr. Witte, the brewmaster, began haunting scrap yards both to warn dealers that accepting stolen property is illegal, and to buy back kegs at $15 to $20 apiece.

At the same time, Mr. Witte engaged local police, urging detectives in Kansas City and Johnson County, KS, to track scrap yards' repeat suppliers. He also strapped each of his kegs with a large yellow "STOP!" tag, depicting a cartoon cop warning scrap dealers not to buy Boulevard kegs.

His diligence is paying off. A recent tour of area scrap yards found that several dealers said they still buy kegs, but not Boulevard's. A similar reticence may have trickled down to local thieves. "I talked to one bartender," says John Dickey, a Leawood, Kan., police detective. He says the bartender told him "they took four or five of his kegs the other night, but left Boulevard's."

The simplest way to protect kegs and small companies like Boulevard would be to increase deposits on kegs, which currently run in the $15-to-$25 range. Then, bars would have an incentive to be more diligent in safeguarding kegs.

But asking retailers to pledge kegs' full value is difficult. Bar owners, particularly at specialty pubs that have up to a hundred varieties of beer on tap, already feel squeezed paying deposits on each keg. Michigan is one state that has capped the amount a beer distributor can charge for deposits at $10 a keg, hoping to protect small family-owned bars.

Earlier this year, an Anheuser-Busch wholesaler in Kansas City proposed raising keg deposits to $50 from $12. It didn't go down well with some bar owners. Andrew Mullen, a co-owner of the Paddy O'Quigley's Pub and Grille chain, threatened to take A-B products off tap.

Mr. Mullen's brew pub on Roe Boulevard has been hit three times since November by keg thieves. To keep from losing any more empties, Mr. Mullen has invested heavily in security. He has installed a concrete divider like those highway crews use to divert traffic, and upgraded to a heavier, cutter-proof chain to string through the handles of kegs stored behind the restaurant.

He hopes that will help him on Friday, when he expects St. Patrick's Day revelers to empty at least 50 kegs that he'll have to guard through the weekend. "It's the Super Bowl of keg theft," Mr. Mullen says. "They'll be out that night for sure."

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