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Drink Cost Increases Fit Revised N.Y. Bill

Quenching one's thirst is becoming more expensive in New York, where elements of an updated bottle bill took effect earlier this month. A refundable 5-cent deposit was added to bottles of water less than one gallon and sold in the state. Plain, flavored and nutritionally enhanced waters that don't contain sugar have joined other drinks included in the deposit program like beer, soda,

ALBANY, N.Y. — Quenching one's thirst is becoming more expensive in New York, where elements of an updated bottle bill took effect earlier this month.

A refundable 5-cent deposit was added to bottles of water less than one gallon and sold in the state.

Plain, flavored and nutritionally enhanced waters that don't contain sugar have joined other drinks included in the deposit program like beer, soda, sparkling water and wine coolers.

One component of the bill is estimated to bring over $115 million in annual revenue to the state.

As part of a requirement that took effect in August, suppliers of deposit drinks are ordered to hand over 80% of unclaimed deposits to the state's General Fund. Beverages eligible for refunds now account for 90% of those sold in the state.

Previously, manufacturers kept 100% of all nickel deposits that went unclaimed by consumers. The money helped pay for a 2-cent-per-container handling fee paid to retailers for redeeming bottles and cans. All retailers are required to redeem deposit beverages that they sell in their stores.

“The theory behind it was that the beverage company has expenses pertaining to the bottle law so they should be able to keep the money to offset their expenses,” said Jim Rogers, president and chief executive officer of the Food Industry Alliance of New York here.

These beverage companies are now asked to do more with less since the handling fee has increased 75%, from 2 cents per container to 3.5 cents.

The new expense is already being billed into the cost of beverages.

In fact, as soon as the unclaimed deposit rule took effect in August, increases of about 4 cents per unit were attached to bottles of water and other beverages sold to White Plains, N.Y.-based grocery wholesaler Krasdale Foods, Mitch Klein, vice president of retail services, told SN.

“Our most popular water comes in a 24-pack of 16.9-ounce bottles, so right out of the gate, the product costs us 96 cents extra,” he said. “The cost-of-goods increase to the retailer ends up being about $1.02 per case.”

To maintain a 30% profit margin, the retailer must pass along an increase of $1.20 to the consumer, he added.

When you combine that with the 5-cent deposit per bottle increase that recently took effect, an additional $2.40 is added to the retail price of a case of water.

Klein is already noticing dramatic increases at the retail level.

“One of the [local] chains is selling Poland Spring's 24-pack for $5.99 this week, when four weeks ago it was just $3.99,” said Klein. He declined to name the retailer.

D'Agostino Supermarkets, Larchmont, N.Y., has noticed no change in water sales since the deposit took effect on Nov. 8, spokeswoman Amy Krakow told SN.

But its shoppers are recovering price increases by claiming their deposits.

D'Agostino's location in the Chelsea section of New York sold Poland Spring 12-packs of 16.9-ounce bottles for $5.69 last week.

“People are bringing the water bottles back to the store,” Krakow said.

With the updated bill comes an additional burden for retailers who strive to keep food safe while managing containers of returned soda, beer, sparkling water, wine coolers and now water. Representing about 25% of beverage sales, 3.2 billion bottles of water are sold in New York each year. The task of managing redemptions is especially difficult in smaller, urban stores.

“You're expecting us to run clean stores and yet you want us to bring garbage back to our stores,” said the FIANY's Rogers.

An earlier version of the bill included sugared drinks like iced tea, fruit drinks and vegetable juices. If passed it would have included all beverages except for distilled spirits, wine, baby formula and dairy drinks. But legislators took seriously the FIANY's concerns that sugared beverages could attract vermin to its constituents stores. As part of a compromise, sugared beverages were dropped from the bill.

“We're not pleased that the bill was expanded, but the legislators appeared to have heard what we were saying,” noted Rogers.

The FIANY also appeared to be met halfway when it came to the handling fee. Although it's been increased to 3.5 cents per container, it isn't enough, Rogers said. “We're losing money on every container we redeem,” he said.

Beverage companies like Summit Spring Water, Harrison, Maine, are also losing money since bottles purchased in states where a 5-cent deposit cannot be redeemed are being brought to states where they can.

“I don't get to charge people in New Hampshire for the deposit, but when that bottle shows up in Maine, I have to fund it,” said Summit Spring President Bryan Pullen who is in favor of a national approach to the deposit system.

“Redemption rates in Maine exceed 100%,” acknowledged Klein.

He anticipates that what's happening in Maine with water bottles sold out of state being brought back for redemption, will happen on a greater scale in New York.

“Maine's got the ocean on one side, a foreign country above it and two states that aren't heavily populated,” Klein said. “So with New Jersey and Pennsylvania nearby there could be some significant over-redemption in New York.”