SOUTH BEND, Ind. (AP) — The price of scrap metal is causing headaches for beer wholesalers who are seeing their metal kegs wind up in scrap yards instead of having them returned.

Indianapolis-based Monarch Beverage lost 2,804 kegs last year, said Fred Dufour, the company’s vice president of operations. He estimates Monarch is losing $400,000 a year because retailers, restaurants and bars are not returning all of their kegs.

“It’s a huge problem,” he said.

Thieves will steal kegs that sit outside restaurants or bars and sell them to a scrap yard, Dufour said. Retailers, who charge customers a $10 deposit for the kegs, also lose kegs when customers take them to scrap yards where they can easily make more than the deposit.

South Bend’s Belmont Beverage store probably loses 8 percent of its kegs each year, district manager Mike Hettinghouse said.

United Beverage Co., also in South Bend, has started hunting down kegs at scrap yards. When it finds one, the yard usually sells it back for the deposit the customer paid.

“We speak with our accounts about making sure that their kegs are in a secure location,” United Beverages President Len Nelson said.

The problem extends into Michigan, where the state’s liquor control commission raised the deposit last month to $30.

Breweries there have complained that retail customers were selling kegs to scrap yards for sometimes more than $1.25 per pound rather than returning them. An empty keg generally weighs around 30 pounds.

Unlike Michigan, deposit requirements are not set by state alcohol officials in Indiana. Wholesalers and manufacturers determine the deposit and it can vary between regions.

Posted 6/7/2007