THE GIST
Proposed New York State legislation that seeks to keep packaging waste out of landfills has potential financial implications for the state’s breweries, in addition to cider makers, wineries, and distilleries. Leaders in Albany say new policies will reduce pressure on cities and towns to figure out how to best recycle products, while business leaders and trade groups are wary that changes could add new costs.
Just how burdensome those costs could be is currently a matter of debate. A coalition of dozens of trade groups and commerce organizations, including the New York State Brewers Association, New York Cider Association, New York Alliance of Fine Wine, Distilled Spirits Council of the United States, and others calling themselves “impacted stakeholders” wrote a memo expressing concerns with the bill last week.
As written, the bill requires breweries and other alcohol producers with net incomes above $1 million to reduce packaging and help pay for improvements to municipal recycling programs. Senate Bill S4246, which establishes a “Packaging Reduction and Recycling Infrastructure Act,’ is currently in committee.
The bill falls into the category of “extended producer responsibility” (EPR) programs, by which manufacturers are obligated to be more financially and legally responsible for recycling or correctly disposing of waste generated by their products and packaging. “This legislation shifts the onus of recycling from municipalities and ensures that producers of products are serving our interests by establishing solutions to sustainable packaging,” the bill states.
New York State Brewers Association (NYSBA) executive director Paul Leone says the state’s breweries support recycling and sustainability, but are fearful of the financial implications of the bill as it’s currently written. He estimates that there may be about 100 breweries in New York—roughly 20% of all licensed breweries—that would meet the $1 million threshold currently proposed by the bill that would require companies to make changes.
“We are for recycling and we are for this [initiative], as long as it doesn’t fall back on the breweries and manufacturers and hurt them financially,” Leone says. “All we’re saying, along with industry partners, is: This [bil] has problems, take a look at them and fix it.”
WHY IT MATTERS
The NYSBA says its members are in favor of environmental stewardship—the theme of this year’s NYSBA conference is sustainability—but the organization is concerned that the EPR bill as currently drafted would create financial burdens for breweries that are already struggling with rising costs and a challenging sales environment.
Specifically, the NYSBA fears that breweries could be made financially responsible for ensuring all packaging materials—such as cardboard, cans, PakTech holders, etc.—are recycled. This could mean breweries would be responsible for finding a streamlined recycling solution that, in the case of PakTech, even the product’s creator hasn’t fully developed.
So far, lawmakers supporting the packaging EPR bill have said the bill is designed to put the onus on manufacturers and producers.
“The only way we can begin to mitigate the growing issue of waste pollution, which threatens our natural resources, is for the initial producers of this waste to be fully involved with the end-of-life solutions,” said State Sen. Pete Harckham, chair of the New York Senate Environmental Conservation Committee and sponsor of the bill, in a press release.
NYSBA, however, is hopeful that Gov. Hochul’s administration and state lawmakers are open to amending the bill’s provisions to be less burdensome to manufacturers. The governor and both legislative chambers have expressed general support for the bill.
“This administration certainly does not want to hurt business in New York. We have confidence that they’ll listen to the industry and make the amendments needed before anything is passed,” Leone says.
There is a case study for what could be coming:
An EPR law targeting the carpet industry, which New York Gov. Kathy Hochul signed earlier this month, requires carpet makers to create a program for recycling unused or discarded carpeting in order to divert these materials from landfills.
It also requires carpet makers to use a certain percentage of post-consumer content (i.e., recycled carpeting material) in their products, and sets benchmarks for the percentage of carpet that the industry must recycle.
It also imposes a financial penalty for noncompliance with any part of the bill—a penalty not to exceed $500 per day of the violation. A trade group representing the carpet industry opposed these programs.
So far, Leone says the NYSBA hasn’t heard much from members about the proposed EPR legislation, though he says he’s monitoring the bill closely. For at least some brewery owners in the state, anxieties about the bill’s costs are also front-of-mind.
“Overall, I think [the bill] is a good thing, but I know it’s going to cost us some money,” says Tim Shore, co-owner of Buried Acorn Brewing Company in Syracuse. “We don’t need more pressure on small businesses in New York State. It’s already at its breaking point.”
Shore says that in addition to upticks in base malt costs (+22%) and can prices (+80%) over the past two years, his brewery has also seen rising costs due to regulation. He references unemployment surcharges announced last July, as well as an increase in upstate New York’s minimum wage (to $14.20) that went into effect this year. While Buried Acorn did raise on-the-shelf prices $1-$2 per four- or six-pack last year to offset some of these expenses, Shore says his business has also just had to absorb some of them, resulting in lower margins.
Shore says that Buried Acorn supports sustainability efforts and his brewery recycles all the materials it can. He participated in an environmental footprint reduction audit in 2020 in partnership with the New York State Pollution Prevention Institute and the Cornell Enology Extension Laboratory. He says while he’s supportive of the end goals of EPR legislation, it shouldn’t be financially onerous for manufacturers.
“It’s not the right time for another cost increase for small business in New York State, even for a worthy cause,” Shore says.
The New York League of Conservation Voters, which has advocated for EPR legislation, says the average resident of that state generates five pounds of trash per day. The group says it’s time to not only continue encouraging residents to reduce their waste, but to compel manufacturers to generate less packaging waste in the first place.
“This proposal would shift the financial burden of recycling away from taxpayers and municipal governments and instead back to the producer, to compel these companies to use materials that are easier to recycle and generate less waste overall,” the group states in support of SB the bill.
On the whole, the U.S. has a recycling rate for beverage aluminum cans, glass bottles, and plastic bottles that’s well below other nations. According to a June 2022 food and agribusiness report by Rabobank’s RaboResearch division, just 52% of aluminum cans in the U.S. are recycled, compared to 76% across Europe, nearly 100% in Japan, and 99% in Brazil.
The logistics of collecting and recycling packaging materials are another possible pain point for breweries. PakTech, for example, is a commonly used brand of six-pack holder that, while billing itself as completely recyclable, isn’t able to be recycled by most municipal systems. At Wolf Hollow Brewing Company in Schenectady, taproom manager Eddie Del Castillo currently collects any PakTechs that customers return, even though the brewery is only able to reuse ones that are colored black (its distributor wants the color to be uniform). Del Castillo personally transports the other colors of PakTechs to another brewery that’s able to use them. He’s happy to put in this extra effort, but he worries about how larger breweries would deal with a much larger influx of PakTechs—as well as other packaging materials like keg caps or cardboard that might be required to be recycled under the EPR bill.
“At first glance, the tracking and accounting for ‘packing products’ is going to be decently tedious, especially if a company is producing on a much larger scale,” Del Castillo says. “The idea of a local organization of producers coming together to tackle the responsibility issue is interesting, but that once again requires someone to step up and organize it and take on ever more responsibility that they may not have time for.”
To get a better picture of what the bill could mean for New York breweries, Leone has spoken with breweries and trade groups in other states where packaging EPRs have recently passed, including Colorado, Maine, and Oregon. None of those states, however, has yet implemented its plan; all are still in the process of developing advisory or organizational boards that will oversee the process.
Still, a look at Colorado in particular may shed some light on what New York’s proposed EPR legislation could mean for breweries:
In Colorado, the EPR legislation requires producers that generate packaging waste—including breweries—to pay into a fund that promotes recycling in the state.
The program will be overseen by a “producer responsibility organization” designated by the Colorado Department of Public Health and Environment, and is not required to come up with a specific plan until February 2025.
Businesses will be charged fees based on the amount of certain types of packaging material—aluminum, cardboard, etc.—that they generate.
There is still much that is unknown in Colorado, including what the specific rates would be on various packaging materials, which materials would be covered, and which new recycling efforts the fees would cover. The law does lay out financial penalties for noncompliance: An initial penalty of $5,000 goes into effect the first day of the violation, with each day thereafter incurring a $1,500 fine. Fees increase for subsequent violations within the same year.
The Colorado Brewers Guild worked with its state’s EPR bill sponsors to carve out exceptions for small businesses, including breweries, that means they wouldn’t have to pay into the fund. According to Shawnee Adelson, executive director of the Colorado Brewers Guild, less than half of the state’s brewery members—and likely only its largest members—would be bound by the EPR law. Others would be exempted if:
They are brewpubs with a retail food license.
They sell less than $5 million worth of packaged products annually (i.e., canned or bottled beer).
They generate less than one ton of packaging material annually.
“These exemptions make sense because [the fee] is meant to be on packaged materials, so if most of your beer is being served over the counter at your establishment, why would you have to pay into this if you’re not making much waste?” Adelson says.
For now, it’s a waiting game in New York and Colorado. The NYSBA will know more about the financial impacts of the EPR bill on breweries once the bill progresses, but the group advocates that there be no additional costs to its brewery members—which isn’t the case as the legislation is currently written.
“It’s going to take some time for the state to listen to the industry. We are hopeful that we’ll make the changes needed to protect business in New York,” Leone says. “I’m hopeful that this [bill] is a positive thing in the end.”
Words by Kate Bernot