Beau's recently started selling their Lugtread beer in ceramic swing-top bottles. The deposit was $2 per bottle, redeemable only at the brewery. I'll also add as an aside that both the 750ml ceramic swing-top bottles, as well as the 2L (3L?) growlers are collected by homebrewers for their beer.

Anyway, It didn't take any time at all before they had the 750ml bottles for sale in the LCBO, and this created a strange situation where if you brought the bottles back to the Beer Store like anything else bought at the LCBO, you got 20 cents back for your deposit. But if you brought it back to the brewery, you got $2. That's quite a difference!

Then the LCBO declared that Beau's could not offer a $2 return deposit at their brewery - they had to offer the same 20 cent return deposit as the LCBO. And so a lot of customers went into an uproar over it.

On the surface it does appear to be more government stupidity, but there is a method to the madness. Forcing a low return deposit actually encourages re-use of the bottles, and is actually better for the brewery in the long run. And certainly better for the environment because the bottles are being re-used. As the Ontario Beer Store likes to advertise, they have a 97% return rate on beer bottles. That's impressive, and we'll come back to that in a moment.

Back in March of this year just prior to the LCBO decree, our brew club The Members of Barleyment was out at Beau's brewery. The owners were gracious enough to allow us to have a metric tonne of malt delivered there - our annual bulk order from the wholesaler in Montreal. We stayed for a few hours chatting, and a few of us actually helped bottle the Lug Tread in the 750ml ceramic bottles.

While we were doing that, I asked one of the owners what he thought of homebrewers hoarding their bottles. Without hesitation he replied "We don't want them back". He then went on to explain that with a $2 deposit it's a lot cheaper for them to use new bottles. He explained that their cost for each bottle is about $2 for a new one. If they have to pay $2 for a used one, it then costs a considerable amount of money to wash that bottle, so it ends up costing a lot more to re-use a bottle. Simple business sense. Washing bottles - especially non-glass ones that you cannot see through - is expensive. So it's quite understandable why they wouldn't want them back.

While he did mention that the decree from the LCBO was coming, we did not really chat further about what this meant for their brewery. So the following is just me putting 2 and 2 together, it's not something I discussed with them at that time.

It seems to me that this forced 20 cent deposit is a good thing for the brewery, because it gives them a cheap source of bottles, and encourages them to do the environmentally-responsible thing and re-use their bottles. Since Ontario has a 97% return rate on bottles, this means that eventually Beau's will be in a position where 97% of the bottles they use are re-used, and only 3% of them are new. This means their bottle costs will eventually come down, which in turn means they will either have a better bottom line as a result, or they will be able to pass some of those savings on to the customer (or a bit of both).

But there is still the other side of the equation - the customer. They are paying $2 for the bottle and only getting 20 cents back! That seems like highway robbery and seems pretty unfair. It also appears to be a disincentive for returning the bottles. However, I don't think things are so cut-and-dried.

First of all, as a cost per ml of beer, Beau's Lug Tread is extremely expensive. It's top-shelf, premium brand. It's not your buck-a-bottle crowd that are buying this beer. I believe that the majority of people buying this beer have already written off the entire price of the bottle - including the $2 deposit. I believe that for them, the money is gone for good the second they walk out of the store. Since the high return deposit of $2 was only available at the brewery anyway, there was only a very small percentage of people taking advantage of it. The majority did not care about that $2. But if Beer Store statistics ring true, 97% of Beau's customers want to do the responsible thing and bring the bottles back, no matter what the deposit is. So chances are those people who have written off the full cost of the bottle of Lug Tread will still take back the empty, probably not for the 20 cents, but rather because they want to do the responsible thing.

In the end, I think that while this policy does initially seem asinine, it is actually fairly well thought-out, and designed to encourage bottle re-use.

For those interested, on Monday morning at about 7:30 am local Ottawa time (Eastern), one of the owners of Beau's is being interviewed about the whole ordeal. Somewhere on the CBC Radio website, you should be able to find a link to listen to it over the Internet.