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Section: Daily Dispatches

Metal Is So Precious
That Scrap Thieves
Now Tap Beer Kegs

Brewmaster Combs Junkyards
For Company Property;
Stealing 3 Tons of Steel

By Joel Millman
The Wall Street Journal
Tuesday, March 14, 2006

KANSAS CITY, Mo. -- 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.

In the past few months, Belgium's main railway station has lost
nearly all of its 800 aluminum luggage carts. German railway
operator Deutsche Bahn says metal thieves recently dismantled and
carted off three miles of idle rail track outside Weimar. In
Beijing, a European commodities analyst noted, some 25,000 manhole
covers have gone missing since the start of last year. They were
replaced with concrete plugs.

How bad is it getting? Last month, groundskeepers at the Royal Johor
Country Club in Malaysia discovered that somebody had taken the
aluminum cups from 12 holes on the golf links.

It's a growing problem in the U.S., too, where crooks steal aluminum
guardrails from highways and plumbing pipe from construction sites.
Even military installations aren't immune. Metal scroungers have
stolen about $50,000 in booty from the Concord Naval Weapons Station
east of Oakland, Calif., Pentagon officials estimate.

The thieves are growing more brazen. In Oregon, two men and a woman
dressed in orange workmen's vests arrived at the isolated Elkhorn
Creek Bridge in the Willamette National Forest in November 2004. In
broad daylight, they put out traffic cones, then dismantled
crossbeams and handrails from the short bridge. They hit two more
over the next year, according to the Bureau of Land Management, the
federal agency that owns some of the land. The bureau said the
thieves trucked 3 tons of steel to a scrap yard outside Salem, the
state capital.

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

With rising metals prices, it's not a bad fringe benefit. Just a few
years ago, scrap yards paid only about $5 a keg. But prices are as
high as $21 now in some parts of the country.

The cost of a new keg, meanwhile, has also tripled, to about $90.
That's a headache for specialty brewers like Kansas City's Boulevard
Brewing, which started in 1989 to brew Belgian-style pilseners and
ales. The 40,000 kegs in Boulevard's inventory represented more than
20% 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 suburban Johnson County, Kan., to track scrap
yards' repeat suppliers. He also came up with a novel way of dealing
with the problem, strapping each of his kegs with a large
yellow "STOP!" tag with 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 in Johnson County, threatened to
take Busch products off tap, selling them in bottles only.

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 about 15 kegs stored each night 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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Blanchard & Co. Inc.
909 Poydras St., Suite 1900
New Orleans, Louisiana 70112

Centennial Precious Metals
Box 460009
Denver, Colorado 80246-0009
Michael Kosares, Proprietor

Colorado Gold
222 South 5th St.
Montrose, Colorado 81401
Don Stott, Proprietor

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Box 11296
Glendale, Arizona 85316
Harvey Gordin, President
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1-800-822-8080 / 952-929-1129
fax: 952-925-0143
Contacts: David Schectman,
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Missouri Coin Co.
11742 Manchester Road
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Resource Consultants Inc.
6139 South Rural Road
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Pat Gorman, Proprietor
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5820 Main St., Suite 601
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Swiss America Trading Corp.
15018 North Tatum Blvd.
Phoenix, Arizona 85032
Dr. Fred I. Goldstein, Senior Broker

The Moneychanger
Box 178
Westpoint, Tennessee 38486
Franklin Sanders
1-888-218-9226, 931-766-6066



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