No fan of the scheme – which offers a 10-cent refund on bottles and cans – Mr O’Shea said it is hurting his business and cash flow.

Like most beverage businesses, Mr O’Shea has had to increase the price of his bottled product to try and recoup the costs of the scheme.

Those costs includes giving money to the government, which is used for the customer refund, as well as $80 to register the label for each beer.

Five Barrel has 50-odd beers in its portfolio so the label costs can add up.

As a small producer who prefers to put out limited runs of most beers, it means the price on some can be high because there is no volume to absorb the cost.

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For instance, his core range of beers get released in 10,000-bottle batches, while his limited release beers only get a 500-bottle run.

The core range price rise is less than 10 cents a bottle but the limited-release beers can go up by around 20 cents due to the small number of bottles.

That’s a cost several Illawarra small bars have decided is too much to handle, opting not to stock Five Barrel bottles in their fridges.

“They decided it wasn’t cost-effective any more to put a local craft beer on, they felt like they would have to put the bottle prices up too much,” Mr O’Shea said.

“When they saw that the larger craft players were only passing on a fraction of the cost it obviously made it a lot more attractive to them [to go elsewhere].”

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He said the scheme also affected Five Barrel’s cash flow because they had to pay the container deposit charges to the government a month in advance – before being paid for the beer they’d sold.

Mr O’Shea said he’d been “pretty critical” of the scheme ever since it was announced and didn’t feel small craft beer producers should be included.

The scheme’s aim is to reduce litter and wine have been excluded because it is consumed at home and the bottles are placed in the drinker’s recycling bin.

Mr O’Shea said his product is consumed in a similar fashion and believes small craft brewers should get similar exemptions.

“I honestly don’t really understand why they couldn’t have extended certain exemptions tailored towards smaller producers,” he said.

A spokeswoman from the Environment Protection Authority said there were allowances in place for small producers.

“The NSW government has implemented measures to assist businesses adapt to the requirements of Return and Earn, including a cap on more than 40 container registrations for businesses that sold less than 2.5 million containers in the previous financial year, most relevant to boutique beverage suppliers, and financial assistance loans to small businesses, in the first months of the scheme,” the spokeswoman said.

The Independent Pricing and Regulatory Tribunal has recommended changes  – including further relief on registration costs and extending payment terms.

The spokeswoman said the EPA would consider these draft recommendations.