Every day there’s a new repercussion caused by the coronavirus shutdown, like a soaring demand for canned beer (and consumers stocking their pantries) that has led to a global aluminum can shortage.
Sure homebound consumers are buying beer in all kinds of formats (even kegs!) but cans are the most desired format and that’s lead to a 12oz can shortage that is causing breweries, both big and small, to scramble.
“It’s something many of us who have worked in the beer industry for a long time have simply never seen,” Brian Erhardt, chief supply chain officer at Molson Coors, told Beer & Beyond, Over the past eight weeks, for instance, packaged beer orders have come in at Fourth of July levels – traditionally the industry’s biggest weeks. And other recent weeks have not been too far behind.”
“There are not enough 12-ounce cans in the world to meet this level of demand – for us, for our industry and for consumer packaged goods companies, in general.”
“We’re getting far more cans than we planned to get over this period, but not as many as we know we can fill,” Erhardt added. “But we’re doing everything we can to get our hands on them. We’re not cutting corners or costs. We’re sourcing all available cans in North America and looking beyond that for more in the future to meet record orders.”
So why the soaring demand for canned beer? And why now?
Well to begin with, cans have been growing as a beer packaging choice for years. They’ve always been part of large brewers like Anheuser-Busch or Molson Coors’ game plan…And they’ve reached a near tipping point for craft brewers as well…even before the pandemic lockdowns.
But with the coronavirus shutdown of bars and restaurants and everyone sheltering-in-place, trips to retail are now more strategic. Consumers are limiting their retail trips as much as possible to avoid possible infection.
And in a coronavirus world, shopping runs have become more like hit-and-run raids and 12-pack can packages are selling at an unprecedented rate.
Bottom line… no one expected in the beer biz saw this coming.
“This is truly unprecedented,” says Jamie Westfahl, Vice President and Head of Procurement for Molson Coors…
“We sell about 11.5 billion cans, on average, every year. So even a 5% swing is material. When demand goes up by 30% over a two-month period, we’re talking hundreds of millions of cans, and there’s just no way suppliers can meet that, and it’s affecting the whole beverage industry.”
On a May 7 conference call with analysts and investors, Dan Fisher Senior Vice President and COO for Ball Corp., one of the largest can suppliers for North America, reported “some of the lowest inventory levels we’ve ever had … because of the pantry-stocking phenomenon that took place and continued in the first part of April.”
Fisher added that the company is experiencing “sporadic operational disruptions and incredibly tight supply-demand conditions, particularly in North America.” And that he expects “outsized demand for aluminum cans to continue even once on-premise locations begin to open.”
Like the many businesses impacted by but the pandemic, the brewing industry is shuffling business models to get its beer to consumers no matter their packaging.
But the global can shortage is just the latest in a growing number of things that no one expected, starting with a coronavirus pandemic…