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(Gone Baby Gone)
It’s a perfect storm of circumstances that’s led to a critical shortage of aluminum cans especially for craft brewers.
And like COVID-19 it’s not going away anytime soon.
Craft breweries, already struggling from pandemic bar and restaurant closures, which shifted sales emphasis to canned beer options, are now facing the specter of being unable to secure those aluminum cans.
On July 17 analysts from the banking advisory firm Evercore Inc. warned of “rampant and unprecedented” beer out-of-stocks from the nation’s largest supplier to smaller craft brewers, due to growing can shortages.
On July 31 the Boulder-Colorado-based craft beer trade organization, the Brewers Association warned of medium to long term aluminum can shortages that could further challenge American craft breweries already in survival mode.
And on October 6, Ball Corp, the world’s largest manufacturer of cans, told investors that the US market alone is short 10 billion cans in 2020, according to Beer Business Daily.
And here’s what’s causing that shortage…
The Pandemic
In early March the onset of the coronavirus led to US bar, taproom and restaurant shutdowns, effectively putting the brakes on kegged beer sales and sending canned beer sales through the roof, as consumers stocked their pantries to wait out the pandemic.
Almost overnight kegged beer destined for restaurants and bars was diverted to cans for consumers now sheltering-in-place and brewery can supplies were decimated by the unexpected transition.
And it’s not like aluminum cans weren’t already in demand before the pandemic hit CNN Business reports…
“Brewers increasingly turned to the vessel during the past 10 years. Beer sold in cans accounted for 50% of all beer sold in 2010 and 60% in 2019, a 20% increase, according to the National Beer Wholesalers Association, a trade association for US beer distributors.”
The Rise of Seltzer Beverages (Hard and Not)
Just as the craft beer segment unexpectedly exploded almost 15 years ago, the seltzer segment is now experiencing unprecedented growth.
And unlike craft beer where around 40% are still bottled, seltzers are sold almost primarily in cans.
Big Beverage Companies Have Locked Up Available Cans
Big beverage companies like Pepsi, Coke, Anheuser-Busch and Molson Coors, all companies with rich economic resources, saw a shortage coming early on, according to the Washington Post.
And they “began hedging their bets, shoring up contracts with canning giants but also negotiating contracts with smaller distributors,’ which left craft brewers even more vulnerable to the growing can shortages…
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