As if the highest inflation rate in 30 year wasn’t bad enough, one of the world’s largest suppliers of aluminum cans will no longer be dealing with smaller craft brewers, which will lead to heftier costs, reduced variety and higher prices for consumers.
Here’s the deal…
The transition from bottles to cans over the last decade has been a boon to many craft brewers for a number of reasons…
- Convenience– Canned craft beer is lighter and easier to transport making them cheaper to ship to retail. And in an industry where business margins can get incredibly tight – who doesn’t want that?
- Freshness– Proponents of canning argue that cans provide a more effective light and oxygen barrier – and as a result that they preserve the beer’s freshness and integrity longer.
- Sustainability– The craft beer community in general, aligns itself with both the ecological and sustainability movements. And as the lighter cans are easier to ship, they leave a much smaller carbon emissions footprint. Cans can also be recycled, and can be back on store shelves in 60 days.
- Improved Cans Technology– Innovations over the last couple of years have led to cans that just function better. Newly designed pouring lips now accentuate the beer’s aromatics. Boston Beer’sJim Koch was once a fierce opponent of canning, and now Sam Adams beer is a leading participant in the movement.
- Canning Has Become Smart Business–. Canning lines which take up less square footage are lowering overhead), plus they are cheaper to manage than most bottling operations. And in addition to affording everyone lower shipping costs (see #1), cans take up less space, so they are cheaper to warehouse as well.
But with cans now a dominant packaging option comes increasing demand. To negotiate that growing pressure, the Ball Corporation, one the world’s biggest aluminum can producers, is increasing the minimum number of cans breweries must order. Numbers that many small craft brewers could never meet.
But the pain doesn’t stop there. This from CNN Business…
“Beginning in 2022, Ball wrote that it would no longer be able to store excess cans from those non-contract customers in its warehouses and that the price per can would increase by nearly 50% for some non-contract customers, according to notices sent to the companies.”
And many craft breweries that don’t have existing contacts with Ball will be forced to smaller aluminum can providers, who may not even provide specific brand printing on cans, let alone warehousing. Again all this potentially leading to “higher costs, reduced variety and higher beer prices for consumers.”
As Bart Watson, Chief Economist for the Brewers Association explained to American Craft Beer this is an escalating problem for some craft brewers…
“This is going to be a real challenge for the affected brewers, primarily on pricing. They are going to be squeezed between the largest brewers who won’t see much change in availability/pricing and the smallest, who again won’t see many changes (they already typically bought via brokers). Those brewers have a tough choice of seeing their margin eroded or raising price.”
“Increasing prices in early 2022 is likely the affect that most consumers will directly see, but there may also be some availability issues with spring seasonals or other small brands where the brewers aren’t able to find new can supplies quickly enough.”
“Finally, consumers will likely see packaging changes for some brands (brands that were previously in printed cans now with a shrink sleeve, label, or even in bottles).”
It’s a perfect storm of unwanted circumstances, the highest inflation rate in three decades meets pandemic shortages and bottlenecks = serious problems for smaller craft brewers.
So fasten your seat belts everybody because craft beer prices are going to rise in 2022.