US faces aluminium shortage during lockdown as brewers switch to cans

Breweries in the US are running out of aluminium cans to package their beer after months of on-trade closures led to a much greater concentration on at-home drinking.

Brewers worldwide have shifted their priorities from kegs to cans in recent months after bars and restaurants were forced to close to stem the spread of coronavirus.

But now, packaging companies are struggling to keep up with the rising demand, and an aluminium shortage could prevent companies big and small from bringing their beer to market, reports Brewbound.

David Racino, co-founder of Texas-based packaging company American Canning, told the publication that sourcing 16oz cans will “be a problem this summer”.

“There is just such a strain on the supply chain right now.”

Beer and cider sales in supermarkets, shops and online topped US$1 billion in the week ending 9 May 2020, according to Nielsen, surpassing the top pantry-loading week of 21 March 20 by $15 million. The research firm also noted that shoppers are making fewer transactions, but spending more when they do, which suggests they are doing a ‘big shop’ once per week and stocking up on large quantities of what they would normally buy on an ad-hoc basis. Large packs continue to outpace most other pack sizes, with 30 packs up 36.2% and 24 packs up 35% in the week to 9 May.

This has added pressure to brewers’ canning lines, as some have not been able to scale up demand in time.

Another factor has been the rise in demand, and production of, hard seltzers. Hard seltzer brands such as White Claw have also stretched the customer base for packaging companies.

Racino added that smaller, craft breweries are disproportionately affected by the shift, but big players are struggling to scale up as well. A spokesperson for Molson Coors told CNN Business that “everyone who makes anything that goes into a 12-ounce can is being challenged to some respect.” CNN also reported that brewers such as Molson Coors, Brooklyn Brewery, and Karl Strauss are expected to decrease production of their brands and focus on core products.

This means that companies such as Ball Corporation have somewhat inflated earnings in the short term, but an overall reduction of brands could lead to revenue dips later in the year. Ball’s earnings for the first quarter of 2020 were $146 million on sales of $1.2 billion, compared to $118 million on sales of $1.1 billion during the same period last year. The company added in its results statement that “demand and business conditions are expected to be challenging in the second quarter, and the company currently expects earnings in this segment to be down mid-single digits.”