This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
US craft breweries face can shortages as prices spike
Craft brewers in the US are being priced out of the market after drinks can manufacturing giant Ball Corp. raised its minimum order fivefold.
According to reports, Ball Corp. spokesperson Scott McCarty highlighted how supply-chain problems, spurred by the pandemic as well as inflation, have raised costs for all the materials the company buys prompting the decision.
McCarty explained: “We shared new ordering requirements in early November with our customers to be transparent about the ongoing supply/demand imbalance, and to explain changes to our ordering requirements designed to help Ball produce as many cans as possible for all of our customers.”
Boulder-based Upslope Brewing’s founder and president Matt Cutter said: “We went down the path of trying to figure out how to react and how to make our business sustainable.”
The new policy by Ball Corp. has left small, independent brewers considering their options with many turning to brokers to try to secure a deal.
But Cutter highlighted: “The brokers, of course, have to take their cut. With the cuts they’ve added, that increases the price of our cans.”
Craft brewers are also looking for warehouse space because Ball Corp. has reportedly said that it will no longer store pallets of cans specifically for smaller brewers.
According to a report in The Wall Street Journal in January, aluminium prices have jumped by 24% in the last six months and the sector faces new threats as businesses try to get their hands on the necessary raw materials to continue manufacturing.
Ball Corp. originally planned to start the new minimum order requirement at the start of the year, but postponed the date to 1 March following calls from the Brewers Association (BA).
Bob Pease, president and CEO of the BA said: “I have heard from a fair number of members who have been able to place additional orders since Ball announced the extension which has been a lifeline for many of these brewers.”
When Ball Corp. first announced the change, brewers reportedly told the trade association that the move would put them out of business.
But the BA said the businesses are reportedly looking at higher costs and fewer options for their packaging and will likely have to offer a smaller variety of beers, which means reduced choice for consumers.
Pease added: “This is also going to absolutely result in price increases for the beer drinker. These business models are now going to be, at best, less profitable.”
The new policy affects customers who don’t have contracts with Ball Corp. but who have terms of credit with the company. However, Pease warned that the minimum order will increase to five truckloads from one truckload. In. essence, that means a small brewer will have to buy at least 1 million cans, up from about 200,000 cans.
It is also alleged that the new minimum order requirement will also apply to each different SKU, for different-sized cans. Ball Corp. will store cans bought in 2021, but it reportedly won’t warehouse customers’ inventory going forward meaning that this is the end of the road for some smaller breweries.
Pease said brewers now might have to buy blank cans and then apply a shrink sleeve, which wraps around the can, or a pressure-sensitive label, but pointed out that those methods cost more and don’t recycle as well. Plus, it doesn’t make financial sense for each brewer to spend more on a vessel that doesn’t answer their eco-credentials or align with their fiscal position.
Cutter lamented: “The new minimum order requirement doesn’t make economic sense. That’s over a million cans. We don’t have the cash to hold that much inventory and we don’t have the warehouse space to store that many cans. A truckload of cans costs roughly US$25,000”.
The company’s costs have already risen because of the price increases and Upslope’s expenses for cans have shot up 45% and as a result, a six-pack of its beer costs US$2 more.
Cutter added: “We have talked to other suppliers that are ramping up their production and giving more and better options to small craft brewers”.
McCarty revealed that Ball Corp. has invested US$1billion in five new aluminium drinks packing plants across the country however noted that it will take a while for all the factories to be fully operational and still expects the demand for aluminium containers will continue to exceed supply.
Related news
Stone Brewing to cease all international exports