Aluminum and Can Shortages Threaten Craft Beer Industry

Sep 19, 2023

Home Beverage Industry Enthusiast

The email landed in Rich Vandenbergh's inbox like a thud. On November 18, as he scrolled through the message, a creeping sense of worry settled in, then dread. He swore after he was done reading.

The founder of Greenport Harbor Brewing Company in New York was one of many breweries that received an email last month from Ball Corporation, the largest can supplier to the beverage industry in the United States, informing them of order requirement changes that could greatly impact many small-to-midsized breweries that use the manufacturer for printed cans.

Citing impacts from the novel coronavirus pandemic and a surge in demand across nearly every beverage category, starting on the first of the year, the Colorado-based company said it will require non-contracted customers to increase its minimum orders of printed cans from one to five truckloads per SKU, or individual brand, starting January 1, 2022.

A truckload of 12-ounce cans contains 204,225 while a truckload of 16-ounce cans can hold 155,600.

"These changes, if accurate and widespread, have the potential to change the entire beer landscape for small and independent brewers," says Bob Pease, President and CEO of the Brewers Association, in an emailed statement. "Most breweries cannot order or store [one million] cans per SKU. Having to go to labeled cans and adding broker fees will drive up prices for small brewers and make their products less cost-competitive versus larger brewers, who already have scale advantages."

A copy of the email was provided to Wine Enthusiast by a brewery impacted by this change. The letter also noted that the company would no longer be warehousing inventory. The news of this change was first reported by Denver Westword.

There are around 9,000 breweries operating in America, the highest amount in the nation's history. Most are small, locally owned and have embraced aluminum cans for packaging, citing environmental benefits such as being lighter to ship than glass, thus reding greenhouse gas from transportation, and the likelihood empty containers will be recycled. There are also flavor benefits to cans, such as the ability to completely block out light when stored, thus avoiding the light-struck aroma of skunk, and being airtight to avoid oxidation, which can yield a wet cardboard aroma.

Printed cans are the kind used by large national or regional brands where the label is part of the aluminum. Even a truckload of cans is a commitment for certain breweries, but as the craft beer industry has grown, consumer demand has been there.

"We’ve been packaging beer in cans for about seven years and Ball is the only can supplier we’ve ever used," says Charlie Berger, cofounder of Denver Beer Co. "It's always been the same minimum order, and [selling] 204,000 cans is not nothing, but selling a million is a major challenge."

The brewery currently sells about 14 beers in cans, he says, including year-round offerings and seasonals. "We’ve just survived Covid," he says. "It was a year and a half of pivots and changing business models daily.

"We lost a ton of taproom sales but we were saved by packaged beer. Now that model has been thrown into question." – Charlie Berger, cofounder of Denver Beer Co.

There are options outside of printed cans. Many small brewers have been using blank cans, known as brights, and affixing them with vinyl labels that partially cover the aluminum, or shrink-wrap plastic sleeves that can mimic printed cans.

"I think this surge in demand for aluminum cans and bottles points to an underlying trend that we can expect to continue even after the pandemic," Scott McCarty, a Ball Corporation spokesman, wrote in an emailed statement. "In recent years, we’ve seen an uptick in interest in the can in large part due to its sustainability benefits compared to competitors."

He noted that aluminum has the highest recycling rates of any packaging substrate.

"As the packaging waste crisis mounts, consumers are seeking sustainable options like cans and beverage brands and can-makers are responding accordingly," he says.

That's true for printed or blank bright cans, but there's growing annoyance among recyclers that the vinyl and shrink-wrapped labels that small brewers use can catch fire in smelting plants, causing batches of otherwise reusable aluminum to be removed from the stream.

For beverage makers who will now have to switch to alternative labels, this means additional waste in the recycling stream. Many brewers have begun educational campaigns urging customers to peel or remove labels from cans before recycling, but it is difficult to track or ensure whether those efforts are actually made.

Keeping an eye on existing inventory is now critical, as brewers have wholesale commitments. For many independent brewers staying available and visible on off-premise accounts is paramount to their continued viability.

It's unclear how many breweries will ultimately be impacted by Ball Corporation's decision, but the rest of the canning industry is strapped for supplies due to the rise of at-home consumption during the pandemic and competition for those materials from other categories like hard seltzer, ready-to-drink cocktails, wine and other beverages.

Simply switching to glass bottles is not an option, brewers have said.

"Our customers have been clear, they want beer in cans and only cans," says Berger. "Store shelves have also been reformatted to accommodate cans so even a quick switch isn't possible."

Vandenbergh and others are also worried about timing. Seasonal beer releases need to be planned out months in advance. Without access to their expected cans, brewers will need to figure out how to meet anticipated commitments.

Amid the backdrop to this announcement is the overall increase in the price-per-unit as well as ballooning shipping costs.

"When the total cost goes up for materials and shipping, the price goes up to our wholesalers, and then retail costs go up, and that goes to the consumer who will see a dollar or more difference between us and larger breweries that can eat that cost, and it's going to disenfranchise consumers against us," says Matt Kahn, the president and cofounder of Big Ditch Brewing in Buffalo, New York. "Overall, we are looking at a $2 increase per case. Right now, I don't see a great solution for this problem."

For those affected by the change, entering into new relationships with other can companies could prove difficult. There are broker companies and others with access to cans—Ball highlighted four such companies in its email—but they too are feeling the supply and logistics pinch.

Some brewers will have to install a labeler or additional equipment if they lose access to printed cans, another blow to the budget.

Mobile canning options across the country are also an option. Often these companies have inventory and the ability to label and pack cans, but breweries will still need to commission new artwork to replace printed cans labels. Right now, those mobile canners and other brokers are trying to source cans from around the world to bring into the United States. The shipping costs are staggering, they say.

Brewers theorize that the Ball change could bring about competition in the canning industry, revealing the need for additional companies to produce and handle printed cans, but that could take years to develop and get running.

McCarty says that Ball has installed two additional lines at existing facilities, and is constructing four new plants in Arizona, Kentucky, Nevada and Pennsylvania.

"A majority of our craft brewing customers are contracted, and with our capacity constraints, we need to focus on meeting their requirements and those of our other contracted customers," he says.

For now, there is uncertainty among small breweries, but some are hopeful that they will find solutions before consumers are impacted.

"I’m optimistic that the supply chain logistics return to normal and with additional plants coming online, hopefully this change will be more temporary than protracted and just the new way it will be," says Vandenbergh. "So, we have a beer, do our best and wait to see."

Editor's Note, 1/4/2022: In January 2022, Ball Corporation announced that it would delay the change in minimum orders until March 1, 2022. The change followed an industry outcry, pressure from the Brewers Association and a letter sent to Ball Corporation from Senator Ron Wyden (D-OR), Chairman of the Senate Finance Committee. "In order to provide more time for non-contracted customers to understand the options that have been created, we plan to postpone until March 1, 2022, the implementation of our new minimum order requirements for customers that do not have supply contracts with our company," says spokesman Scott McCarty.