Ball Adds Canning Capacity as Craft Breweries Feel the Crunch

Breweries nationwide are under pressure from a tightening can supply, but relief could be on the way — next year.

The Ball Corporation, the world’s largest manufacturer of aluminum cans, announced a new production line at its facility in Rome, Georgia, will come online next week, joining another new production line at its Fort Worth, Texas, facility, Ball executives said during a conference call discussing Q2 earnings. Even with the addition of those new production lines, demand is outstripping supply.

Two new facilities in Arizona and the Northeast will also go online in 2021.

“Our initial plans to add 6 billion units of capacity in our North American business by the end of 2021 have been adjusted upward following recent contract discussion,” chief operating officer of global beverage packaging Dan Fisher said. “We proceed fully scaling out our new facilities in Arizona and the northeastern U.S. sooner rather than later. As of today, our capital growth projects are on track.”

In Q2, Ball’s beverage packaging unit in North and Central America posted $189 million in operating earnings on $1.3 billion in sales, up from $141 million in operating earnings on $1.3 billion in the same quarter last year.

With its expansion projects and importing cans from its global operations, Ball expects its North American can business to grow 4% in 2020, Fisher said.

However, even with these expansion projects, the company’s “beverage can business in each region is sold out in advance of new capacity coming online,” CEO John Hayes added.

Ball supplies cans to the world’s largest beverage manufacturers, many of whom have had the opportunity to “step into some growth profiles that they haven’t seen in a while, and they’re using the can and innovative packs to do that,” Fisher said.

The COVID-19 pandemic’s shift of beverage consumption from on-premise to off-premise has been a boon for Ball, but has underscored supply chain issues for its customers.

“This overall shift off-premise has been a great help for us, but it’s also pointed out the fact that making sure that you have your supply chains in good order is important,” Hayes said. “So, we’re trying to keep up with our customers as best we can.”

The Brewers Association (BA), the trade group that represents the country’s small and independent brewers, published a can shortage advisory last week warning members that “demand is likely to continue to outpace supply through next year or possibly longer.” The BA noted that breweries are now competing with wine and spirits producers for cans, as those categories have both begun offering canned versions of their products.

Couple that with restrictions in the on-premise channel and the increasing popularity and off-premise sales of hard seltzers and active lifestyle offerings sold in slim cans, and there’s a perfect storm of can shortages, particularly for smaller breweries without large contracts.

“The can shortage may threaten the ability to survive the pandemic for some craft brewers,” the BA wrote. “The smallest brewers are most likely to have orders delayed or canceled, as can manufacturers are more efficient when they don’t have to change out the printing plates as often. A company ordering a half or full truckload may be less of a priority.”

Earlier this spring when on-premise establishments were completely shut down for on-site consumption, draft beer — which normally accounts for 8% to 10% all beer sold — saw its share drop to 0%, according to National Beer Wholesalers Association chief economist Lester Jones. Cans filled the void created by draft’s absence, with can’s share increasing from 60% in the first 11 weeks of the year to 67% between weeks 12-20. Bottles’ share increased just 1%, to 33%.

Evidence of the can shortage’s impact on craft breweries abounds. Last week, Yakima, Washington-based Bale Breaker Brewing followed up its own press release announcing the debut of can packs of its pilsner with a note that the rollout would be delayed.

“We sent this press release out this morning and have since heard that the cans are delayed (we know we’re not the only brewery feeling that can shortage) — we’re now planning for a mid-August release,” the brewery wrote.

Another unnamed brewery posted in Brewbound’s Marketplace on Wednesday offering to purchase at least four pallets of cans from anyone with excess inventory.

“We are looking to purchase 12 oz. aluminum cans with 202 diameter,” the poster wrote. “Preferably blank but we would consider pre-printed.”