Ball Corporation is making beer a smaller part of its mix after over-indexing in the category, CEO Daniel Fisher shared during the company’s Q2 earnings report earlier this week.
The move is part of a “repositioning” of the company’s portfolio with “a higher customer concentration” in energy drinks and carbonated soft drinks, he said.
“We’re making that pivot,” Fisher said, shifting focus to “the categories and the brands and the areas that have a little bit more tailwind for the future.”
Asked about how much of Ball’s mix is alcohol, Fisher said “moving from 40% to 30% would be optimal over time.” He described the change in mix as “future-proofing the business.”
“We’re starting to see the tailwinds of that,” he said. “We’ll continue to see the tailwinds of that into ’26 and ’27.”
Ball’s pivot away from beer should be no surprise, as Fisher has critiqued the industry’s reliance on price increases for several years. He has called for beer companies to deploy promotions to push volume several times during earnings calls, most recently during the company’s Q1 earnings call in May.
Fisher noted that “beer is softer than we anticipated” this year, although some of Ball’s customers are outperforming the category. He pointed to domestic beer as “doing OK.” Meanwhile, one of Ball’s beer customers “is struggling” due to tariffs, Fisher said, and “unless that relieves itself, we’re not anticipating greater performance than the 3% top end.”
“They’re certainly challenged, and they’re one of our partners, and so we’re challenged along with them,” he said, while not naming the partner, it is likely in reference to Mexican beer importer Constellation Brands.
“It was a bit choppy in North America, but largely because we weren’t able to use Monterrey to its full extent in Mexico because of the tariffs and then just some acceleration in a couple of areas where we had to convert to different can sizes to keep pace with the growth, Fisher said. “So in the short term, I’d say we underperformed in North America, but a little bit more stable outlook.”
Year-to-date through July 26, beer category volume has declined 4.5%, while dollar sales have declined 2.8% in NIQ-tracked off-premise channels.
Ball reported Q2 global aluminum shipments increased 4.1%. The company posted $212 million in net earnings during the quarter on sales of $3.34 billion. That marked an increase from $158 million in earnings on sales of $2.96 billion in Q2 2024. On a comparable basis, Ball’s Q2 earnings totaled $249 million compared to $232 million last year.
In North and Central America, Ball recorded $208 million in operating earnings on $1.61 billion in sales. That marked a decline from 2024 when the company posted operating earnings of $210 million on sales of $1.47 billion. The company attributed the year-over-year (YoY) declines due to “price/mix and higher costs,” which higher volumes (mid-single digit percent growth) only partially offset.
Ball’s North American business posted growth from “higher-than-expected volume growth across non-alcoholic categories, especially energy drinks,” Dan Rabbitt, SVP and interim CFO, said during Tuesday’s call with investors and analysts. Those trends boosted the company’s confidence in seeing volume growth near the high end of its 1% to 3% growth range for 2025.
Fisher called out energy drinks for getting “out of the gate strong” and beating expectations, with one of its partners “growing nearly 20%.”
“There’s some innovation in that category, probably more so than any other category, flavor proliferations and the right can mix, the right promotional activity, advertising,” Fisher said. “So I think they figured out a recipe that’s winning right now.”
Sales of multipacks are helping drive that volume growth, which Fisher said is connected to promotional activity and weakening consumer confidence.
“[They’re] buying multipacks at an accelerated rate versus the prior couple of years,” he said. “That’s what’s contributing to probably a little bit more volume growth than anyone anticipated in the first half of the year.”
Nevertheless, the focus on non-alcoholic beverages does come with “lower margin” for Ball, Fisher noted.
Pricing dynamics remain a concern for Ball as the Trump administration’s tariffs are now in effect as of August 7. Fisher acknowledged that inflationary pricing over the last few years “really constrained our volume.”
“The multipacks are being pushed – that’s because end consumers are strapped, and the can is the vehicle for our customers to grow with,” he said.
Fisher conceded that Ball “did not do well” during high inflationary times over the last few years.
“We’re recession-resistant, not inflation resistant,” he added. “So when our customers need to take price to offset additional input costs, that’s a direct volume headwind to us. So we saw that.
“But you’re at a different point in time in the economy where either the end consumer, if they can’t afford to pay for those higher input costs, then everybody is going to – everybody – our customers and us – are going to struggle,” he continued. “And then that gets you back into the recessionary environment.
“Our customers have fixed costs. We have fixed costs. So I think there’s going to have to be a balance here. With hamburger at $10 a pound, that’s not a good environment for long. And we’re benefiting from it now, but no one is going to be benefiting from that particular environment for a while if interest rates don’t come down and things don’t stabilize a bit.”
On the topic of tariffs, Fisher expects around a $0.25 per 12-pack increase in costs.
“How impactful is that in the price sensitivity curve?” he asked. “Cans are clearly cheaper than PET outside of the 2-liter PET, cheaper than glass still. So if that quarter for a 12-pack creates different buying behaviors, then I think you start to see – and we saw the beginnings of that – you’ll see the 24-packs and the 30-packs and the end consumer being far more conscious on that buy pattern, which then changes the velocity pattern, which changes the lumpiness of your business.”
Still, Fisher said Ball really likes “the trajectory 18 months out on all of this when we have our new facility and things are operating in a more efficient normalized freight pattern. And let’s hope that cooler heads prevail on some of the tariffs and things of that nature.”