Ball Corporation, the world’s largest manufacturer of aluminum beverage cans, has postponed the implementation of its new policy to increase minimum order quantities and end warehouse services until March 1, the Brewers Association (BA) announced Tuesday.
The policy, part of Ball’s “customer reduction plan,” was announced in November and slated to go into effect January 1. When implemented, the plan will require non-contracted Ball customers to order at least five truckloads’ worth of printed aluminum cans per SKU, a 500% increase over the previous minimum of one truckload (204,000 cans). Ball instructed smaller customers to work with third-party can brokers, which cuts into margins.
In the interim, Ball told the BA that it “will not be able to provide [non-contracted] customers with delivery date assurance,” the trade organization noted in a press release.
The postponement is the result of conversations between Ball, the BA and Sen. Ron Wyden (D-OR), who wrote a letter to Ball CEO John Hayes and president Dan Fisher imploring them to adjust or postpone the policy.
“Abruptly implementing this proposed policy change could harm your customers and undermine small brewers’ contributions to the American economy,” Wyden wrote. “For this reason, I urge you to immediately postpone implementation of these policies, and to instead work with small brewers and other stakeholders to craft mutually beneficial policies for Ball’s non-contracted customer base.”
On December 31, the day before the policy was to go into effect, Hayes and Fisher wrote to Wyden about the new March 1 implementation date and referred to a December 30 call between the senator and the can supplier.
“As we discussed, while it will be challenging for us to give delivery date assurances to non-contracted customers, we will continue to try to support these customers as best we can during this exploratory period,” they wrote.
Hayes and Fisher indicated to Wyden that they were interested in discussing potential solutions with craft brewers.
“Through your staff, we would also welcome the opportunity to engage with brewers on the distributor supply option that we have created to address this supply issue, and to explore other ways in which the impacts can be mitigated,” they wrote. “In particular, we would like to explore if there are other ways beyond increasing the minimum order requirement for decorated cans to overcome the impact of lost production created by small runs.”
Ball’s moves to increase minimum order quantities are “intended to ultimately increase the supply of beverage cans into the North American market,” Ball strategic communications director Scott McCarty told Brewbound.
“Together with the investments we have made in expanding capacity through investments in five new plants in North America, we are working to try to increase supply by improving our efficiencies and scalability,” he said.
Since the pandemic forced major shifts in consumer behavior in 2020, Ball has announced several new facilities to attempt to to meet demand for canned beverages. They include new plants in Glendale, Arizona; Pittston, Pennsylvania; North Las Vegas, Nevada; Concord, North Carolina; and Bowling Green, Kentucky.
In addition to quintupling minimum order quantities and ceasing warehousing services, Ball also informed some customers that pricing would increase by 28% for printed 12 oz, cans and 19.5% for printed 16 oz. cans, according to one price sheet Brewbound obtained. McCarty specified that pricing is a separate issue from ordering procedure.
“Current market dynamics, including the unprecedented demand for cans that we have seen in recent years and the dual challenges of supply chain pressures and inflation in North America, continue to strain the global supply of beverage cans and contributed to rising costs for virtually all of the materials we buy to make our products,” he said.
Ball representatives will reach out to customers about the postponement and their options and the company plans to “engage in more detail with brewers on the distributor supply option that we have created to address this supply issue,” McCarty added.
Cans have become the packaging option of choice for craft brewers, and account for about 60% of BA-defined craft volume, according to the trade organization. Widespread bar and restaurant closures and restrictions due to the COVID-19 pandemic shifted a lot of beer volume from draft into package, nearly all of which went into cans. Other beverage industry sectors outside of beer are leaning into aluminum over glass and plastic.
This combination of market factors – along with aluminum tariffs – has extremely constricted global can supply. During Ball’s Q3 earnings call, the company said it is oversold by 10 billion units in its three main regions, with the majority coming from North America.
Wyden, who has championed several legislative victories for craft brewers, including the passage of the Craft Beverage Modernization and Tax Reform Act, applauded Ball’s postponement in a statement shared Tuesday.
“This postponement is good news to start the new year for small brewers in Oregon and throughout the country who now have more time to work on long-term solutions that will allow them to continue getting their quality beer to market and generating jobs in the process,” he said. “I know this is a major concern for small brewers and will continue to birddog this issue for them in the weeks ahead.
“Meanwhile, this extra time is especially important now when the economic fallout from this ongoing public health crisis is landing hard on small businesses working round the clock to overcome these challenges,” Wyden continued.
Oregon Brewers Guild executive director Christina LaRue noted in the statement that the news was welcome, but the challenges Ball’s policy poses for craft brewers will persist.
“The majority of our brewery members will not have the ability to commit to such an extreme increase in required volume by Ball,” she said. “The extension will thankfully give them a little breathing room to help find alternative solutions. But as we’ve seen over the last two years, with record numbers of breweries in Oregon and across the country packaging more of their product to make up for the loss of draft, many will be vying for those same solutions.”
This story was updated at 9:15 p.m. ET on Tuesday, January 4 to include comment from Ball.