The Brewers Association (BA) is urging the Can Manufacturers Institute (CMI) to ensure that small and independent craft brewers have access to aluminum cans amid the years-long inventory crunch beverage producers are now facing.
In a letter to the CMI, BA president and CEO Bob Pease painted a dire picture for the nation’s nearly 8,400 craft brewers.
“Our members report that the news on aluminum can supply is worsening, with some allotments representing as much as a 40% reduction in supply,” he wrote. “Some brewers are learning their purchase orders for Q1 deliveries have been canceled. Others are being told that they will not be able to get cans until the second quarter of 2021.
“These businesses will simply not survive that long without cans,” he continued.
The closure of on-premise bars and restaurants last March to help stop the spread of the COVID-19 pandemic shifted beer volumes from kegs, which is roughly 10% in a normal year, to cans and bottles for at-home consumption. However, that shift wasn’t shared equally between both package formats.
The popularity of cans among craft brewers has been rising steadily for years. In 2015, cans accounted for just 18.9% of BA-defined craft brewers’ volume sold at off-premise retailers tracked by market research firm IRI, according to an analysis from BA chief economist Bart Watson.
By 2020, cans’ volume share had increased to 52%, overtaking bottles for the first time. Last year, all major can packaging formats increased in volume year-over-year, according to Watson’s 2020 packaging analysis:
- 12 oz. 6-pack cans, +23%;
- 12 oz. 12-pack cans, +47.2%;
- 16 oz. 4-pack cans, +32.4%;
- 19 oz. can single-serve cans, +85.2%.
It’s not just craft brewers that are leaning into cans — spirits companies and winemakers are also embracing aluminum. Last year, the dollar share of canned ready-to-drink cocktails increased 84% and dollar sales of canned wine grew 61%, according to market research firm Nielsen IQ. Dollar sales of slim or sleek cans — the taller, thinner 12 oz. cans preferred by hard seltzer makers — increased 92%.
Craft brewers’ can procurement struggles have been well-documented. Chicago-based Hopewell Brewing discontinued Lil’ Buddy lager, which it packaged in 8 oz. mini-cans, due to can manufacturers ceasing production of the package in favor of 12 and 16 oz. options, co-founder Samatha Lee told the Chicago Tribune.
Middleburg Heights, Ohio-based Fat Heads Brewery pivoted to 12 oz. bottles and 16 oz. cans after its preferred 12 oz. cans weren’t available, sales and marketing director Bill Wetmore told Fox 8 Cleveland.
During the summer of 2020 when its can inventory was tight, CANarchy — the craft rollup of Oskar Blues, Cigar City, Three Weavers, Wasatch, Squatters, Deep Ellum and Perrin — rewrapped surplus pre-printed cans with new labels to accommodate beers within its portfolio.
“The aluminum shortage, since early last year, has required us to become much more diligent in our planning and forecasting across many departments within CANarchy including operations, commercial, innovation, etc.,” VP of procurement Patrick Lynch told Brewbound. “We had to pivot to some other solutions this past summer to ensure that our products were available, sleeving a couple of million pre-printed cans.”
Top can manufacturers Ball Corporation and Crown Holdings typically sell their products in bulk orders that are too large for most craft breweries, who must turn to brokers, adding another layer of complexity.
In his letter, Pease called for more transparency in the aluminum can market.
“Where there may be few options for aluminum can manufacturers in the short term to fix the imbalance between supply and demand, the BA believes that reallocation, increased transparency, and shared knowledge will serve the interests of both brewers and aluminum can manufacturers and foster a productive relationship for the years ahead once we are past this pandemic,” he wrote.
Can manufacturers are working to increase capacity, but available cans from new facilities are still months and even years away.
Ball Corporation, the world’s largest manufacturer of aluminum beverage cans, estimated its own supply was 10 billion units short in 2020 and expects the shortage to continue into 2022. Last year, the company made several moves in an attempt to ease the crunch, spending $1.1 billion in capital expenditures, executive vice president and chief financial officer Scott C. Morrison said in the press release accompanying the company’s 2020 fourth quarter and full year earnings report. Capex costs for 2021 are estimated at $1.5 billion.
Those projects included adding capacity to existing can production facilities in Rome, Georgia, and Fort Worth, Texas, and breaking ground on new plants in Glendale, Arizona, and Pittston, Pennsylvania, which are expected to come online in Q1 and Q2, respectively. Additionally, Ball is working on a new can lid facility in Bowling Green, Kentucky, that will begin production in 2022.
Ball’s beverage packaging division for North and Central America posted 2020 full year earnings of $683 million on sales of $5.1 billion, considerable increases over $555 million in earnings on $4.8 billion in sales in 2019. Ball’s investments in new facilities led to Q4 earnings to be flat compared to 2019, despite a $200 million increase in sales in Q4 2020 compared to the same quarter in 2019.
Ball began importing cans from its global markets to the U.S. and will continue to do so until 2022, according to the release. But the popularity of cans is surging across the globe, not just in the U.S.
“Other world regions where Ball operates are also seeing tremendous growth in beverage can demand, and Ball is investing in new plants and existing operations in other regions as well,” Ball director of strategic communications Scott McCarty told Brewbound.
Crown Holdings, the world’s second largest beverage can manufacturer, announced last month plans for a new 355,000 sq. ft. plant in Henry County, Virginia. It is expected to come online in the second quarter of 2022.
Crown belongs to the Can Manufacturers Institute (CMI), the recipient of Pease’s pleading letter. Ball does not, a CMI spokesperson confirmed.
In addition to calling for more transparency, Pease also asked the CMI for “continued communication as manufacturers allocate supplies in the short term and increase capacity to address the longer-term growing demand for aluminum cans.”
The BA hopes the letter will open communication with can manufactures while reiterating how pressing craft brewers’ needs for cans are.
“We want to be allies with our suppliers, but we also want to do what we can to get our members access to raw materials,” BA marketing director Ann Obenchain told Brewbound.
The BA also plans to produce a “technical resource [that] will help brewers ensure transparency and clarify from their suppliers in regard to liner materials, as well as outline the different types of liners available as brewers source cans from further afield,” according to a post on its website that accompanied the CMI letter.
“In addition, the Brewers Association government affairs team is working on reducing tariffs on finished cans to help lower costs for brewers who choose to source cans globally,” the BA wrote. “We continue to investigate other solutions and welcome any member suggestions on actions that would be helpful to their business.”