Can Inventory Running Low Nationwide; Ball Corporation Plans to Build Two Plants

Can inventory nationwide has tightened, due to the seismic shift in beer sales from on-premise draft to off-premise package since the COVID-19 pandemic began.

“Sixteen ounce cans are going to be a problem this summer,” David Racino, co-founder and CEO of Austin, Texas-based American Canning, told Brewbound. “There is just such a strain on the supply chain right now.”

The shortage, Racino said, will disproportionately affect craft breweries, as larger companies receive their allocations from large can manufacturers such as Ball Corporation.

“Just because of their size, they get preferential treatment,” he said of larger beer manufacturers.

American Canning sells blank and decorated cans to brewers and other beverage producers in bulk. The company sources its products from large can manufacturers, of which there are few.

Ball Corporation, the largest can manufacturer in the U.S., said “certain canned beverage SKUs have been in short supply,” particularly 12 oz. slim cans. In part, the shortage of those cans are being caused by the popularity of hard seltzers, sales of which were skyrocketing before the COVID-19 pandemic changed beverage alcohol purchasing behaviors. That segment’s leaders, Mark Anthony Brands’ White Claw and Boston Beer Company’s Truly Hard Seltzer, both use the slim can package.

“Prior to COVID, 2020 was already poised for notable can growth across a variety of categories,” Ball strategic communications director Scott McCarty told Brewbound. “For instance, hard seltzers have experienced explosive growth as a category and specifically in cans. Soft drinks and the still and sparkling water categories have seen it, too, with marketers shifting their packaging mix toward cans and away from single-use plastics.”

Ball has turned to its global manufacturing network to support domestic customers for the time being, and has worked to boost efficiency at its 16 U.S. plants, McCarty said. Additionally, Ball is constructing two new facilities — one in Glendale, Arizona, and one in a not-yet-named location in the Northeast — and adding new lines to existing facilities. These additions will add at least 6 billion units to Ball’s overall capacity by the end of 2021.

In 2017, Ball announced it was closing three plants: in Birmingham, Alabama; Chatsworth, California; and Longview, Texas. That same year, Ball announced plans to build its Goodyear, Arizona, plant, which is just under 20 miles from Glendale. Last year, Mark Anthony Brands announced its own plan to open a facility in the same city, as have Red Bull and Rauch Fruit Juices.

But the end of 2021 is still 18 months away. To supply American Canning’s customers now, Racino has turned to a can manufacturer in Guadalajara, Mexico.

“Being in Texas, it actually works really well — we’ve been happy with it,” he said. “However, if you are in Rhode Island, it is really not a cost-effective solution because of the shipping costs.”

American Canning’s Texas location and the passage of the U.S.-Mexico-Canada Agreement (USMCA), which went into effect on July 1 and allows for tariff-free trade on many goods among the three countries, makes ordering from a Mexican supplier an easy call. If cans become scarce south of the border, Racino will have to explore other costlier options.

“We’re able to kind of leverage that relationship to continue our supply, versus some of the companies that don’t do business internationally and are having a hard time reacting to it,” he said. “So, if we end up pulling cans from Asia, from Australia, from Europe, something like that, obviously the cost is significant to get those cans here, and so it really just means more dollars out of everyone’s pocketbook when they really can’t afford that right now.”

Crowlers — 32 oz. cans filled and sealed on demand mostly at taprooms — are again in short supply, Racino added. To stretch its inventory, American Canning has moved from offering crowlers by the half-pallet, about 1,200 pieces, to selling them in boxes of 120 pieces.

However, American Canning is sold out of 32 oz. crowlers until its next shipment in early August. The company has been offering customers 25.4 oz crowlers in the meantime, which are the same diameter and can be seamed on traditional seamers with an attachment to accommodate their shorter height. Production runs of both crowler sizes, as well as slim cans, aren’t as frequent as runs of traditional 12 oz. cans.

“It’s been difficult to plan based on the way they play their allocation game and production,” Racino said of Ball. “It’s just tough to know what we’re going to get until they’re produced and they’re on a truck on the way to us.”

Another can producer who has had to change its production schedule and made things difficult for smaller customers is the Metal Container Corporation (MCC), a subsidiary of Anheuser-Busch InBev, Racino said.

MCC produces 45% of cans and 55% of lids for A-B’s U.S. operations at seven plants across the country, according to the company’s website. MCC had introduced MCC Flex, a program that sold excess capacity to craft breweries, but ended the practice when A-B needed all the cans it could produce.

“They shut down the Flex program basically for the rest of the year without much notice,” Racino said. “They pulled the rug out from under the little guys on that one because ABI needed their cans.”

A request for comment from A-B was not returned at press time.

In addition to selling and decorating bulk cans, American Canning also offers mobile canning, on-site canning for Texas breweries, and filling and seaming machines. When the pandemic forced taproom breweries to stop selling draft beer by the pint, Racino and his team knew that these companies would be in need of canning equipment, at least temporarily. So, they got to work developing a countertop can filler that fills and seams six to 12 standard diameter cans per minute.

“You just keep loading it up, and it’ll run basically all day long off of either a keg or a bright tank,” Racino said. “It’s very low power, very low compressed air requirements, very low CO2 requirements, so it’s just super easy to operate.”

So far, American Canning has received 20 orders for the filler, which can be lifted by two people and stored when not in use. The fillers are automated and require less hands-on attention than traditional seamers, which some taproom breweries were using to can beer.

“It’s not a cost-effective thing for people to pay their whole staff to sit there and fill cans one at a time all day long,” Racino said.

Asked what wisdom he’d share with can-strapped brewers, Racino said planning is key.

“Our recommendation is always to try to look ahead of the curve a little bit here and know that it’s gonna get bad,” he said. “And don’t panic buy, because that hurts your fellow brewer, but put some thought into your projections and what you’re going to need over the next two to three months.”

Editor’s Note: This story was updated to clarify that David Racino was referring to large can manufacturers, not his smaller company, showing preferential treatment to large brewers.

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