After aggressively adding more than 350 craft beer clients in 18 months, Crown Beverage Packaging — a leading supplier of aluminum cans for beverage manufacturers — is now struggling to keep up with demand from the very customers it sought, and is considering altering the ways it services craft customers.
Over the last week, Crown began informing a number of craft breweries that it would no longer be able to fill orders of printed aluminum cans, Brewbound has learned.
“We were told that they wouldn’t be able to reprint our cans at any time and that we needed to find a new supplier or a new package variety,” said Heather Sanborn, the co-founder of Portland, Maine’s Rising Tide Brewing Company.
Rising Tide isn’t alone. At least three other brewers shared similar stories on an online forum hosted on the Brewers Association website, noting that Crown has “no capacity for small volume accounts in 2016.”
“We were not even allowed to order, just told ‘no cans for you,’” wrote one brewer.
Ron Skotleski, Crown’s director of marketing, said he was “surprised to hear and read some of the rumors.”
“I can tell you, point blank, that Crown is committed to the craft segment,” Skotleski told Brewbound. “We are huge proponents of craft and have helped hundreds of breweries get into canning.”
Nevertheless, Skoleski said, Crown is “reviewing the number of new startup breweries we can continue to service every year.”
“This is a very fluid situation and we are trying to adopt our business model to grow with craft,” he added.
Part of the problem for Crown may be the smaller minimum order requirements that are preferred by craft brewers, according to a source familiar with Crown’s business who spoke to Brewbound on the condition of anonymity.
Over the years, Crown has allowed its smallest craft customers to purchase half-truckloads of aluminum cans — about 12 pallets or 100,000 cans, the company told Brewbound. Competitor suppliers Ball and Rexam typically require customers purchase full truckloads.
Going forward, Crown will likely require that customers order a full truckload, the source said, and it has already begun evaluating customers on annual sales volumes.
For his part, Skotleski said “larger minimum orders could be required going forward,” adding that Crown didn’t have a “checklist or metrics” to decide which customers would be allowed to continue purchasing.
“We are having one-on-one conversations with some of our smaller breweries,” he said.
“We brought on 218 new craft breweries in 2014 and took on another 135 breweries as of July this year,” Skotleski added. “You can imagine what that does to an organization and a division.”
A majority of Crown’s craft customers are trying to place minimum purchase orders, Skotleski said, which drastically impacts the company’s ability to properly service all of its clients.
At the heart of the issue are printed cans, a colorful representation of a craft brewery’s identity, and sometimes the most important part of the brand when it comes to helping a smaller business stand out on the shelf.
“Every single one of our customers can still get Crown cans,” said Nick Osborne, the business development and sales manager for Crown’s craft division. “It is the printed can side that has put a strain on our business.”
The alternative for brewers that have been shut out from receiving printed cans from Crown is to order blank cans and use custom-designed shrink-sleeve wraps instead, Skotleski said.
“The way I look at it, shrink sleeves offer a brewery a lot of flexibility,” he added.
But Sanborn, whose brewery ordered about 375,000 printed cans from Crown this year, disagrees.
“It’s not an option for us,” she said. “We are buying multiple truckloads at a time of the same can. It (shrink sleeve) is a great option if you are running a smaller number of labels but it doesn’t make sense at our scale.”
Rising Tide said it will only make about 3,800 barrels in 2015 and it’s unclear how many similarly-sized companies could be impacted as a result of Crown’s new approach.
But to better understand exactly how all of these craft accounts are hampering Crown, first consider the manufacturing process. In oversimplified terms, it goes like this:
A craft brewery submits its (often complicated) can design to Crown. Crown takes sheets of aluminum, stamps out the requested size cans (typically a 12 oz. or 16 oz.) and sends them to “the decorator,” a machine where individualized graphics are applied. Companies are then able to select from different types of finishing varnishes and, once the design is approved, Crown reels off thousands of printed cans for a brewery.
Multiply that process by 400 breweries, many of which are canning multiple SKUs, and one can understand just how complicated and inefficient the manufacturing process can become.
“You hit a point where it is very difficult for the plants to run,” Skotleski said, noting that each 100,000 can run requires the machines to be shut down and “changed over” with new graphics plates.
“It puts a strain on our operations,” he added.
Nevertheless, Crown said it is committed to continuing its endeavors in the craft segment and is currently putting in measures to better serve its existing client base.
“There are so many orders and accounts and our graphics department is flooded,” Skotleski said. “We have the largest account management department in the industry and we are in the process of doubling our customer service department.”
Crown has also begun working with a third party graphics company, Southern Graphics Systems, that will assist with the production of pilot cans and make plate designs, Skotleski said.
Skotleski added that Crown would be “really hesitant” to bring on new craft customers at this time, noting that the company would “strategically look at each opportunity.”