The can supply issues for craft breweries keep mounting. The Ball Corporation recently changed its minimum order requirement for aluminum packaging to five truckloads per SKU for printed cans for non-contracted customers. What’s more, Ball will no longer warehouse inventory on behalf of customers. Instead, non-contract smaller brewery customers will need to work with a set of four distribution brokers to order any quantity less than five truckloads.
In actual numbers, this bumps the minimum order from 204,000 cans to just over 1 million (and then have the space to warehouse them all). Yikes. The Brewers Association tells us the vast majority of small to mid-size brewers can’t meet those minimums. “Only 3% of craft breweries are regional craft breweries (producing about 15,000 barrels per year). Even most regionals do not have the brand size or storage space for those minimums.“
“The Brewers Association is aware of the ongoing communication between Ball and its customers regarding changes in ordering policy,” said Bob Pease, President & CEO, Brewers Association. “These changes, if accurate and widespread, have the potential to change the entire beer landscape for small and independent brewers. Most breweries cannot order or store 1M cans per sku. Having to go to labeled cans and adding broker fees will drive up prices for small brewers and make their products less cost competitive versus larger brewers, who already have scale advantages.”
Adding this extra distribution layer for most small customers could lead to increased prices (fees, labeling, transport costs) and longer lead times in addition to the likelihood of less availability. The BA summed up a few more ripple effects:
Additional impacts could be environmental, including the increased use of plastic shrink sleeves and pressure sensitive labels if brewers cannot meet minimums, which reduces the recyclability and value of aluminum. There is also the potential for additional carbon emissions with extra transportation of cans to distributors rather than direct shipment to breweries. Depending on how brewers react to increased cost and order sizes, it could potentially lead to lower availability of smaller brands in the marketplace and higher costs for consumers.
If your head is spinning (or hurting from slamming it into nearby walls) regarding supply chain issues, this feature we ran a while back might have some handy tips. Here’s a relevant section for today:
No cans? No problem. We’ve seen breweries take blank cans and use their label applying machines to take care of the issue themselves. We’ve seen others keg beers they had planned to can to keep the beer fresh for as long as possible. In some cases, brewers are setting aside bright tanks to keep the beer refrigerated until cans arrive.
We’ve been impressed by the creativity we’ve seen across the industry throughout the pandemic and we have no doubt it will continue. To get you inspired, here are a few tips:
- Find another supplier: The whole industry may be struggling with a shortage, but that does not mean switching suppliers won’t be helpful. If your supplier is taking too long to deliver inventory, consider looking into a new one.
- Diversify your product: Breweries are struggling with malt and hops quality due to the excessive heat. If that’s the case at your business, consider brewing other styles or a hard seltzer. The hard seltzer market has been hot for a few years now and has been less impacted by the shortage.
- Hire a sales associate and do some outreach: If you cannot can your beer, it may be time to reach out to local bars and restaurants with kegs. Hiring a sales associate who can reach out to local bars and restaurants can save your business from wasting good beer while also providing a new revenue stream.