Craft beer could get even more expensive

By Alicia Wallace, CNN Business

Your next can of craft beer could be a lot more expensive.

Ball Corp., one of the world’s largest suppliers of aluminum cans, is sending shockwaves through the craft beer world after raising the minimum number of cans some producers must order and saying it would raise prices.

Ball has said he will now require non-contract customers – which include many small breweries – order no less than five trucks (roughly 1.02 million cans) for each of their drinks starting January 1. The previous minimum purchase was one truck per product.

Additionally, starting in 2022, Ball wrote that it would no longer be able to store excess cans of these non-contract customers in its warehouses and that the price per can would increase by almost 50% for at least some non-contractual customers, according to notices sent to breweries.

The news has many small breweries and regional breweries scrambling to secure cans and raised fears of higher costs, reduced variety and higher prices for consumers.

“I see this as an economic killer for some, and most small brewers are definitely going to have to raise their prices significantly or rethink all of their models,” said Garrett Marrero, CEO and co-founder of Maui Brewing Co. . in Hawaii. .

The tight-knit craft beer industry was already reeling from the pandemic’s restaurant and sales floor closures, inflationary pressures, can shortages and other supply chain disruptions.

Then, just over a week ago, Ball notices landed in the inboxes of hundreds of craft brewers across the country, according to the Brewers Association, the trade organization representing small independent brewers. The Denver Westword was the first to report Ball’s purchase minimums.

In the letters, copies of which were provided to CNN Business, Ball wrote that demand for aluminum cans continues to exceed supply.

“Ball is investing to bring additional capacity online, and until then, we remain in a very limited supply environment for the foreseeable future,” the letter said. “This environment is preventing us from delivering the quality customer experience that our customers expect from Ball, and we’re making some adjustments to the way we do business to address it. “

With less than six weeks into the New Year, hundreds of craft brewers will no longer be able to purchase their pre-printed cans directly from Ball and will instead have to secure one of their business’s most critical components from new sources, Bob said. Pease, President and CEO of the Brewers Association.

“It’s still pretty new, so we’re still trying to collect information from our affected members,” Pease told CNN Business.

The Brewers Association is weighing its options and considering reaching out to policy makers, Pease said, and hoped to speak with executives at Ball, who is a longtime member, he added. Pease said on Friday he heard from Ball’s senior management and that the two sides are working to set up a meeting in December to discuss the recent changes.

Ball is not completely abandoning the craft beer industry, a company spokesperson told CNN Business.

“The new model will increase our overall efficiency and allow us to produce more cans for our contract customers, including craft brewers,” Ball spokesperson Scott McCarty wrote in an email.

McCarty added that Ball is building five factories in the United States to produce more cans, adding that “every year we assess supply and demand and will continue to invest where it makes sense.”

As potential solutions for customers who could not meet the increased minimums, Ball offered contact details for four distributors who could take smaller orders, provide warehousing, and offer labeling options such as stickers and packaging. shrink plastics.

“This will force us to close our doors”

When Upslope Brewing Company launched in Boulder, Colo., In 2008, it was one of the few craft breweries to pack their beer only in aluminum cans.

“My first phone call for cans was to Ball,” co-founder Matt Cutter told CNN Business. “They said, ‘That’s good, you can buy a whole truck. “”

It was not feasible then for Upslope, a company whose the seed money came from Cutter’s second mortgage on the house. But a few years later, when Upslope’s snowmelt beer was consumed throughout the Mountain West area, it was certainly possible.

“And Ball kept knocking on our door,” he said.

Ball, also a Colorado-based company, had a can-manufacturing plant just down the highway and offered services like storage and cheaper shipping. Upslope, which has trucked its cans from Ball since 2014, now feels left behind.

Cutter fears that the higher costs – including raw materials, storage, and additional margins resulting from working with new distributors – could ultimately lead to six-product packs sold in stores costing $ 1 to $ 2. more by next spring.

Ultimately, he said, those higher costs might not be sustainable for small businesses.

“As craft brewers, we don’t roll in the dough here,” he said. “We cannot absorb this. This will force us to close our doors.

In Pueblo, Colorado, one of the co-founders of Walter Brewing Co. was frantically trying to get up to speed on what Ball’s plans might mean for his brewery.

Walter Brewing has purchased cans for his Walter’s Original Pilsner and Walter’s Pueblo Chile Beer from groups that buy from Ball, as well as directly from Ball.

“It would take us over a year to cross [a truckload]Said Andy Sanchez, one of the co-owners of Walter Brewing.

The five new requirements trucks is out of the question.

“With six weeks’ notice, it’s a lot to digest in such a short time,” Sanchez said. “It would be crucial for any small brewery for Ball to rethink the path and perhaps think of a way to mitigate the short-term impacts. “

Maui Brewing, by its scale operations in Hawaii, and the close relationship with Ball’s plant there, should be relatively safe from major disruption, Marrero said. However, he fears that mainland breweries and Maui Brewing’s efforts to expand production there met with complications.

He fears that brewers who cannot float costs to move suppliers will be forced to change their operations, shut down or regroup. He said he was also concerned that this could lead to greater use of less durable materials, such as plastic labels.

“This will create a paradigm shift in craft beer going forward,” he said.

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