Supply chain hiccup leaves craft breweries scrambling for aluminum can alternatives
AYESHA RASCOE, HOST:
The Colorado-based company Ball is the world's largest manufacturer of aluminum cans, and it says demand is so high, it has to drop smaller customers. As Matt Bloom of Colorado Public Radio reports, the supply chain hiccup has left many craft breweries scrambling for alternatives and raising their prices.
(SOUNDBITE OF MANUFACTURING PLANT AMBIENCE)
MATT BLOOM, BYLINE: The inside of the Denver Beer Company's production facility is bustling. Tall steel tanks hold batches of fermenting beer, which is then pumped into thousands of aluminum cans on an assembly line before being shipped to customers.
PATRICK CRAWFORD: Last year, we used about 6 million cans.
BLOOM: Patrick Crawford is the brewery's co-founder. He says canned beer became the lifeblood of his business when taprooms shut down at the start of the pandemic, and it's still a big moneymaker. But late last year, Ball, his main supplier, told him they were dropping his orders.
CRAWFORD: We were surprised. We were shocked. We were bummed. It's very short notice. And so it felt like we had just gotten up from one beating from COVID, and now it had this next big battle to fight.
BLOOM: The demand for cans skyrocketed during the pandemic as beverage companies pivoted to selling canned products as a way to make up for lost revenue from in-person sales at bars and restaurants. That's why, last November, Ball announced plans to raise its minimum order from one truckload to five. That meant Crawford would have to order more than a million cans at a time for each brand of beer he makes, which is way more than he can sell.
CRAWFORD: Having to buy our inventory upfront for four years doesn't make a lot of business sense.
BLOOM: Ball also told breweries they had to stop storing cans at the company's warehouses, which are overcrowded. So on top of ordering more cans than ever, he'd have to find a new place to store them all too, if he wanted to keep buying from Ball.
CRAWFORD: It's basically them telling us that they don't want us as a customer, you know?
BLOOM: In the months since the policy was announced, Denver Beer Company and other breweries have had to scramble to find new sources of cans. Many have delayed new brews and raised prices due to higher raw packaging costs.
BART WATSON: We're hearing that more than a thousand total beverage companies were affected, but that includes soft drinks and kombuchas and other things that are in cans.
BLOOM: Bart Watson is an economist with the Brewers Association, the country's largest trade group for craft brewers. He says shifting to glass bottles or other packaging is cost prohibitive for many brewers, so they're stuck finding new, likely more expensive, suppliers of cans.
WATSON: When brewers are getting these huge cost increases, which aren't just in cans but across the supply chain, you know, they have a choice to either reduce their margins, which, you know, you can only do so far until you're actually losing money, or pass some of that on to customers.
BLOOM: Ball didn't return several emails and calls to talk about its new minimum order policy. In a letter to breweries, the company says it's making investments to build more can factories to help meet demand. It also shared information for alternative distribution through its competitors.
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BLOOM: Back inside the Denver Beer Company's distribution site, Patrick Crawford cracks open a can from the assembly line. It's a raspberry Kolsch called Princess Yum Yum. He says this is the last batch that will go into cans from Ball's manufacturing plant a few miles down the road.
CRAWFORD: Now we're buying a can that's either produced in Wyoming or maybe even in Quebec. And so our shipping costs are going to go up a lot, which is working a little bit of against what we're trying to do when it comes to sustainability too, so...
BLOOM: He says they'll be able to keep store shelves stocked though, which is the most important thing, but it'll cost customers. This month, they rolled out their largest price increase ever for a six pack - up 20%, from 9.99 to 11.99.
For NPR News, I'm Matt Bloom in Denver.
(SOUNDBITE OF DEBO BAND'S "AND LAY") Transcript provided by NPR, Copyright NPR.