A nationwide shortage of cans is the latest threat to craft beer. Ball Corporation, the world’s largest manufacturer of cans, told investors this week that the U.S. market alone is short 10 billion cans in 2020, according to Beer Business Daily, a trade publication.
When demand is this high for cans, only a few beverage producers get priority. The big companies (Pepsi, Coke, Anheuser-Busch, Miller-Coors) saw a shortage coming early on and began hedging their bets, shoring up contracts with canning giants but also negotiating contracts with smaller distributors.
“In times of shortage, there are no antitrust violations with privileging your largest customers first,” said Bart Watson, chief economist for the Brewers Association. “Most smaller brewers buy indirectly from brokers, and that means they are lower down on the list. It’s nothing nefarious, but it’s one of the challenges small companies face.”
DuClaw Brewing Company, a midsized brewery in Baltimore, has run out of cans every week since late July. The company gets can shipments sporadically from distributor Gamer Packaging, according to DuClaw’s logistics manager Daniel Iman, and have been told there will not be a steady supply until next August.
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Paula Gamer, president of Gamer Packaging, says the shortfall is national and adversely affects can manufacturers, distributors and brewers alike.
“We could sell 200 million more cans between now and the end of the year if we could get them,” Gamer said. “Unfortunately, we’re having to turn away new customers because we have to take care of existing customers first. And none of our manufacturers are taking new customers through the end of the year.”
Scott McCarty, director of strategic communications at Ball Beverage Packaging North and Central America, says the shortfall is a confluence of a number of trends. Hard seltzers experienced explosive growth as a category and specifically in use of cans. Soft drinks and sparkling waters have had tremendous growth, too, he says, with marketers shifting their packaging mix toward cans and away from single-use plastics.
“The peak summer season, with a heat wave in much of the U.S., also contributed to that high demand. And covid-19 added further to demand, as consumers bought more beverages in aluminum cans for home consumption,” McCarty added.
Ball has expanded domestic capacity by installing two new lines in existing facilities and building additional plants in Glendale, Ariz., and Pittston, Pa., that will provide at least 6 billion cans by the end of 2021.
According to Can Manufacturers Institute President Robert Budway, can makers are expected to import more than 2 billion cans in 2020 from their overseas facilities to meet customer needs. And can manufacturers overall expect to have to add the capacity to produce 12 billion more cans by the end of 2021, says Budway.
Last year, many beverage categories pivoted to cans, but Lester Jones, chief economist for the National Beer Wholesalers Association, says the pandemic has pushed what was a natural evolution to a crisis point.
By the end of 2019, 60% of the beer market was in cans, he says. For years craft beer makers had preferred bottles, which are perceived as “fancier” and more suited to higher-end restaurants and bottle shops.
“But as soon as craft beer went more mainstream, in grocery stores and convenience stores, cans became the preferred package. They are easier to stack and ship, and they fit into more occasions — going to the beach, or a sporting event or concert,” he says.
Brewers turned to cans in recent years because they are a penny cheaper per container than bottles, they are lighter empty or full, and they store a bit snugly. But Watson says beer drinkers’ enthusiasm for cans during the pandemic is for another reason: Because people are trying to go to the store less, large-format packaging is more popular and “you can carry a 30-pack of cans, not a 30-pack of bottles.”