Craft beer can become even more expensive

Ball said it will now require customers without a contract – which includes many smaller breweries – order no less than five truckloads (approximately 1.02 million cans) per each of their beverages from January 1st. The previous purchase minimum was one truck per. product.

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

The news has many small and regional breweries struggling to secure themselves cans and has spurred the fear of higher costs, reduced variation and higher prices for consumers.

Hawaii-based Maui Brewing received message from Ball Corp.  this month that the purchase minimum for aluminum cans will increase fivefold.

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

The dense craft beer industry was already upset by pandemic-induced restaurant and crane closures, inflationary pressures, canned shortages and other supply chain disruptions.
So a little over a week ago, notices from Ball landed in the inbox of hundreds of craft brewers across the country, according to the Brewers’ Association, the trade association that represents small and independent brewers. That Denver Westword was the first to report about Balls purchase minimum.

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

“Ball is making investments to bring additional capacity online, and in the meantime, we will remain in a tightly limited supply environment for the foreseeable future,” according to the letter. “This environment makes it difficult for us to deliver the quality customer experience our customers expect from Ball, and we make some adjustments to how we conduct business to address that.”

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

“This is still pretty new, so we’re still trying to gather 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, hoping to speak with leaders at Ball, a longtime member, he added. On Friday, Pease said he heard back from Balls senior management, and the two sides are working to arrange a meeting in December to discuss recent changes.

Ball is not leaving the craft beer industry completely, a spokesman for the company told CNN Business.

“The new model will increase our overall efficiency and allow us to actually produce more cans for our contract customers, including craft brewers,” Ball spokesman 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 evaluate supply and demand and will continue to invest where it makes sense.”

As potential solutions for customers who could not meet the increased minimum requirements, Ball offered contact information to four distributors who could take smaller orders, deliver stock and offer labeling options such as stickers and plastic shrink wrap.

‘It will force us out of the market’

When the Upslope Brewing Company launched in Boulder, Colorado in 2008, it was one of only a handful of artisan brewers to exclusively pack their beer in aluminum cans.

“My first canned phone call was to Ball,” co-founder Matt Cutter told CNN Business. “They said, ‘It’s fine you can buy a truck.'”

That was not possible at the time for Upslope, a company if start-up funds came from the second mortgage in Cutter’s house. But a few years later, when Upslope’s snowmelt-based beer was consumed throughout the Mountain West region, it was certainly possible.

Upslope Brewing Co., based in Boulder, Colorado, is a long-term customer of Ball who is unlikely to be able to meet higher purchase minimums.

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

Ball, also a Colorado-based company, had a can manufacturing facility just down the highway and offered several services such as storage and cheaper shipping. Upslope, which since 2014 has bought its cans by the truck load from Ball, now feels outside in the cold.

Cutter fears that the higher costs – including raw materials, storage and any additional gains from working with new distributors – could eventually lead to in-store craft items becoming $ 1 to $ 2 more expensive next spring.

In the end, he said, these higher costs may not be sustainable for smaller businesses.

“As artisan brewers, we do not roll in the dough here,” he said. “We can not absorb this. It will force us to stop.”

In Pueblo, Colorado, one of the co-founders of Walter Brewing Co. tried. feverish to come up with what Ball’s plans might mean for his brewery.

Walter Brewing has purchased cans for their 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 more than a year to go through [a truckload], “said Andy Sanchez, one of Walter Brewing’s co-owners.

The recently needed five wagon load is excluded.

“With six weeks notice, there’s a lot to digest in that short amount of time,” Sanchez said. “It would be crucial for any small brewery if Ball would reconsider the path and perhaps think of a way to mitigate the short-term consequences.”

Walter Brewing Co., in Pueblo, Colorado, packs their beers in Ball Corp. cans.  Co-owner Andy Sanchez said he is trying to determine how his brewery will be affected by higher purchase minimums.

Maui Brewing because of its scale of operations in Hawaii and close connections with Balls’ factory there, should be relatively isolated from major disruptions, Marrero said. However, he fears that breweries on the mainland and Maui Brewing’s efforts to expand production are facing complications.

He worries breweries that can not flow the cost of switching suppliers will be forced to change their operations, close or consolidate. He said he is also concerned that this could lead to a greater use of less sustainable materials, such as plastic labels.

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

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