For N.S. Craft Brewers, Aluminum Shortage Means Paying ‘Ransom’ To Shippers and Scrounging Used Cans
HALIFAX — If you knocked back a Kitchen Party Pale Ale in the last couple of months, you might have noticed something strange.
Peel back the bright yellow Big Spruce label and you likely saw another brewers’ branding underneath: anything from Flying Monkey to a gin soda or a label from a Quebec brewery.
As Big Spruce’s Jeremy White explains, the double-labelled cans aren’t a strange cross-promotion or shady business practice: they’re the result of a desperate scramble to make it through the aluminum can shortage that’s been battering craft brewers since the start of the Covid-19 pandemic.
In a recent interview, White told Huddle the shortage is putting some local breweries in dire financial straits—and forcing others to go to extreme lengths to find cans for their beer.
“Oh my Lord, it’s critical,” White said of the shortage. “We’re not in a good spot… We are, you know, desperate.”
Keeping can-crazy customers happy
According to North Brewing’s Peter Burbridge, finding enough cans has been a problem for a while.
The problem began when North American craft breweries began switching from bottling their beer to canning it. The shift began just a few years ago and happened so rapidly that, today, bottling craft beer is almost unheard of.
Manufacturers have had a tough time keeping up with the explosion in damand for cans. Then, Covid-19 hit.
People kept drinking, but with bars closed no one was interested in buying beer in kegs. So breweries started putting all the beer that once went into kegs into cans.
With kegs off the table, supply was stretched even further. But things got even worse when the cargo ship Ever Given wedged itself into the banks of the Suez Canal, grinding international shipping to a halt for a week.
That clogged supply lines from China, where many breweries had turned for cans as the shortage got worse. Saltbox Brewing Company’s Andrew Tanner says his suppliers told him ships were weeks behind schedule.
“It’s not so much that the ships were all sort of backed up and funneled into the Suez Canal for a week. [The big problem came] after the ships funneled off and were then delayed getting to their ultimate destination, which meant they were delayed coming back around into China,” he said.
He said the Suez blockage was kind of like a highway traffic jam that impacts drivers long after the initial cause is cleared up “except those people that were in that traffic jam get to their destination and immediately turn around and go through it again.”
‘We had to do something or… lose everything’
For White, this cascading series of events has meant significant costs. In fact, the brewery is “still recovering” from a period earlier this year when their supply completely dried up.
In February, Big Spruce secured a shipment of cans for its popular Kitchen Party IPA. White says the team was “elated” to have a big shipment on its way and filled its tanks with the brew.
“We were ready. We were going to put 30,000 cans of Kitchen Party into the market in 48 hours,” he said.
But the truck showed up with the wrong cans and White was left scrambling. In the end, he was forced to scrounge used cans from other small breweries and paper over their labels with Big Spruce’s.
“We just had to do had to do something or lose the shelf space, you know, lose everything,” he says.
Since then, he says he’s been in a “mad scramble” to secure enough cans.
“Just now I’ve over-ordered these damn cans from as many places as I could. In about four weeks I’m going to be so flushed with kitchen party cans. We’re probably going to go bankrupt because we’ve over-invested in inventory – it’s that level of bad right now, it’s just awful,” he says.
Normally, he says it costs about 30 cents to buy and decorate a can. But buying and wrapping used cans costs him about 45 cents a can. Multiply that by tens of thousands of cans and it’s a major cost for smaller breweries.
And that’s before you factor in shipping costs, where supply-and-demand economics have sent prices skyward.
Shippers are demanding ‘ransom’
“Shipping companies have realized that everybody’s in this rat race to try and ship things out, so they have escalated their costs. So now we have situations where it’s almost become a bit of a bidding war to get space on a container ship,” Tanner says.
He and White both say their shippers have contacted them and demanded an extra $4,200 on top of what they’ve already paid in order to secure a spot for their cans on cargo ships.
“It’s almost like a little bit of a ransom,” Tanner says.
Eight months ago, White says, it costs between $5,500 and $6,000 to get a shipment of cans from a Chinese supplier. Now, it’s closer to $13,000.
He admits that rising costs are expected in any business but says these massive increases have come too quickly for breweries to adjust their prices—especially since negotiating a price increase with the NSLC can take months.
Shortage could last until 2023, or longer
White says he doesn’t believe many in the industry have grasped how bad the situation is. And he doesn’t see things getting better any time soon.
“It’s not going to end. Until Covid is parked to one side we’re all going to be short on cans forever,” he says.
Even that prognosis might be under-selling it.
Earlier this year, the president of aluminum can manufacturer Ball told investors the pandemic-driven shortage could continue for years.
“We see the demand continuing to outstrip supply well into 2023. And depending on our customers’ rate of capacity expansion, possibly beyond,” Daniel Fisher said.
Burbridge says finding enough cans continues to weigh on him.
“I am worried about it. We have deals in place with three different suppliers so I’m hopeful we’ll be okay. But again, just when we think we’re going to be okay, suddenly, the cans that we thought were coming arrive don’t arrive,” he says.
“But there’s not much you can do right now you kind of have to take where you can get and, and hope.”