BALL CORPORATION MAKES SUDDEN ANNOUNCEMENT

Darin Dorholt of Westside Liquor in Waite Park informed me over the weekend of the announcement that Ball Corporation, a major supplier of aluminum cans for the brewery industry, announced suddenly that they were raising their rates and minimum orders for their non-contract customers; many of which include the smaller craft breweries across the country as well as here in Minnesota.  He recognized immediately what that COULD mean for the breweries, liquor stores, and consumers who enjoy the many varieties of craft beers offered here in central Minnesota. Higher prices and possibly fewer options.

It also seems like a deadly blow to our smaller breweries across the country.

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TRUCKLOAD ORDERS AND PRICE PER CAN SKYROCKET

As stated in my first story yesterday, Ball Corporation raised its minimum truckload order from one truckload, approximately 204,000 cans to 5 truckloads, approximately 1,020,000 cans per single SKU.

HOW WILL THIS AFFECT LOCAL BREWERIES?

Speaking with Nick Barth of Beaver Island Brewing, Nick tells me that a lot of small to mid-sized breweries who were ordering 1 to 2 truckloads of a single SKU, will be forced to either; 1. Up their order to 5 truckloads, or 2. Find another supplier. Ball Corporation also states that they will not provide storage for the excess cans in their warehouses for those non-contract customers either.

You can listen to the interview with Nick Barth by clicking on the player below:

BIG BUSINESS FEELING THE HEAT?

This includes breweries like Beaver Island who have had orders placed with Ball Corporation since May. Ball Corporation is not honoring existing orders. According To Nick, the statement they made is essentially effective immediately. Even though Beaver Island paid fees to get the cans designed and ready for their press, they are out the money, AND they won't see the cans?!  How can they possibly take the money for a promise of product, and not have any plans to deliver?

 

Photo by Beaver Island Brewing
Photo by Beaver Island Brewing
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POSSIBLE SCENARIOS

Nick Barth says there are a few things that are likely to happen because of this announcement. Breweries will possibly consolidate their portfolio to less Limited Time Offers and Seasonal offerings in can resulting in possibly less innovation. Or, as breweries flock to the other can suppliers, like Crown, Ardaugh, and Can Pack, they will also have an opportunity to institute a minimum order.

Photo by Beaver Island Brewing
Photo by Beaver Island Brewing
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Another scenario could be that breweries will supplement Limited Time Offers and seasonal offerings in cans with more expensive sleeved cans. This would result in a price increase for consumers of approximately 20-30% due to the can cost to breweries, as the prices soar from 11 cents per can to 26 cents per can or more.

Beaver Island already uses sleeved cans for their Limited Time Offers and seasonal offerings and already have that worked into their prices. More demand could result in an increase in cost and lead times for them and other breweries to receive their cans, and get them to market.

 

Barth says, "It will pinch the supply chain for us and drive up the prices across the board. It will also make breweries like us focus on our packaged beer line up as well."

I asked Nick what we can do as local consumers, to support our local breweries? Nick said that breweries are bound to have out-of-stock products and price increases as they try to manage these sudden supply chain issues.

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