In 2002, Oskar Blues Brewing Company was the first brewery to package craft beer in cans. With various degrees of resistance, the rest of the industry followed.
Not that it needs to be told, but canned craft beer appeals to both the brewer and the consumer. The benefits for the consumer are obvious. In our outdoor lifestyle here in Alaska, the portability and durability of the lighter medium has very practical appeal. A case of canned beer is about 11 pounds lighter than a case of bottled beer, and it’s easy to reduce the recyclable mass by crushing the cans to pack them back out of any remote destination. Cans are impervious to light; light being one of beer’s arch enemies when it comes to freshness and stability.
For the brewer, although bottles might survive a little more abuse on the packaging line, the lighter cans are easier to move around and cost less to get to market. The medium also provides a lot more real estate for the brewer to adorn with bold and alluring artistic statements, some of which over the years have come across as works of art to me.
Long gone is the paradigm that beer in cans tastes tinny. I used to think that, but modern can lining systems assure that the can itself has nothing but a positive influence on what’s inside.
So, it’s almost unimaginable that a severe global aluminum can shortage threatens the ability of brewers to market their suds in what’s become America’s favorite beverage medium. It’s hitting smaller craft brewers especially hard, and especially here in Alaska.
“What the hell?” I thought to myself when I first heard of this in an October conversation with Dana Walukiewicz, co-owner of King Street Brewing Company.
“We’ve had some supply disruption, and were out of cans except for three styles for a while, and it won’t get cleared quickly,” he said.
Immediately, I thought COVID was to blame. It makes sense. When I got pushed out of my favorite watering holes, I ran to the grog shops to get my fermented fix. I like canned beer more than bottled beer and growler fills, and bought armloads and even cases of canned beer expecting to wait out the pandemic while locked down at home.
And it wasn’t just beer that drove demand up; as people hoarded supplies and emptied shelves, anything wrapped in aluminum went right along with it. “I’d have been fucked if craft beer came in toilet paper tubes,” I thought.
I was partially right, according to Brewers Guild of Alaska Board President Lee Ellis.
“Really, the problem began a decade or so ago. It’s been an issue that crafter brewers have been aware of for the last five or six years. Demand nationally has gone way up, and not just for craft brewing products. All industries are getting away from plastic bottles and getting into aluminum,” Ellis explains.
Kenai River Brewing Company co-owner/founder Doug Hogue agrees.
“Think about it,” he says. “Look what’s going into cans now. This happened without COVID, but there’s a huge increase in demand because of more stuff going into cans than before. Think of wine. Think of seltzers. There’s even canned water now.”
“Fast forward to COVID, and you have the perfect storm for this situation to come to a head,” says Ellis. “On-premise sales were curtailed, think draft beer, and came back in a limited fashion. Through COVID, people went to where they could get craft beer – the shelves – and picked up what they wanted and further increased the demand, creating even more huge demand problems. Paper, cardboard and glass have experienced the same demand increases too because of this, and more shortages are coming,” Ellis predicts.
It’s even more complicated than that. A brewer’s ability to get a share of an increasingly limited supply of aluminum cans depends primarily on market position right now. I don’t care how good your beer is or how much people want it, when it comes to market position – the little guys – the small, independent craft brewers are hit hardest.
“Craft beer is definitely at the tail end of the supply chain,” says Alaskan Brewing Company’s communication manager Andy Kline. “All of the craft beer produced in one year is what Coke and Pepsi produce in one day.”
“Pepsi, Coke, Anheuser Busch and the big guys eat up 90 percent of the total aluminum can supply. It’s a situation where all of the industry is allocated product from a total supply and when demand goes up without further supply, the can manufacturers kick everyone out except for the bigger guys. You’re either in the club or you’re not,” says Ellis.
Our smaller brewers in the Guild echo Ellis’s sentiment because they’re not in that “club” and they’ve increasingly been pushed away from the can manufacturers they’ve had long term relationships with. This has forced them down to less reliable, often sketchy, and certainly more expensive third party brokers with promises from the manufactures that nothing would change.
That hasn’t been the experience, and the brewers remain desperate.
“We’re at the bottom of the totem pole in terms of volume, and the three can manufacturers are going to satisfy the big guys first. We’ve been working with our manufacturer that requires us to go through a third party broker, which adds more cost to the product. We’re using two different third party brokers, in fact, to secure our supply chain. My biggest concern is cost increases and that affects the consumer in the long run,” says King Street’s Walukiewicz.
“The manufacturer pushed us to third party as the first move, still saying they would supply us, and then completely pulled us and left us with nothing. We’ve actually had to go to the Philippines to get enough. I worked with the third party broker our manufacturer hooked me up with. I told them, I’m willing to make any kind of deal,” says Kenai River’s Hogue.
“We’ve been using the labor intensive crowler canning machine to package 25-ounce cans over the last three years,” says Girdwood Brewing Company’s social drinking advocate Josh Hegna. Girdwood doesn’t widely distribute and relies heavily on the now mostly dead Alaska tourist industry to pour beer for. “While we’re not sure if aluminum shortage or the supply chain, we have run out of cans on a couple of occasions which is pretty brutal when we’re doing to-go only.”
It’s been tough for Girdwood, having invested heavily in predicted sales.
“Pre-COVID we were trying to pack the taproom and built an expensive expansion to support this model. The expansion cleared all the permitting hurdles in early March of 2020, right before we got shut down. Ouch,” says Hegna. “Our biggest innovation was the purchase of a Wild Goose canner so that we could become more efficient with packaging. Unfortunately, like a lot of things over the past eight months, it is delayed. A big concern is that we invest in a new canning machine and we won’t have cans.”
Is the aluminum can shortage fatal to the craft beer industry?
It depends on who you ask, although most of our innovative, creative brewers, having survived COVID with the odds being stacked against them, think they’ll be okay, Ellis is much more hard core and rightfully so in his position in the Guild.
“I’m pitching the American Brewers Association’s lobbyists. I’m pitching the idea to increase aluminum can capacity by asking the President to include aluminum cans in the Defense Production Act. The Brewers Guild of Alaska was the first organization in the nation to bring this issue to the attention of the Brewers Association, about the can shortages and the fact that craft brewers are being removed from the supply chain. The aluminum can manufacturers decided to take no steps to increase production. You’re either in the club or you’re out.”
Although Ellis isn’t getting a lot of traction from the Brewer’s Association, he’s committed to fighting the good fight for our local breweries. There’s a lot at stake.
“We’re having to globally source aluminum cans from all over the world and it’s a Wild, Wild West. If a supplier comes to you and says ‘I have 1,000,000 cans. You can buy them today, right now, or not at all.’ So, you buy at double the price with no graphics and pay double the price to get them here, or you get nothing at all.
“If you want to kill craft brewing; this is how you do it; you cut off the ability for them to produce,” says Ellis.
I don’t disagree with Ellis. I don’t care how much you can make, you have to be able to get it to market. Still, I fall short of supporting a big brewery conspiracy theory. It’s ultimately just the law of supply and demand at the core level.
“I personally don’t think we’re getting pushed out by big brewing purposely. Remember, credit where credit is due: the reason small brewers are canning beer is because of the can manufacturers. One of the biggest producers, Ball, came in and accommodated the craft beer industry’s smaller runs that got canned beer started,” says Hogue. “It’s always the little guy that’s going to get pushed out.
Hogue lessened the severity of the problem by switching to Euro 330-ml cans that are the same diameter, but a little bit shorter than a conventional 12-ounce can. Did this cost him money? You bet. We had to shorten the label a tad and that required re-working the label art work and of course we had to do a complete machine re-tool for the new cans. Yeah, it’s a lot of money,” he says.
Other breweries are changing what they put in cans — and when.
One small move we’ve made is that we moved our specialty one-off beers into 16-ounce cans. Our beer all used to be in 12-ounce cans. Our core beers are all in 12-ounce cans and we have to be able to continue to provide those. We’ll be okay,” says Bearpaw River Brewing Company owner/operations manager Jake Wade.
“Our suppliers can’t react quickly enough,” agrees Alaskan’s Kline, “although they are ramping up and I understand they are building new facilities,” he says.
Even though Alaskan Brewing is in a little better position in the market due to its size, the state’s largest brewer is adjusting, too.
“It’s a concern for us, but we’re not in a situation of getting in to a massive shortage. Our level of influence with our supplier gives us an advantage so we can get them to the table. We started talking to the manufacturers last year to secure what our projections were. Still, we’re in the same boat as everyone else and feeling the pressure,” says Kline.
Although still in a primary relationship with their aluminum can manufacturer, Alaskan’s been dealing with third party brokers for specialty can sizes, but “we’re sticking with our 12 and 16 ounce sizes and not working the specialty can arena right now,” says Kline.
At Midnight Sun Brewing Company don’t look for Sockeye Red IPA or Wolf Pack Pilsner in cans – staples in the breweries five core canned beer brands – after supply runs out and until around mid-February because of the can shortage.
There’s no doubt that the aluminum shortage is making Alaska beer more expensive. Not all brewers agree with Ellis’s estimation of a 10 to 20 percent increase, though.
“With what we’re paying for shipping, and malt prices changing a tad, and that’s nothing to do with canning, we’re maybe plus 5 percent and maybe not even that much with our costs. There may be a little bit of an uptick, but I don’t think it’s going to be sharp,” says Hogue.
Brewers don’t like increasing the cost of already expensive beer up here and consider price increases last resorts.
“We had a conversation about pricing, and my answer is I don’t’ think we would at first. Let’s see how long term this is going to be,” says Bearpaw’s Jake Wade.
I like that attitude a lot. Brewers have their consumers in mind through all of this crap because it’s those consumers that have gone out of their way to support local. But Wade really hit it out of the park with “beer is like every man’s drink and it should be affordable. If we had to take a small financial hit for a matter of months because we think it’s going to end soon, we’ll keep the prices the same. Everyone’s taking a hit, right?”
I’m probably not helping the problem, but I’m a steadfast local canned craft beer lover and large scale consumer. I’m not rationing or buying any less of it. Neither should you.
It’s the resiliency, adaptability, creativity and generosity of Alaska craft brewers – not to mention the steadfast quality of their beer – that will keep beer alive and vibrant up here; COVID and the aluminum shortage be damned.