Inflation seems to be affecting us in every way. But having a beer to make it all feel better, might cost you too.
The craft beer industry is dealing with a can shortage that will likely raise the price, as aluminum manufacturers and distributors look to make up the difference.
NBC 7 went behind the scenes at Karl Strauss’ distribution center in Pacific Beach, to find out how it might make your beer a little pricier.
By the looks of the towering walls filled with empty painted cans, a can shortage doesn’t seem to be an issue.
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Chad Heath, Karl Strauss’ marketing and sales director, showed NBC 7 the factory where the canning takes place.
“It’s easier for us to distribute cans. They’re lighter. They take up less space. They’re easier to manage than glass. They’re not as heavy,” said Heath.
Heath said the brewery stockpiled them as preparation for the pandemic and popularity.
“Between seltzer’s coming out, energy drinks, everything else. There’s a lot of demand for the same cans that we use in the brewing industry,” said Heath.
Inflation, supply chain issues, the back-up at shipping ports, and now the consumer's reluctance to come back to the tap for draft beer is hurting the industry, according to Heath.
“Restaurants are having a hard time getting people. You’ve all heard of the great resignation and people not coming back to hospitality.”
Heath held up two types of cans -- painted and sleeved. Demand for the cheaper 5 cent painted can is high. Because supply is low and other factors at play, the cans will increase in price at least for one of the major manufacturers: Ball Corporation.
The following letter was sent to brewery customers in November:
Current market dynamics, including the unprecedented demand for cans that we have seen in recent years, the dual challenges of supply chain pressures and inflation in North America continues to strain the global supply of beverage cans and contributed to rising costs for virtually all of the materials we buy to make our products.
Due to this unprecedented demand for cans and the supply chain challenges impacting industries around the world, Ball recently updated the minimum order requirement and warehousing terms for non-contracted customers. In order to support with the transition, Ball has engaged with distributors that have the ability to provide customers impacted by these changes with personalized services such as less than minimum orders and truck volumes, easier forms of payment (i.e., credit cards and credit terms), off-site warehousing and shorter lead times.
Ball will continue to take orders from contracted customers and is actively investing in expanded plant capacity in North America (including 5 new plants, four of which are under construction or already beginning to supply our customers). As always, Ball will actively assess the evolving market situation and work closely with all of its customers to better understand, plan for and supply their future needs.
-Scott McCarty, Ball Corporation
The difference between a painted can and a sleeved one, adds up. Especially now that Ball Corporation is changing policies like increasing the minimum purchase from one truck of empty cans to five trucks. Heath told NBC 7 that amounts to 1 million cans.
“And a lot of these breweries here in San Diego, there’s no way they’re gonna sell that many cans,” said Heath.
The corporation sent out letters to their brewery customers about the changes in the pipeline, meant to deal with the increasing costs.
“This is about 35 cents a can. These are about 5 cents a can. So now you have to pass that cost onto the consumer or you have to absorb them. And already putting beer in a can is not the most profitable way a brewery makes money.”
So there are several reasons you will likely see the price increase for your next craft beer. A perfect storm brewing for now, but they hope will pass soon.
“This whole industry has been founded on entrepreneurs that are scrappy, innovative and do things differently than anyone else does. So if any industry can figure this out I think we are going to be ok,” said Heath.