HALIFAX – If you’ve dropped a Kitchen Party Pale Ale in the past couple of months, you might have noticed something strange.
Peel off the bright yellow Big Spruce label and you’ve probably seen another brewer’s mark underneath: anything from Flying Monkey to a gin soda or a Quebec brewery label.
As Big Spruce’s Jeremy White explains, double-labeled cans aren’t some weird cross-promotion or questionable business practice – they’re the result of a desperate rush to get through the aluminum can shortage plaguing brewers. handcrafted from the start. of the Covid-19 pandemic.
In a recent interview, White told Huddle that the shortage is putting some local breweries in dire financial straits and forcing others to go to great lengths to find cans for their beer.
“Oh my Lord, this is critical,” White said of the shortage. “We’re not in a good position… We’re, you know, desperate.”
Keeping Can-Crazy Customers Happy
Finding enough cans has been a problem for some time, according to North Brewin’s Peter Burbridge.
The problem started when North American craft breweries began to switch from bottling their beer to canning. The change started just a few years ago and happened so quickly that today the bottling of craft beer is almost unheard of.
Manufacturers have struggled to keep up with the boom in demand for cans. Then the Covid-19 hit.
People continued to drink, but with the bars closed, no one was interested in buying beer on taps. So breweries started to put all the beer that was once in kegs into cans.
With the kegs off the table, the offer has been stretched even further. But things got even worse when the freighter Never given got stuck on the banks of the Suez Canal, blocking international shipping for a week.
It was clogging supply lines from China, where many breweries had turned to cans as shortages worsened. Andrew Tanner of Saltbox Brewing Company said his suppliers told him the ships were weeks behind schedule.
“It’s not so much that the ships have all been saved and routed through the Suez Canal for a week. [The big problem came] after the ships moved away and then were delayed to reach their final destination, which means they were delayed to return to China, ”he said.
He said the Suez blockade was a bit like a freeway traffic jam that affects drivers long after the root cause has been clarified “except the people who were in that traffic jam get to their destination and immediately turn around and start over.”
“We had to do something or … lose everything”
For White, this cascading series of events came at a significant cost. In fact, the brewery is “still recovering” from a period earlier this year when its supply completely dried up.
In February, Big Spruce secured a delivery of cans for their popular IPA Kitchen Party. White says the team were “delighted” to have a large cargo on their way and filled their tanks with beer.
“We were ready. We were going to get 30,000 cans of Kitchen Party to market in 48 hours, ”he said.
But the truck showed up with the wrong cans and White found himself struggling. In the end, he was forced to salvage used cans from other small breweries and paper on their labels with Big Spruce’s.
“We just had to do something or lose the storage space, you know, lose everything,” he says.
Since then, he says he’s in a “mad rush” to get enough cans.
“Earlier, I ordered these damn cans from as many places as possible. In about four weeks, I’m going to be so flushed out from kitchen cans. We’re probably going to go bankrupt because we’ve over-invested in stocks – it’s that shoddy level right now, it’s just awful, ”he says.
Normally he says it costs around 30 cents to buy and decorate a can. But buying and packaging used cans costs him about 45 cents a can. Multiply that by tens of thousands of cans and that’s a major cost for small breweries.
And that’s before you factor in shipping costs, where the economics of supply and demand have pushed prices skyward.
Senders demand a “ransom”
“The shipping companies have realized that everyone is in this mad rush to try and ship things, so they’ve increased their costs. So now we have situations where it has almost become a bidding war to get space on a container ship, ”says Tanner.
He and White both say their shippers contacted them and demanded an additional $ 4,200 on top of what they already paid in order to secure a place for their cans on the freighters.
“It’s almost like a small ransom,” Tanner says.
Eight months ago, White says, it cost 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 any business expects costs to increase, 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.
The shortage could last until 2023, or even longer
White says he doesn’t believe many in the industry understand how serious the situation is. And he doesn’t see things getting any better anytime soon.
“It’s not going to end. Until Covid is parked on the side, we’ll all be running out of cans forever, ”he said.
Even this prognosis could underestimate him.
Earlier this year, the chairman of aluminum can maker Ball told investors the pandemic shortage could last for years.
“We see demand continuing to exceed supply until 2023. And depending on the rate of capacity expansion of our customers, maybe beyond,” said Daniel Fisher.
Burbridge says finding enough cans continues to weigh on him.
“I worry about it. We have agreements in place with three different suppliers so hopefully everything will be fine. But again, just when we think it’s going to be okay, all of a sudden the cans that we thought were coming aren’t coming, ”he says.
“But there’s not much you can do right now, you kind of have to take it where you can go and hope.”