Brewers Association technical staff, supply chain sub-committee and senior management have been monitoring the movements of foil packaging. There is a new dynamic that we would like to inform you about today.
Members of the Brewers Association who were previously supplied directly through Ball Corporation are advised that the minimum order, if supply is available, has increased to five truckloads per SKU for printed cans for non-contract customers. Additionally, Ball will no longer warehouse inventory on behalf of customers and will direct most small brewer customers to one set of distributors and will move non-contract customers with quantities less than five truckloads to these distributors.
These changes show that Ball is moving towards the type of “long-term contracts for committed volume with effective cost-recovery mechanisms,” as stated by John A. Hayes, President and CEO of Ball Corp. , during the company’s third-quarter earnings call. Overall, aluminum can shortages look likely to continue through 2022 and possibly beyond, as there is more competition for aluminum from alcoholic beverages as well as non-alcoholic and increased demand for this type of packaging from customers. There are more factories being built in the United States, not only from Ball Corporation, but also from other companies.
For smaller brewers, this is an additional aluminum sourcing change challenge after a year and a half of many such challenges. Shifting a large portion of aluminum can sales from small brewers to distributors has the potential to increase prices for small brewers (through increased distribution costs, additional labeling costs and transportation), increase lead times and potentially reduce can availability for small brewers. brewers who can no longer meet the minimums.
Other impacts could be environmental, including the increased use of plastic shrink sleeves and pressure-sensitive labels if brewers can’t meet minimums, reducing aluminum’s recyclability and value. There is also potential for additional carbon emissions with additional transportation of cans to distributors rather than shipping directly to breweries. Depending on how brewers respond to rising costs and order sizes, this could potentially lead to lower market availability of smaller brands and higher costs for consumers.
The Brewers Association is committed to continuing supply chain communications with members and taking action where possible. We also want to continue to hear from our members about how this change might affect their business so that we can communicate these impacts to policy makers and the media. Please feel free to email Bart Watson firstname.lastname@example.org and Chuck Skypeck email@example.com with stories of how this affects your availability and pricing on an ongoing basis. These stories will inform our work with champions on Capitol Hill and elsewhere in government as we educate them on supply chain issues. As part of our ongoing dialogue with competition authorities, we will also continue to monitor changes in the supply chain for their competitive effects in the marketplace.
Brewers Association staff will continue to keep members informed through our monthly Supply Chain Update as well as direct communications on larger changes such as this.