Sorry, no can do Pandemic leaves beer, soft-drink manufacturers with crippling shortage of aluminum containers and brewing cross-border tariff war
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This article was published 07/08/2020 (1035 days ago), so information in it may no longer be current.
A pandemic-fuelled thirst for beer and soft drinks has left beverage manufacturers across Canada with a hard-to-swallow shortage of aluminum containers.
And industry experts are predicting that what began because of COVID-19 in March will continue because of cross-border retaliatory tariffs.
“We began the difficult conversations when around half our business wiped out once restaurants and bars shuttered,” said Steve Beauchesne, CEO of Beau’s Brewing, which delivers kegs and cans from coast to coast out of Ontario.
Then, he says, “people turned to cans and deliveries, which began an internal scramble to meet the demand.”
Like Beau’s, several independent brewers say the unprecedented shortage has meant orders placed during the early days of the pandemic have yet to be delivered.
“Manufacturers told us they just don’t have stock anymore,” said Sean Shoyoqubov of Winnipeg’s Oxus Brewing. “The only way we made ends meet then was by pivoting to making hand sanitizers instead of beer.”
Even Canada’s oldest independent brewer said it continues to face pressure.
“Due to supplier production limitations, as well as increased demand from consumers… we are seeing pressure on our can supply… adding to existing supply-chain challenges resulting from COVID-19,” New Brunswick-based Moosehead Breweries told the Free Press via email.
And to make matters worse, aluminum manufacturers have recently begun to play favourites — creating more problems for their customers, Beauchesne said, explaining that in the past, Beau’s was able to order cans directly.
“But now we’ve started working with brokers who do the talking and lobby for us on our behalf,” he said. “The whole thing hit us in waves and it hit us hard, maybe though because so much of our beer went straight to tap rooms and bars.”
Even multinational beverage giants are facing shortage issues.
At Molson Coors, spokesperson Marty Maloney said it’s been a concern over the past several months, owing to a worldwide shortage of aluminum affecting “anyone who makes anything sold in cans — from beer to pop to sparkling water and beyond.”
“While our members are implementing contingency plans to mitigate these challenges, some products will be temporarily unavailable.” – Canadian Beverage Association president Jim Goetz
The Canadian Beverage Association, which represents dozens of companies that make pop, juice, sparkling water, energy drinks and coffee said all 120 of its members’ plants have been affected.
“While our members are implementing contingency plans to mitigate these challenges, some products will be temporarily unavailable,” said association president Jim Goetz.
Cornell University business management professor Vishal Gaur said the shortage will take “a long time to level out.”
Gaur said his MBA class plays a game using beer to stimulate what economists refer to as the “bullwhip effect.”
“It mimics a supply chain for beer which faces a sudden surge in demand, leading to shockwaves that percolate upstream, causing stockouts, inventory pileups and cost,” he said.
For Molson Coors, Maloney said a recent change in industry-standard sizes for beverages that reduced can capacity from 473 to 355 millilitres, has mitigated some of the damage.
“While we can’t speak for our competitors, the good news is that because of the actions our supply chain and procurement teams have taken from the outset, the 355-ml industry-standard can situation is improving for our business,” he said.
Those changes have helped elsewhere, but only incrementally.
“Brewers might want to start looking elsewhere,” said Lindsay Gillanders from Manitoba-based Capital K Distillery, which faced plastic bottle shortages instead of can-related issues from April to June.
“We used to get things shipped in from China,” she said. “Now, we’ve found other local suppliers and that’s made things easier — although it still hasn’t normalized completely.”
Almost all of Canada’s aluminum cans are shipped from the U.S., and now a cross-border battle looms, following President Donald Trump’s announcement Thursday that he intends to reimpose 10 per cent tariffs on aluminum imported from Canada.
Canadian officials indicated Friday the country plans to retaliate by imposing taxes of up to $16.6 billion on steel, aluminum and hundreds of other products coming into the country from the United States.
Updated on Friday, August 7, 2020 7:23 PM CDT: Minor copy edits
Updated on Friday, August 7, 2020 10:18 PM CDT: Additional minor copy edits