Ball Corporation makes it difficult for the craft breweries by increasing the minimum purchase limit of cans

Ball Corporation one of the world's top aluminium can manufacturers, has sent shockwaves through the craft beer sector by raising the minimum amount of cans that some makers must purchase and announcing price hikes. Starting January 1, non-contract clients, which include many smaller brewers, will be required to buy at least five truckloads (approximately 1.02 million cans) of each of their beverages. Previously the minimum buying number for each product was one truckload.

According to notices given to brewers, Ball stated that beginning 2022, it would no longer be allowed to hold extra cans from non-contract customers in its warehouses, and that the price-per-can would increase by roughly 50 percent for at least certain non-contract clients.

The announcement comes as Ball Metal Beverage Container plans to construct a massive 800,000-square-foot factory in Cabarrus County, North Carolina. Under a deal reached with the state of North Carolina in July, the company stated it will generate more than 200 jobs with a $384 million investment. Many small and regional breweries are trying to get cans as a result of the changes, raising worries of greater expenses, less variety, and higher pricing for customers.

“I do see this as an economic killer for some, and certainly most small brewers are going to have to raise prices significantly or rethink their entire models,” said Garrett Marrero, chief executive officer and co-founder of Maui Brewing Co. in Hawaii.

Pandemic-related restaurant and taproom closures, inflationary pressures, can shortages, and other supply chain disruptions were already wreaking havoc on the tight-knit craft beer business. As per the Brewers Association, a trade group representing small and independent brewers, notifications from Ball arrived in the inboxes of hundreds of craft brewers throughout the country a little over a week ago. Ball's purchasing minimums were originally reported by the Denver Westword. Ball stated in the letters, which CNN Business received copies of that demand for aluminium cans continue to surpass supply.

“Ball is making investments to bring additional capacity online, and in the meantime we remain in a tightly constrained supply environment for the foreseeable future,” This environment is making it difficult for us to deliver the quality customer experience our customers expect from Ball, and we are making some adjustments to how we do business to remedy that,” added Ball Corporation.

Bob Pease stated that with less than six weeks until the New Year, hundreds of craft brewers will no longer be able to purchase pre-printed cans directly from Ball, and will instead have to find new sources for one of their most important business components president and chief executive officer of the Brewers Association.

“This is still pretty darn new, so we’re still trying to gather information from our members that are being impacted,” Pease said to CNN Business.

The Brewers Association is examining its options and considering reaching out to legislators, according to Pease, who added that he was hoping to speak with officials from Ball, a longtime member. Pease said he received a response from Ball's top leadership on Friday, and the two sides are seeking to schedule a meeting in December to discuss the recent changes. A business spokeswoman told CNN Business that Ball isn't totally quitting the craft beer sector.

“The new model will increase our overall efficiency and allow us to actually produce more cans for our contracted customers, including craft brewers,” Ball spokesperson Scott McCarty revealed in an email.

Ball is developing five factories in the United States to increase can production, according to McCarty, who also stated that "every year, we analyse supply and demand and will continue to invest where it makes sense." Ball provided contact information for four wholesalers that could handle lesser orders, supply storage, and offer labelling alternatives like as stickers and plastic shrink wrap as potential solutions for clients who couldn't reach the new minimums.

When Upslope Brewing Company opened in Boulder, Colorado in 2008, it was one of just a few artisan breweries using only aluminium cans to bottle its beer. Upslope co-founder Matt Cutter stated to CNN Business that their first phone call after the news was to Ball Corporation. In reply, Ball Corporation said that they can purchase a truckload.

That wasn't possible at the time for Upslope, a company whose first funding came from Cutter's home's second mortgage. It was absolutely plausible a few years later, when Upslope's snowmelt-based beer was being drunk throughout the Mountain West region. Ball, a Colorado-based corporation, has a can-making factory just down the road and provided services like storage and discounted shipping. Upslope, which has been buying cans from Ball by the truckload since 2014, is suddenly feeling left out in the cold.

Cutter is concerned that, as a result of the higher expenses — which include raw materials, storage, and any additional margins from dealing with new distributors — artisan six-packs offered in shops might be $1 to $2 more costly by next spring. He believes that, in the end, these rising prices will be unsustainable for small firms.

“As craft brewers, we’re not rolling in the dough here. We can’t absorb this. It’ll force us out of business,” added Cutter.

One of the co-founders of Walter Brewing Co. in Pueblo, Colorado, was desperately attempting to figure out what Ball's intentions meant for his brewery. Walter Brewing has obtained cans for its Walter's Original Pilsner and Walter's Pueblo Chile Beer from both wholesalers and Ball directly.

“It would take us more than a year’s time to go through [a truckload],” said Andy Sanchez, one of Walter Brewing’s co-owners.

“With six weeks’ notice, it’s a lot to digest in that short time. It would be crucial for all small breweries if Ball would rethink the path and maybe think of a way to mitigate the short-term impacts,” said ,” Sanchez.

Maui Brewing should be somewhat sheltered from large interruptions due to its scale of activities in Hawaii and its ties to Ball's factory there, according to Marrero. He is concerned, though, those breweries on the mainland, as well as Maui Brewing's ambitions to grow production there, may meet challenges. Brewers that can't afford to move suppliers may be compelled to adjust their operations, liquidate, or combine, he fears. He's also concerned that increased usage of less-sustainable materials, such as plastic labels, would result.

source https://www.alcircle.com/news/ball-corporation-makes-it-difficult-for-the-craft-breweries-by-increasing-the-minimum-purchase-limit-of-cans-73001