Local NewsNational

Actions

Aluminum shortage affecting small businesses

Aluminum Shortage
Posted at 11:07 AM, Feb 24, 2022
and last updated 2022-02-24 14:07:19-05

DENVER, Colo. — More companies around the globe are canning beverages, leading to a shortage of aluminum cans. Now, small businesses are adapting to survive.

“The root of the problem started in the beginning of the pandemic,” said Bart Watson, the chief economist at the Brewing Association. “Generally, we’ve seen the manufacturers struggle with demands of the cans. Now, we’re starting to see more of the raised prices and implemented policies restrict purchases for smaller companies.”

Aluminum is one of the world’s most in-demand metals right now, and unfortunately, supply is stuck in Asia, according to the Wall Street Journal.

This whole situation has led to a shortage. According to Market Insider, average prices for aluminum soared more than 62% last year.

Small businesses, like local breweries, are getting hit the hardest.

“There’s really only so many levers you can pull,” said Jerry Siote, one of the co-owners of Lone Tree Brewing Company. “We have been a client of a third-party can purchaser from Ball since we started canning. Our third-party purchaser would aggregate lots of other small breweries, so they were one large client for Ball.”

Places like Lone Tree Brewing Company, which according to Siote has less than 20 employees, order from big can manufacturers. But to compensate for the can shortage, some big manufacturers are changing their policies for companies to buy more for a minimum order.

Ball Corporation, which sells cans to local breweries like Lone Tree Brewing Company, is raising its minimum order from 200,000 cans to 1 million, which is why small businesses are adjusting. Siote said the way his company has been able to survive is buying through a third-party vendor and labeling their own cans.

“We are very fortunate we have some room to store our cans in large amounts,” Siote said. “We also had to source outside storage many miles away from here that we have to pay rent and what that does is give us a peace of mind, where we can unload large cans and we aren’t at risk of running out when we need more.”

Watson said while big companies won’t need to worry as much when it comes to aluminum cans, smaller businesses will probably end up paying more.

“This is a bigger challenge for small brewers,” Watson said. “They’re going to have to go through distributors which is going to increase cost. And if they can’t get printed cans, they’re going to have additional cost applying a label or shrink sleeve. So, what you’re seeing for craft brewers when they get cans is now it’s a much higher cost input for them. And given that everything is going up in cost, craft brewers are going to see margins go down or have to raise prices.”

Siote said this is just an adjustment they were planning for and believes his customers will be forgiving for the raised prices.

“If you see a local brewery, go up a dollar or so in the tasting room, just know they didn’t do it out of pure greed,” Siote said. “They did it to survive and keep that product on the shelf and keep everyone employed. think that’s the lesson.”