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Holiday hangover: Aluminum box maker, which grows in NC, hammers craft breweries

By Alicia Wallace, CNN Business

Your next box of craft beer can be much more expensive.

Ball Corp., one of the world’s largest suppliers of aluminum cans, is sending shock waves across the craft silver world after raising the minimum number of cans some manufacturers have to order and saying it will raise prices.

Ball said it will now require non-contract customers – which includes many smaller breweries – order no less than five trucks (approximately 1.02 million cans) per each of their beverages as of January 1st. The previous minimum purchase was one truckload per product.

In addition, as of 2022, Ball wrote that they would no longer be able to store redundant boxes from the non-contract customers in their department stores, and that The price per box will increase by almost 50% for at least some non-contract customers, according to messages sent to breweries.

[The news comes as Ball Metal Beverage Container prepares to build a huge 800,000 square foot facility in North Carolina’s Cabarrus County. In a deal announced in July, the company said it would create more than 200 jobs in a $384 million investment under an agreement signed with the state of North Carolina.]

The beverage container company will build a large facility, creating hundreds of jobs in Cabarrus County

The changes have many small and regional breweries in the process of securing boxes and has led to fears of heavier costs, reduced variety and higher prices for consumers.

“I see this as an economic killer for some, and certainly most small brewers will have to raise prices significantly or reconsider their entire models,” said Garrett Marrero, CEO and co-founder of Maui Brewing Co. in Hawaii.

The dense craft beer industry was already on track for pandemic closure of restaurants and taps, inflationary pressures, box shortages and other disruptions in the supply chain.

Then, a little over a week ago, Ball from the inboxes of hundreds of artisan brewers across the country landed in the inboxes, according to the Brewers’ Association, the trade association that represents small and independent brewers. Denver Westword was the first to report on Ball’s purchase minimum.

In the letters, copies of which were delivered to CNN Business, Ball wrote that the demand for aluminum boxes continues to exceed supply.

“Ball is making investments to bring additional capacity online, and in the meantime we will remain in a tightly limited supply environment for the foreseeable future,” according to the letter. “This environment makes it difficult for us to deliver the quality customer experience our customers expect from Ball, and we are making some adjustments in how we do business to address this.”

With less than six weeks to the new year, hundreds of craft brewers will no longer be able to buy their pre-printed boxes directly from Ball, and instead will have to secure one of the most critical components of the business from new sources, said Bob Pease, president and CEO of Brewers Association.

“This is still fairly new, so we’re still trying to gather information from our affected members,” Pease told CNN Business.

The Brewers Association is considering its options and considering reaching decision-makers, Pease said, hoping to speak with leaders at Ball, a longtime member, he added. On Friday, Pease said he heard back from Ball’s top management, and the two sides are working to set up a meeting in December to discuss the latest changes.

Ball is not leaving the craft beer industry completely, a spokesman for the company told CNN Business.

“The new model will increase our overall efficiency and allow us to actually produce more boxes for our agreed customers, including craft brewers,” Ball spokesman Scott McCarty wrote in an email.

McCarty added that Ball is building five factories in the United States to produce more boxes, adding that “every year we evaluate supply and demand and will continue to invest where it makes sense.”

As potential solutions for customers who could not meet the increased minimum requirements, Ball offered contact information for four distributors who could take smaller orders, secure stock and offer labeling options such as stickers and shrink wrap.

“It will force us out of business”

When Upslope Brewing Company was launched in Boulder, Colorado in 2008, it was one of only a handful of artisan brewers to pack their beer exclusively in aluminum cans.

“My first phone call for boxers was to Ball,” co-founder Matt Cutter told CNN Business. “They said, ‘It’s okay, you can buy a truck.'”

It was not possible then for Upslope, a business that has start-up funds came from the second mortgage on Cutter’s house. But a few years later, when Upslope’s snowmelt-based beer was consumed throughout the Mountain West region, it was certainly possible.

“And Ball kept knocking on our door,” he said.

Ball, also a Colorado-based company, had a box-making facility just down the highway, offering services such as storage and cheaper shipping. Upslope, which has bought its boxes at the truck truck from Ball since 2014, now feels left out in the cold.

Cutter fears that the higher costs – including raw materials, storage and any additional margins when working with new distributors – could eventually lead to in-store craft kits being sold $ 1 to $ 2 more expensive next spring.

Ultimately, he said, these higher costs may not be sustainable for smaller businesses.

“As artisan brewers, we do not roll in the dough here,” he said. “We can not absorb this. It will force us out of business. “

In Pueblo, Colorado, one of the co-founders of Walter Brewing Co. tried. feverish to speed up what Ball’s plans might mean for his brewery.

Walter Brewing has purchased cans for Walter’s Original Pilsner and Walter’s Pueblo Chile Beer from groups that buy from Ball, as well as directly from Ball.

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

The recently needed five truck load is irrelevant.

“With six weeks’ notice, there’s a lot to digest in the short time,” Sanchez said. “It would be crucial for any small brewery if Ball wanted to rethink the way and perhaps think of a way to mitigate the short-term consequences.”

Maui Brewing, because of the scale of operations in Hawaii and close connections with Balls facilities there, should be relatively isolated from major disruptions, Marrero said. However, he fears that breweries on the mainland and Maui Brewing’s efforts to expand production there face complications.

He is concerned that brewers who cannot afford the cost of switching suppliers will be forced to change operations, close or consolidate. He said he was also concerned that this could lead to greater use of less sustainable materials, such as plastic labels.

“This is going to create a paradigm shift in craft beer going forward,” he said.

The-CNN-Wire ™ and © 2021 Cable News Network, Inc., a WarnerMedia company. All rights reserved.

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