BROOMFIELD, Colorado: One of the world's largest suppliers of aluminum cans, Ball Corp, is increasing the minimum number of cans non-contract customers must order and announced it will raise its prices, causing panic in the craft beer industry.
Ball said it will now require non-contract customers, who include many smaller breweries, to order five truckloads per product, or roughly 1.02 million cans starting on 1st January, compared to the previous purchase minimum of one truckload.
According to notices sent to breweries, it also said in 2022 it will no longer store excess cans for non-contract customers in its warehouses, and the price-per-can could increase by nearly 50% for some non-contract customers.
As a result, many small and regional breweries scrambled to secure cans and warned of higher prices and reduced variety for consumers.
"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, as reported by CNN.
The craft beer industry was already reeling from the COVID-19 pandemic, then a little over one week ago, notices from Ball landed in the inboxes of hundreds of craft brewers across the country, according to the Brewers Association, the trade organization representing small and independent brewers.
Ball's purchase minimums was first reported by Denver Westword.
According to copies provided to CNN Business, Ball claimed demand for aluminum cans continues to outstrip supply, adding it "is making investments to bring additional capacity online, and in the meantime we remain in a tightly constrained supply environment for the foreseeable future."
But a company spokesperson told CNN Business that Ball is not completely abandoning the craft beer industry.
In an email, Ball spokesperson Scott McCarty wrote, "The new model will increase our overall efficiency and allow us to actually produce more cans for our contracted customers, including craft brewers."
Boulder, Colorado-based Upslope Brewing Company was one of only a handful of craft brewers to package their beer solely in aluminum cans.
"My first phone call for cans was to Ball," co-founder Matt Cutter told CNN Business. "They said, 'That is fine, you can buy a truckload,'" as reported by CNN.
However, Cutter stressed that higher costs might not be sustainable for smaller businesses.
Because of its scope of operations in Hawaii and close relations with Ball's local plant, Maui Brewing should be relatively insulated from major disruptions, Marrero said, but he fears breweries on the mainland U.S., and his company's efforts to expand production there, face difficulties.
"This is going to create a paradigm shift in craft beer moving forward," he said.