Demise of draft beer leads to a can shortage.
Brewers facing what their trade association has called a ‘perfect storm’ when it comes to packaging
John Sleeman was looking for cans of Sleeman Cream Ale at a store, but couldn’t find them. “There were no cans,” said the founder of Canada’s third-largest brewery.
Instead, he settled for bottles, because Sleeman Breweries Ltd. and other Canadian beer brewers are struggling to get enough cans to meet their needs in the midst of a months-long can shortage in North America.
The can shortage means consumers’ preferred brand of beer — or pop, for that matter — might not always be available in the kind of package they want. But brewers this week said that, in most cases, they aren’t actually running out of packages to put their liquid in, just the most popular package.
The Canadian brewing industry is facing what Beer Canada, the major trade association for brewers, has called a “perfect storm” when it comes to cans. Even before the pandemic, beer drinkers were switching to cans from bottles in increasingly larger numbers. In the past five years, cans have grown to 65 per cent of all beer sales, from 40 per cent, while bottles fell to 25 per cent of sales from 50 per cent, according to Beer Canada.
On top of that, pop and sparkling water manufacturers started turning toward cans and away from single-use plastic bottles. And the alcoholic seltzer category — White Claw and similar products — has exploded in the past few years, adding more demand for cans, according to an emailed statement from Ball Corp., one of two major North American can manufacturers.
Making matters worse, COVID- 19 forced a broad shutdown of the hospitality sector in March, so bars, restaurants, theatres and stadiums weren’t serving draft beer and fountain pop. Instead, people appear to have switched to buying more canned beer and pop “for home consumption,” Ball said.
Demand for kegs of beer — which typically account for 10 per cent of all beer sales in Canada — dropped to almost zero this spring. In June and July, can sales were up by 16 to 17 per cent, Beer Canada said.
Despite relaxed restrictions on bars and restaurants in August and a strong patio season, keg sales only rebounded to 50 per cent of last year’s sales in August.
“There are brewers out there that are having to pick and choose what brands that they do package,” Beer Canada interim president Luke Chapman said. “They simply don’t have the can supply to meet all their needs.”
A tight supply of cans amid surging demand has meant many manufacturers have had to limit certain stock keeping units ( SKUS) — industry speak for one brand in a one type of package. For example, Sleeman Cream Ale in a six- pack of cans is one SKU, while a 12- pack of cans is another SKU.
Manufacturers, in what has become a common pandemic strategy, adapt to demand surges by cutting back production of less popular SKUS in order to make more of their top-selling SKUS.
“We’re packaging all of the SKUS in cans that we are able to,” John Sleeman said. “And perhaps if John Sleeman wants a Cream Ale and Cream Ale isn’t as big a volume seller, for instance, as Clear, then John Sleeman has to buy it in bottles.”
But he added that there is no reason to panic buy beer, since his brewery hasn’t run out of packages for beer despite months of issues with can supplies.
Coca- Cola Ltd. in Canada is also prioritizing cans for its highest demand brands, including Coke, Diet Coke, Coke Zero and Sprite.
“Because of the need to prioritize these brands, other brands or flavours that come in cans may have limited availability,” Coca- Cola said in a statement. “However, our broader range of products continue to be widely available in PET ( polyethylene terephthalate) and glass bottles.”
Moosehead Breweries Ltd. chief executive Andrew Oland on Tuesday also said that certain SKUS have been briefly out of stock due to the can shortage.
“There’s been an industry shortage of cans and it’s been an ongoing issue,” he said.
Moosehead, which orders tens of millions of cans per year, typically keeps roughly three to four weeks of inventory per SKU, Oland said. But after the pandemic hit in March, it was briefly running out of specific products.
“We’d just have one brand, in one pack size, that would be out of stock for a few days. We’re out of stock on Monday and we’re going to be running it in the brewery on Thursday,” he said. “We get concerned about it, but in the scheme of things, they’ve been relatively minor, particularly to some other players in the industry.”
Oland said the industry shortage of cans has been an ongoing issue that he expects to be dealing with “for the next year, at least,” as can manufacturers add extra capacity.
Ball said it is “aggressively expanding” its capacity by at least six billion cans by the end of 2021, with two new lines at existing facilities and two new U.S. plants.
Until then, Canadian brewers — particularly smaller ones — will be building bigger stashes of cans to make sure they have enough to keep up with demand, according to the Ontario Craft Brewers trade association.
“We need to have more money tied up in inventory now,” said Jeff Dornan, the OCB chair who owns All or Nothing Brewhouse & Distillery in Oshawa, Ont. “We have a large pile of cans downstairs. I think we maintain about a quarter- million cans in the building, which is at least a tractor- trailer’s worth.”