Brewers hopeful as metal tariffs end
Connecticut beer drinkers may have lucked out without knowing it.
The Trump administration reached a deal last week to remove taxes on steel and aluminum imports coming from Mexico and Canada.
National sources reported that the tariffs, when they went into effect, could increase the price of aluminum cans and cause an eventual price hike on beer.
The U.S. tariffs on metals were in effect for nearly a year, with steel imports subject to a 25 percent tariff and aluminum to a 10 percent one. Now prices should get back to pre-tariff levels, local brewers said.
“It’s moving in the right direction,” said Phil Pappas, executive director of the state’s Brewers Guild.
If the tariffs had continued, larger companies might have felt a sting, but that effect would be magnified for craft brewers, which operate on smaller margins.
Cans continue to be a popular packaging method for smaller craft brewers looking to distribute their beers, according to economists at the National Brewers Association. Cans rose from 16 percent of packaged production in 2014 to 41 percent in 2018, reports said.
While 98 percent of the material used to make cans is produced in the United States, the Brewers Association reported that 66 percent of the primary aluminum used in the process is imported from Canada.
“Every penny counts, especially when we are vastly growing,” Pappas said. “A lot of our breweries are looking to expand production, and thousands of dollars of equipment and canning lines can be expensive. Increasing those costs that go into buying something like that is more detrimental than it needs to be.”
Area brewers said the added cost to package their beer could have created a “snowball effect” that could ultimately hit customers.
“Anytime prices go up on raw materials…that definitely eats into our margins,” said Zack Kyte, owner of Half Full Brewery in Stamford.
Kyte said packaging costs tend to be higher for craft beer makers not buying in bulk. Higher costs on their end could lead to price hikes on shelves.
“We’re just one of several breweries across the state. Different breweries may have different responses to what is going on,” Kyte said.
The 25 percent tariff on steel also created a dilemma for brewers in their startup phases, according to Bob Chicoine, co-owner of the incoming Dockside Waterfront Biergarten and Brewery in Milford.
The waterfront business broke ground earlier this year, but Chicoine said he chose to buy all his steel fermenting tanks and brew house equipment prior to the tariffs going into effect last year to avoid price hikes.
“I didn’t know what was going to happen and was just being proactive,” he said. “For me, it was a monetary decision. It was just like ‘do I wait and pay more for the fermenter tanks and brew house when I’m ready to use them or do I
buy early and store them?’”
The tariffs may have been lifted, but some brewers believe the effects of them has already dealt a blow to the industry.
“There are a lot of different forces at work right now,” said Peter Cowles, owner of Bridgeport-based Aspetuck Brew Labs — including a demand for aluminum and steel that is continuing to outpace the supply that distributors can offer.
He attributed the demand to the ongoing growth of the national craft beer market.
Connecticut, for example, continues to add new breweries to its list, which is nearing 100 businesses.
“I can imagine that the suppliers that are making tanks and brewery equipment are feeling it big time, so anyone just getting into this business now (and) trying to get new equipment is going to feel it more,” he said.