July 23, 2019
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Trump tariffs hike price of beer cans, squeezing Maine craft brewers

Gabor Degre | BDN
Gabor Degre | BDN
Garrett McIntyre, an assistant brewer at Geaghan Brothers Brewing, stacks cans of beer at the Brewer facility in this August 2017 file photo. Maine brewers say tariffs imposed by President Trump on imported aluminum and steel are increasing the cost of cans they use for their brews.

Some Maine craft brewers are getting a bad taste in their mouths over the Trump administration’s import tariffs on steel and aluminum, which are affecting the price of cans.

So far, consumers aren’t seeing price increases. Businesses say they don’t expect to see the full effects of the tariffs for at least several more months.

Aluminum can price increases are eating away at some craft brewery profits, while other brewers have had to change business practices and order cans a month or more earlier to assure they have enough.

“The tariffs are having an impact on the craft brewing industry. Absolutely,” said Bob Pease, president and CEO of the Brewers Association, a 4,700-member brewery industry group based in Boulder, Colorado.

“We don’t have any hard data yet on any overall shortage of aluminum cans, but we are hearing about can price increases of 6 percent to 12 percent from our members,”

There are some sporadic reports of shortages of the more unusual can sizes, such as 16-ounce and 19.2-ounce sizes, but there are no shortages of the most popular 12-ounce cans, he said.

Squeezing profits

Gabor Degre | BDN
Gabor Degre | BDN
Sam Chase, manager and bartender at Nocturnem Draft Haus in Bangor, in this January 2015 photo holds a glass of Zephyr IPA, made by Rising Tide Brewing Co. in Portland. Rising Tide saw prices for the cans it uses for its beers rise twice since President Trump set tariffs on aluminum and steel impors from certain countries in March 2018.

Rising Tide Brewing Co. in Portland, which sells most of its beer in cans, already has received two notices of aluminum can price increases since the tariffs went into effect in May.

“We just got one [Thursday] that said the price will go up because of the aluminum tariff,” Heather Sanborn, co-owner of the brewery, said. “That’s the second notice in the past few months. And it specifically pointed to the tariffs as the reason for the increase.”

She usually sees only one price rise annually from Ardagh, a large Chicago can supplier. The second notice is effective as of Aug. 1.

Ardagh spokeswoman Jennifer Cumbee was not immediately available for comment on how widespread its price hikes are on aluminum cans.

“This is very unusual and it is worrisome,” Sanborn said.

Sanborn said she couldn’t quantify the overall impact of the tariffs on the price of beer. But so far, it would be difficult to pass it on to customers because of the stiff competition among existing and new craft brewers in the state, she said. Rising Tide sells its beer throughout Maine and in nearby states.

“We’d like to pass on the cost to drinkers, but I’m not sure it’s feasible because the market is very competitive,” she said. “Our margins are very thin. Any increase is detrimental.”

Bubbling competition

Maine had more than 120 brewers as of this January, up 30 percent over the 93 in January 2017, according to the Maine Brewers’ Guild.

In 2016, craft brewers had a $227.95 million economic impact on Maine and employed a total of 2,177 people, both including multiplier effects from related businesses.

An average of six craft breweries opened annually statewide during the past decade, according to a study released in March 2017 by the University of Maine School of Economics and the Maine Brewers’ Guild.

Sean Sullivan, executive director of the Maine Brewers’ Guild in South Portland, said the two groups are in the midst of a new study to be released this fall that will include more details, and he expects the economic impact to be higher.

Adam Tuuri, co-owner of Bear Bones Beer, with locations in Lewiston and Bridgton, said the tariffs have had little effect on his smaller breweries. Bear Bones sells beer mostly from the tap and in take-out growlers, but does sell some canned beer.

“The tariffs affect us because it costs more to can,” he said. “But it isn’t a make-or-break problem.”

Tuuri said small breweries now under construction will be hit more by the aluminum and steel tariffs than a small brewery already operating. Steel is used in some of the brewery machinery and in kegs.

In July, he received a notice from his can supplier, Zuckerman Honickman Inc. of King of Prussia, Pennsylvania, that prices would rise starting Aug. 13. Zuckerman handles smaller orders of beer.

The company pointed to significant increases in the aluminum commodity market since the beginning of this year, some of which it said “is attributable to the decision to implement tariffs on aluminum imports.”

One example of an increase is a 12-ounce regular can, which is up $4.80 per 1,000 cans ordered.

The notice said pricing may change further during the rest of the year because of raw materials costs, freight and government actions and regulations.

For larger brewers, long ordering cycles have become even longer.

Ordering earlier

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Fred Forsley, founder and president of Shipyard Brewing in Portland, during a tour of the company’s facility in February 2015. Forsley said that the Trump tariffs instituted in March 2018 have forced him to order aluminum cans at least a month longer in advance to assure he has enough for production.

“The tariffs haven’t affected us yet but we have to give longer projections on orders. So it’s delayed things by about a month,” said Fred Forsley, president and founder of Shipyard Brewing, a Portland-based brewer that sells throughout and outside of Maine. The company has 16 locations, seven of them in Maine.

Shipyard is one of the largest craft brewers in Maine, producing more than 100,000 barrels a year.

Forsley said about 15 percent of production is for canned beer, but that portion of the business is growing.

So far, because his contracts are long-term, he said he hasn’t seen price hikes or shortages of aluminum cans. He sources cans from Crown of Philadelphia and Ball of Broomfield, Colorado, two of the larger metal packaging companies in the United States.

Worries about aluminum can shortages and price hikes emerged in early March when President Donald Trump signed a proclamation imposing a 25 percent tariff on certain steel imports and 10 percent on aluminum.

The Brewers Association issued a statement on its website about the tariffs and how they could cause unintended consequences in the beer industry.

“Though we think the more targeted tariffs exempting Canada and Mexico are a step in the right direction, we do not believe that can sheet aluminum or the steel used to make brewing equipment poses a threat to national security,” the statement said.

“The Trump administration ran on lessening the burdens on small businesses of taxes and regulations,” Pease said. “The tariffs are having a negative impact on small, independent Main Street manufacturers.”

Nationwide, aluminum cans make up 28.5 percent of packaged production for small and independent brewers. Those brewers are the largest growing group of brewers that package beer in cans, and as such would be the ones most directly affected by a price increase in cans.

The Brewers Association also said that kegs are made of steel and likely will be affected by higher prices.

Pease said that while bottles still dominate beer packaging, cans have been growing rapidly. Whether the tariffs reverse that trend depends on how long they last, Pease said.

“If you pay 1 cent more for each beer can and buy 1 million cans at a time, that’s $10,000,” he said. “That’s real money to a small business.”

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