At Rockaway Brewery, a small craft beer maker, cans of the ESB brew are filled one can at a timeWhen customers began to line up at 5 a.m. outside Scott Metzger’s microbrewery in San Antonio, Mr. Metzger knew he had to start making more beer.
Mr. Metzger, who founded Freetail Brewing Company as a brew pub about seven years ago, spent thousands on new equipment so that he could start canning Soul Doubt, his signature India pale ale; Bat Outta Helles, his Bavarian-style lager; and a number of seasonal flavors and other brews. Now, there’s just one unexpected problem: Where will he get the cans?While the craft beer boom has benefited small breweries around the country, it has also left some scrambling for cans. The 16-ounce size is in exceptionally high demand; it’s slightly larger and has become a popular way for niche brewers to distinguish themselves from behemoths like Budweiser and Coors, which use 12-ounce cans.“Certainly we’ve seen some of our brewery members struggle in recent months,” said Bart Watson, the chief economist at the Brewers Association, a national trade group for craft beer businesses. “This has proven to be a real challenge for members that have built their business model around getting these cans.”For a few years now, more affordable ways of canning have helped spawn new craft beers and made the process easier for small brewers. Mobile canners began bringing their own canning machinery right to a brewer’s door around the same time as aluminum cans were losing their stigma. And even though glass bottles still hold more cachet among craft brewers, funky, unique can designs became a popular way to court the young hip beer enthusiasts that have helped to lift sales of niche local brews.“Cans are much more accepted on the market now,” said Paul Halayko, the co-owner and president of the Newburgh Brewing Company in New York. “I think for a very long time, people thought that beer should be in a bottle.”As defined by the Brewers Association, craft brewers produce no more than six million barrels annually. Some, like Newburgh, which Mr. Halayko said has sold about 400 barrels worth of canned beer in the last year, produce far fewer.
A three person-operation at Rockaway Brewery fill cans of ESB brewIn the past, some smaller breweries and their distributors that needed only a few thousand cans at a time worked with Crown, a major manufacturer. It required a much smaller minimum order than two of its main competitors, Ball and Rexam. But the enormous surge in demand for cans squeezed the company, which raised its minimum order to the industry-standard truckload, which can range from roughly 155,000 to 200,000, depending on the size of the can.“That’s a lot of cans to store, it’s a lot of cash to lay out, and the little guys just don’t have that,” said Tim Dorward, a mobile canner whose clients often refer to him as Tim the Can Man. “Crown was working with people, and they’re very interested in the craft industry, but it just caught them by surprise.”In a statement, Thomas T. Fischer, a spokesman for Crown, said the company recognized that the new order minimum could present a challenge for some brewers, and that Crown had recommended alternatives.“We remain excited about the future of craft beer and supporting brewers of all sizes in the short and long term,” Mr. Fischer said.Craft brewers are often compared to chefs: They tinker with recipes, experiment with flavors and appeal to a niche market that likes the authenticity associated with beers that seem only a few steps removed from being brewed in someone’s basement.The industry has been growing at a double-digit clip over the last six years, and makes up more than 10 percent of all beer sold in the United States, according to Vivien Azer, a managing director at Cowen & Company, an investment banking business. That is significant when beer sales over all have been relatively flat.Some microbreweries have also benefited in states that have relaxed certain restrictions on sales, in some instances raising the cap on how much beer can be sold on-site.Some brewers and can distributors say they started seeing a can shortage over the summer. Orders that normally took two to four weeks to fill suddenly were taking eight weeks, then 12 weeks or even longer.“We were able to make an order pre-emptively before there was a panic,” said Chris M. Thompson, a co-founder of Whitewater Brewing Company in Ontario, which gets cans from a third-party distributor.Others were not so lucky. Mr. Thompson said that Whitewater lent cans to nearby breweries so that they could meet order deadlines.“Running out of cans is pretty serious,” he said. “You’ve got clients that are depending on that, and you let them down, there’s plenty of people that are willing to fill that gap.”Most canned beer comes in six-packs of 12-ounce cans, so producing four-packs of 16-ounce cans is one way for craft brewers to set themselves apart from deep-pocketed beverage companies that have increasingly pushed into craft territory.In recent years, the Duvel Moortgat Brewery of Belgium and Anheuser-Busch InBev, the maker of Budweiser and Stella Artois, have scooped up smaller competitors.“I think that for craft brewers, things are going to get tougher because the bigger guys are encroaching either with their own craft brands or by buying craft brands,” said Pablo Zuanic, an analyst at Susquehanna International Group.Craft brewers may also feel the squeeze in other ways: A new program from A-B InBev offers distributors an incentive if they agree to sell the company’s brands almost exclusively.“We do think it’s a bit concerning,” said Mr. Watson, from the craft trade group. “The incentive program is another example of how they have influence over distributors that may reduce options and market access for small brewers."In a statement, A-B InBev said that “nothing in the program prevents distribution of other brands.”
Rockaway Brewing Company uses about 6,000 cans per month, far below the minimum order requirements of some manufacturers“Craft brewers are thriving with unfettered access to market, and our incentive programs don’t interfere with that,” the company said.Crown, Ball and Rexam all say they are looking at ways to address the growing demand for cans. But Ball’s agreement to buy Rexam for nearly $7 billion in February has some small brewers worried that the supply problem will only worsen.“That’s kind of a cloud hanging over this whole thing,” said Mr. Metzger, who said that Freetail considered trying 16-ounce cans until he heard about the shipping delays.
Mr. Metzger said he paid Crown about $28,000 for the printing plates that stamp Freetail’s artwork and logo on its 12-ounce cans. But that money will be wasted, he says, if he is forced to switch to a supplier with a smaller minimum order.“We’re ordering what we can from Crown before the minimum goes up,” he said. “In or around March, it might start getting slightly scary.”In a follow-up email, Crown said that it “does not charge customers for development of printing plates,” but charges a small fee “for the development and separation of artwork prior to printing on the can.”Ethan Long and Marcus Burnett started brewing beer at their bungalows in the Rockaways, about an hour’s subway ride from New York City. They eventually opened a 700-square-foot brewery and tasting room in Queens, the Rockaway Brewing Company, and sold glass jugs of beer known as growlers from a small counter space near the door.The two men raised $30,000 to buy a canning machine to package more transportable 16-ounce servings of their seasonal and staple beers, and they expanded their facility, adding two rooms.“We haven’t been able to do a big variety of one-offs because there haven’t been available cans,” said Mr. Long, who estimates that he uses about 6,000 cans every month. By comparison, Anheuser-Busch InBev says it uses an average of 1.5 billion cans a month.
Simply switching to another size can, or bottle, is not always easy. Labels are often specifically designed for 16-ounce cans, and they require approval from federal and local alcohol authorities.Some breweries have also built their identities around the distinct look of a 16-ounce size, Mr. Watson of the Brewers Association said. Additionally, glass bottles typically cost more, which can make a difference given the relatively modest budgets of many local and regional brewers.“For a small start-up business, it’s not an insignificant amount of money,” said Mr. Halayko of Newburgh. “We’re just buying blank cans, wherever we can find them, and then we’re actually applying the labels ourselves.”Newburgh has had internal discussions about whether to switch to a 12-ounce can, he said. But the company put a lot of effort into making its packaging distinctive, and in April the purple cow on its cream ale even won the Most Loved Label Competition sponsored by CNBC.© 2015 New York Times News Service
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