Ball, the world’s largest manufacturer of aluminum beverage cans, has informed customers without contracts that minimum quantities for orders of printed cans are increasing to five truckloads per SKU and that the company will no longer provide warehouse services for its customers, according to a post shared by the Brewers Association.
These changes are slated to go into effect on January 1, according to a report in WestWord.
Beverage industry professional Mark Gallo noted on Twitter that the new minimum amounts to more than 1 million cans:
🚨🤯🚨🤯
Ball can manufacturer has announced new minimum order sizes (5x as much) :
204,000 cans (1 truck) turns into 1,020,000 (5 trucks)
— Mark Gallo®️ (@guhlo) November 18, 2021
That number of 12 oz. cans would hold roughly 3,084 barrels of beer — more than the vast majority of craft brewers produce in a year.
Earlier this month, Ball chairman and CEO John Hayes said the company would begin to explore various ways to “recoup” its costs during a conference call discussing Ball’s third quarter earnings. Other methods to do so could include increasing prices via negotiating with customers who have longer-term contracts, redrawing shorter-term contracts as they expire, and including increases in open contracts.
Ball directed affected customers to third-party brokers to order quantities smaller than five truckloads, which will likely drive up prices.
“For small brewers, this is an additional aluminum supply change challenge coming after a year and a half of many such challenges,” the BA wrote. “Moving a large portion of small brewer aluminum can sales to brokers has the potential to increase prices for small brewers (through increased broker fees, additional labelling costs, and increased transportation cost), increase lead times, and potentially reduce the availability of cans for smaller brewers who can no longer meet minimums.”
The policy change may have environmental effects in addition to financial ones. With such high minimum order quantities for printed cans, brewers may turn to plastic shrink wrapped or pressure labeled cans, which are not as recyclable as printed cans.
“There is also the potential for additional carbon emissions with extra transportation of cans to brokers rather than direct shipment to breweries,” the BA wrote.
Craft brewers’ packaging mixes lean toward cans, but cans’ share increases at an inversely proportional rate to brewery size. Last year, craft brewers producing more than 100,000 case equivalents packaged 50.3% of their beer in cans, according to BA chief economist Bart Watson’s annual packaging report. Craft breweries producing fewer than 15,000 barrels annually used cans for 82% of their volume in 2020.
“Depending on how brewers react to increased cost and order sizes, it could potentially lead to lower availability of smaller brands in the marketplace and higher costs for consumers.”
During Ball’s Q3 earnings call, the company said it is oversold by 10 billion units in its three main regions, with the majority coming from North America.
Ball did not respond to a request for comment. We will update this story when the company responds.