Headwinds have converged to create an unfavorable environment for craft breweries seeking to package their beer in aluminum cans, which now make up about 60% of independent craft beer packaged volume, according to the Brewers Association (BA), a trade group representing the nation’s small and independent brewers.
The combination of large beverage companies transitioning from plastic bottles to cans in recent years, and the uncertainty of the COVID-19 pandemic shifting focus from the on-premise channel to off-premise sales, can supply has been highly strained.
To add to craft beverage producers’ concerns, Ball, the world’s largest manufacturer of aluminum beverage cans, recently announced its minimum order requirement for printed cans will increase next year from 1 truckload (204,000 cans) to 5 truckloads (more than 1 million cans) per SKU.
With 2021 coming to a close, and ordering for the busy summer season quickly drawing near, Brewbound spoke with several can suppliers and printers to gauge how they and their clients are navigating these currents.
American Canning to Expand into New Facility With Own Can Manufacturing Plant
American Canning, an Austin, Texas-based aluminum can and packaging supplies provider, will add an aluminum can manufacturing plant to its operations in 2022.
Plant operations are expected to begin in August, producing 12 oz. cans at first, and adding16 oz. cans by early 2023. American Canning co-founder David Racino told Brewbound he anticipates the plant, once fully operational, will produce 300 million cans a year on its one line.
The plant is part of a planned company expansion, which includes moving operations to a new 155,000 sq. ft. facility by February 2022. Along with housing the manufacturing plant, the new space will increase capacity three-fold, with additional storage space that will be able to fit an estimated 20 million cans ready for shipping.
“I think it’s no secret, the last few years have been difficult on cans,” Racino said. “That package format has taken off in popularity so quickly in the last three, four or five years. And it’s been a really difficult thing for the smaller to mid-size beverage companies, because procurement is so challenging.
“While some of the pandemic stuff will kind of normalize, there is a lot more demand for beverages in cans now than there was pre-pandemic and that growth was going to happen pandemic or not, it just really was an accelerator,” he continued.
To help meet demand, the new facility will also include 3,500 sq. ft. dedicated to a second shrink sleeve line, which will increase American’s shrink sleeving capacity to 1.5 million cans per week.
Racino said expansion plans were already in discussion before supply chain constraints, and the company had been looking into how to vertically integrate by creating its own cans. In the fall of 2020, Racino and his co-founder Mike Daniel began discussions with Japan-based Toyo Seikan, a global leader in packaging manufacturing with a particular focus on creating cans that have a smaller environmental impact.
American Canning plans to use Toyo Seikan’s can-making innovation to increase their own sustainability efforts as well.
“One of the interesting things about this particular can technology is it’s a little bit different than what most people are accustomed to,” Racino said. “It’s a completely dry manufacturing process. … There’s not a single floor drain within our manufacturing space.”
Traditionally, when making aluminum cans, an aluminum sheet must be turned into a can body, “but that requires a lot of cooling and lubrication to disperse the heat and to prevent that aluminum from tearing,” Racino explained.
Toyo Seikan’s method saves a “considerable amount of water.” The lack of waste also allows American to operate its plant more easily within the city limits of Austin, rather than a separate facility.
“The [traditional] manufacturing process, while it’s really pretty good, this technology that Toyo Seikan came up with, this manufacturing process, just takes [sustainability] one step further,” Racino said. “And I think our customer base, especially in the craft beverage world, is really advocating for local product, handmade product, and I think sustainability being something that a lot of people care about now, it’s a huge win-win to be able to increase the can supply in an environmentally friendly way.”
Racino acknowledged that shrink sleeve cans have more of an environmental impact than printed cans, as the plastic sleeves themselves are not easily recycled.
“It’s no secret, we do shrink sleeving all day long, and it still has its place for now, but it is plastic,” he said. “While sleeved cans are recyclable, we know plastic does make it into the landfill and there are inefficiencies there. This takes us one step closer to removing some of that material from the waste stream.”
American Canning serves several thousand beverage producers across the U.S., the majority of which are craft breweries. Racino explained that far and away the biggest concern clients have is where their cans are going to come from next year and the following years.
“I mean, there’s just a lack of certainty around supply next year, which has been pretty terrifying for a lot of our customers,” Racino said. “Frankly, people are just scared. They don’t know whether their business is going to grow next year, whether it’s going to completely shrink, whether they’re going to be able to have revenue in the short term. I think it changed the focus for a lot of people next year, as now they’re having to shift their priorities entirely to supply chain for those heavily distributing their product.
“It’s going to be a challenging year for our customers to kind of sift through all this stuff. And really, at the end of the day, we’re just trying to figure out how to build a little bit better solution that is tailored for the small producer that has really no seat at the table due to the scope and scale of the beverage industry,” he continued.
Wildpack to Add In-House Label Printing in 2022
Wildpack Beverage, a national beverage co-packer and can decorator, will add in-house label printing to its offerings in Q1 2022, as part of its goal to be a “one-stop shop” for beverage producers.
Wildpack offers sleeving, co-packing, and packaging sales for a range of beverages, and this month began testing its own in-house label printing.
“It helps us to vertically integrate,” Wildpack chief operating officer Chuck Zadlo told Brewbound. “If it’s something you can do yourself, it’s pennies on the dollar versus paying somebody else to do it. And then you’re also incurring the additional freight – all those costs have to get passed on to the end customer, unfortunately. This allows us to be much more competitive on the can decorating side for customers that maybe aren’t a good fit for printed cans.”
Wildpack operates six plant locations: Sacramento, California; Longmont, Colorado; Las Vegas, Nevada; Marietta, Georgia; Grand Rapids, Michigan; and Baltimore, Maryland.
Zadlo said the company has “strong plans” to continue to grow in 2022, either through new builds or acquisitions. While he declined to share where that expansion will be, he said high contenders are around southern California, the Midwest, and the Texas area.
“We’re always actively looking for an acquisition target that either enhances our capabilities, or is a good fit for our current set of capabilities,” Zadlo said. “Ultimately, it’s about bringing our services and products closer to the customer so that they can save on freight, and we’re growing their business by adding value in that front.”
The expansion will help support the increase in customers that Wildpack is expecting next year. The company brokers cans through Ball, Crown, Ardagh, and internationally through Envases, giving it the ability to navigate supply issues for its clients.
“If you need half a pallet for a small project, we’ve got your back,” Zadlo said. “You want to do 25 pallets, we’ve got your back, whether it’s printed or sleeved. And then we also have, for some of our larger customers, a pathway to larger quantities of printed cans.”
About a third of Wildpack’s customers are craft breweries, including Revolution Brewing and Sierra Nevada. Another third is ready-to-drink canned cocktail makers, such as High Noon, while the rest are energy drink and nutritional supplement beverage companies.
“We sell cans from RTD beverage to craft breweries, so we really aren’t discriminatory to anybody,” Zadlo said. “If you want 12 oz. standard, 12 oz. sleek, 16 oz. standard, we’re kind of a one-stop shop for that.”
Since its founding in 2017, Wildpack has made it its mission to “disrupt the middle market opportunity” in co-packing, according to Zadlo.
“We’ve looked at [digital printing],” he said. “It’s something where we’re very interested in the technology. When you look at digital printing, it’s just not there yet from a technology standpoint, but there are a couple of companies that are getting some significant investments.
“Once the technology’s there, we can get the costs reduced,” he continued. “Right now, they’re a little bit higher than sleeved cans, so they don’t necessarily make sense in every situation for some customers, but I expect that to get better.”
When Ball’s printed can minimum increase was announced, Zadlo said he wasn’t shocked.
“The five-truck minimum, that was a big step,” he said. “Lack of storage, and now charging for storage was a big change. But I’m not really shocked. Frankly, I’m kind of surprised it took that long.
“But when you’re looking at it from Ball and Crowns’ perspective, they’d rather work with a preferred distributor and just make cans,” he continued.
While he recognizes the strain the move puts on beverage producers, he emphasized that there are some misconceptions people have about alternatives to printed cans.
“I think there is this perception that sleeved cans will put breweries out of business,” Zadlo said. “They are more expensive without a doubt, but sleeving companies, printing companies have been in business for a long time. And they’ve been a great tool for craft brewers to use to have an opportunity for sales to go out of their tap rooms, whether it be crowlers or a 4-pack of 16 oz. cans.
“Are the margins as good? No, they’re not.” he continued. “I mean, printed cans are cheaper than sleeve cans. But, depending on what you’re charging for price-to-retail, it’s still a great option for a lot of people.”
Zadlo predicts the aluminum can supply constraints won’t improve until 2023. Until then, price increases across the industry are going to be inevitable, he said
“There will definitely be price increases in the market. At some level, somebody is going to pay for this somewhere,” he said. “Companies that are managing their bottom-line costs will be successful. Companies that understand that margins [have] to be X to be profitable are going to look at their top-line sales, and are they going to have to add a dollar to a 6-pack to make it work? And the answer is probably yes.”
DWS Printing: ‘We’ve Got Your Back’
Following the changes at Ball, Deer Park, New York-headquartered DWS Printing sent an email out to beverage producers:
“Sourcing cans can be a bear, and the big boys are making it even more of a challenge with their recent announcement of increased minimum orders for pre-printed cans,” the letter reads. “We’ve got your back.”
DWS offers pressure sensitive labels and shrink sleeves across various can sizes from its facilities in New York and Austin, Texas, and three years ago began providing shrink sleeve application in-house. The company also offers “cover up” sleeves – foil-backed shrink sleeves that are opaque enough to cover previously-printed cans.
A family-owned company, DWS has operated since the 1800s, now with its fourth generation of ownership with co-owner Andy Staib.
When the Ball news began circling, Staib wanted craft beverage producers to know that DWS has the resources available to help them navigate whatever can and label transitions they have to make.
“Brewers and DWS, we’ve always gotten along real well. It’s been a standing piece of business for us since literally the 1800s,” Staib told Brewbound. “I want them to know we’ve got their back and we have the capacity and the resources to feed them, so to speak.
“[Supply issues are] very concerning for so many craft brewers in the industry and the unknown as well. How are they going to weather that storm?” he continued. “I think brewers, they’re smart. And they’re adaptable.”
Staib said he and his clients didn’t see the changes from Ball happening, or at least happening with such a short timeline for changes. Ball’s minimum order change was announced in mid- November, and is effective January 1.
“I get it,” he said. “It’s very similar to what Crown had done not long ago, just trying to cull the number of customers they serve.
“The leadership that made that decision? I don’t know how they sleep at night,” he continued. “I guess business is business, but it kind of goes against the grain and the culture of the craft brewing community, which is collaborative. We all want to have each other’s back.”
DWS now has more than 500 clients, of which about a third are brewers. Its brewery clients range in size from early start-ups to large breweries such as Atlanta, Georgia-based SweetWater Brewing Company. Orders sizes range from a minimum of 1 pallet (4,000 12 oz. cans in New York or 7,000 12 oz. cans in Austin), to as large as multiple truckloads.
“I think what the benefit [of working with DWS] is – especially now, considering the announcement by Ball – is being able to offer any of those offerings, but at much, much lower minimums,” Staib said. “We welcome business and we’re ready to assist.
“The truth is, it’s a potentially game changing influx of business and we are expecting the pipeline to fill up rather quickly,” he continued.
Staib said he is prepared for the influx, which the company’s newer Austin facility will support.
After 18 months of planning, the company opened the Austin location in October 2020 to better service clients nationwide. The new location’s success has been bittersweet for Staib, as his brother Tom, with whom he worked for more than 30 years and co-owned the company, unexpectedly passed away just days before the facility’s opening.
“We chose Texas, because obviously it’s relatively centrally located. And the intent was and is to service the sleeved can market for the craft brewing industry,” Staib told Brewbound. “It’s been a whole new world without Tom at my side, but the company is continuing to forge on as well, and I think he’d be proud.”
The company now has an estimated total capacity of 1.5 million cans per week (assuming a majority of volume is from 12 oz. and 16 oz. cans.) – about 90,000 cans per day in New York, and 160,000 cans per day in Austin. The increased capacity allows DWS to increase its lead times for orders from 4-6 weeks, to as little as a week. Once print-ready artwork is finalized, label set up takes only a few days.
Staib said future expansion is definitely on the horizon, likely around 2024.
“We’re getting Texas into a well-oiled machine,” he said. “I think the next stop would be somewhere on the West Coast for us to be able to service the Pacific Northwest.”