Yes, the Chicago River is green this year, but St. Patrick’s Day celebrations will again be scaled back due to coronavirus restrictions. For many people, even scaled back celebrations include a glass or two of beer, often a pint or two of Guinness. This year, the beer most likely will be poured from cans and consumed at home rather than pulled from a tap in a pub, and, just as the global pandemic has changed how holidays like St. Patrick’s Day are celebrated, it has caused disruptions in the supply chains delivering those cans.
First, the Guinness situation. In October of last year, Diageo, owner of Guinness, announced a temporary change in some cans of Guinness Draught, causing unhappiness in some quarters. Due to a supply issue, the floating widget, a nitrogen-filled capsule that gives the draught beer in cans the silky, creamy head, would be replaced by a fixed widget system. Assuring consumers that it’s exactly the same Guinness, the company said then it expected to have the floating widget back in production in early 2021. So far there’s been no word about its return.
Meanwhile, in the US, craft brewers have been seeing another supply issue: a shortage of aluminum cans. According to Alan Szuter, owner of Wolf’s Ridge Brewing in Columbus, OH, craft beer had been moving rapidly from glass to aluminum, with consumer preference, cost, ease of recycling and retailer preference among the factors driving the shift from bottles to cans. In an article in Craft Brewing Business, he references a Brewer’s Association analysis that showed cans going from less than 20% of the total in 2015 to about 47% by 2019, and then to over 55% by mid- 2020. He said that this increased can usage combined with the impact of the pandemic on supplier plants, uncertainty around global supplies, tariffs and other factors resulted in a can supply shortage.
When tap room operations were shut down last year, or capacity limits were imposed due to safety concerns for customers and employees, brewers had to shift to making beer to go, and, for many, that meant lots of cans. Plus, as an article in Spirited magazine reminds us, “A widespread adoption of cans by other segments of the beverage industry—including hard seltzers, still and sparkling waters, soft drinks, coffees, kombuchas, energy drinks, canned wines, and ready-to-drink cocktails—has also contributed to the increased demand.” And during the pandemic, people have purchased more beverages in cans to consume at home.
According to Spirited, aluminum can producers in the US are working to shore up available stocks, add new production lines and build new plants. Spirited reports that according to an Aluminum Association survey, shipments to US markets of the sheet product that’s manufactured into cans increased 2.6%, year-to-date, through September 2020 over the prior year.
Spirited also reports that, according to a statement from the Can Manufacturers Institute, US can manufacturers have imported an estimated 2 billion cans from overseas facilities to help meet domestic demand and will add capacity to produce 12 billion more cans by the end of 2021.
According to a recent Chicago Tribune article, in November 2020, a Credit Suisse analyst said that “for the most part, the North American can industry is sold out for the next 24 to 36 months and we don’t see the supply chain catching up to real demand until 2025-26.”
The Tribune article also quotes Bart Watson, chief economist for the Brewers Association, who doesn’t expect the situation to resolve until the pandemic abates. “The fundamental reason this has occurred — volume going out of draft and into package — won’t improve until summer or late summer , until we solve the public health situation and we can go back to on-premise sales,” such as in bars and restaurants, Watson said.
While CJ Logistics might not be able to guarantee floating widgets or an abundance of aluminum cans, we are supply chain problem solvers at heart. With extensive experience providing integrated supply chain solutions for CPG, food and beverage companies, we have the tools to optimize and manage the supply chain, so you can focus on making great products. Sláinte!
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