The Aluminum Can: The Bright Spot in the 2020 Packaging Segment.
September 25th, 2020
The US food segment is shaping up for a pretty decent year, all considering. Shining brightly is the aluminum can packaging industry where consumer demand for sparkling water has triggered renewed interest in the packaged beer segment. Demand for aluminum cans has skyrocketed, partly due to a Covid-19 induced reduction in restaurant traffic and shifting consumer preferences. In an attempt to make up lost revenue from depressed restaurant sales, breweries are pivoting from distributing beer in kegs to cans. According to the Brewers Association (which represents a $29.3bn industry) craft beer rose 3.6% to 26bn bbl or approximately 13.6% of the beer market, based on the latest 2019 data.
The spike in demand, however, has resulted in a severe shortage of raw aluminum which has negatively affected canning inventory and production capacity. Compounding the problem is a recent 10% US tariff on Canadian aluminum and the fact that fewer people are recycling. Many beverage packaging companies are working with customers to minimize the supply impact by distributing cans directly from their plants. Yet while larger brewers, with their own canning lines, are shielded from shortages, small brewers who depend on JIT inventory, continue to bear the brunt of these short-term supply shocks.