Breweries in the US adjusting to aluminium & steel tariffs; profit drops looming large

Canning beer is getting more expensive for breweries, thanks to the tariffs on imported steel and aluminium that went into effect in June. The price of steel went up by 25% and aluminium by 10%.  

Wilmington Brewing Company cans beers every alternate week with about 6,000 units of aluminium cans in one canning session. The company is bracing itself for the upcoming price rise. The company cans about 27% of its beers on draft.

“When we first heard about (the tariffs), it was a little worrisome because we’re canning every other week now," Savard said. "We’re canning a lot of beer, a lot of aluminium, but it hasn’t influenced us quite yet.”

Savard considers looking for other can suppliers to control the cost and so that it is not passed on to the consumers.

The owner of Waterman’s Brewing Company went to Washington, D.C., to talk to lawmakers about exempting the industry from the tariffs. Waterman recently benefitted by the tax overhaul bill for local breweries which, they think would be negatively impacted by the import tariffs. Waterman’s also relies on steel and aluminium for kegs and for brewing equipment. It hasn’t yet been affected by the tariffs, but will be hit once their can increase the prices.

As told by CEO Gavin Hattersley to Bloomberg MillerCoors, the brewer of Miller Lite and Coors Lite, might raise prices to compensate for losing $40 million in profits due to aluminium tariffs. Hattersley said that even a 50 cents price increase per 12-pack would also cause the beverage market to be hit badly.

MillerCoors is not considering switching to bottles because, as Hattersley said, exposure to light can spoil beer.

According to President and CEO of the Beer Institute, the tariff is equal to a $347.7 million tax on the industry and could lead to a loss of 20,291 jobs.

"It's going to be something that's going to put jobs at risk and would be against the U.S. consumer," said Carlos Brito, CEO of Anheuser Busch Inbev NV, which makes Budweiser, Corona and Stella Artois.

According to U.S. Department of the Interior, in 2017, the United States imported 52 percent of the aluminium it used.