Upslope Brewing Co. faces difficulty over finding new supplier for its limited release brews

Upslope Brewing Co. had decided not to lay off any of its 73 employees as a result of the COVID-19-related shutdowns and limitations. When inside seating restrictions were imposed, the Boulder craft brewer did everything it could to make its patio appealing. The brewery's most recent problem is to locate a new supplier for the cans that house its IPAs, lagers, and limited-release brews. Starting March 1, Ball Corp., the world's largest beverage-can producer, will increase its minimum order fivefold.

“For us, it created quite a scramble. We went down the path of trying to figure out how to react and how to make our business sustainable,” said Matt Cutter, Upslope Brewing’s founder and president.

During the pandemic, demand for Ball, located in Westminster, and other aluminium-can makers skyrocketed, far outstripping supply. In an email, Ball spokesman Scott McCarty noted that supply-chain issues exacerbated by the pandemic, as well as inflation, had driven up costs for all commodities the business purchases. The Wall Street Journal reported at the end of January that aluminium prices had increased by 24% in the previous six months.

“We shared new ordering requirements in early November with our customers to be transparent about the ongoing supply/demand imbalance, and to explain changes to our ordering requirements designed to help Ball produce as many cans as possible for all of our customers,” added McCarty.

Golden is home to one of the company's production plants, as well as others in other states and countries. It is attempting to link craft brewers with wholesalers that purchase cans from various manufacturers, including Ball. One of the brokers has been approached by Upslope Brewing.

“The brokers, of course, have to take their cut. With the cuts they’ve added, that increases the price of our cans,” Cutter said.

Small, independent brewers are considering their choices in light of Ball's new stance. Ball will no longer keep pallets of cans for small brewers, so they're seeking for warehouse space as well. Ball had intended to implement the new minimum order requirement on January 1st. After hearing from companies, the Brewers Association, a national trade organisation, and Oregon Sen. Ron Wyden, co-chairman of the Senate Small Brewers Caucus, the corporation postponed the implementation date to March 1.

Small brewers contribute more than 400,000 employments nationwide, according to Wyden, and play a crucial role in "creating vibrant local economies," according to a December letter to Ball. He believes the legislation, as well as the short lead time for the change, would exacerbate the brewers' challenges as a result of the epidemic.

According to the Brewers Association, Colorado has more than 400 craft brewers, the fourth-highest amount in the country. A total of about 941,000 barrels of beer are produced each year.

“I have heard from a fair number of members who have been able to place additional orders since Ball announced the extension which has been a lifeline for many of these brewers,” said Bob Pease, president and CEO of the Brewers Association.

Brewers informed the trade organisation when Ball originally announced the plan that it would put them out of business.

“I think some of the panic has died down,” added Pease.

However, according to Pease, firms would face greater expenses and fewer packaging options, and will likely have to offer a narrower selection of beers, limiting customer choice.

“This is also going to absolutely result in price increases for the beer drinker. These business models are now going to be, at best, less profitable,” stated Pease.

Customers who do not have contracts with Ball are affected by the new policy. The adjustment took effect immediately for organisations that pay in advance, and it will take effect on March 1 for companies that do not have contracts but have credit terms with the company.

According to Pease, supplies to craft brewers with contracts have not been disrupted. If they don't, the minimum order will be increased from one truckload to five truckloads. A small brewer will need to purchase at least 1 million cans, up from around 200,000 cans previously. Each separate SKU, or stock keeping unit, for various-sized cans will be subject to the new minimum order requirement. Ball will keep cans purchased in 2021, but will no longer warehouse customers' inventories.

Preprinted or "decorated" cans were offered by Ball. Brewers may now have to purchase blank cans and put a shrink sleeve or a pressure-sensitive label on them, according to Pease. According to Pease, those approaches are more expensive and do not recycle as efficiently.

For small brewers, losing access to Ball's warehouse space is a major loss. When Upslope Brewing first opened its doors in 2008, it purchased cans from a Wyoming-based manufacturer. Ball approached Upslope about becoming a supplier in 2012, and the brewery switched.

Ball had pallets of cans on hand for Upslope and didn't charge them until the brewer took a load.

“They worked with us really well. It made a lot of sense to change over and reduce shipping costs,” said Cutter.

Upslope Brewing, on the other hand, cannot afford the increased minimum order demand.

“That’s over a million cans. We don’t have the cash to hold that much inventory and we don’t have the warehouse space to store that many cans,” commented Cutter. He stated that a truckload of cans costs around $25,000.

Because of the price hikes for everyone Ball announced in late 2021, the company's costs have already risen. Upslope's can costs have increased by 45 percent as a result of the rise and what it is paying the new supplier. As a result, Upslope's beer costs around $2 extra each six-pack. Another outcome, according to Cutter, will be more competitors willing to partner with small brewers.

“We have talked to other suppliers that are ramping up their production and giving more and better options to small craft brewers,” Cutter said.

Ball spokesperson McCarty said the business has committed $1 billion throughout the country in five new aluminium beverage packaging factories. But, as McCarty pointed out, it will take time for all of the plants to be fully operating, and Ball anticipates demand for aluminium containers to continue to outstrip supply.

The closing of pubs, restaurants, and tap rooms, according to Charlie Berger, co-founder of Denver Beer Co., helped fuel demand for aluminium cans.

“During the shutdowns and  lockdowns, our off-premise sales were great. When people couldn’t go to a bar or a restaurant to grab a draft beer, it didn’t stop them from buying a six-pack from the liquor store,” said Berger.

Berger expects the stockpile of printed cans at Denver Beer Co., which will celebrate its 11th anniversary in August, to endure for a long time. Before the new criteria took effect, companies were allowed to place more orders.

“We’ve spent a lot of time brainstorming on how to change our business model. The beauty of craft beer is how innovative we can be, how we can make do. I think long term, it’s still the craft beer business. We’re still in Colorado and we’re still having fun doing it,” Berger said.