US beer and canning industry continues to worry over price and premium hike from aluminium tariffs

Local breweries in the US that rely heavily on aluminium cans are starting to feel the pinch of import tariffs on aluminium products imported from Canada. Winnipeg is home to over 20 different local beer breweries that now have no other choice than to pay the tariff in order to continue producing beer.

“Everything is expensive enough as it is – why are we adding more expenses to everything?” said Tyler Birch, co-owner of Barn Hammer Brewing.  Birch started a beer canning company in the beginning of 2018, Mammoth Mobile Canning, which cans beer for five local breweries in Winnipeg including his own.

In his last shipment of aluminium beer cans, 160,000 cans costed him an average of 20 cents per can. With the tariffs and mark-ups from retailers, he is expecting a 20% increase, adding over $6,000 to the total cost.

“The unfortunate thing is it won’t necessarily affect us it’s just going to affect the customer in the end because that’s just how it always works,” Birch said.

Birch isn’t alone in his frustration with the tariff.

“This is an extra 10% that we’re paying for no reason, over politics, that’s really what this is about,” said Orest Horechko, general manager of Fort Garry Brewing. Fort Garry Brewing is among the oldest of beer breweries in the city. After the tariffs, Horechko said he had to pay an extra $2,000 to $3,000 per shipment of cans.

Enterprise and Trade Minister Blaine Pedersen echoed the same concerns regarding the tariff.

“We are of course very disappointed that the US Administration has applied tariffs to Canadian steel and aluminium. This is a step in the wrong direction,” Pedersen wrote.

Jim McGreevy, CEO for the Beer Institute said the tariffs amount to a yearly $347 million tax on the U.S. beer industry. The price hikes caused by tariffs are significant in light of the 36 billion aluminium cans and aluminium bottles U.S. brewers purchased in 2017.

“Ninety per cent of the aluminium we use is imported and 45 per cent of it comes from Canada,” McGreevy said.

Anheuser-Busch, which operates 21 breweries in 15 states, issued a statement in March when tariffs were proposed.

“Because beer is increasingly packaged in aluminium cans, the proposed 10 per cent tariff on aluminium will likely cost U.S. brewers millions of dollars, making it more difficult to grow and further invest in our U.S. operations,” the company said.

Miller Coors expressed a similar sentiment on price rise. Petaluma-based Lagunitas Brewing Co., which is working to open a brewery in Azusa, is already feeling the impacts of the tariffs.

The industry is suffering because of the increase in Midwest Transaction Premium, which is basically the shipping and handling fee to cover the logistical costs of moving metal into and throughout North America. But McGreevy said it has become a tool to speculate and artificially inflate the price paid for aluminium by businesses and consumers. The Midwest Transaction Premium increased 135 per cent between Jan. 1 and July 9 of 2018.