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Vancouver Sun
07-07-2025
- Business
- Vancouver Sun
Nearly tapped out: Trump's tariffs and trade winds threaten America's craft brewers
WASHINGTON, D.C. — Patrons huddle around the 30-foot-long wooden bar at Spiteful Brewing on Chicago's Northside, enjoying drinks, televised sports, and games ranging from darts to Dungeons & Dragons. 'It's a corner tavern without the booze,' says co-founder Jason Klein, noting they only serve beer they brew on-site, not liquor. What customers don't see is the storeroom, where Klein is engaged in another game: playing Tetris with supplies. U.S. President Donald Trump's aluminum tariffs have forced U.S. breweries to consider stockpiling cans as a hedge against rising costs, but for small brewers like Klein, space is limited. Start your day with a roundup of B.C.-focused news and opinion. By signing up you consent to receive the above newsletter from Postmedia Network Inc. A welcome email is on its way. If you don't see it, please check your junk folder. The next issue of Sunrise will soon be in your inbox. Please try again Interested in more newsletters? Browse here. 'It's like a puzzle back there for us. We've had to sacrifice on things like grain so we could hook up on cans,' he says. But Klein is facing more than just logistical challenges. Trump imposed 25 per cent tariffs on steel and aluminum in February, citing the need to promote domestic manufacturing and protect national security. He then doubled them to 50 per cent in June, and small brewers are feeling the squeeze. Trade talks are underway, with Canada looking for deals to reduce or avoid Trump's tariffs. Both sides aim to conclude a deal by July 21. If no deal is reached, the tariffs will remain. Meanwhile, higher costs threaten the thin margins and production capacity of smaller U.S. brewers, while trade tensions are limiting export opportunities for the larger ones, particularly in their biggest market, Canada. American craft brewing took off in the 2010s but has since faced challenges, including oversaturation, COVID, and inflation. 'Everything's gone up,' Klein says. 'Grain has gone up. Hops have gone up. Storage has gone up.' With input prices rising, brewers feel pressure to raise prices but worry about going too far. 'At some point, you're not going to pay $14, $15, $16 for a six pack,' Klein says, noting that sales have already slipped. The whole industry is grappling with this trend. U.S. craft beer production peaked in 2019 and has since declined, according to the Brewers Association. The U.S. craft brewing industry saw a 3.9 per cent drop in barrel production between 2023 and 2024 and a slight decline in its overall U.S. beer market share, dropping to 13.3 per cent. Its retail value grew by 3 per cent to $28.9 billion, but that was largely due to price hikes and strong taproom sales. Now, the industry is facing even higher production costs related to the price of aluminum cans. Aluminum cans are the go-to for US breweries because they are light, easy to ship, and more environmentally friendly, as aluminum is recyclable. As of January, cans accounted for 75 per cent of the craft beer market share, according to Beer Insights, so there was plenty of panic when the tariffs were introduced. Much of the aluminum used for canning in the U.S. comes from domestically recycled products, while just 30 per cent is sourced from raw aluminum, largely from Canada. It's only the raw imports that are directly impacted by tariffs, which means the feared price spikes have been minimal, thus far. But the price of aluminum generally is based on the London Metal Exchange (LME) and the Midwest Premium indices, and while the LME hasn't changed much this year, the Midwest Premium has soared, hitting a record 60 cents per pound in early June — a whopping 161 per cent rise since January. Distributors peg their rates to these indices quarterly. For distributors like Core Cans, a California-based, family-run company specializing in the supply of aluminum cans and other packaging, this has meant only having to raise prices by 3 per cent thus far, says co-founder Kirk Anderson. For Craft Beverage Warehouse, a Midwest distributor, it has been closer to 4 per cent, according to co-founder Kyle Stephens. But the tariffs will continue to put upward pressure on pricing, they warn, and the greater the market uncertainty and the higher the indices go, the more big suppliers and companies buy up greater quantities of aluminum to shore up their inventory. 'That's what impacts us the most,' says Stephens, noting that the reduced supply drives up the price. 'People are out there hedging, buying a ton of aluminum and driving that price up.' By the third and fourth quarters, if the uncertainty continues, Sophie Thong, director of account management for Can-One USA, a manufacturer of aluminum cans in Nashua, NH, says craft brewers should expect prices to rise further. 'In Q3, it will be higher,' she says. Smaller brewers say they have little choice when it comes to suppliers. Most major U.S. suppliers have raised minimum order demands so high that smaller players often rely on distributors or Canadian suppliers to get the smaller orders they can manage. Klein, at Spiteful Brewing, noted that the Trump administration wants the industry to source their cans domestically but that he has to work with his Canadian supplier because his former U.S. distributor raised its minimal order from a single truckload, with 200,000 cans, to five truckloads – a whopping 1 million cans he doesn't have enough room to store. Also, for many brewers, buying two or more times the normal amount is about more than just the space. 'It has a negative effect on cash flow, too,' Klein adds. Faced with these challenges, many in the industry are finding creative ways around the pinch. For distributors and suppliers, this means working with clients to keep costs at a minimum. Craft Beverage Warehouse, for example, has adopted shared shipping, which involves reaching out to breweries by region to see if they want to be part of a group order to reduce shipping costs. For breweries, some are storing as much as they can, leaning on taproom sales, and diversifying their products. 'If their beer volume is going down, maybe they're making a hop water or, if a state allows it, they might be making a hemp-derived THC product,' Stephens says. While U.S. breweries do their best to adapt at home, the international market is presenting a new hurdle. Canada is the biggest foreign market for American craft brewers, making up 38 per cent of U.S. craft beer exports as of early 2025. But now, amid Trump's trade war, they're dealing with rising input costs as well as retaliatory bans on the sale of U.S. alcohol in major provinces, including Ontario, Quebec, British Columbia, Nova Scotia, and others. Last month, Alberta lifted its three-month ban on U.S. alcohol sales, but it remains in place elsewhere, and Ontario and Nova Scotia recently announced they would not order liquor stores to restock U.S. products. Ontario Premier Doug Ford has been vocal about the impact. 'Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirits and seltzers. Not anymore,' he said. In 2024, the Liquor Control Board of Ontario reported more than $6.2 million worth of sales of beer from New England alone. While most small craft brewers don't export their products, larger ones do, and they stand to lose tens of millions of dollars in lost sales in 2025 alone as a result of the Canadian sales ban. This is another trade irritant irking the U.S., according to US Ambassador Pete Hoekstra. Like he did with Canada's now-dead Digital Services Tax, Trump may soon target these Canadian sales bans for leverage in the ongoing trade talks. Craft brewing was a tough business before the tariffs. Last year, for the first time in two decades, more U.S. craft breweries closed than opened. Now, with packaging costs rising and trade uncertainty mounting, it's enough to drive some brewers to … well, drink, and hope for policy shifts. Klein says policymakers should understand the demands Trump's tariffs are putting on smaller businesses. 'I think the policymakers need to understand that the only thing they're doing is increasing costs for small businesses,' he says, noting how they're punishing him for buying aluminum cans, which he can't source in America. Many American craft brewers notably do use U.S.-based distributors and suppliers, and Can One-USA, for example, set up shop just over a year ago to meet the needs of these smaller players, offering smaller minimum orders and warehousing options. But brewers with domestic supply chains are still facing higher prices, thanks to the market uncertainty. If trade tensions escalate, Klein warns that many small breweries may not make it. 'If the trade war escalated such that you couldn't buy cans cost-effectively from Canada or from somewhere else, and the American companies didn't lower their prices or lower their minimum order quantities, I think that would absolutely affect what we could do in the future.' As U.S. craft brewers grapple with soaring aluminum costs and squeezed margins, the retaliatory Canadian sales bans on American beer and liquor add a painful blow, cutting off their biggest export market and threatening millions in sales. Amid the trade tensions, many American breweries face an uncertain future where rising costs and shrinking access to shelf space have them wondering how long they'll be around to pull their next pint. National Post Our website is the place for the latest breaking news, exclusive scoops, longreads and provocative commentary. Please bookmark and sign up for our politics newsletter, First Reading, here .
Calgary Herald
07-07-2025
- Business
- Calgary Herald
Nearly tapped out: Trump's tariffs and trade winds threaten America's craft brewers
WASHINGTON, D.C. — Patrons huddle around the 30-foot-long wooden bar at Spiteful Brewing on Chicago's Northside, enjoying drinks, televised sports, and games ranging from darts to Dungeons & Dragons. Article content 'It's a corner tavern without the booze,' says co-founder Jason Klein, noting they only serve beer they brew on-site, not liquor. What customers don't see is the storeroom, where Klein is engaged in another game: playing Tetris with supplies. Article content Article content U.S. President Donald Trump's aluminum tariffs have forced U.S. breweries to consider stockpiling cans as a hedge against rising costs, but for small brewers like Klein, space is limited. Article content Article content 'It's like a puzzle back there for us. We've had to sacrifice on things like grain so we could hook up on cans,' he says. But Klein is facing more than just logistical challenges. Article content Trump imposed 25 per cent tariffs on steel and aluminum in February, citing the need to promote domestic manufacturing and protect national security. He then doubled them to 50 per cent in June, and small brewers are feeling the squeeze. Article content Trade talks are underway, with Canada looking for deals to reduce or avoid Trump's tariffs. Both sides aim to conclude a deal by July 21. If no deal is reached, the tariffs will remain. Meanwhile, higher costs threaten the thin margins and production capacity of smaller U.S. brewers, while trade tensions are limiting export opportunities for the larger ones, particularly in their biggest market, Canada. Article content Article content An industry on the edge Article content American craft brewing took off in the 2010s but has since faced challenges, including oversaturation, COVID, and inflation. 'Everything's gone up,' Klein says. 'Grain has gone up. Hops have gone up. Storage has gone up.' With input prices rising, brewers feel pressure to raise prices but worry about going too far. Article content 'At some point, you're not going to pay $14, $15, $16 for a six pack,' Klein says, noting that sales have already slipped. Article content The whole industry is grappling with this trend. U.S. craft beer production peaked in 2019 and has since declined, according to the Brewers Association. The U.S. craft brewing industry saw a 3.9 per cent drop in barrel production between 2023 and 2024 and a slight decline in its overall U.S. beer market share, dropping to 13.3 per cent. Its retail value grew by 3 per cent to $28.9 billion, but that was largely due to price hikes and strong taproom sales. Article content Now, the industry is facing even higher production costs related to the price of aluminum cans. Article content Aluminum cans are the go-to for US breweries because they are light, easy to ship, and more environmentally friendly, as aluminum is recyclable. As of January, cans accounted for 75 per cent of the craft beer market share, according to Beer Insights, so there was plenty of panic when the tariffs were introduced. Article content Much of the aluminum used for canning in the U.S. comes from domestically recycled products, while just 30 per cent is sourced from raw aluminum, largely from Canada. It's only the raw imports that are directly impacted by tariffs, which means the feared price spikes have been minimal, thus far. Article content But the price of aluminum generally is based on the London Metal Exchange (LME) and the Midwest Premium indices, and while the LME hasn't changed much this year, the Midwest Premium has soared, hitting a record 60 cents per pound in early June — a whopping 161 per cent rise since January. Distributors peg their rates to these indices quarterly. Article content Article content For distributors like Core Cans, a California-based, family-run company specializing in the supply of aluminum cans and other packaging, this has meant only having to raise prices by 3 per cent thus far, says co-founder Kirk Anderson. For Craft Beverage Warehouse, a Midwest distributor, it has been closer to 4 per cent, according to co-founder Kyle Stephens. Article content But the tariffs will continue to put upward pressure on pricing, they warn, and the greater the market uncertainty and the higher the indices go, the more big suppliers and companies buy up greater quantities of aluminum to shore up their inventory. 'That's what impacts us the most,' says Stephens, noting that the reduced supply drives up the price. 'People are out there hedging, buying a ton of aluminum and driving that price up.' Article content By the third and fourth quarters, if the uncertainty continues, Sophie Thong, director of account management for Can-One USA, a manufacturer of aluminum cans in Nashua, NH, says craft brewers should expect prices to rise further. 'In Q3, it will be higher,' she says. Article content Article content Smaller brewers say they have little choice when it comes to suppliers. Most major U.S. suppliers have raised minimum order demands so high that smaller players often rely on distributors or Canadian suppliers to get the smaller orders they can manage. Article content Klein, at Spiteful Brewing, noted that the Trump administration wants the industry to source their cans domestically but that he has to work with his Canadian supplier because his former U.S. distributor raised its minimal order from a single truckload, with 200,000 cans, to five truckloads – a whopping 1 million cans he doesn't have enough room to store. Article content Also, for many brewers, buying two or more times the normal amount is about more than just the space. 'It has a negative effect on cash flow, too,' Klein adds. Article content Faced with these challenges, many in the industry are finding creative ways around the pinch. Article content For distributors and suppliers, this means working with clients to keep costs at a minimum. Craft Beverage Warehouse, for example, has adopted shared shipping, which involves reaching out to breweries by region to see if they want to be part of a group order to reduce shipping costs. Article content For breweries, some are storing as much as they can, leaning on taproom sales, and diversifying their products. 'If their beer volume is going down, maybe they're making a hop water or, if a state allows it, they might be making a hemp-derived THC product,' Stephens says. Article content While U.S. breweries do their best to adapt at home, the international market is presenting a new hurdle. Article content Canada is the biggest foreign market for American craft brewers, making up 38 per cent of U.S. craft beer exports as of early 2025. But now, amid Trump's trade war, they're dealing with rising input costs as well as retaliatory bans on the sale of U.S. alcohol in major provinces, including Ontario, Quebec, British Columbia, Nova Scotia, and others. Article content Article content Last month, Alberta lifted its three-month ban on U.S. alcohol sales, but it remains in place elsewhere, and Ontario and Nova Scotia recently announced they would not order liquor stores to restock U.S. products. Ontario Premier Doug Ford has been vocal about the impact. Article content 'Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirits and seltzers. Not anymore,' he said. In 2024, the Liquor Control Board of Ontario reported more than $6.2 million worth of sales of beer from New England alone. Article content While most small craft brewers don't export their products, larger ones do, and they stand to lose tens of millions of dollars in lost sales in 2025 alone as a result of the Canadian sales ban. This is another trade irritant irking the U.S., according to US Ambassador Pete Hoekstra. Article content Like he did with Canada's now-dead Digital Services Tax, Trump may soon target these Canadian sales bans for leverage in the ongoing trade talks. Article content Article content The final pint? Article content Craft brewing was a tough business before the tariffs. Last year, for the first time in two decades, more U.S. craft breweries closed than opened. Now, with packaging costs rising and trade uncertainty mounting, it's enough to drive some brewers to … well, drink, and hope for policy shifts. Article content Klein says policymakers should understand the demands Trump's tariffs are putting on smaller businesses. Article content 'I think the policymakers need to understand that the only thing they're doing is increasing costs for small businesses,' he says, noting how they're punishing him for buying aluminum cans, which he can't source in America. Article content Many American craft brewers notably do use U.S.-based distributors and suppliers, and Can One-USA, for example, set up shop just over a year ago to meet the needs of these smaller players, offering smaller minimum orders and warehousing options. But brewers with domestic supply chains are still facing higher prices, thanks to the market uncertainty.
Edmonton Journal
07-07-2025
- Business
- Edmonton Journal
Nearly tapped out: Trump's tariffs and trade winds threaten America's craft brewers
WASHINGTON, D.C. — Patrons huddle around the 30-foot-long wooden bar at Spiteful Brewing on Chicago's Northside, enjoying drinks, televised sports, and games ranging from darts to Dungeons & Dragons. Article content 'It's a corner tavern without the booze,' says co-founder Jason Klein, noting they only serve beer they brew on-site, not liquor. What customers don't see is the storeroom, where Klein is engaged in another game: playing Tetris with supplies. Article content Article content U.S. President Donald Trump's aluminum tariffs have forced U.S. breweries to consider stockpiling cans as a hedge against rising costs, but for small brewers like Klein, space is limited. Article content Article content 'It's like a puzzle back there for us. We've had to sacrifice on things like grain so we could hook up on cans,' he says. But Klein is facing more than just logistical challenges. Article content Trump imposed 25 per cent tariffs on steel and aluminum in February, citing the need to promote domestic manufacturing and protect national security. He then doubled them to 50 per cent in June, and small brewers are feeling the squeeze. Trade talks are underway, with Canada looking for deals to reduce or avoid Trump's tariffs. Both sides aim to conclude a deal by July 21. If no deal is reached, the tariffs will remain. Meanwhile, higher costs threaten the thin margins and production capacity of smaller U.S. brewers, while trade tensions are limiting export opportunities for the larger ones, particularly in their biggest market, Canada. Article content Article content An industry on the edge Article content American craft brewing took off in the 2010s but has since faced challenges, including oversaturation, COVID, and inflation. 'Everything's gone up,' Klein says. 'Grain has gone up. Hops have gone up. Storage has gone up.' With input prices rising, brewers feel pressure to raise prices but worry about going too far. Article content 'At some point, you're not going to pay $14, $15, $16 for a six pack,' Klein says, noting that sales have already slipped. Article content The whole industry is grappling with this trend. U.S. craft beer production peaked in 2019 and has since declined, according to the Brewers Association. The U.S. craft brewing industry saw a 3.9 per cent drop in barrel production between 2023 and 2024 and a slight decline in its overall U.S. beer market share, dropping to 13.3 per cent. Its retail value grew by 3 per cent to $28.9 billion, but that was largely due to price hikes and strong taproom sales. Article content Now, the industry is facing even higher production costs related to the price of aluminum cans. Article content Aluminum cans are the go-to for US breweries because they are light, easy to ship, and more environmentally friendly, as aluminum is recyclable. As of January, cans accounted for 75 per cent of the craft beer market share, according to Beer Insights, so there was plenty of panic when the tariffs were introduced. Article content Much of the aluminum used for canning in the U.S. comes from domestically recycled products, while just 30 per cent is sourced from raw aluminum, largely from Canada. It's only the raw imports that are directly impacted by tariffs, which means the feared price spikes have been minimal, thus far. Article content But the price of aluminum generally is based on the London Metal Exchange (LME) and the Midwest Premium indices, and while the LME hasn't changed much this year, the Midwest Premium has soared, hitting a record 60 cents per pound in early June — a whopping 161 per cent rise since January. Distributors peg their rates to these indices quarterly. Article content Article content For distributors like Core Cans, a California-based, family-run company specializing in the supply of aluminum cans and other packaging, this has meant only having to raise prices by 3 per cent thus far, says co-founder Kirk Anderson. For Craft Beverage Warehouse, a Midwest distributor, it has been closer to 4 per cent, according to co-founder Kyle Stephens. Article content But the tariffs will continue to put upward pressure on pricing, they warn, and the greater the market uncertainty and the higher the indices go, the more big suppliers and companies buy up greater quantities of aluminum to shore up their inventory. 'That's what impacts us the most,' says Stephens, noting that the reduced supply drives up the price. 'People are out there hedging, buying a ton of aluminum and driving that price up.' Article content By the third and fourth quarters, if the uncertainty continues, Sophie Thong, director of account management for Can-One USA, a manufacturer of aluminum cans in Nashua, NH, says craft brewers should expect prices to rise further. 'In Q3, it will be higher,' she says. Article content Article content Smaller brewers say they have little choice when it comes to suppliers. Most major U.S. suppliers have raised minimum order demands so high that smaller players often rely on distributors or Canadian suppliers to get the smaller orders they can manage. Article content Klein, at Spiteful Brewing, noted that the Trump administration wants the industry to source their cans domestically but that he has to work with his Canadian supplier because his former U.S. distributor raised its minimal order from a single truckload, with 200,000 cans, to five truckloads – a whopping 1 million cans he doesn't have enough room to store. Article content Also, for many brewers, buying two or more times the normal amount is about more than just the space. 'It has a negative effect on cash flow, too,' Klein adds. Article content Faced with these challenges, many in the industry are finding creative ways around the pinch. Article content For distributors and suppliers, this means working with clients to keep costs at a minimum. Craft Beverage Warehouse, for example, has adopted shared shipping, which involves reaching out to breweries by region to see if they want to be part of a group order to reduce shipping costs. Article content For breweries, some are storing as much as they can, leaning on taproom sales, and diversifying their products. 'If their beer volume is going down, maybe they're making a hop water or, if a state allows it, they might be making a hemp-derived THC product,' Stephens says. Article content The Canadian crackdown Article content While U.S. breweries do their best to adapt at home, the international market is presenting a new hurdle. Article content Canada is the biggest foreign market for American craft brewers, making up 38 per cent of U.S. craft beer exports as of early 2025. But now, amid Trump's trade war, they're dealing with rising input costs as well as retaliatory bans on the sale of U.S. alcohol in major provinces, including Ontario, Quebec, British Columbia, Nova Scotia, and others. Article content Article content Last month, Alberta lifted its three-month ban on U.S. alcohol sales, but it remains in place elsewhere, and Ontario and Nova Scotia recently announced they would not order liquor stores to restock U.S. products. Ontario Premier Doug Ford has been vocal about the impact. Article content 'Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirits and seltzers. Not anymore,' he said. In 2024, the Liquor Control Board of Ontario reported more than $6.2 million worth of sales of beer from New England alone. Article content While most small craft brewers don't export their products, larger ones do, and they stand to lose tens of millions of dollars in lost sales in 2025 alone as a result of the Canadian sales ban. This is another trade irritant irking the U.S., according to US Ambassador Pete Hoekstra. Article content Like he did with Canada's now-dead Digital Services Tax, Trump may soon target these Canadian sales bans for leverage in the ongoing trade talks. Article content Article content The final pint? Article content Craft brewing was a tough business before the tariffs. Last year, for the first time in two decades, more U.S. craft breweries closed than opened. Now, with packaging costs rising and trade uncertainty mounting, it's enough to drive some brewers to … well, drink, and hope for policy shifts. Article content Klein says policymakers should understand the demands Trump's tariffs are putting on smaller businesses. Article content 'I think the policymakers need to understand that the only thing they're doing is increasing costs for small businesses,' he says, noting how they're punishing him for buying aluminum cans, which he can't source in America. Article content Many American craft brewers notably do use U.S.-based distributors and suppliers, and Can One-USA, for example, set up shop just over a year ago to meet the needs of these smaller players, offering smaller minimum orders and warehousing options. But brewers with domestic supply chains are still facing higher prices, thanks to the market uncertainty.
National Post
07-07-2025
- Business
- National Post
Nearly tapped out: Trump's tariffs and trade winds threaten America's craft brewers
WASHINGTON, D.C. — Patrons huddle around the 30-foot-long wooden bar at Spiteful Brewing on Chicago's Northside, enjoying drinks, televised sports, and games ranging from darts to Dungeons & Dragons. Article content 'It's a corner tavern without the booze,' says co-founder Jason Klein, noting they only serve beer they brew on-site, not liquor. What customers don't see is the storeroom, where Klein is engaged in another game: playing Tetris with supplies. Article content U.S. President Donald Trump's aluminum tariffs have forced U.S. breweries to consider stockpiling cans as a hedge against rising costs, but for small brewers like Klein, space is limited. Article content Article content 'It's like a puzzle back there for us. We've had to sacrifice on things like grain so we could hook up on cans,' he says. But Klein is facing more than just logistical challenges. Article content Trump imposed 25 per cent tariffs on steel and aluminum in February, citing the need to promote domestic manufacturing and protect national security. He then doubled them to 50 per cent in June, and small brewers are feeling the squeeze. Trade talks are underway, with Canada looking for deals to reduce or avoid Trump's tariffs. Both sides aim to conclude a deal by July 21. If no deal is reached, the tariffs will remain. Meanwhile, higher costs threaten the thin margins and production capacity of smaller U.S. brewers, while trade tensions are limiting export opportunities for the larger ones, particularly in their biggest market, Canada. Article content Article content An industry on the edge Article content American craft brewing took off in the 2010s but has since faced challenges, including oversaturation, COVID, and inflation. 'Everything's gone up,' Klein says. 'Grain has gone up. Hops have gone up. Storage has gone up.' With input prices rising, brewers feel pressure to raise prices but worry about going too far. Article content 'At some point, you're not going to pay $14, $15, $16 for a six pack,' Klein says, noting that sales have already slipped. Article content The whole industry is grappling with this trend. U.S. craft beer production peaked in 2019 and has since declined, according to the Brewers Association. The U.S. craft brewing industry saw a 3.9 per cent drop in barrel production between 2023 and 2024 and a slight decline in its overall U.S. beer market share, dropping to 13.3 per cent. Its retail value grew by 3 per cent to $28.9 billion, but that was largely due to price hikes and strong taproom sales. Article content Aluminum cans are the go-to for US breweries because they are light, easy to ship, and more environmentally friendly, as aluminum is recyclable. As of January, cans accounted for 75 per cent of the craft beer market share, according to Beer Insights, so there was plenty of panic when the tariffs were introduced. Article content Much of the aluminum used for canning in the U.S. comes from domestically recycled products, while just 30 per cent is sourced from raw aluminum, largely from Canada. It's only the raw imports that are directly impacted by tariffs, which means the feared price spikes have been minimal, thus far. Article content But the price of aluminum generally is based on the London Metal Exchange (LME) and the Midwest Premium indices, and while the LME hasn't changed much this year, the Midwest Premium has soared, hitting a record 60 cents per pound in early June — a whopping 161 per cent rise since January. Distributors peg their rates to these indices quarterly. Article content For distributors like Core Cans, a California-based, family-run company specializing in the supply of aluminum cans and other packaging, this has meant only having to raise prices by 3 per cent thus far, says co-founder Kirk Anderson. For Craft Beverage Warehouse, a Midwest distributor, it has been closer to 4 per cent, according to co-founder Kyle Stephens. Article content Article content But the tariffs will continue to put upward pressure on pricing, they warn, and the greater the market uncertainty and the higher the indices go, the more big suppliers and companies buy up greater quantities of aluminum to shore up their inventory. 'That's what impacts us the most,' says Stephens, noting that the reduced supply drives up the price. 'People are out there hedging, buying a ton of aluminum and driving that price up.' Article content By the third and fourth quarters, if the uncertainty continues, Sophie Thong, director of account management for Can-One USA, a manufacturer of aluminum cans in Nashua, NH, says craft brewers should expect prices to rise further. 'In Q3, it will be higher,' she says. Article content Smaller brewers say they have little choice when it comes to suppliers. Most major U.S. suppliers have raised minimum order demands so high that smaller players often rely on distributors or Canadian suppliers to get the smaller orders they can manage. Article content Klein, at Spiteful Brewing, noted that the Trump administration wants the industry to source their cans domestically but that he has to work with his Canadian supplier because his former U.S. distributor raised its minimal order from a single truckload, with 200,000 cans, to five truckloads – a whopping 1 million cans he doesn't have enough room to store. Article content Also, for many brewers, buying two or more times the normal amount is about more than just the space. 'It has a negative effect on cash flow, too,' Klein adds. Article content Faced with these challenges, many in the industry are finding creative ways around the pinch. Article content For distributors and suppliers, this means working with clients to keep costs at a minimum. Craft Beverage Warehouse, for example, has adopted shared shipping, which involves reaching out to breweries by region to see if they want to be part of a group order to reduce shipping costs. Article content For breweries, some are storing as much as they can, leaning on taproom sales, and diversifying their products. 'If their beer volume is going down, maybe they're making a hop water or, if a state allows it, they might be making a hemp-derived THC product,' Stephens says. Article content Canada is the biggest foreign market for American craft brewers, making up 38 per cent of U.S. craft beer exports as of early 2025. But now, amid Trump's trade war, they're dealing with rising input costs as well as retaliatory bans on the sale of U.S. alcohol in major provinces, including Ontario, Quebec, British Columbia, Nova Scotia, and others. Article content Last month, Alberta lifted its three-month ban on U.S. alcohol sales, but it remains in place elsewhere, and Ontario and Nova Scotia recently announced they would not order liquor stores to restock U.S. products. Ontario Premier Doug Ford has been vocal about the impact. Article content 'Every year, LCBO sells nearly $1 billion worth of American wine, beer, spirits and seltzers. Not anymore,' he said. In 2024, the Liquor Control Board of Ontario reported more than $6.2 million worth of sales of beer from New England alone. Article content While most small craft brewers don't export their products, larger ones do, and they stand to lose tens of millions of dollars in lost sales in 2025 alone as a result of the Canadian sales ban. This is another trade irritant irking the U.S., according to US Ambassador Pete Hoekstra. Article content Like he did with Canada's now-dead Digital Services Tax, Trump may soon target these Canadian sales bans for leverage in the ongoing trade talks. Article content The final pint? Article content Craft brewing was a tough business before the tariffs. Last year, for the first time in two decades, more U.S. craft breweries closed than opened. Now, with packaging costs rising and trade uncertainty mounting, it's enough to drive some brewers to … well, drink, and hope for policy shifts. Article content Klein says policymakers should understand the demands Trump's tariffs are putting on smaller businesses. Article content 'I think the policymakers need to understand that the only thing they're doing is increasing costs for small businesses,' he says, noting how they're punishing him for buying aluminum cans, which he can't source in America. Article content Many American craft brewers notably do use U.S.-based distributors and suppliers, and Can One-USA, for example, set up shop just over a year ago to meet the needs of these smaller players, offering smaller minimum orders and warehousing options. But brewers with domestic supply chains are still facing higher prices, thanks to the market uncertainty. Article content Article content If trade tensions escalate, Klein warns that many small breweries may not make it. Article content 'If the trade war escalated such that you couldn't buy cans cost-effectively from Canada or from somewhere else, and the American companies didn't lower their prices or lower their minimum order quantities, I think that would absolutely affect what we could do in the future.' Article content As U.S. craft brewers grapple with soaring aluminum costs and squeezed margins, the retaliatory Canadian sales bans on American beer and liquor add a painful blow, cutting off their biggest export market and threatening millions in sales. Article content
Yahoo
26-02-2025
- Business
- Yahoo
Craft brewers expect Trump's aluminum tariffs to raise the price of a six-pack
CHICAGO — When two suburban childhood hockey pals launched Spiteful Brewing in 2012 as a post-collegiate enterprise, the business overcame long odds to grow from a stovetop startup into an award-winning craft brewery and tap room on Chicago's North Side. But after successfully navigating everything from the pandemic to a flat craft brewing market that has forced several Chicago competitors to close, Spiteful faces an imminent new challenge: tariffs. President Donald Trump's 25% tariffs on imported aluminum, set to go into place March 12, will raise the cost to produce every whimsically adorned can of Spiteful beer, from its Working for the Weekend Double IPA to its Fat Badger Ale. For Spiteful and other Chicago craft brewers, the results may be inevitable: libation inflation. 'Imagine something that you're buying every day goes up 25% overnight,' said Jason Klein, 42, co-founder of Spiteful Brewing. 'We would have no choice but to raise prices — there's no way we can absorb that.' A niche segment of the beer industry, craft brewing has become big business in Illinois, with hundreds of mostly small manufacturers generating $3.1 billion in economic impact in the state in 2023, according to the Brewers Association, a Colorado-based trade group. But after years of explosive growth, craft brewers have struggled in the post-pandemic landscape amid a glut of competitors, with a number of high-profile brewery and taproom closings in the Chicago area. Tariffs may be another blow. Beyond malt, hops, yeast and water, aluminum is a key ingredient in the manufacturing process, used to make the cans for most of the craft beer sold at retail. The 25% tariffs on imported steel and aluminum, which Trump announced Feb. 10, are projected to significantly affect a number of industries, including automobile manufacturing, construction, electronics and packaging. The U.S. imports roughly half the aluminum used in manufacturing, with Canada by far the largest supplier, according to data published this month by the Council on Foreign Relations. For the craft beer industry, which depends heavily on aluminum cans from Canada, the 25% increase will hit hard, according to Klein. Spiteful Brewing annually sells nearly a half-million cans of beer, which it distributes to retailers throughout the Chicago area. The three largest U.S. can manufacturers are Ball Corp., Crown and Ardagh, according to data from IBISWorld. Some craft brewers buy their cans through suppliers, who deal in large volumes and act as middlemen with the manufacturers. Spiteful buys its cans directly from Ball, a Colorado-based company and the largest U.S. manufacturer. All of the cans delivered to Spiteful are sourced from Canada, Klein said. 'For us, in packaging, it's probably the most expensive part of what's in a six-pack,' he said. A typical Spiteful six-pack sells for $11.99 on store shelves, Klein said. He expects the retail price to go up at least $1 per six-pack after the tariff hits. Started as a homebrewing hobby in the 1980s, the commercial craft beer industry has grown exponentially during the new millennium, expanding from 1,566 breweries to nearly 10,000 as of 2023, according to the Brewers Association. California, Pennsylvania and Texas are the three biggest craft brewing states. Illinois ranks 13th in the nation, with 305 craft breweries as of 2023, up from 68 in 2012 — the year Spiteful Brewing launched. Nationally, craft brewers represented 13.3% of domestic beer production in 2023, up from just 5% in 2010, according to the Brewers Association. Sales of craft beer accounted for nearly a quarter of the $117 billion U.S. beer market — including imports and other domestic products — in large part due to higher price points. But craft beer sales have been stagnant since the pandemic hit, with volume down 10% in 2020, up 8% in 2021, flat in 2022 and down 1% in 2023, according to Bart Watson, president and CEO of the Brewers Association. The final numbers are not yet in, but Watson expects craft beer sales to have declined in the 'low single-digits' in 2024. Not surprisingly, craft brewery closings have rivaled openings in the post-pandemic landscape. In 2023, 493 craft breweries opened and 405 closed, including taprooms, brewpubs and microbreweries, according to the Brewers Association. The Chicago market has seen dozens of prominent casualties in recent years, including Metropolitan Brewing, one of the city's oldest craft breweries, which filed for bankruptcy and closed in 2023. In December, Revolution Brewing, the largest craft brewer in Chicago, closed its money-losing Logan Square brewpub while keeping its Avondale taproom and brewery open. Another pandemic-era phenomenon is the increased reliance on cans. Early 2025 sales data show aluminum cans account for 75% of packaged craft beer's volume and revenue, according to the Brewers Association. Spiteful buys plain aluminum cans and applies an array of colorful cartoon labels during the packaging process to market its portfolio. 'That really started for us during the pandemic when we were like 70% draft, and then it went away overnight,' Klein said. 'So we had to pivot, and we purchased the labeler because it allowed us to essentially can everything.' During his first term, Trump imposed 10% tariffs on imported aluminum in 2018 but provided exemptions for Canada and Mexico, while the Biden administration rolled back the tariffs on the European Union. This time around, the imminent threat of 25% tariffs on aluminum from Canada looms even larger for craft brewers. BevWrap, a seven-year-old labeling company in Elk Grove Village that provides cans to a number of Chicago-area craft brewers, hopes to sidestep the tariffs by using domestically sourced cans through its supplier, Chicago-based Berlin Packaging. But if BevWrap does get hit with the tariffs, it will have to pass along the price increases to the brewers. 'It is a daily conversation with customers and vendors,' said Ralph Drozt, BevWrap's founder. 'If there is a price increase, I've got to kind of reassess and look at the business and see how much of that we can absorb and how much has to be kind of passed on.' BevWrap prints labels and distributes 10 million cans a year, investing more than $1 million annually to acquire the aluminum containers and materials, Drozt said. Chicago-area craft brewery customers include Steep Ravine, Moor's, Old Irving, Mikerphone, Pipeworks, Miskatonic, Marz and Hop Butcher. The company also labels cans for makers of cannabis-infused drinks. Drozt, who hasn't had a price increase since launching the business in 2018, said he was able to bring down his costs this year by switching can manufacturers from Ardagh to Crown through his supplier. If the 25% tariffs bring his can costs back up, Drozt said, his customers will see a price bump that may be hard to swallow for some struggling craft brewers. One of those clients, Steep Ravine, a 10-year-old craft brewer formerly known as Ravinia Brewing, is busy building a new brand after agreeing to change its name in November to settle a trademark lawsuit with Ravinia Festival. The Highland Park-based craft brewer also just reopened its Logan Square outpost this month in partnership with Chicago-based Moor's Brewing, rebranding the taproom/sports bar as Diversey House. Kris Walker, co-founder of Steep Ravine, said thin margins will force craft brewers to raise prices to cover their costs associated with the 25% aluminum tariffs. 'Regardless of their true costs, I think smart operators are going to take the opportunity to raise the price in advance of their real cost hitting them,' said Walker, 49. 'I think everyone's going to see the prices go up.' Steep Ravine sells four-packs of 16-ounce cans, generally for $11.99 at retail, Walker said. With some craft brewers struggling financially, Walker said he expects major brewers like Molson Coors and Anheuser-Busch to hold the line on prices — despite the tariffs — putting the squeeze on smaller competitors. 'I would be playing the game right now to see if this is really the time that can break the craft beer industry,' Walker said. 'If they (the big companies) can keep things under $9.99, craft beer guys are either going to have to take more margin loss than they are in order to keep matching it, or they're going to raise the price. I do think there's a major risk to the craft industry as a whole.' Klein remains hopeful that Spiteful will navigate the tariffs successfully. At the same time, he questions the efficacy of the Trump tariffs — ostensibly meant to promote American manufacturing — and its real impact on small businesses and their customers. 'I don't know what it will ultimately accomplish, really, other than higher prices for everyone,' Klein said. 'Once they go up, they don't tend to come down.' Sign in to access your portfolio
