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Trouble brewing as tariffs and can shortage hit N.S. beer industry

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WATCH: A can shortage has left some craft brewers in Nova Scotia scrambling during their busiest time of year. Alicia Draus reports – Aug 3, 2018

It takes a lot for a can of beer to make it to your fridge.

Only two plants in the United States make aluminum cans. From there, cans are shipped to a supplier to add the labels and are then distributed to brewers.

But now, trouble is brewing along the supply chain.

Jeremy White with Big Spruce Brewing in Cape Breton said a large purchase from his supplier in Ontario came with an extra cost.

“Because the blank aluminum cans they decorate for us were purchased from the United States, we were slapped with a 10 per cent tariff on top of the base price for the can.”

He said that works out to about five cents a can, and with a purchase of 100,000 cans, the costs add up.

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“Margins are very tight for us on that beer, another five cents off that margin is pretty substantial.”

WATCH: Canada hits back at U.S. steel and aluminum tariffs

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Canada hits back at U.S. steel and aluminum tariffs – May 31, 2018

Shaun O’Hearn with Nine Locks has not been hit with any tariffs yet and said there is still confusion about how the trade war will impact the industry.

“As far as talking to my suppliers, they really don’t know,” he said.

But tariffs are not the only concern. There are only two major can suppliers in North American: Crown Corp. and Ball.

“From what I can tell from my suppliers, Crown is doing some work on one of their plants, so right now their plant is shut down, which I think is why there’s such a shortage of cans,” O’Hearn said.

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That shortage is being felt across the industry. While most orders usually take four weeks to arrive, orders are currently taking about 11-12 weeks, or longer.

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“We’ve been lucky because we’ve had a large supply of cans in stock. We have a lot of storage space that’s close to here, and most of it is filled with cans.”

But not all breweries are so lucky. White said the extra wait time has already had an impact on his brewery. Last month, he had seven barrels of beer ready to go, but no cans.

“We were unable to put any of it into cans and move it out of the way for subsequent batches of beer, so we were at full stop mode for about 10 days here.”

READ MORE: Sales of Nova Scotia’s locally made liquor exceed expectations, NSLC says 

O’Hearn said he expects Crown to re-open soon and for things to start going back to normal in the fall. But White said there are concerns of a bottle-neck at the supplier level for smaller craft breweries. He said having a supplier in Atlantic Canada could make the supply chain more efficient.

“Then all the decorating could be done here in Halifax, or somewhere in Nova Scotia, so that we, as brewers, didn’t have to procure so many hundreds of thousands of cans at once and find space from them on our brew floors.

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“It would allow us to buy in lesser quantities. It would allow us to buy more reliably throughout the year with less lead-up time.”

At this point, neither the tariff nor the can shortage have lead to any increase in prices for consumers. Brewers set a price with the NSLC annually, and those prices remain for the year. White said that given the new tariff, brewers may look to meet with the NSLC sooner, but no such plans are in place.

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