THE BOTTLENECKS
IN CAN SUPPLY
Can shortage has industry crying in its beer
Recent months have seen these headlines, respectively, in beer industry trade publication
Brewbound, in the Wall Street Journal, and on the Brewers Association website. Several explanations
have been offered for the challenges can manufacturers have faced in producing enough cans to meet
demand: the difficulties in keeping up with surging hard seltzer volumes, which are virtually 100 %
canned; the way canned offerings are devouring market share in the craft beer world; and, more recently,
changes in beer drinkers’ behavior due to the pandemic-related lockdown (of course, similar shifts
for soft drinks created even greater pressure on can production capacity).
Mike Kallenberger
First Key Consulting
18 · BBII 6/2020
Mainstream beer
in cans rises
But while the explosive growth of
hard seltzer and craft beer in cans
had been capturing our attention in
2019, seemingly small changes in
trends for mainstream beer can still
have big impacts. Craft beer saw
cans’ share grow from 24 percent
to 31 percent between 2018 and
2019 (though only a portion of that
growth could be called unanticipated).
But cans’ share of mainstream
beer, which had been relatively
flat at around 62 percent for
several years, jumped to 64 percent
in 2019. Even two percentage
points on a base that large makes
a big difference. This yields an estimate
of 0.7 million barrels of unanticipated
can demand in the second
half of 2019, a sizable secondary
contributor compared to the
1.1 million barrels of estimated
contribution by hard seltzer (see
Figure 1).
In 2020, of course, the entire
dynamic changed. Hard seltzer
surged more than ever, and we estimate
it contributed a net 2 million
barrels of unanticipated can volume
in the first half. See Figure 2
for the calculation; the same math
was used to develop the 2019
second half estimate.
We all know what happened in
beer in 2020: despite declines in
category volume, cans’ share of
that volume surged with the shift to
off-premise consumption. But while
the interacting forces were different
ing potential can shortages in the
future.
Several pieces of context must be
kept in mind when analyzing this.
First, the rapid growth of cans in
any of these areas isn’t the problem
per se; shortages are tied to
unanticipated growth, over and
above prior expectations. Second,
it can take up to 18 months for
can manufacturing capacity to be
added, so unanticipated growth
can be seen as the difference between
actual can volumes and the
figures that would have been projected
1-2 years earlier. Third, while
the word “shortage” wasn’t used
often in 2019, can inventories had
already been seeing reductions in
response to unanticipated demand.
And so, in order to sort out the effects
of the pandemic from other
factors, we’ll begin by examining
what was going on in 2019.
First Key decided to investigate
which, if any of these, is the
most significant in terms of creating
the bottleneck (no pun intended).
Of course, each has played a role,
but could one be singled out as the
real culprit? After crunching some
numbers – which admittedly rely
on many assumptions and rough
estimates – the First Key team
discovered a wild card in the mix.
Not surprisingly, hard seltzer
growth appears to be the biggest
contributor. But there’s also unexpected
driver of additional shortfalls
in can supply versus demand:
canned mainstream beer (defining
“mainstream” as domestic noncraft,
plus imports). And, as we’ll
see, this has implications for avoid-
Fig. 1: Unanticipated can volume by source