Money Toronto craft breweries feeling the crunch as tariffs hit aluminum beer cans

09:11  06 august  2018
09:11  06 august  2018 Source:   cbc.ca

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Toronto craft breweries are facing a lower supply and a higher price for beer cans due to retaliatory tariffs the federal government imposed on U.S. aluminum imports — and the resulting crunch , they say, is threatening to put them out of business.

Riding the popularity of craft beer , it has grown into one of the largest craft breweries in the state with 32 employees. But now, Octopi Brewing is struggling to adjust to increased operating costs after its U.S. supplier of aluminum cans hiked prices by 15 per cent, blaming the tariffs .

a close up of a can: Henderson Brewing Company is among a group of Toronto microbreweries who say aluminum tariffs imposed by the federal government threaten to force them out of business.© Chris Langenzarde/CBC Henderson Brewing Company is among a group of Toronto microbreweries who say aluminum tariffs imposed by the federal government threaten to force them out of business.

Toronto craft breweries are facing a lower supply and a higher price for beer cans due to retaliatory tariffs the federal government imposed on U.S. aluminum imports — and the resulting crunch, they say, is threatening to put them out of business.

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Ottawa recently introduced a countermeasure on U.S. aluminum and a range of other products to challenge levies President Donald Trump's administration put on Canadian metal products.

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As of July 1, American aluminum products cost Canadian importers 10 per cent more.

"If we have a hiccup like this can hiccup, we could easily be forced out of business," said Steve Himel, founder of Henderson Brewing Company, a west-end microbrewery.

"We are watching this very closely."

'It's going to impact everybody'

Scott Simmons, president of the Ontario Craft Brewers Association, told CBC Toronto its members are currently "absorbing" the hike in beer can costs to shield drinkers from more expensive suds.

But the tariffs are becoming a "critical issue," he says, with some Ontario brewers reporting their can supplies have already dried up.

"It's going to impact everybody at some point," said Simmons, pointing out that brewers who order tallboy cans have already been affected.

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"A lot of the traditional U.S. sources are out of supply now or are maybe treating some of their larger customers first, with more urgency."

a close up of a bottle: Great Lakes Brewery says their monthly order of tallboys has jumped $26,000 in price.© Submitted by Great Lakes Brewery Great Lakes Brewery says their monthly order of tallboys has jumped $26,000 in price.

Session Craft Canning, a Mississauga-based company that provides a mobile canning service to 250 craft brewers in Ontario, is calling on the federal government for help.

"If there's any way the government could subsidize those tariffs, it would help a lot of companies," said managing partner Jeff Rogowsky.

He added that his company is being pressured to raise its prices.

"It hurts us because nobody ever wants to raise their pricing," Rogowsky said.

a close up of a device: Toronto craft brewers are absorbing the increased cost of beer cans to shield drinkers from higher prices.© Chris Langenzarde/CBC Toronto craft brewers are absorbing the increased cost of beer cans to shield drinkers from higher prices.

Great Lakes Brewery, a craft brewery based in Etobicoke that's been operating for 31 years, is "feeling the tariff,"  marketing manager Troy Burtch said.

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Canadian craft brewers are facing a sudden aluminum can shortage and are blaming the supply Brewers facing a can crunch have been urged to simply switch to bottles, "but it's not that easy," Meek said He said the sector has lobbied Ottawa to exempt beer cans from its tariffs but has failed to

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The company orders up to a million tallboy cans each month from a distributor in Chicago. Burtch says the price has soared an additional $26,000 a month since the tariffs were imposed.

"As we get busier, it will hurt with the growth," he explained.

Tapped out can supply

Henderson, a west-end microbrewery, will pay one cent per can more now that the tariffs have come into play.

But Hamil fears the brewery won't have the funds to adjust to delays in its beer can orders.

"That could easily lead to a catastrophic interruption in our business where we find ourselves losing customers, losing listings and ultimately having a failing business," he said.

a man standing in front of a store: Steve Himel, manager and co-founder of Henderson Brewing Company, says his firm is watching the situation closely.© Chris Langenzarde/CBC Steve Himel, manager and co-founder of Henderson Brewing Company, says his firm is watching the situation closely.

Henderson orders its beer cans six-to-10 weeks ahead of canning.

Its supplier has now notified the brewery of a possible six month delay for receiving orders.

"As these tariffs come in and these companies at the ground level are re-examining their business or changing the way they purchase raw material or what gets sent across the border, that trickles through to us," said Himel.

To counter this, the brewery pre-ordered cans 20 weeks in advance — double the old amount of time.

"We have to lay out the cash to pay for those in advance and we haven't budgeted for that," he said, adding most microbreweries can't cope with the strain to their bank accounts after spending thousands to purchase brewing equipment.

If Henderson runs out of cans to package its suds, Himel says the disruption could jeopardize its relationship with retailers — the Liquor Control Board of Ontario (LCBO), the Beer Store, restaurants and bars

"It's possible we will lose a customer who has been looking for our product and no longer finds it, so they choose something else," Himel said.

"Or we could be de-listed from these retail outlets because we're seen as a unreliable supplier of product."

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