They Will Stop At Nothing!! For BeerNexus.com Since the world of craft beer is so dull these days I’ve decided to branch out and start writing mysteries. You know, a classic who done it, with the intellect of a brilliant detective like, Sherlock Holmes. But to stay on BeerNexus I’ll need to somehow dupe the webmaster into thinking I’m still focused on craft beer; maybe I’ll kill someone with a bottle of Bud (probably not all that original) or drown them in a fermentation tank… Maybe I need to give this a little more thought and just stick to craft beer this month. There was a very interesting thing that happened just recently. In the guise of America First, the Trump-In-Chief, decided to put tariffs on steel and aluminum. This was not very well received abroad, much less here in America. Even his economic advisor was so upset he quit. Many in the craft industry did take note as we’re seeing many brewers choose cans as their preferred packaging, not to mention all that beautiful draft beer in stainless steel kegs. Of course craft beer isn’t the only one using aluminum cans; there’s a huge amount of mega brews and soda in cans, as well as other beverages and food products. But aluminum is used in many other products. Think of what Boeing must have thought with all the aluminum in just one airplane fuselage. Think of what Ford must have thought since they started using aluminum in F-150 truck beds instead of steel. Aluminum is used in lots of outdoor applications since it doesn’t rust; think deck furniture and window frames. And it a great conductor so used for electrical transmission as it cheaper and lighter than copper. And just so we understand the relevance of this and why all the hub bub, America imports 90% of aluminum we use to make a wide variety of products…one more time 90%. The US has gone from 23 operational aluminum smelters in 1993 to 5; a precipitous drop in 25 years and only one of them makes the high purity aluminum needed for fighter jets. And it’s basically these plants/industries who really want to see the tariffs so they can compete and increase production. So there are many industries that got very excited/depressed/in an uproar when they heard imported aluminum was going to cost more. But they are also much bigger quantity and longer users than we in craft beer and more likely to be able to get what they need. Those at the bottom of the ladder could feel the squeeze the most. And just to throw a little science lesson in today; aluminum is the most abundant metal in the Earth’s crust at 8.1%, but is rarely found uncombined. It’s usually found in minerals such as bauxite and cryolite, so it needs to be extracted…remember that for the quiz at the end. The front page headline is the aluminum industry pushing these tariffs, but I did a little investigative snooping to see if there were any other leads to follow. I had a hunch and was going to dig till I got an answer. We all love the free enterprise system we have; competition, quality, ingenuity, innovation; they’re all the qualities we believe make for a strong economy. But the greed and competitive aspects can cause people and industries to act in their own best interests at the detriment of others be it labor or other competitors. It’s easy to come up with a list of high profile, well-known names: Rockefeller with Standard Oil, Carnegie with steel, Edison with electricity and Ford with automobiles. And in the more recent decades look what Walmart did to the mom and pop stores in many areas. Doing whatever it takes to beat your competition has always and will continue to go on. And it’s no different in the beer industry, which after a brief respite during Prohibition, began to flourish. Think of how many small and regional breweries there were back in 50’s and what happened to most of them as the mega breweries began to dominate. It wasn’t because they made better beer, as most were basic lagers back then. Look at the long list of beer brands that Pabst owns; it reads like a graveyard of old defunct beers. Some might give more credit to a changing world where we had better ways to transport and more ads on TV to change our mind but clearly there were also other things going on, like volume discounts and other incentives. With the rise of the craft beer industry the mega brews had an upstart to make sure they kept in their place and a slight distraction from buying each other to form larger and larger companies. Think back to 2008 and again in 2012, when there was a hop shortage. We then learned that AB owned a ridiculous amount of hops and basically weren’t interested in sharing with anyone. Thanks to Jim Koch at Sam Adams who had more than enough and was willing to share, the craft brewers survived that crisis. At a later date could we find something similar with aluminum?!? AB/InBev is huge and must be lobbying to better their own lot at the expense of others. Bingo! In 2017 AB/InBev had 94 lobby groups, where they spent to the tune of $8M. And if you dig deep enough, tariffs were one of the issues they were lobbying on. Now some would say that higher aluminum tariffs would hurt AB/InBev even more that the small craft brewers because they use so much. That’s exactly what they would like you to think… It just so happens there is a subsidiary called The Anheuser-Busch Metal Container Corp. and they celebrated their 30th anniversary last year of their Fort Collins plant. This plant runs 24/7 except for three days a year and produces two BILLION 12 oz. cans. Cans are made out of 27,000 pound aluminum coils that are 5.5 miles long (in an unraveled state of course) and they use about one coil every seven hours so almost three and a half per day. Let’s do a little math; 2,000,000,000 x 12 =24,000,000,000 oz. / 3,968 (the number of oz. in a 31 gallon barrel) = 6,489,995 barrels of beer. So if 6M barrels are approximately 3% of U.S. annual sales, then this one plant produces enough cans for 3.25% of all U.S. beer sales. Craft beer stands in the 12.5% range so this plant could can 26% of the entire craft beer production. Oh and by the way, this is one of their FIVE canning plants across the country; Arnold, MO; Jacksonville, FL; Mira Loma, CA and Newburgh, NY being the others. And with those five plants they only supply 45% of the A-B U.S. beer cans. That means they have other suppliers that they are doing some high volume business with. And granted I really don’t know what percentage of A-B is draft vs bottles vs cans, nor do I know that on the craft beer segment either. I do know A-B is approximately 46% of the US market and MillerCoors is 23%. So if the cost of aluminum goes up and everybody pays more, who can still drive a better bargain?? Making it more expensive for craft brewers to do business and possibly cutting into the number and amount of craft beer cans available in the market place is a good thing for AB/InBev. Basically any pressure they can exert on craft beer is good for them. So yes AB/InBev is complaining and beating their chest about the increased tariffs, but they know they can handle it; they can raise the price a little, lay off a few people and maybe cut a touch of advertising (or even lobbying) and be fine. Whereas most of craft beer will have no choice but to pass on increased costs and possibly can less. After I had found out the connection, I went straight to Robert Mueller, knowing his commission would want to know what was going on and check it out. In our face to face meeting he looked at me a little puzzled and said, “if you had told me Baltika instead of Bud I would have jumped on this, as you do know this is a Russia investigation.” I must admit I was clearly disappointed but he did make some sense. He wished me well and told me not to let the door…. So I hope this investigative reporting has provided you some insight into some of the evils of our free enterprise system that allows giant corporations to pressure their smaller and certainly in our case better competitors and why you might be seeing less craft beer in cans. I’m sure The Washington Post will be calling me soon, but I’ll always let BeerNexus match any offer. And as one of my favorite radio commentators used to say, “and now you know the rest of the story.” Glenn DeLuca writes about beer and culture of drinking. He may be reached by writing thebigG@beernexus.com. *** *** *** |
Glenn DeLuca
Outtakes from a life of beer.
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