Below is a brief excerpt from a complementary research note written by our Consumer Staples analysts Howard Penney and Daniel Biolsi. We are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.
As COVID-19 restrictions closed on-premise venues, packaged beer sales jumped. Taxable keg production in April 2020 was 1.3% of its total in April 2019, according to a recent report from the US Department of Treasury’s Alcohol and Tobacco Tax and Trade Bureau.
In April 2020, domestic brewers produced 17,441 taxable kegs of beer, down from 1.29M a year ago. Packaged beer production increased to 13.4M barrels in April from 12.9M a year ago.
Microstar Logistics is one of the largest keg solutions providers in the beer industry. It owns nearly 5M kegs and leases and moves them for the majority of brewers. The company “went to zero revenue in March and April.”
The shift away from kegs to cans for the beer industry has led to shortages. The small brewers are generally worse off, but Molson Coors said it shifted production of some brands to conserve can supplies.
Last month the US Brewers Association issued an advisory on the can shortage. “The can shortage may threaten the ability to survive the pandemic for some craft brewers.The smallest brewers are most likely to have orders delayed or canceled, as can manufacturers are more efficient when they don’t have to change out the printing plates as often. A company ordering a half or full truckload may be less of a priority.”
Wisconsin Aluminum Foundry said, “Orders for beer cans typically take two days to fulfill now take up to five months.”
The tightening shortage in beer cans is starting to impact non-alcoholic beverages. Dr. Pepper noted that it was short cans in mid-August. Beer sales typically slowdown post-Labor Day, so the industry is hoping it can catch up on demand.
With on-premise sales still well below year-ago levels, having can supply is mission-critical for many breweries.