Aluminum Can Shortage

August 24, 2020
Aluminum Can Shortage

Is trouble brewing for users of aluminum cans?  Some beer and soda manufacturers fear that the existing shortage of cans will grow worse in upcoming months.

Some consumers already report difficulty finding specialty flavors of canned beverages like Cherry Coke Zero or niche brews, as producers focus on making the most popular flavors and brands instead.

Additional can manufacturing capacity is in the works, but it will be up to a year before the new facilities are ready.

Video Spotlight: Low Coca-Cola supply blamed on aluminum can shortage  (July 23, 2020, 11Alive)

This post is based on the Syracuse article, The national beer and soda can shortage: How is it affecting supplies in Central New York?, by Don Cazentre, July 29, 2020; the CNN article, Why America is running out of aluminum cans, by Alicia Wallace, July 22, 2020; and the YouTube video in the Spotlight. Image source: belchonock/123RF

Discussion Questions:

1.   What issues are causing demand for aluminum cans to spike, and what types of time-series forecasting variations are these?

Guidance: One of the obvious issues is the COVID-19 pandemic.  As more Americans consume their beer and soda at home, demand for cans has risen.  In addition, the general pantry loading that occurred in the early weeks of the lockdown led to an increase in canned soda sales of 30 percent in March and April of 2020.  In other pandemic-related fallout, brewers have been reluctant to keg their beer, worried that as bars and restaurants close, open, and close again, demand will remain lower than usual.  In addition, since brewery tasting rooms have been shuttered, selling takeout four-packs has becoming increasingly important, also increasing can usage.  These would be considered “irregular variations.”  The volatility associated with these factors can be hard to predict and may not recur in the future.

Other issues have been in the works for a longer period of time.  Flavored, carbonated waters have gained popularity, and for the last two years, hard seltzer consumption has surged.  This has caused a spike in demand for the “slim and sleek” can, which puts competing pressure on the availability of production capacity for the regular 12-ounce cans.

In addition, the last decade has seen a shift in preference among brewers, in particular craft brewers, for using cans instead of bottles.  The longer term, gradual increases seen in hard seltzer and carbonated water consumption and using cans instead of bottles for beer would be considered (increasing) trends, which despite the pandemic may be expected to continue.

2. What supply issues are exacerbating the aluminum can shortage, and what solutions are being considered?

Guidance: Interestingly, the shortage is generally not related to the availability of the raw material, aluminum, used to make the cans.  Rather, it is can production capacity.  Existing facilities are seeking to increase their capacity, and several new ones are being built, but these kinds of capacity increases require time and will likely take at least a year to complete.

In the meantime, the Can Manufacturers Institute reports that some companies are taking the unusual step of purchasing billions of cans from outside the United States


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