Kennedy: Beverage can shortage will likely continue

File photo

File photo

Categories: Business, News, The Daily Gazette

When the pandemic hit and the U.S. economy tapped the brakes, Ball Corp., a producer of aluminum beverage cans, joined other manufacturers in being designated as “essential” businesses that could keep their doors open.

And good thing, too, since Ball, with 58 can plants around the globe, including a 200-employee operation at Grande Industrial Park in Saratoga Springs, already was wrestling with an inventory shortage that would only grow as pandemic-spawned stay-at-home orders multiplied.

Can’t find your favorite flavor of Coke or Pepsi at the supermarket? Beer or hard seltzer brands seem limited? Blame the confluence of demand, sustainability and coronavirus.

The popularity of new beverages, such as hard seltzer and craft beer, started depleting available can numbers last summer. Inventory was stretched even thinner when the pandemic closed bars and restaurants in March and consumers started stocking up for home consumption. Meantime, a steady migration from plastic and glass to what Ball refers to as “infinitely recyclable” aluminum cans was playing in the background.

While just a few years ago, one-third of all new products came out in cans, “Today, it’s 70 percent. That’s a meaningful jump,” Ball CEO John Hayes told analysts in February on the company’s 2019 fourth-quarter conference call.

And it meant that no matter how fast Ball, at 101.5 billion cans in 2019, or the handful of other manufacturers made them, drink producers immediately grabbed the cans for soda, beer, seltzer, wine, water, energy drinks and other beverages.

In fact, because “our inventories are at all-time lows,” Hayes indicated earlier this month during the company’s latest conference call, “we’ve been importing as many cans as possible.”

Colorado-based Ball divides its worldwide operations into several geographic regions, but it is in North America, primarily comprising the U.S., where “demand continues to outstrip supply,” Hayes said. That led to shipping cans produced in Mexico and Brazil to meet U.S. orders in the second quarter; cans also were shipped from atypical places, such as Europe and India.

Altogether, about 2 billion cans were redirected, officials said.

Ball also recently added lines to existing plants to meet demand, and will bring two new facilities – one in a still-unidentified Northeast location – into operation in 2021. The added capacity should allow the production of another 6 billion cans or more next year.

Even then, demand could remain hot, driven by more new beverages coming to market, ongoing shifts from glass and plastic to cans, and “specialty” can configurations sought by drink companies – think the tall, “slim” hard seltzer can versus the same 12-ounces in a traditional soft drink can.

“I could make a very compelling argument right now, given the growth rates we’re seeing, that that will create a shortage in the can market in 2022 or 2023 as well,” Hayes said on the August conference call.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

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