Craft brewers consider kicking the aluminum tariff can to customers
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When the Trump administration imposed a 25 percent tariff on aluminum and steel goods from Canada, microbreweries in Minnesota worried about what it meant for their bottom line. The stress mounted even more when the tariff doubled in reaction to added Canadian tariffs, but then removed just hours later.
One issue is how much of the cost to pass to consumers.
During a recent virtual press conference, Minnesota U.S. Sen. Amy Klobuchar introduced Patrick Sundberg, the owner of Jack Pine Brewery in Baxter, Minn. He said aluminum cans are synonymous with craft beer. He said upwards of 70 percent of all packaged beer, and specifically craft beer, is sold in aluminum cans.
“Back in 2022, I was seeing costs of up to 60 cents a six pack, my costs,” Sundberg said. “So, by the time that transfers all the way down to the supply chain, we’re looking at another dollar per six pack on the shelf, and that was back in ‘22.”
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Eventually, Sundberg said, the cost of the aluminum tariffs will have to trickle down to customers.
“The uncertainty is definitely a little bit nerve-wracking on my part,” he said. “But at the end of the day, I have payroll to make, I have a bank loan that I need to pay off, and if my costs are going up, I’m going to have to pass that along the chain.”
‘It’s tough to navigate this’
At Paddlefish Brewing Company in St. Peter, Dave Long, one of the co-owners, prepares a 25 ounce crowler for sale. They usually can 16 oz cans at another brewery, but for their crowlers, they do this one can at a time in-house.
“You’re always towing that line between bravery and stupidity,” Long said. “And getting into this brewery has just been such an adventure and such a learning experience, and working as a team has been really hard. The challenges with just the external pieces of being in a world now where there’s a lot of uncertainty, you have to work together to make this work.”
There’s no shortage of challenges. Ryan Miller, taproom manager and co-owner, said it takes a lot of money to run a brewery, and that’s where they needed to figure out ways to stave off some of the financial impacts.
“We try to pick different suppliers, have multiple suppliers for things, and try to get our best bang for our buck out of our suppliers,” Miller said. “But obviously, with the tariffs going into effect, that is going to impact a lot of aluminum and steel prices across the board.”
In addition to the cost of cans, grains and other ingredients are getting more expensive. Luke Dragseth, head brewer and co-owner said they’re also navigating changes in demand as some consumers now choose THC seltzers.
Dragseth said tight profit margins are only getting tighter.
“It’s going to be hard to make the customers pay more for the cans,” he said. “We’re seeing costs on grain, and we’re seeing the costs on aluminum, and it’s just taken on out of both sides. It’s a crazy world, and it’s very tough to navigate this. We’re gonna find out. We’re gonna experiment with just about everybody else and make it work.”
There are no clear answers. Paddlefish Brewing brewer and co-owner Joe Weckwerth, said they can only focus on what they do best.
“And so, while it’s a challenging time for the brewing industry,” Weckwerth said. “It’s also a time in which these kinds of community building industries can have a positive influence and bring something important to all the people who are feeling uncertainty right now.”
‘Beer has always been part of the conversation’
After a boom of new craft breweries over the last decade, an increasing number of the businesses closed in the past year. Industry experts said while brewery openings have definitely slowed nationally, Minnesota continues to see new businesses open.
Bob Galligan, director of government and industry relations at the Minnesota Craft Brewers Guild, said it’s still a healthy market.
“But times are hard, and breweries are still climbing out of a rather decimating pandemic and everything has not exactly kept up to speed,” Galligan said. “There’s a whole shift in the wind and a whole bunch of new issues that we’re dealing with.”
The guild has heard from membership that everyone’s concerned. However Galligan said as the industry navigates the current anxiety, no one has to go through it alone.
“Beer has always been a part of that conversation,” he said. “The first whispers of a free democracy happened over pints of ale in the taverns of Philadelphia and Boston, and there’s no better way to ease them than over a pint.”
