California North Coast wineries adjust to shortage of aluminum cans

Aluminum cans as a vessel of choice for a number of beverages — and in recent years for certain wines — has resulted in a supply crunch that’s only worsened in the pandemic.

Sonoma-based Free Flow Wines was in a sweet spot when it brought its high-speed canning facility online nearly two years ago to fill demand from North Coast vintners for a container that was lighter weight and more highly recyclable than glass bottles for single-serving sale in stores. A few months later, public health orders over the coronavirus pandemic shuttered restaurant dining across the nation for months, and store sales of hard and soft beverages soared.

Demand for aluminum cans already was high from the triple-digit growth of hard seltzer and the move of producers of soft drinks and water to cans from plastic bottles, according to Scott McCarty, a spokesperson for Ball Corporation, one of the nation’s biggest producers of beverage cans.

“COVID added further to demand, as consumers bought more beverages in aluminum cans for home consumption,” McCarty told the Business Journal in an email. “Demand hasn’t slowed, and remains at unprecedented levels.”

This level of demand has prompted Ball and other manufacturers to move to expand production capacity and take steps to manage sales amid challenges in the global supply chain and inflation in North America.

Ball in recent months announced new contract terms for new customers: a higher minimum order for preprinted aluminum cans and a limit how long customers could keep inventory in its warehouses. The new minimum is five truckloads of cans per variation in a new customer’s product, or roughly just over 1 million cans, McCarty said.

The company continues to take orders from customers already under contract, which includes a majority of the craft brewers Ball works with, he said.

Back at Free Flow Wines, such moves by can suppliers is affecting how the canner handles jobs, according to Heather Clauss, chief commercial officer.

“We’re working with Ball to make sure we have ample supply,” Clauss said. “We can’t get cans on short notice.”

Because the canning jobs that Free Flow does tend to be smaller scale, most of those vintners opt to buy unprinted cans, called “brites” or “blanks,” and have labels applied to them, she said.

Shrink sleeves and pressure-sensitive labels are common alternatives to pre-printed cans, particularly for wine, beer or spirits producers with smaller-scale runs. With the sleeves, the labels are printed onto special plastic film tubes, and the sleeves are shrink-formed onto the cans by machine.

Free Flow’s provider of shrink sleeve services is CanSource, a national company with a California plant located next door. Ball is also one of CanSource’s suppliers.

In response to the demand, Ball has said it is expanding its U.S. can production capacity. It is has two new lines running at production speed in existing facilities and is building five new plants, in Glendale, Arizona; Pittston, Pennsylvania; North Las Vegas, Nevada; Bowling Green, Kentucky (for can ends only); and Concord, North Carolina. That is expected to increase can production capacity by least 6 billion units of this year, according to McCarty.

Demand from smaller beverage alcohol producers for shrink sleeve labels was behind move last week by Saxco International, a major North American supplier of packaging for the beer, wine, spirits and food industries, to acquire a Southern California company that specializes in printing plastic label sleeves for craft beverages in aluminum cans.

Saxco, which has a Fairfield distribution warehouse for wine, beer and other beverage packaging, purchased We Sleeve-It from Anaheim-based R.B. Dwyer Group of Companies. That sleeving venture launched in late 2017 and has seven locations: Ahaheim; Austin, Texas; Portage, Indiana; Lacey, Washington; Marietta, Georgia; and Wilkes-Barre, Pennsylvania.

Based in the East Bay in Concord, Saxco described the acquisition as a further move into aluminum cans, now offering sourcing of the cans as well as related packaging and sleeving. Jim Dwyer, CEO of R.B. Dwyer, said the two companies had been working together for three years.

Bart Watson, chief economist for Brewers Association, the Boulder-based trade group for craft brewers, said the move by can manufacturers to increase order minimums will challenge smaller producers that had been using printed cans. Applied labels is a solution, but it typically costs more.

“So producers that are forced to shift will see increased input costs,” Watson told the Business Journal. “They’ll have to decide if they can accept that lower margin or if they have to pass those costs on.”

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.