More expensive beer? Craft brewers facing dilemma over can shortage.

Through the COVID-19-related shutdowns and restrictions, Upslope Brewing Co. was determined not to lay off any of its 73 employees. The Boulder craft brewer did what it could to make its patio welcoming when limits were imposed on indoor seating.

Now comes the company’s latest challenge: finding a new supplier for the cans that hold its IPAs, lagers and limited-release brews. Ball Corp., the giant beverage-can manufacturer, is boosting its minimum order five-fold starting March 1.

“For us, it created quite a scramble. We went down the path of trying to figure out how to react and how to make our business sustainable,” said Matt Cutter, Upslope Brewing’s founder and president.

Ball, based in Westminster, and other aluminum-can manufacturers have seen demand for their product skyrocket during the pandemic, outstripping supply. Ball spokesman Scott McCarty said in an email that supply-chain problems spurred by the pandemic as well as inflation have raised costs for all the materials the company buys.

Aluminum prices have jumped by 24% in the last six months, The Wall Street Journal reported at the end of January.

“We shared new ordering requirements in early November with our customers to be transparent about the ongoing supply/demand imbalance, and to explain changes to our ordering requirements designed to help Ball produce as many cans as possible for all of our customers,” McCarty said.

The company has a manufacturing plant in Golden and several more in other states and countries. It is working to connect craft brewers with distributors who buy cans from a variety of manufacturers, including Ball.

Upslope Brewing has turned to one of the brokers. “The brokers, of course, have to take their cut. With the cuts they’ve added, that increases the price of our cans,” Cutter said.

The new policy by Ball, has left small, independent brewers pondering their options. They’re also looking for warehouse space because Ball will no longer store pallets of cans for the small brewers.

Ball originally planned to start the new minimum order requirement Jan. 1. The company postponed the implementation date to March 1 after hearing from the businesses, the Brewers Association, a national trade group, and Oregon Sen. Ron Wyden, co-chairman of the Senate Small Brewers Caucus.

Wyden said in a December letter to Ball that small brewers provide more than 400,000 jobs nationwide and play a critical role in “creating vibrant local economies.” He said the policy and short lead time for the change could aggravate the brewers’ struggles caused by the pandemic.

Colorado alone is home to more than 400 craft breweries, the fourth-highest total nationally, according to the Brewers Association. The total beer production is nearly 941,000 barrels a year.

“I have heard from a fair number of members who have been able to place additional orders since Ball announced the extension which has been a lifeline for many of these brewers,” said Bob Pease, president and CEO of the Brewers Association.

When Ball first announced the change, brewers told the trade association that it would put them out of business.

“I think some of the panic has died down,” Pease said.

But Pease said the businesses are looking at higher costs and fewer options for their packaging and will likely have to offer a smaller variety of beers, which means less choice for consumers.

“This is also going to absolutely result in price increases for the beer drinker,” Pease said. “These business models are now going to be, at best, less profitable.”

Ball’s new policy affects customers who don’t have contracts with the manufacturer. The change kicked in immediately for companies that pay in advance and starts March 1 for companies without contracts but who have terms of credit with the company.

Supplies to craft brewers that have contracts haven’t been interrupted, Pease said. For those that don’t, the minimum order will increase to five truckloads from one truckload. That means a small brewer will have to buy at least 1 million cans, up from about 200,000 cans.

The new minimum order requirement will also apply to each different SKU, or stock keeping unit, for different-sized cans. Ball will store cans bought in 2021, but won’t warehouse customers’ inventory going forward.

Ball provided preprinted, or “decorated” cans. Pease said brewers now might have to buy blank cans and then apply a shrink sleeve, which wraps around the can, or a pressure-sensitive label. Pease said those methods cost more and don’t recycle as well.

No longer having access to Ball’s warehouse space is also huge for the small brewers. When Upslope Brewing started business in 2008, it bought cans from a company with a plant in Wyoming. Around 2012, Ball approached the brewery about becoming its supplier, and Upslope switched.

Ball stored pallets of cans for Upslope and didn’t bill them until the brewer picked up a load.

“They worked with us really well,” Cutter said. “It made a lot of sense to change over and reduce shipping costs.”

However, the new minimum order requirement doesn’t make economic sense for Upslope Brewing.

“That’s over a million cans. We don’t have the cash to hold that much inventory and we don’t have the warehouse space to store that many cans,” Cutter said.

A truckload of cans costs roughly $25,000, he added.