U.S. Beer Market Might Be In Trouble

On Sunday, Forbes reported that the beer industry could be headed for trouble. This report was based on a Brewbound article from earlier in July, stating that beer can inventory was running low.

The beer can shortage is due to an increase in individuals drinking from home as opposed to in bars and restaurants. This change in consumer habits has placed an unprecedented strain on the beer supply chain that the industry was not prepared for.

It’s expected that 16 oz. cans will be affected by the shortage initially, then 12 oz. cans are expected to follow. With beer manufacturers seeking to resolve the supply problem as quickly as possible, packaging companies in Mexico are being looked to for help. Imported goods such as aluminum cans are not subject to tariffs currently. However, at some point, it’s also expected that beer brewers will look to Asian manufacturers for their aluminum can supply.

The beer industry aluminum can shift can already be seen with large producers such as Molson Coors (TAP) and AB InBev (BUD); the two companies are now mainly utilizing their aluminum can supply to supplement their most popular brands currently. There are plans to halt production for lower selling beer brands if needed temporarily.

With all of this being said, consumers can most likely expect higher beer prices on some of their favorite brands for a while; this will most likely result in reduced beer sales at some point in the future. Beer industry investors will most likely be watching for how this supply change affects sales.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.


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