Is your beer getting more expensive?

Beer and WhiskyBeer.

Many people love it.  In fact, on a worldwide basis beer is the most popular alcoholic beverage – and third most popular beverage (after water and tea) overall.

This translates to a lot of people making a lot of beer.  Worldwide production is estimated to be somewhere in the neighborhood of almost 2 billion hectoliters.  [For those of you who don’t think in hectoliters – that’s roughly 528 billion gallons.  Still having trouble picturing it?  Imagine about 800,000 Olympic-sized swimming pools filled with beer. Got it? Good.]  That’s a lot of beer.

Here in the United States, the best-selling beer is Bud Light – with roughly $2 billion in sales in 2017.  But the best-selling beer in the world is Snow Beer – an inexpensive lager which is sold only in China.  Both of these are, I suspect, distasteful to the average consumer on the streets of hipster-addled Seattle or Portland, but I digress.

When I make beer at home (which I do infrequently and not particularly well), I bottle it.  I do that because it is easy to do – and because the bottles are easily reused.

But as beer aficionados will tell you, there is meaningful debate between the merits of putting beer in cans and putting beer in bottles.  [An interesting article on the history of that competition is here.] Roughly 67 billion cans of beer are consumed every year.  That’s enough that if you stacked them end on end they would reach to the moon and back 10 times.  And that means we’re talking about a lot of aluminum.

So why do we care if spirits aren’t put in cans?

Well, today President Trump said his administration would be placing a 10% tariff on aluminum imports.  Those imports make up roughly 90% of the aluminum that is used in the United States – and the largest single use of that aluminum is for beverage cans.

So, you should probably expect that your canned beer is about to get very slightly more expensive.  How much more is hard to say – but industry players are already weighing in with some doom and gloom.  Miller Coors, for example, took to Twitter, calling the tariff misguided and indicating that American workers and consumers would suffer as a result of it.  The Beer Institute pushed a bit harder, suggesting in a press release that the tariff is effectively a $347 million tax on America’s beverage industry, which will likely lead to the loss of in excess of 20,000 jobs here at home.

So would a 10% tariff on aluminum really make that much of a difference in the market?  And perhaps more importantly for our purposes here, how might this impact the world of spirits?

As discussed previously, economic trends within the beer industry haven’t been great lately.  Beer is losing market share to spirits – buoyed only slightly by continued relative strength of the craft beer segment.  I’m no economist, but anything that makes beer more expensive relative to other beverage choices seems likely only to accelerate that trend.  And since canned beer is currently on-trend for the craft segment…?  Well, one could be excused for thinking that an aluminum tariff may take some of the wind out of those sails.

For spirits producers, this is good news.  For spirits consumers, it is even better news; your hooch is about to seem slightly less expensive.  Slàinte!


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