Aluminum, steel tariffs cause Utah breweries to worry
July 7, 2018
The cost of sipping a canned beer might soon increase throughout the country, including Utah.
As the effects of the Trump administration's recent tariffs on steel and aluminum make their way down the supply chain, breweries in Utah are predicting increased production costs and are weighing their options to navigate the change. The 10 percent tariff on aluminum from Mexico, Canada and countries in the European Union, which Trump announced at the end of May, is likely to have rippling effects on the industry.
Brewery owners throughout the state said they have not yet seen their suppliers raise the cost of aluminum, but they are almost positive that an increase is coming.
Scott Ray, co-owner and operations manager of Park City Brewery, said that the brewery uses aluminum to package about half of its beer. The rest is stored in kegs, which often contain steel. A 25 percent tariff on steel accompanied the aluminum tariff.
It places an additional strain on our business model, because it is very competitive out there as it is. Certainly, the tariffs aren’t helping,”Rob Phillips,RoHa Brewing Project
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The equipment to make beer, such as fermenting tanks, is also typically made out of steel. Ray said that the majority of the steel the brewery uses does not come from the U.S. As he prepares to move the brewery into a new space with larger equipment, the steel tariff is a cause of concern.
"I am worried about it," he said. "Unfortunately, with our industry, there are not too many other options (for equipment)."
Rob Phillips, co-founder of RoHa Brewing Project in Salt Lake City and a member of the nonprofit the Utah Brewers' Guild, said that the tariffs especially impact small breweries that lack the profit margins large companies have.
"It places an additional strain on our business model, because it is very competitive out there as it is," he said. "Certainly, the tariffs aren't helping."
Due to the large amount of breweries and the limited amount of space in stores, Phillips said that remaining on the shelves is a constant battle. Raising the cost of beer could have a negative impact on business. For that reason, he hopes to have RoHa Brewing Project absorb the costs where it can rather than having the customers pay.
Phillips said that the tariffs will likely affect about 3 percent of the brewery's cost of production.
"That's a dollar a six-pack almost," he said. "I think that's tough for the consumer to understand."
Greg Schirf, founder of Wasatch Brewery in Park City, is also wary of increasing the cost of beer.
"It will be hard to pass onto the consumer, because they are used to their regular beer prices," he said.
He said that the brewery will likely absorb 5 percent of the cost increase due to the tariff. Wasatch Brewery uses aluminum in about 60 percent of its beer. Even though the cost to produce beer in cans will go up, he is not interested in switching to use more glass.
Schirf said that aluminum cans are often better for the environment because they are easier to recycle than glass. Plus, Phillips added, cans weigh less, stack easier and are less fragile to transport.
Businesses such as Wasatch Brewery and Park City Brewery are not interested in reverting to glass to avoid the increased cost of aluminum. They instead plan to wait and hope that the tariffs are either removed or reduced.
Schirf is hopeful that will happen soon. If not, he said, "It will be bad all the way around."