California’s falling recycling scheme records aluminium beverage cans supply shortage largely effecting breweries

The operations director at California-based Almanac Beer Co. claimed that they had consumers forming queues to get their Black Magic IPA and Peaceful Pils to meet the spring-time demand for beverages.

There has been a prevailing national crunch for beverage cans further elevating the rates of cans and in turn, hiking the prices of drinks naturally. The shortage is being recorded due to some unforeseen factors such as the pandemic and extended lockdowns that had derailed the manufacturing tempo disrupting supply. Moreover, there has been a significant upward trend in the demand for canned cocktail drinks which has contributed to fostering the aluminium need.

Other reasons can also be allocated in California as there are no efficient schematics for waste recycling; also the economy is outdated because of redemption centre extinction. California’s non-functional recycling system is now a severe threat to breweries with policies pertaining to the olden days and it has raised ample problems for the consumers who wish to recycle waste properly.

This epic shortage emphasises how an underdeveloped recycling supply chain can affect a potential industry with a lot to offer.

With the world moving towards sustainability, almost 73 per cent of aluminium cans are made from recycled scraps but as the demand increased for cans, the state’s infrastructure for recycling products did not stand a chance.

In accordance with the data from the California Department of Resources Recycling and Recovery, popularly known as CalRecycle it is known that in the past five years the country’s recycling quota for aluminium can has plummeted by 20 per cent, from 91 per cent in 2016 alone to 73 per cent in the year 2021. 

The vice president of external affairs at the Aluminum Assn, Matt Meenan sadly explained: “The problem that we have, particularly in the United States on cans, is that we don’t recycle them enough.”

Most of the used beverage cans end up in landfills and only 45 per cent is subjected to the recycling process in the US.

The condition in California has impetuously fallen. Referring to the state’s data of 2016, almost 766 million aluminium cans were just transferred to landfills and they were never recycled. The previous year, the amount was 2.8 million, which is sufficient to totally fill about 31,000 backyard swimming pools.

Experts are predicting that the beer business will face utmost tampering if there is no smooth supply of beverage cans and smaller companies will be the ones to face the harshest truth, closure.

“[If] we don’t have beer to send to our distributors, we don’t have beer to sell over the bar in our tap room,” Le said. “It creates that domino effect of us being unable to sell beer or make money. That’s the real disruption.”

Under such curtailed circumstances, the largest can manufacturer in the US, Broomfield, Colorado-based Ball Corp has declared that they would not adhere to small or mid-size purchase orders.

The supply-chain manager at Sierra Nevada Brewing Co. in Chico, Bart Whipple commented: “Ball implemented a minimum order of five truckloads, which is like 5 million cans. For smaller places, that’s a lifetime supply.”

Such statements have raised questions about Huntington Beach-based Beachwood Brewing.

“Ball gave us essentially a two-week notice that we had to order all the cans for the next year,” co-owner and brewmaster Julian Shrago notified.

Shrago had emptied his cash reserves to pay for the cans up front but he was never provided with a delivery guarantee. 

All throughout the industry, the concerns of the vendors were “‘you can’t get this now,’ you’re going to have to wait twice as long,” Shrago illustrated. “Then it became three times as long and then four times as long. It wasn’t that we weren’t able to get products; our lead times increased and our cost increased,” he added.

Both Beachwood Brewing and Almanac Beer Co. duelled over who would get the larger shipment of cans as well as paid premiums to avoid idle business standards. “If we weren’t able to can beer, then we had no beer to sell,” Le elucidated who only two years ago was paying 13 cents for each can. Cans were being priced at 22 cents each by the month of spring. Almanac’s can costs have heightened to an estimated US$167,400 in a period lower than two years with loosely 1.86 million cans bought every year.

When costs soar that way, “eventually we have to pass it down to the customer,” Shrago told the truth.

Though visible discrepancies in the can supply chain augmented during the ongoing pandemic, this problem was built up gradually in the past years.

The demand for ready-to-drink cocktails, like White Claw and Truly had been framing a great competition for the non-ferrous metal, aluminium. During the same time, the origin of can supply in California’s recycling system was crumbling down.

In 2015, under the California Refund Value programme, there were almost 2,245 buyback centres erected or there were allocated places where consumers could go claiming their nickel deposit on a bottle or can. These centres usually earn revenue by selling aluminium, paper, glass and plastic to the scrap market. The price of scrap metal lost 30.8 per cent that year and the centres began to get extinct all at once.

Almost 420 centres were unable to pay their bills and were put up for closure. Another 600 units feared extinction in the upcoming five years. CalRecycle, the state’s board responsible for looking over such occurrences did not perform efficiently to stir the consequences, as the critics pointed out.

California’s ‘Bottle Bill’ AB 2020 has put up a great notion on the table where supermarkets should step in to provide customers with nickel for every can they put in. But very few retailers have agreed to the scheme and there has been no serious enforcement law.

Consumer Watchdog released a study report in 2019 where the researchers concluded that two third out of 50 Los Angeles stores were promptly refusing to issue CRV refunds. The group performed field work as they took bottles to the stores required by the state law to provide refunds and circled the one down who did or did not return nickels in exchange.

The maximum of California’s population has the only open option for recycling which is to toss their used cans in the municipality-provided blue trash bins along with plastic, paper and other recyclable items. But this ‘single-stream’ option is not cost-effective and efficient.

“We have a single bin for curbside recycling, and we know that most of that ends up being contaminated,” commented Sen. Bob Wieckowski (D-Freemont). “Cardboard doesn’t mix well with mayonnaise jars.”

One-third of the material collected in single-stream trash cans usually ends up unsorted in landfills because they are contaminated with other non-recyclable wastes.

Wieckowski the composer of SB 38, a bill that is specially formed to combat redemption fraud, updates requirements for exemptions from the state’s recycled content standards and addresses contamination issues. When the Legislature congregates in August, the Assembly Appropriations Committee would be blooming with the recent updates.

This bill is one out of the several bills proposed in the state Legislature that endeavours maintain the state’s recycling system, like SB 372 which consists of wine and liquor bottles.

Essentially, the cans dumped in the landfills have an accumulated value which is greater than the spot market rate at present.

According to the American Metal Market data, aluminium scrap was valued at UD$ 2,354.78 per tonne in March, up 62 per cent Y-o-Y. Primary aluminium comprises 27 per cent of a new can’s body therefore its prices skyrocketed by 68 per cent during the same time span, from US$2,069 per tonne to US$3,475 per tonne.

International brands are also feeling the pressure. An Amsterdam-based Heineken’s chief financial officer, Harold van den Broek told investors in February that it would spiked prices in part to offset “soaring expenses related to aluminium.”

The price hike is a grave concern for breweries even if the can supply runs smoothly.

Almanac has entered a deal with a packaging broker that looks after its can requirement for now. “The con side is, if there are any price increases, then we’re stuck with that,” Le wrapped the session.