How New US Tariffs May Impact Your Brewery

I don't think broad tariffs have much chance of being imposed. Just look at the airline industry. We could slap a big levy on Airbus; it's obvious that most of the rest of the world would retaliate on Boeing. The result would be a big mess. If the tariffs are generally applied, the price of beer is going to be the least of our worries. The US is pretty self-sufficient in the raw ingredients. Some imported varieties of beer might become scarce or be brewed domestically, and adjustments could be made in other beers. In the case of Corona and Modelo (mentioned above), Constellation would probably have to pay a higher price for imported malt and hops due to Mexican tariffs, plus a US duty on Corona and Modelo. In the case of Constellation, they could, at least in part, reduce their markup, which I suspect now is really big.

 

Barley for beer is a specialized product. Most US barley is malting barley for beer. Other regions likely farm larger quantities of barley used for other purposes.

 

There is such a long list of items a brewery may need, aside from just grain in the weekly, monthly, annual replenishment of goods. and items to handle any of the basic functions a brewery has. x part in the keg washer, or in the seamer goes out, and the only manufacturer of it happens to be so and so, and the price is now.
The price of aluminum is now, because that happens to be the only place your brewery with x capacity could go because so and so had NO MINiMUM ORDER on blank cans.

 

Go back to bottles. No shortage there. Imported materials aren't needed. Bottles also probably offer better stability than small can runs, so could result in less waste.

 

Rahr has 2 malting facilities; 1 in Shackopee, and one in Alix in Alberta. If I were them, and there is a 25% tariff, I would exercise Force Majeur on those contracts. I would absolutely entertain getting malt from Shackopee, or from one of their competitors, but what the hell do they do with all of the malt at Alix? And what are the chances they can service their absolutely gargantuan contract with ABI as well as every craft brewer that is currently brewing with their Alix malt?

Let's also not forget that malting quality barley malt is grown and then imported extensively by most of the major maltsters. There is no easy fix to a tariff like this. It would be a nightmare.

And then there's all of the EU grown malt that so many of us use. Luckily, US grown Pilsner, Munich and Vienna malts have come a long way since I started my career. They are pretty damn convincing, but not necessarily if you're trying to brew a Helles. While they'll do in a pinch, and certainly better than nothing, VERY few brewers are going to spend 2-3x for Continental pilsner malts.

This might finally get me to find a US grown crystal/caramel malt I like, and from a sustainability standpoint, I really like that. Got to look on the bright side...

 

From a press release last month:

“MOORHEAD — Anheuser-Busch has announced plans to close its malt house in Moorhead and sell its elevators in West Fargo and Sutton, North Dakota.

The move is the result of an agreement the brewing company made with Rahr Malting Co. to take on the full capacity of malt production for Moorhead. Any new supply of North Dakota or Minnesota barley will be redirected to Rahr’s Shakopee, Minnesota, malt house starting in 2025, according to a release issued Thursday, Nov. 14.”

https://www.inforum.com/business/an...nt-sell-elevators-in-west-fargo-and-sutton-nd

It would seem that Rahr has three malting facilities: Shakopee, Alix in Alberta and now Moorhead.

Do you think that for AB, they require more malt than both Shakopee and Moorhead facilities can provide?

Cheers!

 

Please disregard the comment of "three facilities" above. I misunderstood the meaning of "take on full capacity ...Moorhead". It apparently means that what amount of malt that was produced at Moorhead will be produced at Shakopee instead. I guess that the Shakopee Malting facility has (or will have) increased capacity.

Cheers!

 

I believe that the plan is for Rahr to absorb that demand into their Shakopee facility rather than continuing to operate the Moorhead facility.

But the prospect of these tariffs must change the economic prospects of that Moorhead facility

Edit: and I see to caught that while I was typing

 

Moorhead was ABI's malting facility. I would have no idea about Shakopee's capacity. But if all of a sudden, every customer they have contracted, needs to move their contract away from Alix, that will most certainly create an enormous logistical problem.

 

I think the thoughts of adjusting barley plantings, malt production and purchasing plans is all premature. It's not likely that the US will impose blanket tariffs on goods from Mexico or Canada. The disruptions across North American economies would be debilitating for everybody.

 

The tariffs, if imposed, might affect maintenance parts for US-based foreign-made planes. I was thinking about existing orders and future purchases around the world. As I understand, many (most?) of the commuter air fleets are foreign made.