Wrapping Up the Can Phenomenon

Several years ago, I met with the owner of an established local brewery to discuss the trajectory of that brewery. It had struggled to stay relevant in a market increasingly packed with shiny new breweries. This was and is a serious issue among older breweries in craft heavy areas.

A recent wrapped can

Brewery consulting isn't something I do. I'm much more an observer of this industry than a part of it. I met with this guy because I knew him and had a mostly cordial relationship with him. I'm sure he consulted others. There was no compensation involved, other than a beer or two.

At the time, we were entering a period in which tried and true brands were struggling. This brewery had several well-known brands that previously had a solid following in retail, pubs and specialty shops. They were declining in popularity and he wondered what they should do about it.

This brewery didn't have any beer in cans at the time. Just 22 oz bombers and six-packs. It was just beginning to become apparent that cans were going to be a thing going forward. One of my suggestions was that they start canning some of their standards. Easy enough.

But there was more to it than that. Another challenge established places have grappled with dating back several years is the flood of small batch, new stuff. They were accustomed to fielding a few standards, which were getting stale and lost in the sea of rotating beers offered by newer places trying to make a name.

That trend had not yet reached the crushing crescendo it has attained today. I suggested they start playing around with creative new names for existing brands and slightly modified versions of those brands. In short, create buzz mainly via the use of fresh new names. My feeling was that the beers themselves probably didn't need to change that much, that altered naming would be enough.

They eventually started canning. More recently, they began to build a portfolio that includes standards, one-offs and rotating seasonals in cans. I don't know how many, but they are, in effect, emulating what many newcomers are doing. There's surely still a relevance issue due to the "establishment" history, but at least they're working a plan.

I have to admit I did not anticipate the latest craze: the wrapped can. It somehow signifies the nearly complete insanity that has engulfed craft beer. You know what I'm talking about. These are the cans that often feature catchy artwork on labels affixed to (typically) 16 oz cans that sell for (typically) $20 (or more) per four-pack or $5 to $7 per can. The beers may be one-offs or rare species from nearby or outside the area. They create automatic interest, intrigue and sales.

But wrapped cans didn't originate as part of a profit motive. They started out as a way for small breweries to get their beer into cans without having to order a semi load of pre-printed cans. Instead, they buy blanks and use limited run label wraps. Along the way, wrapped cans morphed into a sort of code for rare and special among craft beer fans. I suspect that was accidental; I could be wrong.

My experience is that wrapped can beers aren't always great. In fact, they often aren't very good at all. But the artwork and the custom label convey the illusion of something special, in much the same way that wax dipped bottles create the impression of quality and value. As someone may have once said, when you resort to selling packaging, you've entered a new dimension.

No matter. Imitation being what it is in craft beer, the wrapped can phenomenon is spreading like a virus. Seeing consumers willing to spend megabucks on packaging that creates an aura of rarity and value, large and small breweries everywhere are anxious to enter the fray. That's why we see constant wrapped can brand churn in bottleshops and specialty stores.

When will this nutty fad run out of gas? Possibly when consumers become skeptical of packaging gimmicks and overpriced beer. Or maybe when the frenzy swirling around craft beer subsides or collapses. Which happens first? We shall see.

The Rising Tide of Craft Cans

The rapid rise of beer in packaged form began in earnest after World War II. Beer had been available in bottles for many years and in cans for about a decade. But draft was king. That began to change following Prohibition, largely the result of consumers preferring to drink beer somewhere other than a bar or tavern.

Advancements in packaging, refrigeration and transportation made during the war eventually helped make packaged beer more popular than draft. Growing up through the sixties and seventies, I clearly remember an abundance of macro beer choices in bottles and cans.

Most people considered cans to be inferior in those days. They were easier to handle, but there was the constant scourge of tasting the can, whether it was steel or aluminum. Bottles were preferred by most self-respecting beer drinkers and mainstream consumers.

When craft beer came along, canning was impractical. Not that anyone would have bothered with it. The supposition was that bottles were superior if you wanted to protect the integrity of your product. So packaged craft beer came mostly in 12 oz bottles or 22 oz  bombers. Cans were rare.

Today, those assumptions and practices are under siege. A lot of consumers have decided they like the flexibility of cans, which are lighter, less breakable and easier to take on excursions than awkward bottles. They've also decided that beer from a can tastes just fine, that maybe the reason cans had a bad rep in the past was the beer that came in them.

Walk into your local bottleshop and you'll see the result: cans everywhere. In fact, you're more likely to see that trend on display in a bottleshop than you are in a grocery story, according to intel in a recent article by Brewers Association economist Bart Watson. Cans are winning big with a particular segment of the market, which I'll get to shortly.

In the big picture, bottles remain the top dog in packaged craft beer, Watson says. Bottles accounted for about 72 percent of packaged craft production in 2016. Cans came in at just over 28 percent. But can growth is spiraling upward. Watson reckons cans will account for about 31 percent of packaged craft in 2017, once the numbers are in.

The most intriguing part of this for me is where the most spectacular growth is occurring. You might assume brewers across the board are switching to cans. But that isn't the case at all. In fact, only a small percentage of breweries are switching from bottles to cans, according to Watson. Regional craft breweries are largely sticking with glass.

That's why you aren't going to be blown away by craft cans in grocery. Regional and national craft continue to dominate shelves in that channel. Which means a lot of bottles. So shopping the beer aisle in grocery isn't going to be much of an indicator, in terms of can growth. But your local bottleshop probably is.

The reason is wrapped around who's using cans and who's growing. Watson demonstrates this with a table which shows that smaller (likely newer) breweries are far more heavily invested in cans than older, larger breweries. It also turns out smaller breweries are responsible for the greatest craft segment growth, by percentage. And this beer is far easier to find in bottleshops than grocery.

Breweries producing less than 10,000 barrels were responsible for 58 percent of craft segment growth last year; those producing between 10,000 and 100,000 barrels were responsible for 17 percent of segment growth. Between them, these folks accounted for more than 85 percent of craft can share in 2016 and they grew that share by more than 20 percent last year.

The trend to cans is an emerging tsunami. In a few years, they will surely account for more than 50 percent of packaged beer. Cans have gained traction with young fans who flock to smaller, newer breweries. It hardly matters that those breweries tend to produce trendy brews to attract that audience. The appeal of those beers is driving wider acceptance of cans by the day.

Larger, established brewers are being forced to take note. Most have been slow to accept and adopt cans, but attitudes are changing. Hey, even if you don't want to brew and release trendy new styles, putting your beer in cans with updated label art is smart marketing.

Canning the Myths (About Cans)

There's been plenty of talk in recent times about the growing popularity of cans in craft beer. I've discussed the topic several times here. I was mostly concerned with the viability of cans as an alternative to glass. I continue to believe cans are a great packaging option for craft beer and that they will continue to gain share over the next few years.

Right container, wrong contents

When I wrote those prior posts, I was looking only at the growth factors. The numbers are pretty dramatic, showing off-the-hook increases. The graphs below show what's been happening and which segments are growing fastest, among other things. In case you're wondering, all of these graphs are based on information from the Brewers Association.

Growth Spurt
The two graphs below illustrate the growth of canned craft beer in two ways. First, you're looking at case sales growth. Next you're looking at the stripped down financials. These are fairly scary numbers. We are seeing a near doubling of numbers each year. I suspect these figures are convincing some brewers that moving to cans is a viable option.

Segment Stories
The graphic immediately below shows which packaging types are dominant. The bulk of the market is clearly owned by 12 oz cans, whether in packs of six or 12. I'm trying to recall seeing 12-packs of craft cans. I see lots of 6-packs, as well as 4-packs. But not so many half racks in cans. Oh well.

The next graphic shows where the growth is. The two segments with the smallest share of the can market turned in by far the greatest growth for 2011. The growing popularity of 16 oz cans is handily illustrated here. These numbers suggest that some craft brewers may see 16 oz cans as an alternative to 22 oz bottles. I can't run too far with that, but that's what I suspect. Meanwhile, 12 oz cans are competing with 12 oz bottles...which dominate the retail category.

Sobering Perspective
Understanding the place that cans have in craft beer means you have to know the size of the market. The Brewers Association says the retail craft beer market was worth $8.7 billion in 2011...representing a 15 percent increase over 2010. Rapid growth continues...you gotta love that.

Now for the shocking part...if you think cans are about to take over craft beer distribution. The graph below shows what share of the $8.7 billion market is owned by cans. The number is $11.5 million. In other words, barely a blip. Despite monstrous recent growth, which tends to warp perceptions, cans have a very long way to go before they become a serious player in the overall scheme of things. 

Just for fun, consider comparative numbers for 22 oz bottles: They own $44 million of the craft retail market. Bomber market share increased by 35 percent in 2011 and they remain a popular option for breweries and buyers. Yet 22 oz bottles account for only about 5 percent of overall retail sales. And cans represent about a fourth of bomber volume. Yikes!

Note: This post was updated on 9/21/2012 to correct a mistaken data point. 

Help! Canned Beer Prices Make No Sense

I've mentioned the canning of craft beer before, but I feel the need to bring it up again because I'm perplexed. I fail to understand the pricing strategy with canned beer. I'm not alone.

Just to review, it seems completely reasonable to me that more good beer should come in cans. The myth of canned beer tasting bad has been widely debunked. Modern cans use a liner that keeps the aluminum and the beer separate. In fact, cans completely protect beer from light, the most significant cause of beer degradation in shipping and shelving.

As I noted in my earlier post, cans are convenient. They're less prone to breakage when dropped or jostled around. They are light and compact. You can take canned beer places you would never take bottles. They are also easier to display on store shelves because they can be easily stacked.

Beyond convenience, cans offer are environmental benefits. Aluminum is the most recycled form of packaging worldwide. About 44 percent of an average aluminum can comes from recycled material. Obviously, cans are lighter and less costly to ship.  Less energy is used in the aluminum can loop than with glass.

Given the various positive factors, I keep wondering why canned beer seems to cost more than bottles. I consistently see six-packs of cans priced between $9 and $12. Nearby, six-packs of similar bottled beer are selling for $8 to $10. What's up with that?

I've asked around. Nobody has a reasonable answer. 

Does canned craft beer cost more because it's relatively new and the start-up costs are high? Well, this movement has been underway for several years. There's mobile canning out there now, so investment in an expensive canning line shouldn't be an issue. If it was an issue for places that jumped in early on, you'd think the start-up costs would be paid down by now.

Does it cost more because it's a novelty that can be priced higher with no effect on sales? If that's that case, craft beer in a can may stay a novelty. The current pricing structure offers little incentive to consumers who are open to switching to cans. 

What about buying discounts? Are higher prices the result of retailers buying less craft beer in a can? It's easy understand why retailers might be reluctant to move away from bottles. Beer consumers have been conditioned to believe any beer in a bottle is better than the same thing in a can. 

My thoughts? Even though canned craft beer makes good sense to me, the only solid selling point it has at the moment is convenience. For the movement to really take off, prices of cans will need to align fairly closely with prices on bottled beer.

Comments and explanations welcome. 

Boneyard Builds Unique Brand

Bend's Boneyard Brewing has turned a lot of heads among Portland's craft beer fans since it opened in April 2010. The brand that built a reputation primarily on a couple of excellent IPAs is moving onward and upward.

The quasi-elegance of the Boneyard brand

There's no pretentiousness here. When you pull up in front of Boneyard, located in a mixed residential/industrial neighborhood in Northwest Bend, you are greeted by a rustic, ornamental motorcycle. Brewdog, X, is casually vigilant near the warehouse door. This is old school.

Walking up to the door, I was greeted by co-owner and head brewer Tony Lawrence. This was strictly by chance. I didn't call in advance to arrange a tour or interview. I was pleased to meet Lawrence, then amazed when he spent more than an hour showing me the place and telling me about Boneyard.

Beerlogist checks his production notebook

Lawrence, who formerly worked at Deschutes Brewing and Firestone Walker, announces himself as a beerologist, saying it more accurately describes his role. There are several brewers on the payroll at Boneyard and they were hard at work as I walked around with the boss. The 20 bbl brewhouse and collection of fermenters are packed into the available space.

The Boneyard tag itself is interesting. Bend beer fans will probably recall that this place was originally to be called Brewtal Brewing (according to the initial story in The Bulletin). The name morphed into Boneyard Brewing prior to the opening in April 2010. There are reasons for everything.

An example of Boneyard's make-it-here approach

"Boneyard is a name that makes sense for us," Lawrence said, "because beer isn't the only thing we make here. We make a lot of the stuff used in the operation. We can weld and we make our own tap handles, among other things. Recycling discarded stuff from the proverbial boneyard for use in and around the brewery is something we strive for."

As for the beer, Boneyard has a serious problem: They simply cannot make enough beer in the current facility to keep up with demand. They have risen quickly on the OLCC's sales list, coming in at #20 on the Year-to-Date Taxable Barrels sales report for October 2011 (the reports are always two months behind, Lawrence said).

They will soon add three additional fermenters to the mix. That will increase output somewhat, perhaps to the point where Boneyard can begin to seriously think about actively pursuing distribution by 16 oz. can. That plan has been on the drawing board from early on. They even own a $35,000 canning machine...which sits idle.

Canned RPM IPA will eventually happen

"I had hoped to be doing some distribution by can by now," Lawrence said. "But we're barely able to keep up with draft distribution (just the Northwest for now) and there's no way I want to alienate our distributors by launching the canning project and shorting our draft supply. We'll get to canning when we're ready."

It seems likely they won't be ready until next summer at the soonest. Lawrence said Boneyard recently signed a lease on a new building which will house a 50 bbl brewhouse, with plenty of space for fermenters and growth.

"The reality is we just don't have enough room in the present building to house the kind of brewing facility we need to be able to build out the brand," Lawrence said. "The new space, once we get it up to speed, will allow us to supply the draft and retail distribution channels...I hope."

The current brewing operation...too small

When retail distribution comes, RPM IPA in 4-packs of 16 oz. cans will be the first beer to appear on shelves. It will be available primarily at bottle shops and perhaps at grocery stores like Whole Foods and New Seasons. Lawrence isn't ruling out distribution by bottle and says a 750 ml bottle is possible.

"Canning is the road we plan to go down, and we're set up for it," he said. "But never say never with respect to bottles. I see successful breweries doing draft, cans and bottles. You never know. We don't want to rule anything out."

The Boneyard tasting room, located at the brewery, is small and friendly. Beer fans headed to or through Bend absolutely must stop by. The motif fits in well with the uniqueness of the Boneyard brand. Generous tastes will cost you $1 a piece, well worth it.

On my visit, they were pouring RPM IPA, Skunk Ape IRA, Femme Fatale, Backbone and Diablo Rojo Red in the tasting room. All were quite good. I also tasted Hop Venom from a fermenter, which was a little green, as well and several other beers in the backroom. Fun times.

The Boneyard tasting board

Lawrence, the perfectionist, claimed the RPM was a little off. He said a new batch of hops was somewhat green and had shifted the taste in an unfavorable way. Honestly, I thought it tasted fine. RPM has a great aroma and some of the citrus and pine notes that make it a viable competitor for Pliny the Elder.

One final note on Hop Venom and RPM: Lawrence said he is in the process of dialing both of these beers down a bit in terms of ABV. RPM, currently 7.5%, is being dialed down to about 7%. Hop Venom will go from 10% to 8.8%. This is part of an effort to improve the drinkability of both beers.

Canning Expands Reach of Craft

Moving away from bottles and toward cans will open up new markets for craft beer. More on exactly how that will happen momentarily. First, the explanation.

I was over at Belmont Station one day a while ago. It's always fun listening to what shoppers are talking about. One guy was telling his buddy he wouldn't buy a particular beer because it came in a can. This wasn't Rainier or Pabst, by the way. This was a craft beer...Caldera or 21st Amendment, I think.

The anti-canned beer opinion is uninformed. We aren't living in the bad old days when people thought crap beer tasted the way it did because of the can. That beer tasted like crap because that's what it was. Budweiser may have tasted slightly better in a bottle, but it was still crap.

Crap is crap, no matter how you package it

The thing is, cans are convenient. They don't break when dropped or jostled around. Cans are light.You can take canned beer hiking, fishing, skiing or golfing. Convenience is a big consideration, sometimes the most important or only consideration.

Yet bottles maintained a clear edge in the craft market. Many brewers assumed bottled product was the only thing that would sell. For years, that's the only way you could find craft beer on retail shelves.

The bottle bias is starting to breakdown. Bottles are, quite frankly, inconvenient. They break, they're heavy and they cost a lot to ship. Bottled beer takes a long time to chill. Beer in a bottle is also susceptible to light damage.

Some craft brewers are turning the corner and moving away from the bottle bias and in the direction of cans. This change is opening up new markets previously owned by the crap macros. You can get good beer in a can while you're golfing these days. You can get it and take it hiking or fishing. You can get a good canned beer at some sporting events, venues that can't sell bottles for safety reasons.

Just a few craft beers available by the can

Beyond the convenience offered by cans, there are environmental benefits to consider, as well. Aluminum is the most recycled form of packaging worldwide. About 44 percent of an average aluminum can comes from recycled material. Obviously, cans are lighter and less costly to ship. Breakage is a non-issue. Less energy is used in the aluminum can loop than with glass.

Besides the bottle bias, another reason cans have been somewhat slow to catch on is initial cost. A small brewery can fill and distribute 22 oz. bottles fairly cheaply. Cans are another story, involving a large upfront investment.

That's changing. We've all heard about mobile bottling. Now there's mobile canning. Instead of spending several hundred thousand bucks on a canning line, small breweries can now spend between a few hundred and a few thousand dollars to get started canning, depending on the amount of beer to can and other factors.

The future of canned craft beer is now. Contrary to what some may think, it's a good thing.