Business Monday: Tariffs tough for Aspen-area canned brewers to swallow
Duncan Clauss estimates that Aspen Brewing Co. canned about 200,000 beers in its first year of production in 2010. That figure now stands at 750,000 to 1 million, roughly quadrupling the craft brewer’s original output, and a surefire sign that the business is growing.
The craft beer industry in Colorado also is growing fast, punctuated by its $3 billion economic impact in 2016, up from $1.7 billion in 2015, according to the Boulder-based Brewers Association, a trade group that released its findings in September.
But President Donald Trump’s 25 percent tariff on imported steel and 10 percent tariff on imported aluminum has been difficult for the beer industry to digest. The tariffs took effect June 1, after attempts by those in the impacted industries, such as beermakers, failed to convince Trump to reverse course.
The aftershocks can be felt in the Roaring Fork Valley, which boasts a handful of brewers, some of whom can their creations for distribution.
“It’s definitely a huge impact,” said Clauss, the founder and president of Aspen Brewing, which has a production facility at the Aspen Business Center and its Aspen Tap bar and restaurant downtown. “Craft beer operates on a small margin, and part of the attraction in the industry in the past five to seven years is the explosion of cans. Every penny counts. Cans are slightly cheaper than glass, and then there’s the convenience part, the accessibility. You can take cans of beer anywhere.”
Twelve-ounce cans cost about a 10 cents each, said Chase Engel, owner Roaring Fork Beer Co. in Carbondale. A 10 percent tariff, he said, “means only a penny a can, which doesn’t sound like a lot, but when you operate on a paper-thin margins, then you start destroying those (with the tariff).”
With the tagline “craft beer in a can,” Roaring Fork Beer Co. cans about 30,000 beers a month, said Engel, noting distribution has grown annually by 30 percent over the past four years.
Clauss didn’t hesitate when asked if the cost of the tariff could be passed on to consumers.
“I think consumers should definitely anticipate seeing an increase in cost on the liquor-store shelves,” Clauss said. “When we opened in 2008 (before Aspen Brewing canned beers), there were about 1,500 craft brewers. Now there’s over 6,000, so competition for raw materials and ingredients has driven prices up all over the board. This definitely is a big speed bump.
“The revenue is going to come from somewhere, whether it’s trimming our marketing, which is counterproductive to growing a business, or not bringing on new employees.”
Longmont-based Oskar Blues Brewery told The Denver Post in May that the tariff could translate to another $475,000 to $575,000 in yearly expenses. Oskar Blues, the maker of Dale’s Pale Ale, is the state’s second-largest craft brewery, producing 201,000 barrels of beer a year, according to The Denver Post. Breweries aren’t just hit by the aluminum tariff that impacts the cost of cans; brewing equipment — such as tanks — also would take in higher costs because of the steel tariff.
“Everything is steel — our kegs, our tanks,” Engel said. “And we need to purchase more of those to keep growing. If those go up 25 percent, that’s a pretty huge amount when you’re talking about a $30,000 tank and adding onto that.”
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