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3 Reasons Why Craft Breweries Will Overcome New Steel Tariffs

March 28th, 2018

By Farrell Tiller, Economic Development Manager

The White House announced a few weeks ago new tariffs on imported steel and aluminum in hopes of reviving the U.S. steel industry. The 25% steel and 10% aluminum tariffs pose a challenge for companies using these metals by driving up the cost of materials; however, it remains to be seen just how significant the impact will be on the craft brewing community. One conclusion we can draw is that because breweries are becoming increasingly reliant on aluminum cans to market and sell their product, the new tariffs will likely raise costs, making it more difficult for small independent breweries to enter an already ultra-competitive distribution market.

While early micro-breweries traditionally distributed using glass bottles, today’s breweries are increasingly shifting to canning. Beer cansheets are made from mostly aluminum and steel and hold advantages over glass because the cans are more cost-effective to produce and distribute. Canning also offers micro-breweries the ability to craft a unique marketing message and brand identity, an asset that has given micro-breweries the ability to differentiate from and compete with big beer brands such as Miller Coors and Anheuser InBev.

While experts debate the level of impact new tariffs will have on the craft beer industry, here are three reasons why RMA believes craft breweries will be successful despite a possible rise in material costs:

  1. Distribution markets for craft beer are becoming increasingly crowded. New breweries, particularly in Florida, are popping up almost every day, with so many beer brands competing for limited shelf space, new breweries will have to seek other sales channels. Breweries and brewpubs (brewery or tap room with a restaurant component) that focus more on local markets and on-site sales won’t feel the effects of the steel tariffs as strongly as those that heavily distribute canned beer.
  2. Breweries have traditionally been resilient to overcome regulatory challenges. This is not the first-time craft breweries have had to overcome adversity. Florida is the perfect example, as craft breweries have been successful despite growler and distribution laws that largely favored big beer companies over smaller independent brewers. (64oz growlers, the most popular sized beer jug was outlawed in Florida until July 2015).
  3. Brewpubs are becoming the new ale house (but better!) – In many ways, brewpubs are becoming the new ale house, a friendly environment where all ages and walks of life can enjoy a unique dining experience. Today’s family-style sit down restaurants (Such as Ale House’s) are having difficulty competing with the price and convenience of fast-casual restaurants such as Chipotle and Panera Bread. Despite this trend, RMA still sees increasing demand for experiential dining, and brewpubs could be the perfect model to fill this gap. Unlike the traditional Ale House, brewpubs offer more than just food, drinks, and sports. Unique locally brewed beers paired with the perfect meal or snack, games and activities for all ages, live music, and a strong connection to the local community are inherent advantages that brewpubs have over traditional family-style restaurants. Stop by your local brewpub and experience for yourself!

Thank you for reading and please stay tuned for more RMA beer news and upcoming celebrations for National Beer Day (April 7, 2018) and Craft Beer Week (May 14th-20th)!

Lastly, please welcome South Florida’s newest breweries!

  • Mathews Brewing Company, Lake Worth
  • Odd Breed Wild Ales, Pompano Beach
  • Bousa Brewing Company Little River, Miami
  • Prosperity Brewers, Boca Raton (Coming Soon)
  • Tarpon River Brewing, Fort Lauderdale
  • Gulf Stream Brewing Company, Fort Lauderdale (Coming Soon)
  • Steam Horse Brewing Company, West Palm Beach (Coming Soon)
  • Tripping Animals Brewing, Doral (Coming Soon)

 

 

 

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