1 Surprising Trend Giving Craft Beer a Boost

It's craft beer in cans, and it's more important than you might think.

Mar 11, 2014 at 6:15PM

Long regarded as a surefire way to ruin the taste of your craft brew, cans are now front and center in the beer world, acting as a surprising force behind the growth of the craft movement. Boston Beer (NYSE:SAM) and Craft Brew Alliance (NASDAQ:BREW) are both taking advantage of the trend, rolling out cans for several of their beers over the past few years, while brewers such as Oskar Blues and 21st Amendment don't bother packaging their beer in bottles at all. Today we're taking a closer look at the beer can, exploring why it matters and what it can do for the longevity of the craft beer movement.

Beer Cans

Source: Wikimedia Commons.

Impressive origins
Cans were a big question mark when they first hit the market in January 1935. The partnership between the American Can Co. and Gottfried Krueger Brewing released 2,000 cans of Krueger's Finest Beer and Krueger's Cream Ale to the thirsty masses of Richmond, Va. 

Almost immediately, Kreuger's popular cans started cutting into the market share of big-time players Anheuser-Busch, Schlitz, and Pabst, all of which promptly jumped on the bandwagon. By the end of the year, the industry had sold more than 200 million beer cans.

Yes, we can
For a long time, craft brewers -- including Boston Beer founder Jim Koch -- dismissed cans because of their association with economy beers from Anheuser-Busch and Schlitz, and their perceived effect on the taste of the beer inside. These aren't your grandmother's cans, however. A thin film that coats the inside of the can by and large eradicates the taste myth, leaving only the advantages of canned beer in its wake. And the advantages are numerous:

  • Cans are extremely convenient, lighter than bottles.
  • They are not banned where glass bottles are.
  • Cans cool faster.
  • Cans are airtight, and light-proof, so the beer is less likely to get skunked.
  • The can is a better canvas; can art is integral to branding and marketing.

The first point, that cans are lighter, may resonate with consumers, but it is also extremely meaningful to producers trying to reduce shipping costs. The lighter, stackable cans are cheaper to ship than their heavier bottle counterparts.

There is another upside to cans that is crucial to craft producers. Consider this statement from Craft Brew Alliance's 2013 10-K:

The shift in mix from draft to packaged in 2013 compared to 2012 was primarily the result of the increases in volumes of our Kona and Redhook packaged beers and lower volumes on our Widmer Brothers draft beer. Increased competition across the industry, as a result of both the entry of large, multi-national brewers into the craft beer segment and the significant increase in small, local breweries nationally, is putting pressure on on-premise draft sales.

In other words, producers need to give themselves every opportunity to make up losses at barroom taps with a strong retail presence. In this case, putting beer in cans gives you access to the consumer who wants a canned beer -- possibly any canned beer -- for the reasons discussed above.

The importance of the can-loving consumer was not lost on Boston Beer's Koch. He did an about-face on the idea and his company spent two years and $1 million designing the best possible can for its flagship Boston Lager, releasing it to the masses last year.

Bottom line
In 2002, Oskar Blues was the only craft brewer putting its product in cans. By 2009, that number had risen to 52. Today, the website craftcans.com estimates there are now at least 388 breweries canning craft beer. The movement to cans lifts a key impediment on the growth of craft beer sales. It improves availability and reduces cost for brewers, both factors that should improve the long-term viability of the craft movement.

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Aimee Duffy has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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