Printing Margin —

When 22oz bombers began fading as a primary packaging format in 2015, national and regional craft breweries mocked the stickers that began wrapping aluminum cans, calling them amateur. That sentiment didn’t last long as breweries like Treehouse, Trillium, Other Half, Tired Hands, and Monkish changed the game by cranking out same-day sellouts of high-priced Hazy IPAs using this flexible 16oz/4-pack format. By 2018, wrapped four-packs had been validated to the point that Sam Adams released their first ever New England-Style IPA in a printed can, designed to look like it had a sticker on it.

Sticky Situation

Labeled cans arrived on the scene out of necessity, not as a marketing ploy. Their application allows for only one type of aluminum can to be maintained in stock. Precise numbers of stickers may be ordered for upcoming batches, allowing brewers to align their purchases with a batch’s expected yield. This flexible, cash flow-friendly approach helps minimize waste and warehouse space needed to store cans, while keeping customers engaged with constant variety and rotation.

Depending on volume and sophistication of the label design, use of metallics and other premium printing features, they can cost 3X - 4X more than their printed counterpart, totaling as much as $7.00/case extra. The challenge with the alternative of a printed can run is the volume, which tends to start at a full truckload of ~25 pallets, or approximately 600 BBLs of a single brand.

Despite nearly three quarters of all craft brewers producing under 1,000 barrels in 2019, being beneath that key milestone doesn’t preclude you from the economical advantages of painted cans. As crazy as this may sound, it’s cheaper to buy a run and immediately destroy/recycle half of them, than to use a sticker on that same half-truck quantity. The catch again is that it still needs to be a single brand.

Chicago’s Spiteful Brewing has been proving for quite some time that size doesn’t matter. Their first run of printed cans of their namesake IPA was ordered in March 2017, while projecting under 800 BBLs in sales that year. With only about ~40% expected to be IPA, the requirement to pay upfront puts a damper on cash flows. The improvement to gross margin however was crucial in executing their competitive pricing strategy. Operationally, Spiteful takes advantage of free warehousing offered by their can supplier, allowing them to bring in the cans as needed. Since growing to 3,000 BBLs of production in 2020, Spiteful now uses printed cans for their IPA (12oz), Lager (12oz), Double IPA (16oz), and until just recently, their Porter (16oz).

Cramping YOUR Style

Whether brewers want to admit it or not, the glut of big Double IPAs and Imperial Stouts being cranked out by the industry’s long tail is as much push as it is pull. The higher price tag of these styles helps absorb the constraints of expensive, but flexible packaging, not to mention being more profitable entirely. For breweries championing more everyday drinking styles such as Pale Ale and Lager, at consumer-friendly retail prices like $9.99/unit, the cost of labeled cans may be prohibitive. For those adopting the Three Tier System, the delta can easily reach 20% of gross revenue and an unsustainable 50% of gross margin.

Note: Bright Beer Cost varies wildly by style, scale, and ingredient choice. The cost of packaging also varies significantly based on quantity discounting and purchasing power. These figures are for example purposes only, based on conversations with… — Note: Bright Beer Cost varies wildly by style, scale, and ingredient choice. The cost of packaging also varies significantly based on quantity discounting and purchasing power. These figures are for example purposes only, based on conversations with small breweries of wide-ranging sizes.

Outside of capital investments and process improvements, the cost of making beer is constantly on the uptick, with aluminum cans, cardboard, and labor being major contributors. Scaled up national players will continue using their weight to put downward pressure on craft pricing, which means smaller craft breweries should continue using their nimbleness and small batch capabilities as a key point of differentiation. At the same time, breweries must seek growth & efficiencies to offset rising costs and the best way to accomplish this is more focus.

Bet on Yourself

Last month, Chicago’s Off Color Brewing shared a photo of a pallet of freshly printed cans of their top seller, Apex Predator. This was their first printed can purchase for a specific brand since moving into cans in late 2019. The caption on social media read, “We’re pretty confident this Apex Predator beer is gonna work out. So we committed to printed can bodies.🤞”

Off Color has every right to be confident. Over the last 52 weeks, Apex Predator’s in-state sales in IRI-tracked retailers has more than doubled, growing to 2X it’s next closest competitor in Illinois’ Farmhouse Ale category. Championing a style outside the usual suspects like saison requires a long investment horizon. Making the switch to an atypical size and format for saison took discipline and foresight. Off Color’s move to a printed can shows that their focus and commitment to saison is paying off.

Clear to Print

When speaking about personal finances, the question often posed is whether you are working for your money or your money is working for you? I consider this investment mentality a lot when it comes to brand building. Spend more time & money investing in your core so that it’s working for you while you sleep. Creating one-offs is and always will be an important pipeline to the portfolio, but it shouldn’t over-index to the point of neglect. Reallocate away from the noise, bet big on what you do best, and transform those strengths into a long-term annuity.