Local brewers, consumers to feel impact of new aluminum, steel tariffs

Print Article

Sweeping new tariffs ordered by President Donald Trump on steel and aluminum have united allies as diverse as China, the European Union and the national Brewers Association around one idea: they’re all opposed to it.

While countries such as China brace for a global trade war, local experts say the tariffs, which were signed by the president on March 8, could impact some Flathead Valley retailers and consumers.

Trump ordered a 10 percent tariff on all imported aluminum, and a 25 percent tariff on imported steel.

The changes would raise costs for manufacturers that distribute products in aluminum cans or steel kegs, and could inadvertently give an advantage to corporations that have long-term supply contracts over local brewers that buy raw materials in small batches.

Brian Clark is the president and chief operating officer for Fun Beverage Inc., a Kalispell-based distributor that supplies local bars and grocery stores with beer and wine. Clark notices when prices go up from the producers, and he sees how those costs are amplified as they move down the line and are finally available for public purchase.

“Rarely do businesses absorb costs. If a manufacturer is getting a 10 percent increase in the cost of aluminum materials they will generally pass it on,” Clark said. “In the beer business, a three-tier system, they are going to pass it on to the distributors, and I’m not going to eat it. They are going to hit consumers.”

He said when the price of materials rise, so does the wholesale price he pays. As the products pass through different hands, that 10 or 25 percent initial increase in materials often multiplies as each vendor rounds up slightly more than what they paid. Nickels and dimes add up, and by the time it hits supermarket shelves or bar taps, the increase can be significant.

It is difficult to know exactly what the impact will be, Clark said, but he has little doubt it would be a noticeable difference that would adversely impact small brewers and local consumers.

Further, lawmakers lauded recent legislation that cut in half an excise tax on small brewers as a boon to small business.

The cost of these tariffs could essentially wipe those gains away, according to the Beer Institute, a Washington D.C.-based trade association representing the beer industry. The group estimates it could cost the industry as much as $340 million a year. American brewers fill 36 billion aluminum cans and bottles each year.

That impact will also fall disproportionately on small brewers, like those that permeate the Flathead Valley.

Large national beverage producers like Anheuser-Busch often have long-term purchase agreements with their suppliers that would likely insulate them from the tariff increases for at least a little while, Clark said. Local brewers, he noted, don’t sell the volume required to make such deals viable. As such, they’ll be more immediately subject to any tariffs.

New brewers that are on the verge of opening but have yet to purchase brewing equipment could also be hit. Brewing equipment is a large investment, usually hundreds of thousands of dollars, and is largely made of steel. There are two new breweries expected to open in Kalispell in 2018.

Clark also noted that in terms of craft beer, which disproportionately comes from smaller, local brewers, bottles were more popular overall but that trend was changing.

“Consumers are really tending toward cans, with our active lifestyle here in Montana they are especially appealing,” Clark said.

The soda aisle will also be affected. Clark said many grocery stores use soda as a loss leader, meaning they sell them at low prices to attract customers that will then buy other things. If the cost of aluminum increases, those costs might not necessarily hit the price tag below the pop but the store will make that up that income by raising prices elsewhere.

Clark did note there was a vocal minority in the industry that thought the tariffs could have a positive impact.

Reporter Peregrine Frissell can be reached at (406) 758-4438 or pfrissell@dailyinterlake.com.

Print Article

Read More

Basin Commission to discuss new goals

June 18, 2018 at 5:00 am | Daily Inter Lake The Flathead Basin Commission will meet Wednesday, June 20 for a strategic planning session during which members will discuss a new path for the commission in the wake of massive budget cuts and the ...

Comments

Read More

Kalispell man, 41, identified as Olney crash victim

June 18, 2018 at 9:31 am | Daily Inter Lake The Kalispell resident was driving southbound on U.S. 93 at around 6:30 a.m. when the vehicle left the roadway and rolled. Britt was alone in the vehicle. Montana Highway Patrol is still investiga...

Comments

Read More

Putting people first

June 18, 2018 at 5:00 am | Daily Inter Lake Sue Conners does not advertise. Asked about being named North Valley’s Planetree Caregiver of the Year, one of the hospital’s three annual awards, she deflects with a casual “Oh, yeah, yeah.” She rem...

Comments

Read More

Developers revamp U.S. 93 plan in Whitefish

June 18, 2018 at 5:00 am | Daily Inter Lake Developers aiming to create a neighborhood plan for 70 acres fronting U.S. 93 South in Whitefish have submitted a revamped application that is the focus of a Whitefish Planning Board public hearing o...

Comments

Read More

Contact Us

(406) 755-7000
727 East Idaho
Kalispell, MT 59901

©2018 Daily Inter Lake Terms of Use Privacy Policy
X
X