Rising expenses: Exploring the impact of aluminum tariffs on a craft brewery in Nashville
Craft Brewers Brace for Impact as New Tariffs Kick In
Crank up the pain, folks! The craft beer industry, known for its liberal use of aluminum and steel in every nook and cranny, is about to feel the squeeze of the freshly imposed 25% tariffs on the raw materials.
For Wesley Keegan, the brainchild behind Nashville's TailGate Brewery, the tariff appliance means one thing: higher costs all around. "It's a simple equation," he told CNN. "More costs equals less profit."
The tariffs, enacted by President Trump on Wednesday, may see US companies — big and small — bearing the brunt, as they have to find a way to pass along the increased costs to consumers. However, the exact hike in the price of a TailGate Brewery's six-pack of ciders, stouts, or lagers isn't precisely clear yet.
"We have to be prepared to swallow the financial hit," Keegan admitted. "The hard part lies in balancing the reality that you can't survive without turning a profit, but you also can't pass on every price increase to the consumer."
In a world where business is a rat race, Keegan's brewery tries to absorb as much as it can, but it isn't the only input that's seen its price tag jump in recent years. "There isn't a single input in our industry that hasn't increased prices every year for the past five years," he added.
Barrels, Bottles, and Beer
The last few years have been a roller coaster for craft breweries. The pandemic emptied their taprooms, forcing them to bank on takeout vessels like cans and bottles. But then, global supply chain issues created shortages and soaring prices for essentials, including cans, which were already on the rise after the 2018 tariffs.
Add to that the shift in tastebuds, with consumers and retailers opting for beverages beyond beer, and you've got a perfect storm for struggling breweries.
But Keegan hasn't let adversity halt his progress. His 10-year-old company, TailGate Brewery, has expanded to nine taprooms across Tennessee. The post-Covid-19 era saw a shift in his sourcing strategy, with Canada being replaced by a diverse group of suppliers, including China, the US, and even Jordan.
Yet, the aluminum industry is undergoing a consolidation phase, with some manufacturers preferring to work exclusively with large breweries like Anheuser-Busch InBev or being acquired by competitors. This leaves smaller breweries like TailGate struggling to find suppliers who will deal with them directly.
"Too Small to Matter"
Despite operating in a state that overwhelmingly supported Trump and his policies, Keegan keeps politics out of his business. "The voters might cheer for the administration, but if they see their beer prices going up, they won't be too pleased," he said.
The Brewers Association, an organization that represents over 9,000 small and independent breweries, has expressed displeasure with the tariffs, stating that they could "place a significant financial burden on brewers," potentially leading to higher prices for consumers and decreased margins for breweries.
So, here's to another round of hops, barley, and hard decisions for the craft brewing industry. May your glasses be full and your profits healthy!
- TailGate Brewery, like other craft breweries, faces increased costs due to the 25% tariffs on raw materials, which may lead to higher prices for their six-packs of ciders, stouts, or lagers.
- Keegan, the owner of TailGate Brewery, is concerned about balancing the need to absorb higher costs without passing on every price increase to consumers, as he recognizes the struggle to remain profitable.
- The Brewers Association, representing over 9,000 small and independent breweries, has voiced concerns about new tariffs, as they could burden brewers with higher prices for consumers and decreased margins for breweries.
