Can shortage leaves Chicago breweries scrambling, adding yet another COVID-19 hurdle — and spelling the demise of at least 1 brand

So long, Lil Buddy.

Chicago’s cutest beer — an easy-drinking lager in squat 8-ounce cans adorned with cartoonish, rainbow-colored letters — is going into hibernation, much to the chagrin of its producer, Hopewell Brewing.

Even though Lil Buddy has been a hit with bars, restaurants and consumers since its diminutive introduction in early 2019, the beer will disappear in the coming weeks due to an issue plaguing breweries across Chicago and beyond: not enough cans.

Hopewell co-founder Samantha Lee said the brewery was notified last fall that the junior-sized cans would no longer be available due to manufacturers already working overtime to keep up with demand for 16- and 12-ounce cans.

“We’re super bummed,” Lee said. “It’s consistent business for us.”

Now, she said, “It’s one less thing we have.”

Like much of an industrywide downturn that has seen revenues plummet for breweries large and small, the can shortage is rooted in the COVID-19 pandemic. Last March, when keg sales were eliminated literally overnight due to bar and restaurant closures, oceans of beer were diverted into cans, the vessel favored by the majority of American brewers in recent years.

By summer, whispers of a can shortage had begun. It ramped up into fall and now shows no signs of slowing through at least the first half of 2021, causing breweries to rearrange release schedules, temper growth expectations and even — gasp! — shift back to bottles. The shortage is also leading breweries to cut some brands — such as Lil Buddy.

At least one other Chicago brewery is similarly impacted. Saint Errant Brewing, whose calling card is an adjunct-laden pastry stout in 8-ounce cans, found out last week that it will be forced to shift those beers to 16-ounce cans. Brewery co-founder Brent Banks hopes the change is brief.

“We’re begrudgingly going to go to a different format until the stubbies hopefully come back,” Banks said. “It’s unfortunate as we initially went the route of 8-ounce cans for our big stouts out of a desire to provide a format for high ABV pastry stouts where one could crack a single beer at home on a Wednesday and drink it alone. But it kind of became our calling card on the stouts. Oh well, we’ll adapt and hopefully people like the beer for the beer itself as much as the format.”

Acquiring cans for many breweries volleys between blood sport and a waiting game. Larger Chicago breweries that contract a steady supply of cans directly from the manufacturers — such as Revolution, Half Acre and Goose Island — have seen little, if any, impact.

Others, such as Pipeworks Brewing, are at the edge of being affected. Pipeworks co-founder Gerrit Lewis said he eyes 30% growth in 2021, but is only guaranteed enough cans to match last year’s production of 13,000 barrels. Needing to scale back production is an “ever looming” proposition, he said.

“We might not get all the growth we want, but at least we don’t have to go backward,” Lewis said.

Most smaller breweries, which account for the vast majority of Chicago’s approximately 200 beer makers, have had months of can-related misery. Sometimes the brewers haven’t been able to get any cans. Sometimes they are able to get just a fraction of what they need. Sometimes they wait for a promised shipment that never arrives — which happened to Hopewell as recently as mid-January.

“It becomes an emergency at that point and you’re asking around, ‘Does anyone have a palate of cans they can sell us?’” Lee said.

A larger brewery with steady access to cans did help Hopewell last month, Lee said. But then comes the next stage of the crush: When there is access, buying as many as possible.

Given that opportunity this month, Hopewell is renting a warehouse space solely to store the largest number of cans it will ever have bought at one time. And that creates a new anxiety for a small business: The added cost of the warehouse, plus the $30,000 expenditure for 350,000 cans.

The can crush comes as the company already struggles to be profitable during a pandemic that has shuttered Hopewell’s Logan Square taproom.

“We want to do everything we can to stop the bleeding,” Lee said. “The last thing we need is something else to inhibit our sales, something like a can shortage, because we’re already bleeding.”

Can-related uncertainty is rampant through the industry, said Bart Watson, chief economist for the Brewers Association, a Colorado-based trade group. Watson said he doesn’t expect the situation to resolve until the pandemic abates.

“The fundamental reason this has occurred — volume going out of draft and into package — won’t improve until summer or late summer, until we solve the public health situation and we can go back to on-premise sales,” such as in bars and restaurants, Watson said.

Many breweries are in a bind similar to Hopewell, he said, trying to make up for lost draft revenue (especially in their own taprooms, where profit margins are highest) but unable to do so, especially with the can shortage.

The very largest and smallest breweries are most impacted, he said. Mid-sized craft breweries have done better than their smaller peers thanks to being “a little more sophisticated in planning and forecasting the supply chain,” he said.

While can manufacturers are adding production, it is unlikely to solve the crunch quickly. In the meantime, Watson said, there’s little for breweries to do except to plan as far ahead as possible and cultivate a variety of sources for cans, including multiple third-party vendors and other breweries.

“I do think it’ll sort itself out, but it will take time and be a challenge for some breweries to navigate it in the meantime,” Watson said.

Among larger brewers, Left Hand Brewing of Longmont, Colorado, and Michigan’s Bell’s Brewery have diverted beer from cans to bottles. So did Lake Effect Brewing, which is one of Chicago’s smallest distributing breweries.

In October, Lake Effect shifted its year-round portfolio of beers into bottles, using labels and cardboard holders that brewery founder Clint Bautz had stashed away for four years, hoping he’d never need them.

“The can shortage, of all the curve balls thrown at us with the pandemic, that was the scariest thing,” Bautz said. “The supply just disappeared. It was fast. We went to order and they were like, ‘Sorry.’”

Stores were not enthusiastic about the switch to bottles, he said, having come to prefer cans both because consumers like them and because they’re easier to display. Bautz was finally able to get cans last month, and orders picked up again.

“As soon as we said we were back in cans, we got a whole flurry of orders,” Bautz said. “It felt good again.”

But he will need more this month and he’s not sure he’ll be able to get them. That’s why brewers are buying whatever cans they, ahem, can.

After struggling for supply, and needing to delay a couple of brews on the production schedule, Off Color Brewing bought so many cans late last year that its West Side production facility is like a maze, brewery co-founder Dave Bleitner said, constantly rearranging space to accommodate cans both full and empty.

“If you have the opportunity to take them, you take them and figure out where they go next,” Bleitner said. “That’s the challenge right now.”

Bleitner said he worries about what’s ahead, with the only true relief likely coming with the pandemic subsiding, which should lead to sales picking up in bars, restaurants and at Off Color’s Lincoln Park brewery and taproom.

“The biggest concern is what’s going to happen in summer when everyone is cranking and they still don’t have the capacity,” he said. “2021 is going to be fully dependent on how many cans I can get.”

jbnoel@chicagotribune.com

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