BUSINESS US beer manufacturers are exposed to new tariffs

BUSINESS

US beer manufacturers are exposed to new tariffs

CGTN

02:22, October 18, 2018

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(Photo: CGTN)

In a trade war, there will be some sectors that have much to gain, while others will lose out.

A recent report claims the US collected more than $1.4 billion in revenue from steel and aluminum tariffs during the first four months of the tariffs being implemented. The duties, 25 percent on steel and 10 percent on aluminum, were originally unveiled as a national security provision.  

But the tariffs are hurting some sectors in the US, not least manufacturers that use aluminum in their products. Beer manufacturers as well as soft drink companies are among those that are exposed to the new tariffs.

Some craft breweries are already noticing the impact. The Southern Brewing Company is based in Athens, Georgia. They purchased a new canning production line last year. The company cannot keep up with local demand.

In a trade war, there will be some sectors that have much to gain, while others will lose out.

A recent report claims the US collected more than $1.4 billion in revenue from steel and aluminum tariffs during the first four months of the tariffs being implemented. The duties, 25 percent on steel and 10 percent on aluminum, were originally unveiled as a national security provision.  

But the tariffs are hurting some sectors in the US, not least manufacturers that use aluminum in their products. Beer manufacturers as well as soft drink companies are among those that are exposed to the new tariffs.

Some craft breweries are already noticing the impact. The Southern Brewing Company is based in Athens, Georgia. They purchased a new canning production line last year. The company cannot keep up with local demand.

“Aluminum is sort of in a mix of a number of different factors right now that are causing costs to rise in the US and soft drink companies like Coca-Cola and PepsiCo have to respond with pricing increases," said Duane Stanford, the executive editor of Beverage Digest Magazine. "I think it fully hasn't come to roost yet in terms of causing major impacts to the soft drink companies but if tariffs continue, then it could cause more pressure.”

The US soft drink industry is big business, and last year, sales reached nearly $195 billion.  While the US beer industry is estimated to be worth over $111 billion in 2017, craft beer sales make up $26 billion of that total.  

The tariffs have also brought uncertainty and that has led some companies to hold off from further expansion plans. The Southern Brewing Company had looked to expand. But that is currently on hold. “We were discussing getting a bigger canning line,” said Goddard. "Do we expand, do we hire more people to work a new canning line? I know that there are over 6,000 breweries in this country. A lot of them use cans, and who is benefiting from these tariffs? Because I know that the brewing industry, which is one of the hottest industries in this country right now, is not benefiting.”

The saying "small beer" is used to illustrate that something is of little importance. For US beer and soft drink companies, the aluminum tariffs are anything but small.

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