The co-founder of a major Toronto microbrewery is warning that new tariffs on aluminum products will likely be causing the cost of a can of beer to go up, though the increase may not be immediate.
U.S. President Donald Trump slapped a 25 per cent tariff on steel and aluminum products on Wednesday and within hours the federal government confirmed that they would respond in kind by placing a matching 25 per cent tariff on nearly $30 billion in U.S. products, including approximately $3 billion worth of aluminum products.
Speaking with CTV News Toronto on Wednesday, Henderson Brewing Company President and General Manager Steve Himel said that the tariffs will likely push the cost of beer up, with that added cost being borne by consumers.
Henderson Brewing Company, which is located near Bloor and Dundas streets, currently buys all of its cans from an American company. Those cans will now be more expensive.
“We are making fresh product that needs to be consumed in a certain period of time. We have production schedules that are very tight and we have a product that has a shelf life, and to have to be making decisions that can possibly change within a day makes that incredibly difficult,” Himel said of the trade war. “I suppose if we’re super lucky, these tariffs will go away in a week and we might not even notice. But, if they don’t go away, we are instantly looking at somewhere around a 10 cent premium on a can of beer starting now or as soon as our (can) inventory runs out,” he said.
Henderson Brewing Company, and most of the wider craft beer industry, runs on a three-month supply of empty can inventory, according to Himel.
That means that brewers may not necessarily feel the impact of the tariffs until they order their next batch of cans or order specialty cans for a limited edition product, Himel says.
Himel says that it is possible some larger breweries may choose to eat the cost as a loss in the host term. But, he says that Ontarians who buy craft beer right from local breweries will “certainly” and nearly “immediately” see the price go up.
‘It will trickle through’
“To raise the costs of your beer in the Beer Store and LCBO, grocery and corner stores, you have to apply for a cost price increase, and I’m sure that that will take a few weeks or even months to flow through the system,” Himel said. “I do expect that we could see approximately 10 cents a can increased in our cost, which will have to be passed on to the consumer.”
Himel also noted the high taxes Ontario breweries already pay to make their beer, adding that their margins are smaller for microbreweries.
“Ten cents is kind of the margin on a can of beer, so, we’ll have to be very careful about how we operate our businesses with these tariffs in place,” he said.
As to how other local craft breweries will respond to these levies, Ontario Craft Brewers Association (OCB) President Scott Simmons says it is hard to gauge how these tariffs will impact overall prices, as each business will make its own independent decision.
“Some may be able to absorb the increase, a lot will not,” Simmons told CTV News Toronto on Wednesday. “But, it certainly will trickle through. Someone’s gonna have to pay for it, so it’s either gonna be the manufacturer or the consumer or some combination of both.”
Outside of the aluminum tariff, Simmons said some craft breweries source materials from the U.S. for their products—like barley, malt, hops and fruit.
“A lot of it’s domestically sourced and we’re currently looking at other domestic options like everybody is now,” Simmons said.
The tariffs renewed craft breweries' calls for the province to review its tax reforms for the craft beer industry. Simmons pointed out that Ontario breweries pay eight times more compared to Alberta, as small brewers pay just shy of $78 in tax on their first hectolitre of beer—about 100 litres worth—compared to just under $10 in the prairie province.
“It really is the single-greatest issue facing our association and our members. These tariffs just pile onto it, but you know, we’re very hopeful,” Simmons said. “We’ve had very positive discussions with the provincial government that we can get these taxes changed.”
Himel said that it is his hope that more consumers drink draft or buy growlers, since there are no aluminum levies tied to those choices.
Himel also hopes the sentiment to “buy Canadian” continues, as the recent outpouring of support to back local companies amid this ongoing trade war has been a positive thing to see.
“In a sense there is a bit of a silver lining here,” Himel said. “Even though the tariff will be built in, because we don’t really have can suppliers here, it’s still a Canadian-made product and that support feels good.”
