WTF happened to the fitness industry during Covid?
All inventory, wiped out clean.
Sure you could go to Facebook marketplace and purchase kettlebells for $2/lb from the homer who is greasing the receiving boy at Academy Sport, but for those of you not in the kettlebell market, that’s expensive!
Where did all the inventory go? How did it dry up so quickly? Is America that healthy?
….I doubt it.
I have a few theories:
- Inventory allocation – Once Covid hit, these fitness suppliers had contracts with various gyms or on-line coaching programs and held back everything for them.
- JIT manufacturing system – They were using JIT manufacturing which is based on ordering more as soon as they hit a certain low level of inventory.
- The Insta-butt did not forecast – Yes, I am referring to these online equipment suppliers Insta-butts. Meaning, I don’t believe there is anything more than polished pictures behind the company.
Whatever the reason is, my mind can not stop calculating the dollars they could be making if their inventory and supply chain were in check!
So, what is our takeaway from this major inventory shortage?
I dunno… maybe cans?
Would you agree that aluminum cans are your brewery’s kettlebell right now?
Recently, every conversation includes the impending can shortage.
What do we do?
Where will I get cans next year?
Should we sign a contract?
All great questions. However, the question I am asking is:
What will happen with draught next year?
While the sharp decline in draught has hurt the barlage output, what happens when the draught lines come back?
I had a conversation with someone who put it best, they said:
I want to be on the front lines when accounts reset their tap lines.
From where I sit most of you are staring down at
two options one option.
- Sign a contract
- Hunt for aluminum
Given the seriousness of this topic, I have decided to use the next two posts to cover the only real option available for most of the breweries.
Next, we’ll explore what it means to sign a contract for cans.
Then, we’ll discuss what hunting for aluminum looks like.
CAN you smell what the aluminum is cooking?
Currently, breweries of certain size or existing relationships are being offered a contract on aluminum for 2021.
Can suppliers are in talks with their largest volume customers to firm up “guarantees” for the next 12 months.
If you happen to be in negotiations, congratulations.
You may be noticing a couple of things:
- The price of 12oz has increased around .04 per can
- The price of 16oz has increased around .05 per can
Breweries who are distribution focused, especially with 12oz cans, are going to feel this the hardest.
Let’s do some math:
- 3 million 12oz cans projected to sell in 2021
- $120,000 in additional packaging cost
I’m not sure distribution margins can absorb this without a price increase.
So the can supplier is dangling a contract in front of you, guaranteeing the amount of aluminum you project for 2021.
They follow it up with:
There is the demand for us to sell off any cans that you do not use.
When you look a little closer, or press them to get this “sell-off” language in the contract, they balk.
I’m having some deja vu.
This aluminum crisis is starting to feel like the hop crisis many of you are just now exiting.
You remember CBC 2013… kick-ass party, beers were flowing, and you contracted way more hops than you could ever use.
Yea, I’m getting that feeling.
The biggest unknown here is draught. If draught comes back at 50% in 2021, this will push most of you into my acceptable capacity range and redirect a lot of liquid away from cans.
This could lead to excess package (can) inventory, storage fees, taking truck-loads…..aahhhh it’s the hops all over again.
I understand that some breweries want to operate with a peace of mind given their volume requires a contract.
I challenge all breweries, considering a contract, to forecast three scenarios in order to make the best decision possible for 2021.
CAN you tell me when hunting season opens?
I know what you are thinking…
What the hell is this guy talking about?
On Monday he’s showing us Instagram models and comparing our cans to kettlebells.
On Tuesday he is talking about aluminum contracts.
What could he say today that will certify him?
Welcome to hunting season! 🤷♂️
If I owned a brewery and produced less than 15k BBL per year, I would pass on a brite can contract and I would be re-negotiating my printed can minimums and start planning.
Start planning now by building monthly can projections for 2021.
How many will you need in the colder months?
How many will you need come next summer?
What happens when draught comes back at 25%? 50%?
You should be asking all these questions right now.
Once you have the number on paper, reach out to your can supplier and share the findings with them.
Will they be able to supply you?
Should you be talking to other suppliers?
Should you be talking to an international supplier?
Another question to be asking the supplier is:
When do they expect the biggest bottleneck in 2021?
The steps for hunting cans is straightforward:
- Gather the intel.
- Track and communicate with sources.
- If the lead goes dry, engage with more sources.
- Get the aluminum.
When you hear the word “source”, you may be interpreting that word for its literal meaning.
A hunter will leave all options on the table. For smaller breweries a source may be a larger brewery.
And also remember, a hunter is always thinking about where the next meal is coming from, even when they’ve bagged a nice kill.
With inventory shortages across industries we need to be…
- Thinking 5 steps ahead.
- Keeping our eyes on the horizon.
- Always asking “what’s the bottleneck?”
It’s a damn shame when you’ve overcome all of the obstacles to get your business turning over like it should be again… only to run into a brick wall on cans, or labels, or etc etc…
Get out there and get ahead of it.