New York
CNN
—
Perhaps there’s no better example of where the newly applied 25% tariffs on aluminum and steel will be felt than craft brewers, an industry that uses both materials in all facets of production and sales.
And for Wesley Keegan, owner and founder of Nashville-based TailGate Brewery, the implementation of the tariffs will have swift effects on his business. “Everything costs more,” he told CNN. “We get a price increase letter just immediately from every supplier.”
On Wednesday, President Donald Trump enacted a new round of tariffs on the raw metals. Since much of it comes from abroad, US companies — small and large — that rely on steel and aluminum may have to pass on the cost of those tariffs to consumers.
But specifically how much more Keegan’s customers will pay for a 6-pack of his brewery’s ciders, stouts and lagers isn’t clear just yet. He admits that businesses like TailGate have to be “willing to take the haircut” in terms of profits.
“The hard piece is juggling the reality that you can’t be in business if you’re not making money,” he said. “But then you also have to continue to take those price changes on the chin because the consumer is only willing to give you so much.”
Keegan said that TailGate tries to “absorb” as much as it can, but beyond tariffs “there is not a single input in our industry that hasn’t increased prices every single year for the last five years.”
It’s been a difficult several few years for craft brewers.
The pandemic sapped the lifeblood — taproom sales — from many operations, forcing them to lean more heavily on to-go vessels such as cans and bottles. Then, global supply chain challenges caused shortages and drastic price hikes of key inputs, including cans, which already were getting more expensive following the 2018 tariffs.
Plus, the breweries that are still standing were then stung by a shift in consumers’ and retailers’ palates for beverages beyond beer.
All of those were lessons for how Keegan operates TailGate, a 10-year-old company that has gradually expanded to nine taprooms across Tennessee.
One aspect of his business that changed post Covid-19 was the sourcing of aluminum. Before 2020, the primary source was Canada, but he has since diversified to additional places, including China, the US and even Jordan.
And now, the aluminum industry is undergoing a wave of consolidation, with some companies shifting to only working with major brewers such as Anheuser-Busch InBev or being bought by other manufacturers, resulting in a decline in smaller brewers to work with third-party companies that hunt and source aluminum on a global scale.
“One of the functions of the last round of tariffs, plus Covid-19, has been that it’s introduced a third party to the equation where we’re frankly just too small,” Keegan said. “Even though we buy a lot of cans and we’re a pretty sizable brewery, they don’t want to talk to us … we’re so small, it’s just annoying for them.”
Taprooms have evolved into a “third place” for communities, and naturally a place where the day’s topics are discussed — like tariffs. Operating in Tennessee, which overwhelmingly voted for Trump and his policies, can be difficult for a small business that is constantly battling constantly changing regulations that could hurt places like TailGate, but Keegan keeps politics out of it.
“This state voted for this administration, and if they see the headlines, and the tariffs and things like that, they still don’t want to feel the effects of something like an aluminum increase,” he said. “It doesn’t change what they’re rooting for, but it does mean they don’t want to be paying any more either.”
TailGate, as well as 9,000 other small and independent brewers, are part of the Brewers Association, which has been more vocal in its displeasure with tariffs. The group said in a statement to CNN that the tariffs “could place a significant financial burden on brewers, many of whom rely on imported materials, ingredients, and equipment.”
“These proposed tariffs could have far-reaching implications for brewers, consumers, and local economies, as they’re likely to further increase the cost of craft beer, erode brewer margins, or a combination of both,” a BA spokesperson said.
