Demand for cans is booming during the coronavirus pandemic, writes The Wall Street Journal (Aug.26, 2020), propelling can makers to boost manufacturing capacity to prevent shortages and capitalize on a trend they bet will stick. As bars and restaurants closed across the U.S., consumers rushed to buy large packs of drinks—typically sold in cans—in supermarkets. Sales of canned food also jumped.
That is accelerating a continuing shift in favor of aluminum drinking cans, which were already taking share from glass and plastic bottles. Aluminum cans are lighter and more robust than glass, and have higher recycling rates than glass and plastic. The growing popularity of hard seltzers, usually packaged in cans, has been another factor. Coca-Cola said products like Minute Maid Lemonade, Cherry Coke Zero and Pibb Extra may be difficult to find in cans because of tight supplies.
U.S. retail sales of aluminum drink cans (which make up nearly all cans for drinks), rocketed since the pandemic. Ball Corp., the world’s largest maker of these cans, plans to begin running two new production lines in the coming weeks in Fort Worth, Texas, and Rome, Ga., both of which have capacity to make a billion cans a year. Despite this, the company estimates it will still import two billion cans this year to meet N. American demand, from places like Europe, India and Brazil. Ball also plans to open two new plants in the U.S. next year.
Some companies are betting higher demand is here to stay, for canned drinks but also canned food. Previously falling out of favor, canned food sales soared over 23% in the past 6 months.
Classroom discussion questions:
- Identify a half-dozen OM issues that are topics in your Heizer/Render/Munson text that can manufacturers face..
- What options do can makers have for adjusting capacity (see Supp. 7)?