Boston Beer Company, maker of brands like Samuel Adams and Truly hard seltzer, has been found liable in a dispute with their aluminum can supplier: Ardagh Metal Packaging. It would seem that they didn’t meet minimum contractually required aluminum can purchase requirements.

The agreement between Boston Beer Company and Ardagh Metal Packaging took effect January 1, 2020. In December of that year, they extend the contract through January 1, 2027 and expanded the product scope. That’s when the problematic minimum purchase volumes were established. 

The court may have ruled against Boston Beer Company, but that doesn’t mean they didn’t put up a fight. In fact, they justified their lower purchase volumes by claiming that there were product quality concerns associated with Adagh Metal Packaging.

Boston Beer Company subsidiary American Craft Brewing alleged that Ardagh’s beverage cans had a “dark, sticky buildup” on them, thanks to used varnish and a wax-based lubricant. They also claimed that the cans didn’t meet documented manufacturing specifications.

It is unfortunate, but contract disputes between supply partners are all too common. It may start with one complaint, or one missed minimum, before quickly devolving into a mess that can't be resolved. 

Once the trust in a partnership deteriorates, every operational issue starts to carry financial and legal significance. It becomes one more thing and until one of those things becomes the straw that breaks the camel’s back. 

I’ve been told that if you have to refer to the contract, the relationship is over. If that is true for contracts, imagine the relationship death spiral that would accompany a federal lawsuit.

We know that the court found for Ardagh Metal Packaging on most counts, but why? That question remains unanswered… and unanswerable.

That the jury’s reasoning is still sealed by the court. So while the headline damages number ($175.5 Million) is public, we can’t be sure how jurors weighed the competing arguments and why they made the decisions they did.

Supply relationships and the contracts that document them may be built on assumptions that seem durable in the moment, but because we don’t have perfect forecasting, we’re reliant on growth assumptions, demand assumptions, quality assumptions, and partnership assumptions.

Assumptions aren’t ideal, but in many cases there is no better alternative. Legal language that appears manageable during an expansion cycle can quickly become the opposite once that growth stops.

Contract flexibility should be regarded as being as valuable as price optimization. Giving up flexibility should only be done when there are clear, measurable benefits. Procurement should revisit volume adjustment mechanisms, forecasting assumptions, remedy structures, and shared-risk provisions regularly.

As hard as it is, if we think back to those uncertain days in late 2020 when Boston Beer Company and Ardagh Metal Packaging were signing their contract extension and locking in minimum order quantities, the next seven years were anybody’s guess. A contract that had probably been celebrated for the packaging security it offered suddenly became an unsustainable push of supply.

The core challenge can never be simply securing supply. We also have to balance resilience, flexibility, investment certainty, and commercial accountability.

Hear the full story by listening to Consumption Challenges at Boston Beer Company on Art of Supply. 

By Kelly Barner

Keywords: Procurement, Risk Management, Supply Chain

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