Craft beer – the tasty, above-average alcohol content, mystical potion beloved by beer enthusiasts around the world. So much so that loyal customers wear their favorite brewery’s logo like a badge of honor and have been known to stir up trouble with rival brew gangs when necessity demands it. According to brewersassociation.org, from 2016 to 2017, the amount of brewpubs, microbreweries and regional craft breweries grew by 16%. In 2017, 27% of all craft breweries saw negative barrel growth, and 17% saw double digit losses. More breweries are losing money than entering the market and managing the vital components of the business are essential to success.
The 4 Main Data Aspects of a Brewery
There are four main data aspects in particular that brewery owners and managers need to be aware of:
- Sales & Distribution
- Production
- Labor
- Overhead
Sales & distribution are a leading indicator to how much revenue will be coming into the company. Forecasting revenue is critical to keeping up with production demands and having a pulse on orders coming in keeps the lights on and the beer flowing.
Production is the bean counting, rather, hop counting, component of the formula. Knowing how many barrels are being produced, the amount of raw inputs going into a barrel and the expected revenue per barrel gives a brewer control over spending on excess materials too soon or over/under forecasting needed labor to keep up with demand.
Labor tracking allows a brewer to understand where the bottlenecks (pun intended) are in the distribution process and mitigate expensive overtime. Understanding labor distribution from sales all the way through a beer getting into a consumer’s hand is critical to understanding where the most expensive steps in the brewing process are, and how expensive non-optimized processes can be if overtime or too many employees are needed at any given point.
Overhead is key to keep track of too because this reveals all of your additional expenses. As Benjamin Franklin said, “beware of little expenses. A small leak will sink a great ship”. Benjamin Franklin also was rumored to drink Old Ales, so we trust him on the topic.
Understandably not all overhead costs are small expenses – warehouse and restaurant leases, insurance, and administrative staff are all critical components of a brewery’s success, but variable costs left unchecked can add up quickly and create cashflow nightmares.
Keeping track of these four components will help keep the brewery running smoothly and ensuring that you are able to get out in front of problems, long before they become emergencies.
One Voice vs. Multiple for Data Management
The best way to benefit the most from your data when you capture it is to drive it all to one place. Let’s take an IPA for example – there are multiple steps that need to be followed in exact time to create the perfect brew, and if the ingredients are substandard? It’s over from the start…
The same goes for managing the brewery and using data to support your business function. Developing consistent processes that are optimized for success don’t happen by accident and when there are multiple systems storing data not communicating with each other, it’s the equivalent of walking up mid-boil and guessing what hops were added when and when the heat should be turned off – odds are it won’t be a consistent flavor profile. For example, maybe there is a time of year that is busier in the tasting room than others and an increase in raw goods is needed to keep up. Without the data from the sales system, it would be impossible to know when raw goods ordering needs to happen, even though those functions may happen in different systems and by different managers.
Having a single system that connects all of your brewery’s systems in one place is critical to getting a full view of all aspects of the business so you can deliver a consistent product to your customers.
KPIs for Barrels
KPI stands for Key Performance Indicator. These numbers/graphs/charts should be the key parts of the business that a manager or owner can look at and quickly assess if the company is healthy or in trouble. Creating KPIs for barrel-level statistics is another thing that can help tremendously in terms of tracking financial health. Some of our favorites to track include:
- Labor cost per barrel
- Revenue per barrel
- Raw material dollars per barrel
Setting KPIs per barrel versus a time period or a batch makes it very easy to compare performance on a granular level and improve quickly by comparing each barrel performance to the ones prior. Staffing, purchasing and more can all be quantified more effectively and eliminate wasted resources versus forecasting on a larger scale.
Packaging Costs
It is particularly important to pay attention to packaging costs. Ben Franklin was onto something regarding little expenses, and this not-so-little expense can add up quickly. Understandably, retail packaging is almost as critical to the brand as the flavor of the beer, but still many breweries overlook packaging costs when determining pricing strategies. Packaging may not be ordered on the same schedule and it can be somewhat complex to track packaging cost by barrel, but it is critical to take the time to define this early on to ensure no runaway expenses post brewing.
Learn from Industry Leaders
In many businesses, it often helps to learn from the things that the industry leaders are doing to achieve success. The brewing industry is no exception, and right now, industry leaders are taking advantage of the insights that business intelligence brings to the industry. If you want to achieve the highest levels of success possible for your brewery too, learn from the incumbents that running a sound business is the cornerstone of fueling a passion.
Final Thoughts
Being able to capture key data and understand how it impacts your brewing process will give your company a major competitive advantage in your market. If you are unsure of what systems to put in place, we wrote an article on what software can help you manage the different aspects of a business here. Having good systems in place leads to faster, more effective decisions being made and long lasting success as a company. There are over 6,300 breweries in the United States and the market is more competitive today than ever before. Implementing systems to capture data and track your progress gives you the opportunity to scientifically test what works and doesn’t work for your brewery. You’ve done the hard work, tested and measured your brewing process to perfection, now it’s time to take that same passion and implement it in your business strategy.
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