Gauging The Growing Pains: The Hidden Costs Of Brewery Expansion

Hidden Cost of Brewery Expansion

Gauging The Growing Pains: The Hidden Costs Of Brewery Expansion

Hidden Cost of Brewery Expansion

As a brewer with a passion for your product, the last thing you want to do is stand still. If you make beers that people love, you everyone to have a chance to enjoy them. There’s no doubt, then, that you’ll expand your sales at the first opportunity. But before you do, you should be aware of the costly challenges that brewers face as they grow larger, including:

Big League Branding

As a local brewer, you had automatic authenticity with your customer base. You understood their culture, cuisine, and drinking habits, and could thus cater directly to them. But as you expand into other markets, you’ll have to start selling to people you don’t know as well. It will thus be an uphill battle getting them to try your beers instead of sticking to their current favorites.

To build authenticity in a community you’re not part of, you will need to conduct comprehensive market research and build a tailored publicity campaign. This strategy is expensive and takes time, so make sure you have access to flexible, affordable working capital to pay for a campaign every time you expand into a new market.

A Cornucopia of Codes

Brewers are subject to a host of health and environmental regulations, and those regulations vary across local, state, and (especially) national lines. Thus the more you expand, the greater your likelihood of running into regulatory issues. Your best bet is to research all the laws and statutes every time you move into a new jurisdiction, and do everything you can to comply with them ahead of time. But this can be expensive, especially if you have to invest in new equipment. Thus make sure you have either the savings or the working capital to make costly investments upfront.

Climbing Capacity

Expanding your operations frequently requires adding production capacity, which means investing in expensive capital equipment. The problem with such investments is that you have to make them months before you achieve any sales in the new market. Consequently, you’ll need to raise a large supply of cash as soon as you make the decision to expand. Unless you have ample cash on hand, working capital is likely the best way to raise this money. Even if you do have cash on hand, you might still want to use working capital, as it will prevent you from tying up all your money in expensive equipment investments.

To learn more about working capital for brewers and countless other businesses, contact Dimension Funding today.

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Barriers For Brewers: Financial Challenges In The Brewing Industry

Barriers for Brewers

Barriers For Brewers: Financial Challenges In The Brewing Industry

Barriers for Brewers

From the smallest craft businesses to the largest operations, brewing companies invariably face an array of challenges. Not only do they need to produce beers and other brewed products on the right scale and schedule to meet all their clients’ needs, but they also have significant health, environmental, and branding requirements. In order to keep up with all these obligations, brewers must have access to a large and flexible amount of funds on a regular basis. Only then will they be able to:

Obtain Essential Brewery Equipment

Few industries have more pressing capital needs than brewing. From the kettles and stills needed to produce beer and other brewed beverages to canning and bottling lines that package them to supplementary equipment required to wash all of these devices, brewers must fill their facilities with a wide variety of expensive and complex machinery. This creates serious barriers to entry for new startups, which often lack the cash or mortgageable assets to buy this equipment and begin production. Such companies depend on access to affordable leases and working capital in order to get off the ground.

Carry Out Repairs & Maintenance

In addition to getting their hands on brewing equipment in the first place, brewers need to make sure that equipment remains in good condition for the long haul. That means conducting frequent inspections, repairing any devices that are even mildly damaged, and updating existing equipment with new technology as soon as it becomes available. The cost of this maintenance work is usually low, but it can go up if you discover a major problem or need to invest in an expensive but promising enhancement. Access to working capital is essential for brewers to perform this work and keep their equipment in good condition throughout their time in business.

Respond to Shifting Demand

Public preferences for beer and other brewed beverages can change on a dime. If brewers want to keep up with this changing demand, they must be able to expand or scale back production of different varieties with little or no notice. This means investing in flexible equipment that can switch to brewing different products quickly, as well as maintaining access to all the ingredients necessary to create each product on their list. All these actions are expensive, making working capital essential.

Promoting Health

Besides addressing changes in consumer demand, brewers must respond quickly to health concerns. This may require taking essential equipment offline for cleaning or inspection, as well as switching out ingredients. Working capital is necessary to insulate brewers from the cost of lost production while taking these health precautions.

For more information on working capital and other financial resources for brewers, contact Dimension Funding today.

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