Picture this—rows of shiny, stainless steel tanks sitting idle in your brewery, a scene reminiscent of potential that’s yet to be tapped. For many brewery owners, excess capacity can feel like a daunting challenge. However, with the right strategies, it can transform into a golden opportunity for growth and efficiency.
According to the Brewer’s Association industry excess capacity sits right around 50%, which is 36% more excess capacity than a decade ago. So what do we do with this excess capacity?
In this comprehensive guide, we’ll explore the intricacies of capacity management for breweries facing excess capacity. We’ll address the challenges, highlight the risks of unmanaged capacity, and provide actionable strategies to make the most of your brewing potential.
Understanding Capacity in Breweries
Capacity in a brewery refers to the maximum amount of beer that can be produced, stored, and fermented at any given time. It encompasses everything from fermentation tanks and storage to the overall production capabilities of the facility.
Excess capacity occurs when these resources are underutilized, leading to tanks sitting idle and brewing days going unfilled. This scenario can arise due to seasonal demand fluctuations, changes in distribution channels, or increased competition within the market. Now keep in mind, no brewery should run 100% capacity but if you are at the average excess capacity of the industry you do have unproductive assets.
The Risks of Unmanaged Excess Capacity
Managing excess capacity is crucial to maintaining a healthy brewery operation. Here are some risks associated with not addressing this issue:
Increased Operational Costs Without Generating Revenue
When equipment and facilities are underused, they still incur maintenance and operational costs without contributing to revenue generation. This imbalance can strain your financial resources and hinder your brewery’s growth.
Potential Quality Control Issues
Idle tanks and equipment can lead to quality control issues. Regular use ensures that machinery remains in optimal condition, reducing the risk of contamination or spoilage. Unused equipment may deteriorate over time, affecting the overall quality of your beer.
Impact on Morale and Efficiency of Brewery Staff
When production slows down, it can affect the morale of your staff. Engaged and busy employees are typically more motivated and efficient. Excess capacity can lead to downtime, resulting in decreased productivity and staff disengagement.
Strategies to Utilize Excess Capacity
Addressing excess capacity requires strategic planning and creative solutions. Here are some effective strategies to turn your underutilized resources into opportunities for growth and efficiency.
Increase Production of Popular Beers
One of the straightforward ways to utilize excess capacity is to ramp up the production of your top-selling beers. By producing larger batches, you can reduce future bottlenecks and leverage economies of scale, ultimately improving your bottom line.
Diversify Product Offerings
Consider experimenting with seasonal or limited-edition beers to attract new customers. Creating small batches or specialty brews can target niche markets and generate excitement around your brand. Collaborating with local brands, such as coffee shops or farms, for co-branded beers can also expand your reach. Even moving to other non-beer beverage production can be a viable strategy considering the trend beverage-alcohol towards ready-to-drink cocktails and ciders.
Offer Contract Brewing Services
Rent out your brewery space and equipment to other breweries. Partnering with smaller brewers who lack production capacity can create additional revenue streams without significant capital investment. This symbiotic relationship can benefit both parties and maximize resource utilization.
Explore Private Label Brewing
Producing beers for restaurants, hotels, or private events can be a lucrative venture. Partnering with retailers or corporate clients for custom brews provides exclusive, branded beer production opportunities, adding another layer of revenue to your brewery.
Expand into Canning or Bottling
If kegging dominates your production, consider expanding into canning or bottling to tap new markets. Offering mobile canning or bottling services to other breweries can also generate additional income and fully utilize your facilities.
Develop a Barrel-Aging Program
Use downtime for long-term projects like barrel-aged beers. Investing in barrels for whiskey, wine, or other spirits to age unique beer styles can create high-end, premium offerings that appeal to discerning customers.
Host Events or Experiences in Brewery Space
Utilize unused space by hosting tours, tasting events, or private parties. Collaborate with local artists, musicians, or chefs for themed events, creating an engaging and memorable experience for attendees. Educational experiences, such as brewing workshops, can also attract homebrewers and beer enthusiasts.
Operational Adjustments to Improve Efficiency
Beyond strategic initiatives, operational adjustments can optimize your brewery’s efficiency and make the most of excess capacity.
Optimize Scheduling and Staffing
Adjust production schedules to match demand trends, ensuring that resources are used efficiently. Use excess capacity for training staff or cross-training employees in different roles. By fine-tuning your production timeline, you can minimize downtime and maximize productivity.
Evaluate Inventory Management
Produce in response to real-time inventory data to avoid overproduction. Developing a Just-in-Time (JIT) inventory system can streamline production and reduce waste. Using data to project future demand more accurately ensures that your brewery operates with precision.
Outsource Excess Work
If capacity issues persist, consider outsourcing parts of your production to alleviate pressure. Contract brewing out excess needs or leasing unused equipment or space to other businesses can balance your workload and maintain profitability.
Strategic Partnerships to Manage Excess Capacity
Forming partnerships with other businesses can help manage excess capacity effectively.
Collaborate with Local Breweries
Sharing excess capacity with nearby brewers creates a symbiotic relationship that benefits all parties involved. Forming a brewing cooperative can reduce overhead costs and facilitate collaborative brews that appeal to broader fanbases.
Develop Distribution Partnerships
Partnering with distributors or retailers can expand your reach and increase demand for your product. Tapping into new regions or markets creates demand that utilizes excess capacity, driving growth and profitability.
Turning Excess Capacity into Opportunity
Effective capacity management is crucial for the success of your brewery. By proactively addressing excess capacity, you can transform it into a valuable asset that drives growth and efficiency. Creative strategies, operational adjustments, and strategic partnerships can help you make the most of your available resources.
Assess your brewery’s current capacity and explore the options that best fit your business model. By doing so, you can turn potential challenges into opportunities for success. Cheers to brewing a brighter future!
