Keg Return and Deposit Programs for Craft Breweries
By Nick Amador on March 15, 2023
After a long, cold winter, the warmth has bars packing in and customers at your door — all of whom are buzzing for some beer. As you prepare for the two distinct channels of distribution, though, you begin to remember the woes of summers past. Licensee locations and distributors turning kegs at a snail's pace. Individual rental customers lose them left, right, and centre. No matter how you spin it, these inefficiencies are costing you money.
That's where keg return and deposit programs come in. They’re built to help you maintain your fleet across licensee locations and individual rental customers, incentivizing proper treatment and reducing the likelihood of keg loss. In this article, we'll be taking a closer look at why keg return and deposit programs are crucial for craft breweries, providing tips for setting up your own program and ensuring long-term success.
Determining Program Goals and Logistics
Before setting up your own keg return and deposit program, it's important to determine your program goals. Are you primarily concerned about reducing lost kegs, improving your brewery's sustainability, improving keg turn times, or something else? This will be an important distinction to make early on, as it will heavily dictate the direction in which your keg deposit and return program functions.
In addition to program goals, you’ll also want to be mindful of the logistical implications of a return and deposit program. Will you be providing cash refunds, or will you be offering store credits or discounts on future purchases? Knowing how you want to actually run your program (a decision that will be heavily influenced by the program goals discussed above) will allow you to consider requirements for success and obstacles that might stand in your way.
To better explain how program goals and logistics should align, here’s an example for Kegshoe Brewery:
We’re a craft brewery selling primarily through our taproom, with a handful of local licensee accounts that we self-distribute to.
During the summer months, we get upwards of 20-30 patrons per week looking to purchase kegs for home or event consumption — barbecues, parties, etc. The kegs rented from our taproom range in size, anywhere from 20L to 50L. We’ve found that a good number of the kegs being rented don’t end up coming back, so we’re setting up a rental deposit program to ensure they do.
Our goal is to reduce keg loss, and logistically, what this will require is a cash keg deposit that is equal to the price of a new keg (to incentivize returns), accompanied by a cash refund upon return. We’ll need to be mindful of how we’re going to keep track of these rentals and the associated deposits so that we only provide refunds where they’re warranted. We’ll also need to consider the logistics of keeping several hundreds of dollars on hand, in the case that many kegs get returned in a single day.
As you can see in the example above, Kegshoe Brewery needs to ensure that the rental program systems put in place align well with its goals, otherwise, it will be incredibly challenging to make progress toward its goals.
Program Implementation & Communication
Now that you’ve decided on your goals and have worked through the logistical elements of the program, it’s time to consider what implementation may look like — and how you’re going to communicate changes effectively with your customers.
Start by creating a clear policy that outlines the terms of your program, such as the deposit amount, the refund policy, and the timeframe for returning kegs. Be sure to post this policy in a prominent location in your taproom and on your website, making it very easy for customers new and old to access it. It might also be worthwhile to create information material — including taproom flyers, social media content, and email marketing updates — to ensure customers are in the know.
When communicating your program to customers, it will be important to emphasize the benefits of the program — such as reducing waste and helping to keep your beer prices low — to minimize any unrest surrounding the idea (and amount) of deposits. You may also want to offer incentives, such as discounts on future purchases, to encourage customers to participate in the program at the onset.
Monitoring Program Performance
It will be important to monitor program performance, especially in the early monthly
With a program now implemented, and communication set, it will be important to monitor performance over time to ensure that objectives are being met.
For the sake of measuring inventory improvements — in the case of Kegshoe Brewery, our sample brewery above, keg loss reduction was the biggest focus — you’ll want to begin with a baseline. Determine (to the best of your ability) what numbers looked like prior to program implementation, whether keg loss, turn times, or another focus, so that you can compare it to post-implementation results. For most breweries, the use of a Keg Tracking software like Kegshoe will allow you to dial in on these numbers.
Outside of fleet performance, there is another important performance metric to consider, and that’s how your rental sales hold up in a post-program world. There are a lot of variables at play, including deposit amounts and acceptable return times, and you’ll need to pay close attention to sales volumes over time (as compared to historic volumes) to ensure that the introduction of a deposit program isn’t having a negative impact on the revenue-generating ability of keg rentals.
Moving forward, it’s a good idea to occasionally revisit your deposit amount and refund policy to ensure they're still appropriate for your market. If you're finding that a significant number of customers are not returning their kegs, consider sending reminders or implementing stricter penalties. If you notice that returns have been solid but there has been a serious degradation in the total number of units rented, consider easing up on the program details to find a healthier balance.
Understand that a worthwhile keg rental deposit program will evolve over time, dependent on market circumstances and customer response. Focus your attention on crafting a program that helps you achieve your set goals without compromising sales or community relationships in an unnecessary way.
Tools Available for Managing Keg Returns
So your program is now in place, and you have clearly defined how to monitor performance in the months and years ahead. It shouldn’t come as a surprise that managing keg rentals can be a time-consuming process, but the next (and final) step of the process is finding the tools necessary to create efficiency.
Keg Tracking Software
The first (and most effective) option available will be to use keg tracking software with a rental, return, and deposit functionality built in, such as Kegshoe or KegID. These platforms will help you keep track of keg inventory and rental history, making it clear which units have been returned, which haven’t, and what deposits are associated with both.
A second option available to teams would be to use keg collars or labels that display important information, such as the deposit amount and return instructions, right on the keg itself. These can help ensure that customers are aware of the program and the terms of their rental.
Pairing these manual prints with a taproom log book that outlines kegs rented, alongside renter notes (contact info, deposit amount, etc.) will make management more accessible.
Keg return and deposit programs offer a number of benefits to craft breweries — from increased keg accountability, reduced costs associated with lost or stolen kegs, and improved sustainability.
By taking time to determine your program goals and logistics, implementing and communicating it effectively, and monitoring performance over time, you’ll be able to create a successful and sustainable program that benefits both your business and your customers.
To learn more about how Kegshoe Keg Tracking is helping breweries around the world manage their keg return and deposit programs, contact our team today.