The Importance of Keg Management
By Ben Johnson on November 14, 2019
Opening and running a successful brewery is an extremely capital-intensive business.
With the recent boom in the craft beer industry in North America and beyond, it has become increasingly difficult to find reasonably priced brewing equipment. The second-hand market is so active that brewers who are upgrading their equipment or foreclosing on their businesses will find an extremely enthusiastic market ready to purchase their brewing equipment, allowing for the second-hand market for brewhouses to become extremely lucrative. Even the price of used dairy equipment has gone up thanks to craft beer!
Additionally, the made-to-order market has recently become a higher barrier to entry for would-be brewers. In North America, DME, one of Canada’s largest manufacturers of brewing equipment, went into receivership in late 2018, making custom-made brewhouses harder to come by—forcing brewers to look overseas and often face lengthy wait times.
And of course, once you’ve secured your brewhouse, you’re going to need a glycol chiller and a steam boiler, you’re going to have to pay for piping installation, structural construction, electrical and plumbing upgrades, and, of course, you'll probably want to spend some money to make the place hospitable for visitors. Barn board and Edison light bulbs ain’t free, after all. Factor in legal fees, consulting fees, building permit fees, engineering fees, the cost of your vehicles, your office equipment, security systems, and your rent and by the time you’re done, even the most professional brewing operation is going to cost somewhere between $700,000 - $1 million to get up and running.
But there’s one cost many brewers don’t factor in until it’s time to start actually putting their beer somewhere. Kegs.
Typically, you can find new, 30-litre kegs from China at prices between $60 and $80 USD each. If you want to go for higher-end kegs, you can opt for German versions that can cost as much as $150 USD each. If you want 50 litre kegs, go ahead and assume about a 25% increase. If you’re buying kegs in large volumes you can likely expect a discount, but, as a new brewer, it’s unlikely you’re ready to start buying the kinds of volumes that get you those heavy-hitter price drops.
As any brewer will tell you, you’ll quickly discover that selling beer is a volume business; and if you’re doing that business through licensee sales, you’re going to need plenty of kegs in rotation. You’re also going to discover that having lots of kegs on hand lets you be a little more agile. Having kegs means you can free up space in your tanks. Got sudden demand for your märzen as fall approaches? Keg off the pilsner you’ve got in tanks and brew a batch. More kegs mean more freedom to respond to market demand.
Accordingly, kegs, those simple beer-holding vessels we take for granted, can end up being a pretty significant portion of your business’ capital expenditure, which can be pretty daunting when you consider that the entire purpose of a keg is to fill it and send it out into the world.
And unfortunately, that’s where most brewer’s relationship with their kegs ends: The kegs are filled, sent out to licensees, and breweries cross their fingers that the beer is being stored properly and that the kegs will come back soon to be refilled. The result of this is that kegs get lost. A lot. Industry estimates put the yearly rate of keg loss as high as five per cent, but depending on where your brewery operates, some brewers estimate that number can be as high as 10%.
The difficulty, of course, is that the keg collection process can be extremely inefficient.
Once kegs are sent to bars and restaurants, a brewer has little to no control over how long the beer will sit before the keg is tapped or what conditions the keg will be in while it waits. Ask any beer rep for stories about keg storage and you’ll hear horrors of kegs stored in hot kitchens and outdoor keg storage in the middle of summer. Improper tracking of your kegs means you lose control of your product at a very important process in its delivery. Leaving management of your kegs up to bar and restaurant owners can mean that consumers are receiving a sub-optimal version of your beer. You could potentially be turning off customers—and future fans—simply because your kegs sat too long, in less-than-ideal conditions.
And, of course, once these kegs are tapped and consumed, there is often even less consideration for tracking them. Empty kegs can sit for extremely long periods of time--sometimes months. An expensive part of your business, that could otherwise be filled and sent out to bring in more money, will go unused. While it isn’t something most breweries think much about, it can be a severe hindrance to growing a small business. Consider how much money is potentially tied up in assets that are doing absolutely nothing to drive returns – all due to a lack of something relatively simple like keg fleet management.
This can also have a strain on a brewer’s relationships with important licensee customers. The lack of urgency brewers can have for picking up their empty kegs can lead to a lot of frustration with bar and restaurant owners who quickly find themselves running out of space to store empty kegs. If you’re not willing to come get your empty kegs, they might be less likely to pick up your next seasonal offering or re-order your flagship beer the next time your rep comes calling, and so poor keg management can seriously erode your brand with some of your key customers.
This is why it is essential for brewers to have a properly maintained inventory of kegs. From allowing you more flexibility to brew the beer you want, to ensuring your product is consumed as fresh as possible, and to simply tracking your business’s expensive assets, keg management is an essential aspect of running a brewery.
Kegshoe provides and intuitive, mobile keg tracking solution, allowing breweries to track their entire fleet – from filling, to delivering, to returning – all with just the phones in their pockets. Kegshoe’s native iOS and Android apps allow for convenient Bluetooth scanning, with all of the data then getting pushed to a desktop dashboard filled with valuable reports and insights. Among those is the Pickup Report, an automated table that shows a brewery which kegs are ready to be picked up, where they’re located, and how long they’ve been there. Kegshoe works to empower breweries to Increase turnover, reduce keg loss, streamline their distribution cycle, and make the most of their limited resources.
To learn more about tracking your kegs, connect with a Kegshoe representative today.
This article was written by Ben Johnson, an award-winning beer writer and author of BensBeerBlog.com