Craft Beer Inventory Management
Unless you’re a strict teetotaller, you would have noticed that craft beer and microbreweries have exploded along with the maker movement in the past two decades. Microbrewing, in fact, is not new to civilization. Germany had an envious history of centuries of beer brewing before it took off in the United Kingdom and the United States in the 1970s.
It also helped those craft breweries grew hand-in-hand with hipsters and social media. Pairing artisanal beer with good food and hip decor made for unforgettable Instagrammable moments! Craft brewers, however, face the same inventory issues as any other business with simple manufacturing and physical products that need to be shipped around.
Here, we’ll briefly introduce the business of craft beer. Then we’ll cover some issues that craft brewers face in producing their products. This will bring us to even more features that microbreweries should look for when managing their stock of kegs, casks, crates, and bottles. Finally, we finish with an almost-real-life example of a microbrewery using EMERGE App.
The Business of Craft Beer
Craft beer products are often described as microbreweries. This is to distinguish them from larger corporate breweries that are often part of a multinational giant. As such, craft breweries tend to be fiercely independent and highly localized, reflecting their terroir and their owner’s whims and fancies.
Quirky marketing and names aside, microbreweries tend to focus on small batch production and limited, seasonal product runs. They also emphasize quality, flavor, and experimentation with brewing techniques above everything else. It’s no wonder that jaded consumers are seeking out hard-to-get craft beer by region or country.
Nowadays the term “microbrewery” isn’t associated with the physical size of the business. Some cult craft beers have large production runs and export their beers to countries slowly embracing the craft beer movement. China is one such a growing market. Microbreweries today now tend to focus on being different from multinational, mass-market breweries.
This involves taking advantage of their relatively smaller, nimble size to be flexible, adaptable and listen to their target drinkers. As if you’ve seen the price of individual craft beer bottles recently, price is certainly no object to devoted craft beer drinkers! Artisanal beers tend to be priced in the multiples over cheaper, mass-market beer sold in aluminum cans.
The Craft Beer Making Process
The Craft Brewers Guild produced a fantastic 14-step process that describes how your favorite craft beer is made from scratch. Much of the manufacturing involves chemistry and is dictated by the brewer’s style. With this, we can identify business pain points for brewers and how inventory management software, such as EMERGE App, can help resolve them.
1. Raw materials are added
Firstly, malted barley is crushed into broken kernels called “grist”. The grist is then added to a container called the mash tun. Hot water is then added to the grist to create a “mash” that looks like porridge. Natural enzymes in the malt break down the starch into sugars.
The resulting liquid in the mash tun is called wort. It’s a mixture of barley husks and a sweet liquid. Low-temperature water creates crisp, dry beers. Slightly higher temperatures produce sweeter, richer beers. It’s up to the brewer to control this process and create their unique house style.
2. Raw materials are mixed and fermented
Next up is a process called lautering. The wort is collected in a large kettle and boiled. It’s up to the brewer to combine two worts to create a unique beer to keep them separate. Hops are then added to this hot liquid. After boiling the wort is transferred into a whirlpool to separate the wort. Any malt or hop particles are also removed.
Fermentation is the next stage. Yeast is added and it converts the sugary wort into beer by producing alcohol. This is where flavors are also imparted to the beer along with carbon dioxide. But wait, the beer isn’t ready for drinking yet. It’s still “green” and raw. It needs to be fermented and matured in tanks to allow the flavors and finish to develop.
3. The final product is packaged for consumption
Once fermented, the beer liquid is filtered, carbonated with more carbon dioxide to give it fizziness, and transferred to a final tank. It is here that the beer is “cellared” like wine for 3-4 weeks. The result is a beer that is ready to be packaged and distributed. The brewer can choose to pack them into kegs, bottles or cans.
Most importantly, beer needs to be kept refrigerated to prolong its shelf life. Unpasteurized beers have a shorter shelf life than pasteurized beers. So the beer needs to be shipped to refrigerated warehouses. It typically takes 4 weeks to create an ale and 6 weeks for lagers.
Inventory Management Issues for Craft Breweries
At this point, you might have identified some inventory management issues common to brewers. In fact, many of these pain points are also shared by those in the food and beverage industry. They are not particularly unique to craft breweries. The good thing is that the same inventory management software can address these issues whether you’re a brewer, winemaker or gin distiller.
1. Raw materials management
First up, you need raw materials to make beer. Lots of it. Some breweries purchase pre-made malts. Others make malted barley out of barley husks. Either way, you need to store malted barley in sacks in dry conditions with a stable temperature. Other raw materials used include water, yeast, and hops.
2. Simple manufacturing with raw materials
Secondly, there’s the manufacturing process of the beer itself. Hot water needs to be added to malted barley. Their temperature will determine the flavor profile ranging between crisp and dry to sweet and rich. Yeast is also added later along with carbon dioxide. Hops are also added for the finish. All these raw materials are combined in a production schedule to produce beer.
3. Expiry dates and batch tracking
Thirdly, like food manufacturing, craft beers are produced in distinct batches along with expiry dates. Regulatory labeling requirements dictate that batches must be identified on beer labels. This is for recall and health purposes. And each batch has a different expiry date. This means that older stock must be sold first before they expire.
4. Know your inventory available for sale
Finally, you need to exercise control over the finished inventory of kegs, bottles, and cans. What is your actual in-stock quantity versus what your records say? And they need to be shipped to different customers depending on their profile. Kegs go to pubs and bars with draft lines or stores that rent taps. Bottles and cans are typically sold at retailers, online and offline.
A Simple Manufacturing Example for Craft Brewers
Here we’ll walk you through a typical craft beer recipe for a crisp, refreshing lager. The recipe has been scaled down for a typical home brewer, producing about 5 gallons (19 liters) of beer at a time. Scaling up production will necessarily mean buying raw materials in 10 lb and 1 lb bag sizes.
1. Add your raw materials for craft brewing
First, you need to add all of your raw materials used in brewing craft beer. This means adding malt, corn, hops, and yeast as raw materials in your inventory. To simplify things we’ve left out water since this is typically dispensed from a tap. You need not store water physically in your warehouse.
While adding raw materials you also need to take note of their units of measurement (UOM). This is their smallest possible size that they come in. For malt and flaked corn, we’re choosing 1 lb (454 grams) bags. Hops and yeast are packed in handy 1 oz (28 gram) sachets. We enter the respective UOM for each of the raw materials we created.
2. Create products that use these raw materials
This is the fun part. We create a product, let’s say we call it Old Pale Lager. Since we’re working with a small production run, we’ll choose bottles as the UOM. This is the smallest unit for your craft beer. Within the product we then define the raw materials and their quantities used in its production:
- 8 lb malt
- 2.25 lb flaked corn
- 2.25 oz hops
- 0.50 oz yeast
While you’re here remember to select the batch item checkbox. Then add the name of the batch.You’ll see why in the next step.
Finally, let’s define the packing dimensions for your Old Pale Lager. You produce them in individual glass bottles but they are sold in a traditional six-pack of beer. Enter the UOM as bottle and the product quantity as 6. The weight of a six-pack is 4.5 pounds (2 kg). And its dimensions are 9″ x 5.5″ x 11″ or 23cm x 14cm x 28cm.
Entering the packing dimensions of your shipping product here is a real time saver, especially for exporters. EMERGE App will automatically tabulate the weight and CBM in the shipping packing list and in the shipment. This saves you time and effort in manually calculating them during shipping.
3. Create batches for your craft beer production
Most countries require a batch number and expiry date on beer bottle labels. Craft beer is regulated like other food and beverages. In case of an outbreak of bacteria or contamination, you must be able to identify the batch numbers attached to each production run. This will help in traceability and recall of the affected products.
To use batches in EMERGE App you need to define them in the general settings. Select the product that you created in the previous step. Give it a batch name and a batch code or number. This is important for tracing unique production batches. You should enter an expiry date as craft beer is best consumed as soon as it is made!
4. Issue a production order to make a craft beer product
When you’re ready to start brewing your Old Pale Lager beer, you create a production order. Notice how all the raw materials are scaled in proportion to the final bottle quantity that you want to produce? Their UOMs are also listed for your convenience. Pick a warehouse that you want to store the bottles in and then click Produce to start the production order.
When production is complete, the final quantity of bottles produced for your Old Pale Lager will be added to the warehouse that you selected. The amount of raw materials used in the production will also be deducted. This way your raw and finished inventory levels will always be up-to-date and reflect current stock levels.
5. Manage your beer inventory
Now that you have nice stacks of six-pack beers sitting in your warehouse, it’s time to start managing and controlling their movement. First up, you probably have a barcode or QR code printer and scanner setup ready. Generate barcodes with your barcode software and apply them to your stock of beer cartons.
Now, whenever stocks are sold or returned, you simply scan the barcode or QR code label to enter them into the SKU field in EMERGE App. No more fumbling with long alphanumeric characters for your products. This means fewer mistakes and more efficiency when moving stock along your workflow. The same process can apply to your raw materials inventory as well.
Craft beer production is a growing worldwide phenomenon. There’s no shortage of community craft brewers who meet to share tips, tricks, and their final products! And it helps that the maker movement has given momentum to creative entrepreneurs who make artisanal cheese, wine, and beers for sale. Small and medium-sized brewers should look to an inventory management system, such as EMERGE App, to take care of the heavy lifting while they focus on creating award-winning beers.