Everyone can feel it.
On the surface, it seems pretty straightforward:
A lot more breweries have opened within the past decade – many more than the number of new consumers opening their wallets to buy beer.
Taprooms have competition.
Distributors are more selective.
And the price of just about everything besides what you’re selling your beer for has skyrocketed.
The 2015 mindset of “just produce more beer and sell it,” isn’t working anymore.
You know that. We know that. And even “beer media” is aligned.
Case closed, right?
Sure, we can agree that the “old playbook” tactics that worked back then just aren’t cutting it in 2024.
But in our view, the problem ISN’T that the market has changed. Markets change all the time, and that’s to be expected.
Instead, the problem IS that most breweries aren’t sure what to do about it.
And if you’ve been following us for the last few years, you’ll know that we’ve been pretty obsessed with figuring out why this is.
So what did we find?
In short, this:
Let me explain.
It’s common knowledge that taproom beer sales are fundamentally different than wholesale beer sales, which are fundamentally different than revenue from contract brewing.
Everyone in the industry understands this.
But, what we’ve encountered over and over again, is that even with that knowledge most brewery owners treat their business as a singular entity from a financial perspective. As in… all the revenue goes in the top, subtract out the expenses, and that’s how much money we’re making.
Now technically, this is true. But is it helpful?
Our assessment: no.
Our alternative: Instead of looking at the brewery as one singular business to improve… we need to instead, break it down into segments to better understand what’s going on and what to do about it.
These broken-down “financial segments” are what we internally call Business Units.
In other words:
You wouldn’t compare the performance of a restaurant to a gas station food mart to a grocery store. Technically they may be operated by the same entity and each sell food, but financially it would be like comparing apples to oranges to bananas.
So why wouldn’t this thinking apply to the brewery as well?
What if…
Instead of a mixed view of your distribution business (which requires tight operational efficiencies) with the high-margin, marketing-and-experience-dependent revenue that comes in through the taproom…
…you had a clear sightline on each, as if they were actually separate businesses with their own P&L’s and financial models?
Well…
Since we’ve done this a few hundred times at this point, our team can vouch for what comes next… which is actual answers to the following questions:
- Are we making money or not?
- Why?
- What should we do about it?
And with those answers, the breweries we’ve worked with are then armed with the information they need to actually navigate the market conditions we’re all facing successfully.
We have great respect for owners who aren’t afraid to roll up their sleeves, make tough decisions, and build better, more sustainable businesses.
If you’re one of those, fill out this form and let’s see how Small Batch Standard can help your brewery.