Show of hands: How many of you would like to save $20,000 annually at your brewery by not doing much of anything? This is the package the Independent Brewers Alliance (IBA) purchasing co-op has been able to build after its first successful year of operation. We’ve been following the steady progress of this group ever since it was just a theoretical idea in a small conference room at the Craft Brewers Conference in 2016. The stated objective then was to group enough quality craft brewers together, combine their purchasing powers Captain Planet style and enable the individual members to realize the economies of scale of a much larger entity.
“When we launched the IBA in the fall of 2016, we had no members and no significant supplier pricing agreements,” said IBA Executive Director Fort Mendes. “But we did have a clear vision for a co-op of a small group of the country’s brightest craft brewers, leveraging their buying power to lower member costs on raw materials and operational expenses. We were also confident that a craft beer cooperative wasn’t just a good idea, it was a necessity.”
Co-ops have a long, proven record of keeping independent businesses strong and independent in many industries facing increasing competition. This co-op model is how independent hardware stores around the country (under the co-op brand Ace Hardware) are able to stay fully independent while rivaling the purchasing power of Lowe’s and Home Depot. In its first year, the IBA has negotiated savings programs on many categories of raw materials and operational expenses such as freight and parcel shipments, payroll processing, warehouse supplies, recycling and more. Keep in mind that IBA members choose which programs they participate in.
“We’ve got packaging wrapped up,” said Mendes. “We have programs on bottles and cans — printed, sleeved and brites — can boxes, trays, master cartons, kegs and keg leasing. All deals are made with reputable, vetted suppliers, often chosen by our members.”
The group is short of its big bold white board goal of 1 million bbls of buying power, but they aren’t too far off at 600,000 bbls, “with brewer-members ranging from 2,500 barrels to 75,000 barrels,” Mendes noted. ” The average member produces 15,000 barrels.”
Dan Barrett, the controller from Upland Brewing, a 15,000-barrel brewery in Indiana, is a proud IBA member: “Our brewery has seen flat to declining sales and increased costs for labor and raw materials. That’s where the IBA comes in. As a member we’re getting pricing we could never have gotten on our own. The savings we get pay our cost of membership many times over, and things are only going to get better as new members join.”
To help brewers understand how much they can save, the IBA will host an informational 30-minute webinar at 4 p.m. ET Thursday, Feb. 15. To join the webinar or receive a free, no obligation saving analysis, email [email protected].