Packaging plays a huge role in helping a small brewery expand outside of its tasting room walls. This is not to diminish the role of you beer’s quality in your success, but think of all the moments of interaction a retail customer has with your beer before ever sitting down and sipping a pint. That first glance around the shelves and coolers showcases dozens of breweries and hundreds of beers to parse through in a craft beer buying situation. A bevy of questions come to the customer’s mind: What do I recognize? What do I like? What new stands out to me? The aesthetics of logos, labels, containers (cans or bottles?) and cardboard packaging all come into play. Shelf positioning and any additional POS promotion also help.
The portability of the containers and the packaging matters: Do bottles or cans work better for the occasion? Is the cardboard packaging easy to grab? Does it feel chintzy? Does it protect the beer? The packaging doesn’t just impact the beer experience, it can also impact the beer itself. A quick anecdote: The other day, I grabbed a six pack of cans from a brewery I hadn’t tried before (that shall remain nameless). I was excited to try one after work, but when I poured the first one into a pint glass, I had a glass of 90 percent foam. Had to wait for about 20 minutes to try it. Not a great first experience with this new-to-me brewery.
There are a multitude of variables from the point of purchase to the customer placing a six pack in the fridge. Packaging for distribution brings in all sorts of variables for the business behind the scenes — inventory of supplies, extra equipment, tons of man power, etc. Small brewers have little room for error in nailing all of these decisions in their first go-round, as there may not be time for a second.
Shipping beers to retail requires packaging, and that packaging also requires space. Chances are, you don’t have a lot of extra unused space to store this inventory of boxes. This is where a supplier’s fulfillment services come in handy.
“Fulfillment for us is doing whatever the customer needs,” says Rocky Wilson with Victory Packaging. “We help with space by using our warehouses, we help with manpower, distribution, purchasing and even financing.”
“The other big advantage is our customers are only invoiced for what they use when they use it. Our customers use our money and our space and sometimes our labor; all resulting in total cost reduction for themselves.” — Rocky Wilson with Victory PackagingAs an example, Wilson says they have a craft brewing customer in Colorado that has Victory pack empty bottles into six-pack carriers, pack the carriers into mother cases and then deliver the whole packed cases as needed. Essentially, brewers get to focus as much as they can on what they do best and let the professionals do the rest, which, in the end, allows a smaller brewer to have an end-product that rivals the in-house power of a larger brewer.
“We leverage our customers’ purchasing power with our own and our other customers,” Wilson says. “We purchase in larger quantities to get better pricing, and then we store our customers’ products in one of our 65 warehouses in the United States, Canada and Mexico. Our customers can draw from inventory and have smaller orders delivered to them as they need it, usually in one day. The other big advantage is our customers are only invoiced for what they use when they use it. Our customers use our money and our space and sometimes our labor; all resulting in total cost reduction for themselves.”
Independent II is another full service corrugated and packaging company (based in Louisville, Ky,) that has fulfillment services. The company is equipped to design, produce and deliver a variety of corrugated products and has relationships with Against the Grain Brewing, Falls City Beer, Country Boy Brewing and others.
“We understand that our customers may not have their own facility yet, so we may have to ship specific quantities to co-packers in other states in a just-in-time format,” said Finn MacDonald, director of operations for Independent II. “Or, we develop branded protective packaging for innovative distribution, such as petainer shippers. As our customers’ grow and their brand/marketing evolves, we are able to collaborate to design and develop packaging that may feature 1-2-3 Color Print. We Design and Manufacture four-Pack Bomber Boxes, Tray and Case Packs, and Petainer Shippers…and we can Design and Deliver Packaging Supplies [Branded Tapes, Staplers, Case Sealers, etc.] as needed.”
MacDonald notes that Against the Grain is moving Petainers, which has its own interesting cost efficiency — they are disposable, one-way kegs.
Jerry Gnagy, brewer and managing member, told us he sees these three financial benefits:
- Up-front costs for a 30 liter costs up around $24/ Key vs. $60 to $100 for good comparable steel size;
- Against the Grain doesn’t have to wait and pay to get kegs returned; and
- The company doesn’t have to use the chemical, labor, water and energy for cleaning before filling.
Again, for Gnagy, one-way isn’t a total solution, but it fits into the overall business model.
“We use steel in our local market where our distributor can pick up kegs and drop off empties very easily,” Gnagy told Craft Brewing Business. “We also use a portion of steel in the Chicago market because we feel we have a good mechanism for returning the kegs. Once they go out and come back about four times, it makes up for the purchase of the steel and the savings of the KeyKeg price. European distribution and ancillary markets use KeyKeg exclusively because it could be months to years before we see the return kegs.”
Petainers are still mostly found in European markets. The service that is trending up here in the U.S. is the pooled-asset model of Microstar, which operates kind of like Netflix— subscribe to the service and have access to a fleet of kegs on-demand, of which you have no ownership.
MicroStar owns the largest independent fleet in the country, which provides tremendous flexibility for a craft brewer, while reducing several business-running headaches. The combined buying power of MicroStar’s large customer base helps to negotiate lower keg prices, and the pooled-asset model reduces the miles empty kegs travel.
“Some folks mistakenly believe that once a brewer has better access to capital they might then buy their own kegs,” said Michael Hranicka, president and CEO of MicroStar. “What we’re seeing now is that the capital-relief benefits of MicroStar sometimes bring customers in and then they stay on the program for the flexibility, growth opportunities and sustainability benefits we deliver.”
Brewers provide Microstar with their forecasts, and Microstar guarantees that we will meet their requirements, including some cushion up or down. In addition, a dramatic change in forecasts, especially spikes in demand which are commonplace today, can be easily accommodated due to the size of Microstar’s fleet and its keg suppliers.