craft brewery financial training

Brewery Forecasting and Production Planning

Ross Ackerman is Chief Operating Officer and co-founder of GP-Analytics, a data company supporting the craft beer industry. Today we sit down with Ross for a Q&A to discuss how breweries can approach production planning and forecasting during this crisis.

Q: What should breweries be doing now to navigate this crisis?

From a production planning standpoint, now is the time to crank up the forecasting sensitivity.

Watch the data that is coming in and respond to trends that are happening. To keep it simple, take the average of the last three weeks of sales for your production planning. This time period represents the new normal.

Help your wholesaler partners to build a recommended order. They are distracted and their focus is elsewhere. Inform them of inventory levels, what is selling, and what they will need for an order of your products.

Remember, your brands may be 1% of your wholesaler’s business, but they are 100% of your business.

Q: What beer sales trends are you seeing from a macro level?

Initially, I recommended maximum “optionality” for breweries. Fill the tanks, be ready to re-direct into any package that does well. Now we have a lot more information. Larger pack sizes are selling – 2/12 packs, 4/6 packs. The consumer is going for larger pack sizes.

Consumers are gravitating to brands they know. They are thinking, if I’m going to commit to a 12-pack, I want to know it’s a beer I’m going to like. With larger pack sizes, they are less likely to take a chance on a beer they haven’t tried.

Q: For many small or in-planning breweries, the idea of data sharing may be unfamiliar.  Can you provide an overview of how data sharing works? Specifically, how does a brewery get sales data from their wholesaler?

If the wholesaler uses Encompass route accounting system, there is a supplier portal they can log into and see this information. The wholesaler can set them up with this access. Alternatively, if the wholesaler uses a system like VIP (Vermont Information Processing) the wholesaler can generate reports and send to the brewery.

Q:  What type of data or reports should breweries ask for?

Inventory and sales by SKU on a weekly basis are important. Use the 80/20 rule here. Focus on the majority of SKU’s that sell and don’t worry about the 20% for now.

Q: What should breweries be thinking about doing now so that they are in the best position when we’re ‘back to normal’?  In other words, how can they best to position themselves to come out of the crisis ready to hit the ground running?

Raw material procurement is going to become an issue. We want to conserve cash but with off-premise packages increasing 100% in some cases, this will put a strain on raw material supply chains.  Cans and bottles, for example. Consider getting in front of this, increase and expedite orders where possible. This is a smart place to spend money these days.

Q: If people want to learn more, how do they get in touch?

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