COMMENT REPORTING DON’T BE AFRAID OF THE NUMBERS! - FOUR REPORTS YOUR BREWERY SHOULD BE USING

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Reports provide a wealth of information on everything from production costs and inventory levels to customer behaviour and revenue. Armed with this data, brewers can make informed decisions and stay competitive in a crowded market. Whether you’re a small startup or an established brewery, the right reports can help you grow your business and achieve long-term success.

Regardless of the size or stage of your brewery, insight into how your brewery is performing is not optional if the goal is longevity, and proftability. There are two common fatal mistakes we see breweries fall into: 1) they hide from the numbers because they don’t like the story they tell, or 2) they assume that they are too small of a brewery to worry about things like this for now. But looking at the numbers doesn’t have to be an arduous task. Starting with these four reports will set you on the right path, and reduce your anxiety about numbers. Knowledge is power.

The most common reports most owners will already be looking at would be the Proft and Loss (P&L), Balance Sheet, and other fnancial statements found in your accounting program. Some brewers may already be using a series of robust Excel spreadsheets or even a Brewery Management Software that allows reporting of of existing data. However, aside from the general fnancial or inventory reports, we believe there are 4 often overlooked reports that ofer an in-depth understanding of a brewery’s capacity to drive growth in the current market.

Material Planning Report

Chances are you have scheduled batches for the week or two, or even month ahead. You’ve looked at the tanks, know all your recipes and the quantity of raw materials needed for your brewers to brew. So what else is there? Unless you’re using a JustIn-Time Inventory method ( where you only buy what you need and use it all up), or are big enough to consistently keep inventory of all your goods, you’ll need a more comprehensive inventory report to show you what you’re missing.

The material planning report takes your scheduled brews a step further to look at the required raw material for the next period and compares it to your existing inventory. It should also show the quantity of inventory waiting to be received and then fnally indicate what you’re missing for the next couple of batches to go smoothly.

Your brewery’s material planning reports can help your brewery in three key areas:

Š Purchase Planning

A material planning report will be able to show the quantities that would be needed to be purchased for the upcoming batches while accounting for purchased quantities that may not have been received. This way, it allows brewers to take into account the lead time for supplier deliveries and not over purchase on subsequent orders when previous inventories haven’t arrived yet.

Inventory

In addition to helping with purchase planning, a material planning report can also be valuable for inventory management. By comparing your expected raw material requirements to your existing inventory levels, the report can highlight any potential shortfalls or overages in your inventory, enabling you to adjust your ordering strategy accordingly. For example, if the report indicates that you have excess inventory of a particular raw material, you may choose to reduce the frequency or quantity of orders for that material to avoid overstocking. Alternatively, if the report shows that you are running low on a critical raw material, you can increase your orders to ensure that you have enough on hand to meet your production needs.

Š Financial Planning

With the ability to plan out purchases weeks in advance, the report will assist in future fnancial forecasting and allow the brewer to see how much inventory and value they want to maintain at the brewery.

Whether you are using excel to manage your inventory, or the Brewery Management Software you use has the exact report, anyone is able to create this report by combining your raw material inventory, purchased inventory and the expected material used for each batch for the period.

Profitability Report

Another common report brewers generally use would be a type of cost of goods (COGS) report. This allows them to see how much their beer is costing them. The downside of this report is that it’s normally aggregated by the month or a certain time period by the accounting platform and normally excel spreadsheets are not designed to determine the profts at both the SKU and recipe level.

A more indepth proftability analysis would further support the brewer’s understanding of not only COGS on a Per Sku Basis but the amount of revenue the product is generating as well. In this proftability analysis, it is important to view the COGS per SKU or packaged category and include sales information from both wholesale accounts and retail.

For example, while we may know the cost to make our Case of IPA, when calculating profitability, we should be aware of the price and discounts charged to distributors, versus self distributed accounts, versus taproom sales. The cost and volumes sold during the period will provide management a better overall picture of how well a particular product is doing and how much it really is making the brewery.

To set this up, you will need to know the average cost of production for each SKU or each packaging type. Oftentimes it would be easier to fnd this information should you have a Brewery Management system already, but Excel and accounting software like QBO will work the same, just may need additional calculations. Calculating your actual proft margin per SKU, grouped by recipe would provide a clearer insight as to which products are doing the best, highest margins and most proftable (absolute value).

Customer Reorder Analysis

Now that we have additional information on what to buy, and which products are selling the best, we should look at who we are selling to.

A customer reorder analysis is a powerful tool that can provide information and streamline the eforts of your sales team. While most people tend to focus on sales forecasts or overall sales volume, a reorder report allows businesses to see specifc customer behavioural trends by analysing a customer’s order patterns and time. By tracking customer reorders, businesses can quickly identify which customers are placing consistent orders, and which ones may be slipping through the cracks.

By identifying customers who consistently reorder, instead of relying on sales teams to remember which customers to contact, the report provides a clear picture of which customers are most likely to reorder. This helps sales teams take a proactive approach to engage existing customers, re-engage with delinquent accounts and create opportunities to upsell or promote new products to a customer base that is already familiar with your product.

Additionally, now that your sales rep doesn’t need to spend as much time fguring out who to contact and reorder, they can focus more time on generating new business!

Inventory Valuation

An inventory valuation report is an essential tool for breweries that can help businesses keep track of inventory levels and value of products on hand. Despite its importance, this type of report is often forgotten in the brewery. Checking whether the inventory or its value is current or without errors is crucial for any business. This can be done through QuickBooks Online (QBO) where businesses can check the value of their inventory accounts or by reviewing inventory systems for anomalies. A strong understanding of inventory levels can help businesses view their fnancial situation and determine whether they are holding too much inventory or not enough.

The report can provide insight into raw materials, work-in-progress, and finished goods inventory. It also enables breweries to borrow against their finished goods inventory, which is an excellent benefit for financing future business needs or factoring. With inventory counts being few and far between, having a way to update inventory based on production runs and sales is crucial. This allows management to stay informed about inventory levels and know what is going on in their brewery.

While this list is not exhaustive and by no means should be the only reports you look at, by reviewing the Material Planning report, Profitability Report, a customer analysis, and looking at your inventory valuation monthly or even quarterly, you will be primed to grow faster and stronger.

SO WHAT NEXT?

Don’t be afraid of the numbers! The best thing you can do is to make these numbers easy to access, and easy to maintain. This eliminates the friction for having this knowledge at hand. So “eat that elephant” and get yourself setup properly, whether it be spreadsheets, or a brewery management software. This is a one time step, so time block it in your calendar with your team and get it done.

With the hardest part done, the next step is having the discipline to keep these numbers up to date. Formulate a plan and responsibilities with your team on who and when these input values will be updated/ maintained. A brewery management soft- ware will help enforce these rules and roles, but with a simple set of rules you can still make this work with spreadsheets. If you let these input values fall behind, the output of your reports become worthless, and you have lost the edge that they can provide you with.

Now the easy part. Set up a time each month to review the reports that you have set up… feel the power of knowledge surge through you!

Conclusion

Yes these numbers give you great insight into your business, but they also give you answers for when questions are asked by your investors, your board, your lenders, etc. The best way to eliminate more questions is to have concrete answers to the initial questions!

These are just four reports to get you started. Once you get comfortable with them, there is really no limit on what knowledge different reports can provide to your brewery.

About the Author:

Matthew Hon had a background in accounting and sales before helping to found Brew Ninja (https://get.brewninja.net) where as COO he is in charge of all things related to the customer experience. He has a passion for making sure that all breweries who sign up to use Brew Ninja have a great experience and truly recognize the ROI of implementing it in their brewery’s day to day. Aside from being a great leader for Brew Ninja, he is the father of two cute kids, and enjoys calling in sick to hit the slopes at Whistler, BC.