What Your Brewery Business Needs to Know About Inflation
Nearly every industry has felt the effects of inflation over the last several years, however, brewery businesses are on a unique end of the spectrum.
Rising prices, supply chain issues, and an uneasy labor market have forced brewery owners to think outside of the box to keep their business afloat.
How Inflation Impacts Your Brewery Business
Because of the nature of the business and the product being sold, inflation uniquely affects breweries.
Rising Cost of Goods
As inflation rises, purchasing power decreases, meaning the value of your dollar is decreasing, and purchasing a good is more expensive than ever before.
Nearly everything you, as a brewer, needs to craft your products has shot up in price, aluminum being the good impacted the most. The Wall Street Journal reported a 24% percent increase in aluminum prices in the last six months.
The steep jump puts brewery owners like yourself in a tough position. It forces you to look for cheaper alternatives and find more effective ways to present your product to your customers.
Supply Chain Issues
Not only is inflation affecting how much you pay for goods but it is also affecting the way you receive them.
Products like aluminum, grains, hops, and apparel – all of which are essential for brewery businesses – are in high demand. Their respective industries are having a hard time keeping up with these high demands, causing shipping delays.
The industries lucky enough not to experience such delays are still struggling with having enough supply to meet the demands. While businesses are working to level out the discrepancies, it will take years to fully correct itself.
In the meantime, you can expect shipping delays and higher prices.
Uneasy Labor Market
Before COVID-19 and the spike in inflation, the brewery business and its labor market were booming.
Now, workers are harder to come by. Because customers are being asked to dig deeper into their pockets to pay for everyday necessities, their bank accounts are being strained, which in turn, is forcing them to find higher-paying jobs. This is making it difficult for breweries to find employees who are willing to work.
On the other side, brewery owners are stuck between raising their prices(again) and offering employees a fair wage.
How Your Brewery Business Can Make Adjustments to Fight Inflation
While it seems inflation finds a way to impact your brewery business from nearly every angle, there are ways you can make adjustments to combat it.
Review Your Prices
We said it before, and we’ll likely say it again, but adjusting your prices is the best way to combat inflation. Since you are being asked to pay more for the goods you need to produce your product, you need to ensure your prices are reflecting that extra cost.
Raising prices also gives you a better opportunity to pay your employees more sustainable wages.
Because the cost of aluminum is so high, your brewery will need to get creative.
Try tapping into your network by working with other local breweries. You can combine orders to buy larger quantities of aluminum at lower costs.
Be Honest with Your Customers
Your customers are aware of the state of the economy. Be honest with them. If you have to raise prices, explain why. Transparency is key.
Lean into Your Budget
As you go through all of these financial changes, it’s essential you have and use your budget. It will guide you through the tough decisions and help your spending stay on track.
Call On an Accountant
Inflation can be tricky to understand and once you think you’ve adjusted to the current economy, it changes again. To stay on top of inflation and keep your business heading in the right direction, call on an accountant.
At U-nique Accounting, we have experience in the brewery industry and understand how inflation will affect your business. We will work with you to create strategies that put your brewery in a position to adapt and thrive financially.
Contact us today to learn how we can work together to grow your brewery business!