Wednesday, 14 July 2010

Economies of scale


We spent most of the weekend bottling Infra Red. We only bottled 260, that's not really very many for the man hours that went into it. To be fair, most of our labour is either very cheap or free, I don't pay myself anyway and we have a willing volunteer who even goes home and blogs about the beer. All he cost me was a bottle of Tokyo*. Of course there was also Alfie, but he's working for his University fees. The thing is, at the present rate of bottling it just isn't economic, at least it wouldn't be if we had to pay wages for the man hours.

Today Ann has been looking at means of speeding up the process, which involves spending money we haven't got. As we have no idea how big the market is for our bottle products it makes it difficult to be sure how much to invest. The minimum investment, which is about all we can afford, will get us little more than a few more filling heads, which is one of the current bottle necks1 in the process. A little more expenditure would gain us some form of labelling machine, which would be nice, as hand labelling is slow, has variable results and is the most tedious job in the world after cask washing.

Of course we could spend many tens of thousands of pounds on bottling equipment, which would enjoy the economies of scale associated with high throughput, but without developing a market first we cannot even start to contemplate such investment. Without the economies of scale the beer cannot be sold at a low enough price without risking our dwindling cash reserves being further reduced. Without cash reserves we cannot invest in the equipment required to ensure we can produce beer at a reasonable price. It's to do with cash flow really.

In reality this results in all our bottled beer being relatively scarce. Even if we produce more we still have the logistical problems of getting it into various outlets, the transport costs can easily annihilate any profitability.

If you see Infra Red for sale in bottle you are an extremely lucky person indeed. I advise that a small amount of money is sewn into the lining of your jacket to ensure you have the capability to purchase such a rare commodity irrespective of the quantity of reddies that may or may not languish in your wallet.


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1you really do not have to laugh.

9 comments:

The Beer Nut said...

Is selling direct over the Internet an option?

HardKnott Dave said...

Nutty, the short answer is yes and one that is constantly under review at our place. But as with all of these things it's just another activity we haven't, at the moment, got time to administer. At the moment my business is to brew beer, I'd rather not have the added stress of worrying who's ordered a few bottles today. Other people do retailing much better than me.

I know there are websites like myBrewerytap.com but as I understand it we would still need to do the packing and dispatching. BeerMerchants.com is my preferred option, as they just take a consignment and then sell it, theoretically giving me weekends off. Hopefully they will take Infra Red if the sales of Granite and Æther Blæc go well.

BeerReviewsAndy said...

Is contract bottling out of the question too?

i hope the sales on Beermerchants go well! id love to be able to order infra red from there if its half as good as that test verison before then you're onto a winner!

RedNev said...

Using bloggers as slave labour? Not sure what the comrades will make of this!

Velky Al said...

RedNev,

It worked for BrewDog, using bloggers as their at cost advertising agency. ;)

What would be an interesting idea would be a mobile bottling plant that went from small brewery to small brewery and bottled for a day. I am sure I saw something like that in the States, something like these guys:

http://www.signaturebottlers.com/trucks/

Jeff Pickthall said...

Talk to Bitter End about bottling.

Don't think of them as rivals.

HardKnott Dave said...

Contract bottling is an option. I nearly mentioned it but I think that is a whole topic by itself.

I have even thought myself about the options of mobile bottling as a service. The problem with that would be ensuring stability of the beer. Most bottling plants also secondary mature the beer to ensure stability.

Jeez Jeff, just as I'm typing this you post your thoughts. Bitter End has already been at the front of my mind. It's a trade off between cost, investment and trusting somebody else in part of our quality control. Additionally there is the question of hygienic transport of a gyle.

MicMac said...

Cumbrian Bottling would be another obvious option.
http://www.bottledincumbria.co.uk/

They deliver clean & gas-purged 2.5 & 5 bbl grundy-tanks to you, along with clean hoses, fittings, etc.

Re mobile bottling - there used to be someone in the 1990s but they're no more. Recently Tom Wood Brewery's mobile bottling truck appeared on Gordon Ramsay's "F-word" programme -
http://www.tom-wood.com/brewery/bottle.php

But I've not heard from anyone in the industry who's used it.

Another other option is George Wright Brewery (Rainford, Merseyside) I'm drinking their Pipe Dream as I type & it's retained loads of lovely hop character.

James said...

I suspect the Market for your beers is quite large-I have yet to see many pubs offering interesting bottled beer -more of the independents in London (and restaurants) could easily benefit from a supplier such as yourself in my humble. Craft beer should take off in London soon, we mirror New York in certain circles and ale is begining to shake off it's old man image for some...(I can drop into convo with those I know if you like, will send you a direct message when I get chance)