malt costs per bbl

[Brew2902]

Can anyone tell me an average cost for malt/bbl? I know it varies by beer style but what is typical? I'm analyzing some financial data and using the beer recipes it comes to just under $30/barrel. Looking at the yearly cash flow I get $53/bbl which is 33% higher. 5%-10% spoilage/spillage/unusable beer seems to be the norm so what gives? Does anyone know of another way to explain this difference?

On a similar note, is there typical number to use for beer COGS by starting with cost of ingredients for one brew and how much should I allow for waste, spillage, etc.? Again, I know it varies but what is it close to, $40/bbl, $50, $100? Is waste closer to 5%, 10%, 40%?

[nateo]

Are you looking at your own financials, or someone else's?

If it's your numbers, and you use a standard costing system, you should be able to figure out where, exactly, the discrepancies are, whether it's an inaccurate cost of malt, inefficient use of malt, or spoilage/spillage/whatever. That's one of many great things about a standard costing system.

As a side note, COGS includes a ton of costs that are not grain, hops, etc, so make sure you're talking about real COGS, and not just direct materials. There is no "rule of thumb" to figure your COGS based on your direct material cost, especially since brewing is a capital-intensive industry, and overhead is going to be the majority of your COGS.

[Brew2902]

Someone else's numbers. Sounds like fun, eh? I'm looking at an existing facility for some friends. 15 bbl system with all major equipment paid for so where is the money going?

I guess technically COGS would involve every penny spent on anything but I was trying to deal with direct materials only. Have to start somewhere. I wanted to get the margins just considering malt and hops. Maybe include CO2 and chemicals to clean between brews but I estimate these two at < 5%. If these expenses/margins are in the normal range then I can start looking elsewhere.

[dfalken]

Someone else's numbers. Sounds like fun, eh? I'm looking at an existing facility for some friends. 15 bbl system with all major equipment paid for so where is the money going?

I guess technically COGS would involve every penny spent on anything but I was trying to deal with direct materials only. Have to start somewhere. I wanted to get the margins just considering malt and hops. Maybe include CO2 and chemicals to clean between brews but I estimate these two at < 5%. If these expenses/margins are in the normal range then I can start looking elsewhere.

My cost of malt is between $14 and $18 per BBL for beers around 5% ABV. However, my second highest cost is energy (fuel and electricity) which you are ignoring. 3rd come the hops and 4th comes the water which you also have ignored. After that I have in no particular order chemicals, CO2, O2, finings, yeast, water treatment and filter media (this one can be not so trivial depending on what kind of filter you have).

Another very important COG is waste (beer lost to trub, to the filter, in packaging etc) I use 15% for my estimate and it is fairly accurate.

Taxes in my situation are higher than all the other COGS combined. For a 5% beer I am paying around $60 per BBL in alcohol tax plus 21% on top of the selling price for VAT and AdValorem (another alcohol penalty tax).

My total COGS ex-tax but including waste come out to around $40-$45 per BBL.

Hope this helps.

[nateo]

Someone else's numbers. Sounds like fun, eh? I'm looking at an existing facility for some friends. 15 bbl system with all major equipment paid for so where is the money going?

I guess technically COGS would involve every penny spent on anything but I was trying to deal with direct materials only.

So we're all on the same page here, this is how to calculate COGS:

1) Beginning inventory of direct material + purchases = Direct material available for use
2) Direct material available for use - ending direct material inventory = direct material consumed
3) Total manufacturing cost = Direct material consumed + Direct labor used + Factory overhead
4) Cost of goods manufactured (COGM) = Total manufacturing cost + beginning work in process - ending work in process
5) COGS = COGM + beginning inventory of finished goods - ending inventory of finished goods.

Please note, COGS isn't "every penny spent on anything." There is probably some substantial amount of money going to selling, admin, distribution and other non-brewhouse expenses that should be excluded from COGS and COGM.

Like I said, direct materials is not an appropriate point to start with, when considering manufacturing that has substantial overhead costs. I'm not sure why you're starting with that, but it will give you a misleading picture of the costs in question.

I'd be happy to take a look at the numbers and see if we can't figure out what's going on there.