Profit on kegs

[ChesterBrew]

I don't understand what your $43.20 rent expense is.

I agree. Rent is a fixed cost whereas beer production is a variable cost. There's no guarantee that you'll sell beer at the rate you originally assume.

[zachj9292]

I divided my total rent for the year by my production for the year. Then divided for each half barrel keg I sell. So that is how much money is going towards rent per keg


But okay i see what you are saying. I won't include the rent

[Bertsbeer]

Try this

Sales-Variable Expenses=contribution margin/Sales=contribution margin ratio Fixed cost/CM ratio=Break even # then contribution margin (not Ratio) * kegs=net income. Hope this helps.

[zachj9292]

½ Barrel Kegs of Ale 1 = $125 (to the distributor)

Raw ingredients cost to make ½ barrel = $19.28
State and federal tax per ½ barrel of beer = $10.24
Expected energy costs ½ per barrel = $4.64
Employees wages and wages tax = $21.85
Keg rental expense = $10 per keg
Total variable expenses = $66.01

= $58.99 profit margin per ½ barrel keg

½ barrel Kegs of Ale 2 = $135 (to the distributor)

Raw ingredients cost to make ½ barrel = 24.48
State and federal tax per ½ barrel of beer = $10.24
Expected energy cost per ½ barrel = $4.64
Employees wages and wages tax = $21.85
Keg rental expense = $10 per keg
Total variable expenses = $71.21

= $63.79 profit margin per ½ barrel keg



And that is for year one. I don't know why I put rent expense in there, it was awhile ago. Am i missing anything? My profit on a keg seems bigger than what most people are saying

[iscorice]

wow
thats some pretty cheap raw materials,I dont know how you are getting that cheap including yeast, based on current wholesale prices and anything with even medium amount of hops or anything dark with a lot of specialty grains.
Where is the water in the variable costs you burn through a lot of water until you get big. where is the cip cost breakout for fermenters and keg washing? if you are talking about a final profit margin your still missing the fixed costs. obviously these will decrease per unit produced

ex. cream ale 15 gals
28.5 lbs pale malt $ 17.13
6oz honey malt $.50
2oz biscuit malt $.15
1.68oz cluster hops 2.00
yeast dry ? $10-15 more if you are getting branded liquid and overnighted
yeast nutrient?
additives ie.. ph additives, finings, specialty spices

[yap]

also, at a price of $125 to the distributor, you are looking at close to $180 wholesale to accounts once the distributor marks it up. Not sure what kind of beer you are making or where you are located, but that price could be a bit high for a lot of accounts....

also as mentioned, you have missed most of the fixed costs...

insurance
marketing costs
electricity beyond what is used to brew
phone/internet
debt servicing (if any)
toilet paper for the bathroom
the list goes on and on...

[ChesterBrew]

I agree with the others, your ingredient costs seem very low.

Also, I don't know if employee wages should be part of your cost per keg... you'll have these employees around whether beer is being produced or not, right? I think it would be best to figure out what an annual salary would be (including all of your FICA costs, etc.) and divide that by 12 to generate a monthly fixed cost (which goes with others such as what yap lists) that's tracked separately from your keg production cost.

Here's what I use as my itemized list of beer BBL direct costs:

Ingredients
- Malt
- Hops
- Yeast
- Water Treatment
- Other (spices, etc.)

Utilities Usage
- Electricity
- Propane
- Water
- CO2

Keg Packaging
- Keg Rental
- Keg Collars

Excise Taxes
- Federal
- State
- Local

[fa50driver]

Remember - regarding yeast - If you overnight a 15 bbl pitchable for $300, then re-use it for 10 generations, you end up with a cost of about $1/keg. Use it once and you will be up to the $10/keg