said Paul Martinez (pictured left), program director for PAK Programs, a general manager agent (MGA) that serves breweries, distilleries and wineries.
“At the end of the day, you don’t know if you’re getting those jumps and your ability to pivot is critical to the survival of your brewery.”
Supply chain pain continues for brewers
Supply shortages remain a pressing concern for brewers, who now also have to deal with the rising cost of raw materials and transportation challenges affecting their bottom line.
“I don’t know if we’ll be at that point where you can order something and know it’s there in a couple of days. Whether it’s hops for next season or even aluminum cans, putting items in order doesn’t guarantee that you’ll get them when you want to have them,” Martinez told Companies. Insurance.
“The shortage is still very real and is a huge challenge for brewers just in terms of scheduling.”
Supply chain delays also lead to potentially devastating equipment failures for brewers. Machine replacement times swelled from 30 days to 360 days, forcing brewers to cease operations or pivot, causing loss of business interruption.
“In many cases, the machinery and equipment issues are worse than purchasing the day-to-day ingredients for brewing beer, because we have seen no relief from lead times and unavailability of spare parts for boilers and coolers,” said Larry Chasin (pictured right), head of PAK Programs.
Amid supply chain delays and an inflationary environment, Chasin stressed that dealerships need to work with beer customers to get the right valuations.
“It’s easy for an agent to put a number on an app and say we need $500,000 in coverage on their policy,” Chasin said. “But that could easily compound quickly in this environment and leave the insured unable to rebuild.”
Diversification brings flexibility – and new risks
Many craft brewers have adapted to supply chain risks through diversification. Some are creating new products such as hard sodas and canned cocktails or adding a hospitality element such as taprooms.
Others are also branching out through partnerships, such as product collaborations with local distilleries. Expanding the brewers’ portfolio also spreads the risks posed by supply chain uncertainty.
“There are many different styles of beer out there, and some require a lot of hops while others don’t,” Martinez said.
“It’s important to diversify and have a huge portfolio so that if something happens and you can’t get a certain kind of hops, you can have a backup beer that you can make instead.”
Diversification also brews new and different exposures for beer companies. For example, common canned cocktails pose a risk of cans leaking due to their composition. The fruit components, which are high in sugars and acid, mean that manufacturers need to use different cans for cocktails than they do for beer.
“The beverage continues to ferment and can build up pressure in the can, causing the can to rupture,” Martinez said. “With canned cocktails, you have to make sure that all of the ingredients are chemically intact.”
In addition, the introduction of highly resistant alcohol into a brewery premise also increases the risk of steam explosions and fires.
“Even just pouring outdoors creates fumes, and it’s often done in the middle of your brewery, so you’re exposing your entire operation to that risk,” Chasin said.
cooperative industry
Brokers and agents serving the brewing industry must stay on top of their clients’ operations to help them manage their risks and ensure they have adequate insurance coverage.
But there is also an unusual feature in the industry that helps companies deal with business disruptions as they occur.
“It’s a very collaborative industry—we have breweries that contract with neighboring breweries to produce beer for them while they wait for new equipment,” Martinez said.
“Smaller breweries can tap into the resources of larger breweries. They help each other out, and it’s one of the great parts of this industry.”
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