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Why Most Brewers Fail

Why Most Brewers Fail?

According to the Brewers Association, hundreds of breweries close their doors each year. why? What was the main reason for the failure?
Most , how can you avoid a similar fate? BA chief economist Bart Watson said the brewery closures were partly due to increased competition, rent and landlord issues. The truth is, there could be a million different reasons.
But, the number one reason craft breweries fail is because they run out of cash. Cash is king. Cash is the fuel that keeps businesses running. Run out of cash and you’re done. So how do you avoid running out of cash? First, focus on 5 cash flow drivers.
5 Drivers of Brewery Cash Flow

Drivers of Brewery Cash Flow

In the beer business, five main areas affect cash flow. Omit one or more at your own risk.

Accounts receivable

Accounts receivable is what your customers (wholesalers, retail accounts, etc.) owe you. It is cash outstanding. When sales rise, so does accounts receivable. That could be a nasty surprise for a growing brewery — sales are up but cash collections are lagging.


Inventories include raw materials (hops, malt), packaging materials and finished goods, etc. Likewise, as sales increase, so does inventory. Inventory is cash held at a brewery or in an offsite warehouse. Inventory needs to be paid for in dollars – which means more cash out the door.

Accounts payable

Accounts payable is the money you owe your suppliers. The longer you can extend your payment terms, the longer you can hold cash. No one wants to default on paying their bills, but paying early can be fatal to your bank account.

Capital expenditure

Capex is things like brewery equipment, tanks and kegs. Even if you borrow money to buy these items, you will have to pay a certain amount in cash yourself (usually 20% to 30% of the buy price). Don’t forget, you have to pay back the money you borrowed with interest. Another blow to our friend’s cash.

Operating performance

Operating performance

Operating performance, also known as profit or loss, is the difference between revenue and expenses. Revenue (Sales) minus Expenses = Profit or Loss. You can show profits for a period of time and be out of cash. Likewise, you can show losses and have a lot of cash for a period of time. This may seem pointless, but it’s a mathematical truth. But, over an extended period of time, you need to be profitable to ensure you don’t run out of cash. But you already know that.
The number one reason breweries close is because they run out of cash. Want to avoid a similar fate? Track these 5 cash flow drivers (at least monthly) and watch your cash like a hawk.
Get a turnkey solution for brewery equipment
If you plan to open or expand the brewery, you can contact Micet Craft directly. Our engineers will design and manufacture brewery equipment according to your brewing process. Of course, we will also provide you with a complete turnkey solution. Also, if you plan to expand the brewery, we will provide you with customized solutions.

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