Barrel of new exposures for supply-crunched brewers

Barrel of new exposures for supply-crunched brewers

“Brewers are struggling with not knowing when their next hop shipment will be and trying to plan the launch of beers that require specific hops,” said Paul Martinez (pictured left), program manager at PAK Programs, an executive General Agents (MGA) serving breweries, distilleries and wineries.

“At the end of the day, you don’t know if you’re going to get these hops, and its ability to spin is paramount to the survival of your brewery.”

Ongoing supply chain pain for breweries

Supply shortages remain a pressing issue for breweries, who are now also dealing with rising raw material costs and transportation issues impacting their bottom line.

“I don’t know if we’ll ever get to the point where you can order something and two days later you know it’s there. Whether it’s next-season hops or even aluminum cans, ordering items is no guarantee you’ll get them when you need them,” Martinez told Insurance Business.

“The bottlenecks are still very real and only a major challenge for the brewers from a scheduling point of view.”

Delays in the supply chain also make equipment failures potentially devastating for breweries. Machine replacement times have increased from 30 to 360 days, forcing breweries to shut down or relocate operations, resulting in loss from business interruption.

“In many cases, the problems with machinery and equipment are even worse than sourcing the day-to-day ingredients to brew beer, as we have seen no relief from lead times and the lack of availability of spare parts for boilers and coolers. said Larry Chasin (pictured right), President of PAK Programs.

With supply chain delays and an inflationary environment, Chasin stressed that agents need to work with brewery customers to get the right ratings.

“It’s easy for an agent to put a number on an application and say we need $500,000 of coverage on his policy,” Chasin said. “But that could quickly double in this environment and leave the insured unable to rebuild.”

Diversification brings resilience – and new risks

Many craft brewers have adapted to supply chain risks through diversification. Some are producing new products like hard seltzer and canned cocktails, or adding a hospitality element like taprooms.

Others also branch out through partnerships, such as B. Product collaborations with local distilleries. Expanding a brewery’s portfolio also spreads the risk of uncertainty in the supply chain.

“There are so many different styles of beer, and some require a lot of hops and some 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 hop variety, you can have a backup beer that you can make instead.”

Diversification also creates new and different exposures for beer companies. For example, popular canned cocktails are at risk of leaking due to their formulation. Due to the high sugar and acid content of the fruit, manufacturers must use different cans for cocktails than for beer.

“The beverages continue to ferment and can cause the pressure inside the can to rise, causing the can to burst,” Martinez said. “With canned cocktails, you have to make sure that all the ingredients are chemically safe.”

In addition, the introduction of hard alcohol into a brewery’s premises also increases the risk of steam explosions and fires.

“Even pouring out in the open creates fumes, and often it’s right in the middle of your brewery, exposing your entire operation to that hazard,” Chasin said.

collaborative industry

Brokers and agents working in the brewing industry need to keep track of their clients’ businesses to help them manage risk and ensure they have adequate insurance coverage.

But there’s also an unusual feature in the industry that helps companies deal with business disruptions when they happen.

“It’s a very collaborative industry — we’ve got breweries contracting with neighboring breweries to produce beer for them while they wait for new equipment,” Martinez said.

“Smaller breweries can tap larger breweries for resources. They help each other, that’s one of the great parts of this industry.”

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