The brewing industry has become heavily concentrated. There are several large players accounting for a large majority of sales in the industry. According to IBIS World, the largest five companies account for over 70% of total revenue in 2022. But do not let these large companies stop you! A smaller-sized operation can absolutely compete and gain market share in the brewing industry. Peak Business Valuation, business appraiser, works with many small breweries. We help them understand the value of a brewery and key value drivers for a brewery.
Many small breweries compete in today’s market by providing high-quality products. Given the recent consumer trends towards craft beer and alternative alcohol products, it is a great time for smaller breweries to meet consumer needs and gain customers. As such, there is much potential in the market for smaller breweries. This is why it is so important to understand how brewery owners add value to their companies.
As a business appraiser, Peak Business Valuation provides business valuations for breweries across the country. A business valuation can help you understand the value of a brewery and how to increase the value. A business appraisal is especially useful if you are looking to buy a brewery and are negotiating a purchase price. It is also helpful if you are selling a brewery and need to know the fair market value to determine a fair listing price. To get started with your business valuation for a brewery, schedule a free consultation.
Key Value Drivers for a Brewery
In the following paragraphs, we discuss key value drivers for a brewery. To better understand the value of a brewery, obtain a business valuation. Peak Business Valuation, business appraiser, is happy to provide you with a business valuation for a brewery. We are also happy to answer any questions you may have about valuing a brewery. Schedule a free consultation today! For more information take a look at Valuing a Brewery, How to Value a Brewery, as well as Valuation Multiples for a Brewery.
Meeting Increasing Demand for Craft Beer
An important change in consumer preferences is brewing in the industry. Many industry insiders report increasing demand for craft beers. This means consumers are moving away from larger breweries to smaller, locally-owned breweries. This creates an opportunity for local brewery owners to meet consumer demands. Providing consumers with more craft beers will expand sales and grow revenue. As the trend continues, revenue for craft beers is expected to increase. Growing revenue year over year is an excellent way to improve the value of your business.
Developing Differentiated Products
Meeting ever-changing consumer demands can be difficult. Offering a diversified line of products can meet a wider-variety of preferences and can increase the brewery’s value. For example, imagine your brewery already offered several products including craft beer. As consumer tastes changed in favor of craft beer, you would be ahead of the curve.
Offering a wide range of products can also help prevent sales concentration in case of a supply shortage. This helps improve long-run revenue outlooks. When a business appraiser at Peak Business Valuation values a brewery they will look at your product line. Diversifying products can reduce risk associated with stockouts and changing consumer preferences. Reducing risk increases the value of a business.
Improving and Securing Distribution Channels
While offering diversified products is important, it is important to deliver the product. This was proven to be especially important during the peak supply chain shortages over the past few years. Breweries that secured stable distribution channels benefited from increased sales. Having more control over distribution arrangements gives an edge over competitor breweries. One of the best ways to secure distribution channels is by making contracts with key partnerships such as retail and delivery. Obtaining key contracts may reduce the risk associated with your brewery which increases the value.
Maintaining Quality Products through Quality Control
Excellent products produce long-time customers. And, excellent products come from diligent quality control. Establishing effective quality control measures is an ongoing process. It involves careful study of brewery operations and solid use of theory. And while the development of these measures may take time and money, the investment is worth it.
Breweries with reliable quality control processes consistently deliver quality beverages. Many consumers prefer smaller, local breweries because of their quality products. Thus, breweries that can deliver higher-quality products will be more valuable businesses. Quality products are key to customer loyalty.
Using Innovative Technology to Engage with Consumers
Innovative technologies recently entered the market. These platforms provide breweries with new opportunities to connect with customers. Untapped is a new social media platform where customers can find and share new beers. Customers use the tech to rate beers and find new beers—primarily craft beers. TapRm enables breweries and other alcohol brands to sell directly to customers. These recent technologies provide cost-effective marketing opportunities for breweries. Investing in these opportunities can net you higher sales for lower costs. This will increase your revenue and profitability.
Summary
The key value drivers for a brewery shared in this blog will help you increase the value of your brewery. Begin by setting goals to improve these value drivers. This will enable you to maximize the value of a brewery. For more information read Valuing a Brewery.
Whether you are looking to buy or sell a brewery, you should know the value of your brewery. The first step to finding out how much your business is worth is with a business valuation. A business appraiser will analyze your financials, marketing, consumer loyalty, among other factors when determining a fair market value. A business valuation will also analyze your strengths and weaknesses compared to your competitors.
Peak Business Valuation, business appraiser, works with dozens of brewery owners each year. We are happy to answer any questions you have about how to value a brewery. Please reach out by scheduling a free consultation.
