Absolute Numbers LLC

Expanding your craft brewery is an exciting milestone, whether by increasing production, adding new sales channels, or entering new markets. Growth brings new opportunities to elevate your brand, reach more customers, and boost revenue. But without a solid foundation of brewery financial planning, rapid growth can also create financial strain, operational inefficiencies, and declining profitability.

The good news is that with careful planning, clear brewery inventory accounting, and by tracking the right numbers, your brewery can scale with confidence. Here are the essential financial metrics to monitor as you grow:

1. Cost of Goods Sold (COGS)

As production increases, keeping a close eye on your COGS becomes essential. Larger volumes can lead to lower per-unit costs, but only if processes are efficient and supplier contracts are well-managed. Without intentional brewery cost accounting, hidden expenses can easily erode your margins. As operations grow so does the opportunity for waste and increases in unchecked costs.

Start by regularly reviewing the average batch cost of your top-selling brands to ensure any volatility is addressed immediately. Take your performance tracking to the next level by regularly reviewing COGS by brand and SKU. Understanding the impact of your product mix on profitability provides you with more avenues for making a positive impact. Accurate inventory accounting is critical for managing this effort, and informing adjustments when needed. As you scale, regularly monitor supplier contracts, invest in process efficiencies, and routinely run COGS reports to track trends.

2. Gross Profit Margin

Higher production levels and new markets often introduce added costs such as marketing, logistics, and additional staffing. Incorporating direct labor and other overhead allocation in your gross profit margin analysis is the one way to ensure that rising sales are contributing to your bottom line rather than diminishing it. A consistent brewery profitability analysis at both the product and sales channel level can reveal which areas are driving strong margins and which are underperforming.

To keep margins healthy, review profitability regularly and adjust pricing, product mix, recipes, staffing, and other direct production inputs as needed. Don't just monitor overall performance, analyze profit margins by product line, sales channel, and market segment. Certain brands and sales channels may appear fruitful, but implementing a comprehensive review will provide you greater confidence in running a successful business. Make pricing and product mix decisions based on margin performance to ensure profitability scales alongside volume.

3. Brewery Cash Flow Management

Scaling your brewery often requires significant upfront investments, whether it's new equipment, increased payroll, or marketing campaigns. Without disciplined brewery cash flow management, those investments can quickly outpace available capital and limit flexibility.

Some steps to take are developing realistic cash flow forecasts that incorporate seasonal fluctuations, anticipated expenses, and expected sales growth. Revisit your brewery financial forecasting monthly and update projections based on actual performance. Consider establishing a cash reserve specifically for expansion-related expenses.

4. Brewery Operating Expenses

Expansion often brings increased overhead with additional staff, new facilities, and rising administrative costs. These expenses are expected, but uncontrolled spending can hinder profitability. Strong brewery expense management is critical to ensuring that overhead grows at a sustainable pace.

To stay on top of cost control in these areas, take steps to review expenses by department, differentiating between fixed and variable costs. Maintain clear organization within your Chart of Accounts to provide managers with an effective tool with which to review team performance. It is especially important to involve managers as well as other team members. Provide targets and communicate how everyone can contribute to overall success.

5. Debt-to-Equity Ratio

Many breweries use financing to support expansion. While borrowing can be a useful tool, an unbalanced ratio of debt to equity can strain your business and limit your ability to navigate future challenges. Careful tracking of your brewery expansion financing and overall balance sheet health is key to scaling sustainably.

Some steps to take are to monitor your debt-to-equity ratio over time. Set internal targets for maintaining balance sheet health and work toward improving your ratio as you grow. Track trends in interest rates and financing terms to ensure you're securing capital at the lowest possible cost.

Growing With Confidence

Scaling a craft brewery is about more than increasing production, it's about building a strong financial foundation that supports sustainable growth. With reliable brewery bookkeeping, accurate financial reporting, and clear visibility into key metrics, you can avoid common pitfalls and make informed decisions that drive long-term success.

At Absolute Numbers, we specialize in brewery CFO services, financial reporting for breweries, and comprehensive financial support for craft beverage businesses. Whether you need help with brewery tax planning, budgeting, or cash flow forecasting, our team has the expertise to help your brewery scale strategically.

Ready to take your brewery to the next level? Let’s talk about how our financial expertise can help you grow with confidence.