Let’s admit it, we have our fair share of good times in the beer brewing business. But, we know it’s not all fun and games and pints. Hard times come, accidents happen, and disasters strike.
Just look to the latest headlines haunting industry behemoth AB InBev, owner of Anheuser-Busch, and now owner of the cult-favorite Wicked Weed Brewing of Ashville, N.C. The world’s largest brewer probably hadn’t bargained on the backlash from smaller craft brewers who are none too pleased with its deal to purchase Wicked Weed.
The independent and small brewers claim that AB InBev opposes the interests of smaller craft brewers, portraying Wicked Weed as an AB InBev “zombie brewery.” In fact, several craft brewers pulled out of Wicked Weed’s popular Funkatorium Invitational. Organizers were forced to postpone the annual festival just a month before it was set to take place, according to the Citizen-Times.
While many craft brewers may not be crying over this setback for AB InBev, they might be if they were forced to cancel a lucrative event at the last minute. There are many threats to beer sales, events and other aspects of the beer business. Fortunately, for many risks facing brewers, there are actions they can take or insurance they can purchase to protect their businesses.
In this article, we will explore the five most common insurance claims reported by breweries. In other words, we will detail the most common damaging incidents that are occurring within breweries and the coverage they can buy to protect their businesses and employees.
Five Common Insurance Claims
for Breweries
1. Equipment Breakdown – Without the tanks, the boilers, bottling systems, taps and cash registers, a brewery could be hard-pressed to brew, serve, or sell beer. When one key piece of equipment goes down in a brewery, the business could be shuttered for days, weeks or more, costing the owners in the form of repairs, lost revenue and spoiled goods in many cases.
In fact, equipment breakdown – whether it’s a boiler breakdown, power surge in the cold room, or a glycol system malfunction – is the leading cause of insurance claims for breweries. Consider this: a power surge that not only knocks out the power to the brewery’s tap room, but shuts down the cold room leading to thousands of dollars in spoiled inventory. Additionally, consider a sudden and accidental breakdown of one tank causing damage to the entire brewing system as a result.
Without proper insurance, these occurrences could lead to financial ruin for the brewery. Aside from purchasing good insurance, brewers can take steps of their own to mitigate this risk. For example, they can make sure they are ordering regular maintenance services on their equipment to ensure good working order. They can also invest in comprehensive training for employees so that human error is less likely to be the cause of an accident and ensure that equipment and tanks are cleaned carefully and often.
2. Leakage – Tank leakage can also lead to devastating unplanned expenses for breweries if they do not have the proper coverage. Anything from a valve not being set correctly to sudden pressure changes, to a forklift driver bumping a tank with a pallet causing a hose to dislodge or a hole in a tank can lead to a tank collapse. A tank collapse can be similar to the crushing of a giant aluminum can and cause tens of thousands of dollars in damage if not more.
To prevent leakage, brewery owners should regularly inspect tanks and equipment around tanks to make sure nothing is near that could disturb the tank or its hoses. Also, breweries should know who is driving forklifts and other vehicles around their buildings and make sure the operators are properly trained.
3. Contamination – A foreign agent entering a vat, tank, can, keg, or bottle, whether pests, cleaning agent residue, or otherwise can contaminate a batch of beer, costing brewers significant amounts without proper insurance coverage.
For example, if cleaning chemicals are left in the tank overnight and an employee brews a new batch in the morning, the entire batch would be contaminated and unsafe for consumption. Tanks have to be cleaned immaculately with all cleaning chemicals rinsed off thoroughly so the beer does not become contaminated or pick up a chemical taste. Another way to mitigate this risk is to ensure that the brewery has pest controls and proper employee training in place and is doing business with reputable and reliable suppliers.
4. Theft – Employee dishonesty and theft also pose significant risks to breweries. Often when beer is stolen or cash disappears from the register, it’s an inside job. Like the other incidents, theft can also put a brewer out of business without the proper coverage.
Just last summer, nearly 80,000 bottles of beer worth $90,000 were stolen from the SweetWater Brewing Company in Atlanta, according to the Atlanta Journal Constitution. The thieves stole two tractor trailers from the brewery filled with beer. While the stolen beer was later found, not knowing where the beer had been or how it was cared for, the company had to destroy it.
To protect themselves from incidents like this, breweries should consider installing cameras and other anti-theft devices to monitor their facilities and their employees. Prominently placed procedures and protocols for employees can also be helpful in deterring this type of activity.
5. Auto Accidents – Finally, commercial auto is a leading cause of insurance claims in any industry, and breweries are no exception. Often smaller breweries have self-distribution models where they might have vans delivering kegs to pubs and taverns. If a truck were to over-turn on a highway, the driver/employee could face life-threatening injuries or worse, and the brewery could face an expensive loss.
To mitigate this risk, breweries should consider implementing (to a scale that fits their organization) a fleet-wide loss control system. Drivers should be properly screened and trained, and they should be offered regular safety refreshers. Additionally, when using a third party to deliver beer or other product, brewery owners should make sure when possible that company has a good insurance policy and that the risk exposure is transferred to them while the beer is in their possession.
Know Your Risks,
Take Care and Get Covered
The best ways to avoid these issues are to identify the risks facing the establishment, take steps to mitigate those risks, and to talk to a specialized insurer on finding the right coverage for your brewery.
The right insurer focused on the brewery niche can present coverage options tailored specifically for breweries. Further, a good specialty insurer can also assist with assessing the risk at your brewery and identifying cost-effective ways to reduce that risk.
Brew beer. Keep doing what you love, but make sure to protect your investment by assessing your risk and securing the right insurance coverage. Keep the beer flowing, not your worries!