Everyone knows that scaling up comes at a price. In an attempt to increase production, however, brewers trade sizable gross margins for a marginal decrease in their cost of goods.
According to the survey, production breweries making less than 1,000 barrels, on average, enjoyed gross margins of nearly $243 per draft barrel and a cost of goods (COGs) per barrel totaling nearly $107. At 15,000 or more barrels, per barrel gross margins were about $209 while COGs totaled $97, according to the survey. So by doubling production at least four times, breweries save only $10 per barrel on their cost of goods and lose about $34 of gross margins on every barrel of draft beer.
Packaged goods are even less profitable, according to the survey. At 15,000 or more barrels, a brewery’s COGS total about $148 per barrel while gross margins total about $184, on average.
Expressed in a different way — growing capacity costs, on average, about $233 per barrel, according to the survey.