Question 1

What is the lead time for sourcing a bulk quantity of barrels, and what is the lead time for the barrels available to purchase from inventory? What factors can reduce the lead time for sourcing barrels?

Accepted Answer

The lead time for sourcing barrels is 8-12 weeks. In comparison, the lead time for barrels available from inventory is 2-4 weeks. Lead times can be shortened to the 4-6 week range through pre-emptive inventory agreements and long-term working relationships. According to the National Craft Brewers Association, lead time variability is reduced by 40% when two or more suppliers are utilized. For businesses with the capacity to age 10,000 barrels or more, plans for sourcing and/or purchasing barrels must consider the 8-12 week lead time.

Question 2

How much lower are the bulk purchase prices for barrels?

Accepted Answer

The bulk purchase price structure is attractive because a price reduction of 15-25% is achieved through a 100 barrel purchase compared to the purchase of single barrels. The price of a single barrel is $40, and the price range for a bulk order of 100 barrels is $30-34 (25% savings). For a distillery with a capacity to age 50,000 barrels, this represents a savings of $100,000-$500,000 per year. A further price reduction of 20-30% is likely through a long-term deal (3 years or more).

Question 3

What is the best inventory management method for a large-scale barrel program?

Accepted Answer

The best barrel aging practice is to age barrels in the range of 3,000-50,000 barrels, and to maintain a barrel inventory of 10-15%. Aging cohorts should be staggered by 3-4 month intervals, and each barrel should be tracked in a digital system. The annual cost to store barrels is $35-$75 each, and for a 10,000 barrel program the cost is $350,000-$750,000 per year. A digital barrel management system is preferred because the typical variance incurred when the system is used is reduced by 40-50% compared with a system that uses manual tracking.

Question 4

What is the cost of barrel shipping?

Accepted Answer

The cost of barrel shipping within North America is $15-$30 per barrel, and shipping barrels internationally is $50-$120 per barrel. Based on the shipping cost.

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