What's going on, everyone! We don't talk about contract brewing much here, but with the current industry climate I wanted to drop some resources on it.
Contract brewing used to be a taboo topic. Now it's a practical way to fill capacity and diversify revenue. Here's what you need to know.
More breweries are producing beer and other beverages for third-party brands. Contract brewing (Brand A brews at Brewery B) and co-packing (packaging another brand's product) aren't new, but they're expanding. In a market where fixed costs are high and volume is soft, selling capacity to other brands can improve utilization and margins. Contract brewing—where Brand A brews at Brewery B's facility—and co-packing—where a brewery packages another brand's product—are not new, but they are expanding. In a market where fixed costs are high and volume is soft, selling capacity to other brands can improve utilization and margins.
Why the Trend Is Accelerating
Brewery capacity is expensive. Tanks, packaging lines, and labor sit idle when not in use. For breweries that built for growth that did not materialize, or that have seasonal demand swings, excess capacity is a liability. Contract work turns that liability into revenue. For brands without their own facilities—whether start-ups, imports, or non-beer beverage companies—contract brewers offer a capital-light path to market.
What Contract Brewing Involves
Contract arrangements vary. A brewery may produce a brand's beer from recipe to package, or it may receive wort or finished beer for packaging only. Responsibilities for recipe, ingredients, quality control, and compliance are negotiated. The contract brewer typically charges a per-barrel or per-unit fee. Success requires clear agreements, quality standards, and operational flexibility—producing multiple brands on shared equipment adds scheduling and changeover complexity.
Co-Packing Beyond Beer
Co-packing is expanding beyond beer. Hard seltzers, ready-to-drink cocktails, non-alcoholic beverages, and cannabis-infused beverages are increasingly produced at breweries. Equipment and process overlap make breweries logical co-pack partners for adjacent categories. Breweries that add co-pack revenue diversify income and reduce dependence on their own brand volume.
Operational and Compliance Considerations
Contract work adds complexity. Batch tracking must distinguish between owned brands and contract brands. Inventory, tax, and TTB reporting must correctly attribute production and removals. Quality control must meet the contract brand's specifications. Breweries entering contract work need systems that can handle multiple brands, multiple clients, and clear audit trails.
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BrewLedger supports breweries managing multiple brands and production schedules. See how it works when you are ready.