With the Covid-19 shutdown entering month eight, breweries are still adapting their systems and procedures to keep up with a national can shortage, out of stocks, and a completely new supply chain system. To learn more about these challenges and how breweries are continuing to adapt, we caught up with Cape May Brewing Co.’s Vice President of Brewery Operations, Brandon Greenwood.
Can you briefly tell us how your supply chain works in normal circumstances and how that was initially upended by the shutdown?
Our supply chain is a traditional model in that 1) we receive orders from our customers, 2) raw materials are procured against those orders, 3) we brew and package the orders, and 4) we ship the orders. When the shelter-in-place order came down we basically lost our customers overnight. No customers = no supply chain. Obviously this is a bit simplistic but you get the gist.
Can you talk about how you and your team initially tackled out of stocks, and how your process has adjusted since?
We have been fortunate, relative to the industry as a whole, in that we have not had a serious issue with OOS. As far as how we tackled them, it was on a case by case basis and ultimately there wasn’t a single solution that, when applied, solved all OOS. A few key learnings were realized pretty quickly. First was that our core and summer offerings were flying off the shelves, in some instances at twice the forecasted volume, and, as such, we needed to leverage our efforts and resources against those brands. Second was that lead times for suppliers got longer and longer and our material ordering practices needed revision to align with those timelines.
Can you talk about some unexpected difficulties that have occurred, such a national shortage on cans and how you were able to adjust?
As the situation evolved and beer was deemed essential, we breathed a little sigh of relief. The customer landscape was different, but we had customers! We circled up the wagons and strategized on how to navigate this new landscape. At this point OOS were not an issue. At first, we thought that our product demand would be significantly impacted in a negative way due to the near total loss of the on-premise channel and the uncertainty of retail package sales. To our great surprise, retail packaged sales accelerated quickly. So much in fact, that we began to achieve our 2020 sales targets with little to no draft volume. Consumers were buying beer and lots of it!
It was clear that the pandemic was impacting the supply chain but what we didn’t think about was the additional impact that the uptick in all beverage sales was having on the supply chain too. More specifically, the availability of can ends, cans, and beverage-grade carbon dioxide.
Serendipitously, I had heard rumblings late in 2019 that there was likely to be a can end shortage in 2020 so we bought long (stocked up) with enough ends to meet our summer demands. Those ends plus what were able to get from our supplier is getting us through. As for cans, we signed a multi-year supply agreement with the Ardagh Metal Container Company in 2019 that has been critical to ensuring that we not only got the cans we originally forecasted but an additional volume required to meet our increased demand. Yes, we have been impacted by the national can shortage but to a much lesser degree than we initially feared.
Just when we thought we had a handle on the can issue, the pandemic threw us another curveball. This time it was beverage-grade carbon dioxide. To date, though, this hasn’t resulted in any OOS, and I am being told that the supply should return to pre-pandemic levels in the near future. We shall see.
How is the outlook moving forward? What needs to change to get things a little more normal? Are there some things you don’t perceive changing back to normal?
It’s hard to predict what the future holds for us all. One thing’s for certain, it’s a new world out there, and small breweries will need to adjust their business models and practices to find success. In my opinion, meaningful, trust-based supplier relationships (not just transactional ones) and data-driven decision making will be invaluable tolls for success as we move further into the post-pandemic reality.