Insuring a microbrewery: what brewers need to know

The business of beer has changed dramatically over the last couple of decades with craft brewers and microbreweries entering the market at increasing rates. Canadian consumers are getting thirstier, and there are enough new breweries out there to meet the tastes of every type of beer connoisseur. Some microbreweries are happy to experiment with different ingredients and create unique flavours that appeal to a niche audience within their local market, while others are creating beers that attempt to take on macrobreweries with the goal of expanding across the country.

But with so many new breweries entering the market, it’s important to remember that, like any other business, owning and operating a brewery comes with unique risks. Brewery owners should be aware of these risks when they are starting out and establishing their brand, product and customer base. You need a business insurance policy that has standard coverages for your property and vehicles, but you should also be thinking about specialized coverages that are designed to protect breweries.

Protecting your beer

A brewery’s reputation is based on the quality of its product. With so many new products to choose from, customers aren’t going to stick with a brand that can’t maintain consistent quality. That’s why it’s important to pay attention to quality controls when it comes to brewing, bottling and storing your product. If a batch of beer is contaminated or improperly stored, it can make your product unfit for sale.

Unfortunately, the production process can introduce risks that are out of your control. Many smaller brewers don’t have the capacity to store all of their beer on site and may also not have their own delivery vehicles, relying on other businesses to help store and deliver their product. If an issue arises with the temperature control in a cold storage facility or cold delivery truck, your product may be compromised. The right insurance solution will also include coverage for your beer if it spoils off of your premise.

Protecting your brand

In the event that spoiled, contaminated or tampered beer does reach your customers and they become ill as a result of your product, you’ll have to quickly respond to the issue, which can include significant business expenses. As soon as you’re made aware of the issue, you’ll have to notify the public, issue a recall of the product and defend your brand. This usually involves hiring a public relations agency to alert the media about the recall and do damage control so that your business’s reputation isn’t tarnished.

Of course, you need good risk management and quality control practices, but microbrewers should also have insurance that is designed to help protect against these types of scenarios. Product recall expense coverage can cover expenses related to the cost of recalling your product. That includes the cost of notifying consumers, overtime to your employees and the cost of transporting your goods back. And you should also consider Public Relations Expense Reimbursement that can cover press releases, notifying customers and the cost of hiring a public relations expert to mitigate the damage done to your brand

Protecting your brewer

A brewery is nothing without a brewer. The brewer is like a product engineer, research and development department and production manager all wrapped into one. Since the brewer plays such a critical role in the success of a brewery, it’s important to protect him or her like any business would protect a key employee who is heavily relied upon.

Protect your brewer with a specialized endorsement inside your policy called Key Employee Replacement Expense to cover the cost of replacing him or her. This type of coverage is designed to reimburse the costs of hiring a new brewer (or any other employee who is important for your business to function) if he or she is permanently disabled or killed in a covered accident.

These are just a few of the common risks brewers face. Talk to your insurance broker about a solution designed to fit your needs.

This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage – see policy for details.