Cider Corner: ​Ideas to help Develop Best Practices for COGS

Depending on the size of your cidery staff, it may be a part of one person’s everyday job or something you as an owner have to deal with as the time allows, but finding out what your cidery’s Cost of Goods Sold (COGS) is in your processes can be a key accounting piece to help see margins improve and your business grow.

Jerry Thornton, owner of Bryant’s Cider in Richmond, Virginia said as a one-person management team, the number-crunching relies on him while the staff of Blake’s Hard Cider in Michigan told Brewer that the production team handles the purchasing and procurement process necessary for production.

“This role is a blend of scheduling, accounting, and material resource planning,” they wrote in an email. “It would be a full-time job if all responsibilities fell on a single individual. This requires a team of three people to accurately accomplish for us at BHC.”

Awareness of spending allows cideries to have proper insight and to make decisions as to what’s making money, what’s worth spending money on, and what they should stop spending money on.

​Here are a few areas you may try to see if you are using best practices to achieve the greatest results in purchasing.

Plan Ahead

​The Blake’s team believes​ in smart purchasing​ that is​ based on analytical forecasts ​and ​uses a collaboration of internal sales and industry-wide trends. ​”​We are building out our product calendar from 12 months to nearly 24 months ahead of time​,” they said when speaking of cooperage concerns​.

Go Shopping

Shopping for new vendors periodically is always a good practice, Thornton said. It’s a good practice to even look while under contract with a vendor to plan for the next step and find a better price. Sometimes your future output will be a factor and help in price breaks at larger volume levels of need.

Opportunistic Purchasing

Being opportunistic in purchasing is also a help.​ An “opportunistic” spend ​Bryant’s Cider made during ​the pandemic was as ​places sold off fleets​ of kegs​,​ the cidery bought them on the cheap.​ “​Prices always move so just watching and buying the dips is the best approach​,” Thornton said. ​

Look for Price Breaks

Focusing on material quantity “price breaks ” is often a focus, Thornton said. “If there is a healthy discount we try to stock up,” he said. “Labor is also a focus to try to avoid ‘burning’ labor hours.”

Find Your Metrics

For ​Blake’s manufacturing team, ​they told Brewer they are constantly tracking consumed materials, labor, and efficiency all rolled up into a daily OEE (Overall Equipment Effectiveness) metric. ​ ​Department leaders ​will ​meet monthly with ​the accounting department to review figures and ensure accuracy. ​”​To be cost-effective, we look for consistent data and any outliers are investigated and addressed to ensure accuracy​,” they said. ​

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