Preventing — and Recovering from — Spoilage and Contamination

When you consider the most severe types of losses your craft brewery could experience, what types of incidents come to mind?

Fire or flood, perhaps. Or maybe mechanical breakdown.

But what about spoilage and contamination? This type of damage to your finished product is actually one of the top three most severe losses your brewery can experience, according to the Hanover Insurance Group.

“The unintentional use of contaminated materials and the spoilage of a batch of beer present a huge exposure to the financial well-being—and the reputation—of any brewery,” points out Kristian Beall, AAI, of Beall Brewery Insurance. “That’s why it’s so important to take any and all preventive measures.”

Contamination threats include:

  • Mechanical breakdown
  • Power outage
  • Proliferation of undesired organisms
  • Refrigerant contamination

“While vigilance can help to keep contamination risk low, there are a number of additional steps breweries can take to protect their supplies and prevent craft beer spoilage and contamination,” says Richard Beall, principal of Beall Brewery Insurance

Top of the list is good housekeeping. Your brewery should establish housekeeping procedures to ensure that all equipment is clean and sterilized before you begin to brew. All staff should be trained in these procedures, and refresher trainings should confirm that no step will be overlooked.

Next up, consider how you store your raw materials, and how they are transported to the mill, brewhouse, or other brewing equipment. Make regular checks of your storage areas to ensure that they are secure from weather and radical temperature change, and that they are safe from rodents and insects.

Finally, take a long hard look at your production stream. Is it as smooth as it could be? Are there any facets of production that could be tightened up? Ask for feedback from your team, and then develop and institute any changes necessary.

“No matter how tight production is, or how careful staff is, spoilage and contamination happens sometimes,” says Kristian Beall. “The question is, how will your brewery handle it if it happens to you?”

Beall Brewery Insurance works with craft breweries all across the country—and has helped a number of clients whose beer was spoiled or contaminated. The upside of those stories is that those clients had spoilage and contamination coverage in their brewery insurance package—and they had appropriate coverage for breweries of their size.

“We make sure our clients don’t just take the carrier minimum because it’s the easiest thing to do. We talk with them about the right coverage for their risk exposure—and we recommend coverage that includes the cost of the ingredients that went into a contaminated batch of beer,” says Richard Beall. “Our brewery insurance packages also stipulate the valuation of contaminated beer is based on selling price—so the policy protects the profit the brewery would have made, had it been able to sell that beer.”

“Then there are other situations, where a brewery didn’t realize they had a batch of bad beer on their hands, and they sent it out onto the market,” adds Kristian Beall. “That’s a tough situation to be in—but again, the right insurance coverage can make it much easier to deal with.”

If your brewery insurance package doesn’t include coverage for product recall, you may want to reach out to your brewery insurance agent. Consider that the average product recall claim ranges from $25,000-$50,000—and it covers the expense incurred bringing beer back after it’s already on the market, removal and disposal of defective beer and/ or defective packaging—and the profit the brewery lost as a result of not being able to sell the batch.

An ounce of prevention is worth a keg of great craft beer. Any steps you can take to prevent spoilage and contamination are worth your time and energy. But if something does go awry, you’ll want to rely on your brewery insurance to help you recover. The time to find out you have the right coverage in place is now—before you need it.

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