Just a few years ago, spiked seltzers were the new, popular drink at bars and restaurants across the country. Everywhere you turned, you would see White Claw or Bud Light Seltzer in high demand at happy hours and elsewhere. The brewing industry changes fast though, and in the past few years a new contender for the hottest drink has emerged: the canned cocktail. During the pandemic, as alcohol sales skyrocketed, breweries and cideries saw an opportunity to diversify their product offerings and mitigate potential fallout from the supply chain shortages. Supply chain struggles have disrupted some breweries' ability to maintain their normal beer lineup and product inventory, so canned cocktails became a popular new option. In 2021, sales of premixed cocktails rose 42.3% to $1.6 billion and ranked second only to vodka in terms of volume consumption according to the Distilled Spirits Council of the U.S. That same study asked consumers why they had started leaning in the direction of ready-to-drink beverages, which include canned cocktails, and the results help explain this new trend. Most (94%) of consumers stated it was because ready-to-drink beverages provided them with their preferred flavor choice, 92% said ready-to-drink beverages were more convenient and 92% stated these beverages taste better than beer. Canned cocktails are here to stay, but are all breweries ready to offer this popular beverage? Producing canned cocktails comes with a wide range of risks to consider. Agents and brokers looking to keep their brewery clients profitable and protected will want to take time now to ensure their breweries know what they are getting into when producing this new option. |

What's the risk?

First, ready-to-drink beverages come with a variety of canning risks agents and brokers working with clients in the space should understand. While it may be tempting for brewery owners to assume they can package their new drinks in the same beer cans they used for other inventory, this can prove to be a costly mistake. To start, mixed drinks have different pH levels than regular beer, with higher acidity and corrosivity on average. Placed in a regular beer can, these ready-to-drink beverages can corrode the can, causing leakage and damaging inventory. In an industry already struggling to manage can supply, can leakage and lost inventory can slow business and even lead to temporary shutdowns. Contamination is another risk to consider with canned cocktails. Oftentimes, the empty cans are left for long periods of time in the warehouse and stored on pallets and consequently can be exposed to potential contaminants. Pay careful attention to the brewing process. Make sure clients are taking basic safety measures such as covering empty cans in plastic wrap to avoid contamination. The brewing process itself also carries another potential risk. Some breweries use other resources for canning, such as a mobile canner, and don't take the time to confirm their mobile canners have the right equipment on-site to handle canned cocktails. And even if they do confirm their mobile canners have the right equipment, often breweries and cideries do not have the right risk transfer language set in their contracts with third parties to protect their operations. In addition, we also recommend breweries take the time to confirm equipment is properly sanitized between use and products are filtered appropriately. Once the product is ready to go, we sometimes see exposures in the transportation process. These beverages are often shipped far off-site. On occasion, we even see canning on the East Coast with the product then transported to the West Coast via a truck. Over the course of the drive, if the cocktail was overfilled in the can, the combination of the canned beverage's carbonation and the changing elevation can lead to can explosions. |

Canning the right way

While this may seem like an overwhelming set of risks to manage, there are some basic steps agents and brokers can recommend to their brewery clients to mitigate risks, which are highlighted in the slideshow above. In addition to these risk management strategies, making sure brewery owners have the right coverage is essential. Agents and brokers should check in with their brewing clients to confirm their coverage limits are up to date on their current inventory. While canned cocktails are cheap to make, the final product has higher inventory values than beer or seltzer. In the event of a loss, brewery clients stand a lot to lose if their inventory is not properly valued. Canned cocktails are skyrocketing in popularity and breweries owners nationwide want to take advantage of this sudden boom. Without the right risk management practices in place though, they could face severe losses that could even lead to business shutdowns. Agents and brokers should take the time now to reach out to their clients with comprehensive safety and planning recommendations to keep their operations running smoothly as they add on new products. Paul Martinez is program manager and insurance brewmaster for Brewery PAK Insurance Program. Martinez has more than 20 years of commercial insurance experience and 10 years of experience underwriting breweries. He can be reached at (888)386-5701 or [email protected]. Opinions expressed here are the author's own. Related: |

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