Industries / Breweries & Taprooms
Your brewery is three businesses sharing one bank account.
Production, taproom and wholesale have different margins, different cost structures and different tax treatment. Run through one blended P&L, they hide each other — and the one that is losing money is usually the one everyone assumes is fine.
At a glance
- Cost per barrel
- Built through work in process, by brand and by package
- Excise
- Accrued on removal from bond, not on invoice
- Channels
- Taproom and wholesale reported separately, always
- Books closed
- By day 10, every period, on your calendar
The structural problem
One tank, two economics
The same batch can leave as a pint poured across your own bar or as a keg sold to a distributor at a fraction of the revenue. Costed identically, the reporting is meaningless.
| Taproom | Wholesale & distribution | |
|---|---|---|
| Revenue per barrel | Retail pricing, poured by the glass | Wholesale pricing, before distributor margin |
| Packaging cost | Minimal — served from the tank or a keg you retain | Cans, cases, labels, kegs and the deposit on them |
| Freight | None | Real, and often absorbed rather than charged |
| Deductions | Comps and staff pours | Depletion allowances, chargebacks, promotional support |
| Labor | Front of house, tipped in most states | Production and warehouse |
| Sales tax | Collected at the point of sale | Generally an exempt sale for resale — documented, not assumed |
Reported as one line, a strong taproom will mask thin or negative wholesale margins for years. Separating the channels is usually the first thing we do and the first thing that changes a decision.
Where breweries get the books wrong
Five mechanics that are specific to brewing
Excise is incurred on removal
Federal excise attaches when beer is removed from bond, not when a customer pays for it. Accruing on invoice understates the liability and pushes cost into the wrong period. The federal structure is tiered, with a reduced rate on the first 60,000 barrels for brewers under the qualifying production threshold — we confirm your tier against the TTB schedule each period rather than carrying last year's assumption.
Beer in tank is work in process
Fermentation and conditioning take weeks. A brewery that expenses ingredients and utilities as purchased will report margins that track the brew calendar instead of the business. WIP carries absorbed cost until the beer is packaged.
Keg deposits are liabilities
Until the keg returns or the deposit is forfeited on your stated terms, the money is not yours. The float grows every year a brewery adds kegs, and booking it to revenue creates an obligation nobody is tracking.
Inventory sits in four states
Raw materials, work in process, finished packaged goods, and beer in trade with distributors. Collapsing these into one inventory figure makes cost of goods per barrel impossible to calculate and shrinkage impossible to locate.
Distributor deductions arrive late
Depletion allowances, chargebacks and promotional support land well after the sale and are frequently netted against remittances. Without accrual, every month looks better than it was until the settlement lands.
Compliance has to reconcile to the ledger
The Brewer's Report of Operations is built from production, transfer and removal records. When compliance reporting is compiled separately from the books, the two diverge — and it is the divergence, not either number, that creates the problem.
Scope
What we run each period
Cost per barrel by brand and package
Ingredients, packaging, direct labor and absorbed utilities carried through work in process to a finished cost you can actually price against.
Channel reporting
Taproom, self-distribution and wholesale as separate reporting segments with their own contribution, not one blended gross margin.
Excise accrual and reconciliation
Accrued on removal, reconciled to production and removal records so the compliance filing and the general ledger agree.
Inventory across all four states
Raw, in process, packaged and in trade, counted and valued on the period boundary rather than estimated.
Taproom daily books
POS reconciled to bank and merchant settlement, pour cost and comps tracked with the same discipline as any bar we run.
Period close and reporting
Closed P&L and balance sheet by day 10 with written variance commentary, plus cost per barrel trended over time.
Common questions
Before you ask
Why does our taproom look profitable and the brewery not?
Usually because one cost per barrel is being applied to both channels. Taproom beer and distributed beer leave the same tank but carry entirely different packaging, freight, discount and excise profiles. Until the two channels are costed and reported separately, the taproom is quietly subsidising or being subsidised by wholesale and nobody can tell which.
When is federal excise tax actually incurred?
On removal from bond, not on sale. That distinction is the most common brewery accounting error we correct: beer that has left bond and is sitting in a distributor's warehouse has already generated a liability. Accruing on invoice instead of on removal understates the liability and misstates cost of goods.
Are keg deposits revenue?
No. A deposit is a liability until the keg comes back or the deposit is forfeited under your terms. Booked to revenue, it inflates sales and creates a growing off-books obligation — and for a brewery adding kegs every year, that float only gets larger.
How should beer in tank be valued?
As work in process, carrying the ingredient, utility and direct labor cost absorbed to that point. Brewing has a long conversion cycle, and a brewery that expenses everything as purchased will show wild margin swings that track brew schedule rather than trading performance.
Do you handle the TTB Brewer's Report of Operations?
We prepare the underlying production and removal records so the report reconciles to the books rather than being compiled separately from them. Where you have a compliance specialist filing, we make sure the numbers they file and the numbers in your general ledger are the same numbers.
Further reading
Written for operators, not for search engines
Reference
Chart of accounts
Structure, period calendars and prime-cost grouping for hospitality books.
Reference
Cash flow gaps
Why a profitable period can still leave you short, and how to see it coming.
Also: bar accounting · venues & events · CFO & controller · multi-unit & franchise
Bring your last P&L and a recent production report.
Twenty minutes. We will tell you what your beer actually costs and which channel is carrying the other.