Brewing ingredients supplier Bintani Australia has successfully expanded into keg leasing, which the company argues offers major benefits for breweries looking to free up capital.
The company launched the Keg Lease business in September 2012 after a purchasing trip overseas identified an obvious gap in the market.
“We became aware that there were some pretty well established leasing businesses in the US and there was nothing like that in Australia,” Bintani director Phil Meddings told Australian Brews News.
“It’s grown steadily since then and we have over 20,000 kegs under lease at present, and over 100 customers.”
Fortunately for Bintani, German keg manufacturer Franke was looking for an Australian distribution partner at around the same time.
“There’s hundreds of thousands of kegs being leased in the US, and probably 80 per cent of them will be Franke kegs,” said Meddings. “They make arguably the best keg, it’s certainly the only one with a 30-year warranty. And we’re happy to be dealing with a quality, reusable container that has significant ecological advantages over one-way kegs.”
Bintani sells Franke kegs outright, but it is the leasing business that Meddings is most passionate about.
“We do a leasing program where they pay a monthly fee. It’s over one, two or three years and at the end of that period they can purchase the keg, lease it again at a reduced rate or hand it back to us.”
He said a startup brewery could easily save $20,000 to $30,000 in capital outlay by leasing their initial keg fleet.
“Kegs are part of your packaging costs, which really you should only be incurring as your sales grow,” he said.
“If you can get more tap points and therefore you need another 50 kegs, as long as you factor the lease cost into your cost of goods sold, your leasing cost is covered and you’re able to increase your turnover and your gross margin.”
Meddings said breweries are capital hungry businesses, and the worst thing that can happen is for their growth to be constrained because of access to capital.
“I think that has happened in some instances, where they’ve been forced to say ‘no’ to sales because they can’t find $10,000 or $20,000 to buy more kegs,” he said.
Meddings said there are other benefits of the keg leasing program. Brewers can put their own branding on the kegs and effectively treat them as their own.
“That means they’ve got an ability to control the timing of what kegs they’ve got on hand and when they get them back from customers, so that they’re always available to fill,” he said.
Lessees also have greater control over the quality of the keg itself, with knowledge of precisely what beverages it has previously held to best ensure there will be no issues with taint.
Bintani offers kegs for lease Australia-wide.
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