View Full Version : Woolpack Dave's Beer and Stuff - Economies of scale

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14-07-2010, 20:15
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We spent most of the weekend bottling Infra Red. We only bottled 260, that's not really very many for the man hours that went into it. To be fair, most of our labour is either very cheap or free, I don't pay myself anyway and we have a willing volunteer (http://apprenticebeerexplorer.blogspot.com/) who even goes home and blogs about the beer (http://apprenticebeerexplorer.blogspot.com/2010/07/world-cup-beer-sweep.html). All he cost me was a bottle of Tokyo*. Of course there was also Alfie, but he's working for his University fees. The thing is, at the present rate of bottling it just isn't economic, at least it wouldn't be if we had to pay wages for the man hours.

Today Ann has been looking at means of speeding up the process, which involves spending money we haven't got. As we have no idea how big the market is for our bottle products it makes it difficult to be sure how much to invest. The minimum investment, which is about all we can afford, will get us little more than a few more filling heads, which is one of the current bottle necks1 in the process. A little more expenditure would gain us some form of labelling machine, which would be nice, as hand labelling is slow, has variable results and is the most tedious job in the world after cask washing.

Of course we could spend many tens of thousands of pounds on bottling equipment, which would enjoy the economies of scale associated with high throughput, but without developing a market first we cannot even start to contemplate such investment. Without the economies of scale the beer cannot be sold at a low enough price without risking our dwindling cash reserves being further reduced. Without cash reserves we cannot invest in the equipment required to ensure we can produce beer at a reasonable price. It's to do with cash flow really.

In reality this results in all our bottled beer being relatively scarce. Even if we produce more we still have the logistical problems of getting it into various outlets, the transport costs can easily annihilate any profitability.

If you see Infra Red for sale in bottle you are an extremely lucky person indeed. I advise that a small amount of money is sewn into the lining of your jacket to ensure you have the capability to purchase such a rare commodity irrespective of the quantity of reddies that may or may not languish in your wallet.


1you really do not have to laugh.

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