Supply and demand, craft beer style

Chuck Skypeck, principal with Ghost River, recently walked me through several examples of the supply and demand hurdles the Memphis-based brewery faces on a daily basis.

The company is adding two new fermentation tanks which will allow it to produce 10,000 kegs of beer annually versus the current 5,000.

Sounds easy, right? More tanks equals more capacity equals more business. Not quite.

“Brewing tanks like this, you don’t go to Walmart for them,” Skypeck said. “They are custom-made. There are very few companies in the U.S. that make small scale brewing equipment. Craft beer, small producing breweries – almost all of them are facing the same issues with having trouble keeping up with demand which means they’re all trying to order tanks.”

In fact, when Ghost River went in October to talk to the bank about a loan to finance the tanks, it required going to the tank manufacturer first to get a quote. In that quote were a price and a delivery time of 30 days.

Fast forward to a month or so later when Ghost River went back to said manufacturer and showed them the money (a really bad Jerry McGuire pun).

“The price hadn’t changed, but the delivery time had almost doubled,” Skypeck said. “They’re in the same boat we’re in, there’s such a strong demand for the product that their delivery times are expanding.”

And with 1,700 breweries nationwide – the majority of which are small like Ghost River – it’s easy to see how precious these tanks really are.