August 27, 2015
An overview about what to consider before canning. Cost, profit, and when to pull the trigger on the canning solution that's right for your business.
The debate over whether to use a mobile canning vendor or to purchase your own canning equipment will always be lively. To research this article, I spoke with both mobile canning vendors and the equipment manufacturers themselves. These individuals include Mike Horn, owner of Old Dominion Mobile Canning LLC; Pete Rickert, Jr., head six packer of We Can Mobile Canning; Lindsey Herrema of The Can Van; Peter Love, founder of Cask Brewing Systems; and Michelle Dyon, marketing for Wild Goose Canning.
At some point early in the life of most craft beverage businesses, owners find themselves asking: Should I use a mobile canning vendor or bite the bullet and invest in my own canning line? It’s a tough decision to make because costs associated with mobile canning aren’t always transparent, which makes it difficult to understand profit. Then, of course, you have to weigh the pros and cons of the cost of ownership, labor to run the machine as well as potential finance costs — not to mention all of the supplies you need to actually get your liquid into the can and produce a final product. Here’s a guide for anyone at any stage of the canning research process — for both mobile and purchased equipment.
Two Questions to Ask Yourself About Canning
If you’ve learned any lessons so far about running your brewery or cidery, it’s that it’s not smart to just jump in and try to figure things out. Running a successful business takes care and consideration when making decisions as big as adding a format to your line-up. So the first two questions I’d recommend asking yourself are:
Do you have the cash flow to purchase a canning line?
Do you have the experience needed to operate a canning line?
Let’s talk about cash flow first. There’s no doubt that canning will be an expense for you, but it's an expense that will bring in additional cash. Certainly the equipment is one expense, but what about the cash outlay for supplies, parts, storage, and training?
Ah, training. Yes, you can’t just turn on a machine and expect it to magically do the canning for you. It will take the help of several people to get your liquid into the finished package. Consider what time and travel costs will be required to learn how to use the machine as well as keep up with maintenance.
What Our Mobile Canning Pros Had to Say About Cash Outlay and Experience
“Breweries are able to get their beer in cans when they need to, without sitting on idle equipment when they don't need it. Packaging equipment is expensive, so for small and medium breweries who don't need to can every day, purchasing their own equipment is wasted money when they aren't running it," said Lindsey Herrema of The Can Van.
“Buying the canning line is only part of the battle. Now you need cans, lids, cardboard, carriers, etc. You'll also need somewhere to store all that stuff! With our service we bring everything needed and take back the unused materials. At the end of the day, you have beer in a pallet ready to be sold,” said Pete Rickert of We Can Mobile Canning.
And as it relates to that training and experience challenge, “Within our Mobile Canning Systems network we have the collective experience of over 30 million cans filled across the United States and Canada,” said Mike Horn of Old Dominion Canning. So you won’t need to worry that the job is done right.
The Costs of Mobile Canning
Okay, so you’re curious about mobile canning, but it’s hard to understand the costs associated with it. Every single vendor I’ve spoken with has a different pricing model, so it’s not easy to compare one mobile canning vendor to another. Here’s a list of everything you should expect to pay for.
Most mobile canning vendors only require you to actually pay them for the cost of filling the cans. “All materials can be purchased by the brewery separately or from your mobile canner. Usually as a brewery’s canning volume increases, they start to buy more of the materials themselves,” Horn said.
Here’s the rundown:
Cost of filling cans — machine and labor
Cost of cans
Cost of printing or shrink sleeves (don’t forget plate development costs and proofs which can cost as much as $3,000, or more.)
Pak-Tech enviromentally friendly snap on covers, or traditional 6- and 4-pack rings
Pack-out Materials — case tray or corragated containers
Freshness date stamping. “Almost all mobile canners charge extra to print a freshness date or other message on the bottom of the can," Horn said.
Some mobile canning vendors have different fees for the size of the can, so be careful. It could influence your decision to package in a 12 oz. vs. a 16 oz. can.
So What Does that Boil Down to Price Wise?
Here is a look at pricing offered by a vendor in New York State called The Mobile Can Man. In this example, I use a 40 barrel batch, 12 oz. cans, and PakTech 6-pack handles to determine the costs to get started with mobile canning. This estimate also accounts for the brewery or cidery buying all supplies from this vendor, and the fact that there will be some leftover suppliesafter the mobile canning vendor leaves.
Pre-Printed Cans: $15,249.76
Filling fees: You could expect a cost of about $4.56 / case yielding 560 cases = $2,553.60
Preprinted cans: 79,356 minimum can order @ $.11 / can = $8,729.16 + $3500 plate fee = $12,229.16
PakTech 6-pack handle: @ $.70/case = $392
Travel fees: $75 for travel within 50 miles and it increases about $75 / additional 50 miles — one way. For this example I just used 50 miles of travel.
In this example, you’ll have about 72,612 printed cans left over for future canning.
Sleeved Cans and Shrink Sleeves: $6,329.40
Filling fees: You could expect a cost of about $4.56 / case yielding 560 cases = $2,553.60
Sleeved Cans: $.165 each = $1,108.80
Shrink Sleeves for the Cans: $.12 for 15,000 minimum order = $1,800 + $400 proof = $2,200
PakTech 6-pack handle: @ $.70/case = $392
Travel fees: $75 for travel within 50 miles, and it increases about $75 / additional 50 miles — one way. For this example I just used 50 miles of travel.
You’ll have about 8,280 shrink sleeves left over to use on another batch, but no cans left over in this scenario.
In both scenarios you also have to factor in the cost of the boxes you will put the 6 packs in, but you would incur this cost with bottling as well.
How does this pricing compare to the pricing offered by the vendors that I spoke with? “Using our service will range from 15 cents to 68 cents per can. The variation in price is so vast because the brewery can choose how much of the materials they want to supply. The 15 cents would cover just our machine and labor, and the brewery would supply the cans, ends, etc. The 68 cents would be for us to provide everything. We tailor our service to fit each brewery's needs,” said Pete Rickert of We Can Mobile Canning.
Printed Cans? Shrinked Sleeves Cans? And How Many of Each?
As you can see above, the filling costs are just a slice of the costs associated with canning. And, because the costs associated with canning don’t breakdown perfectly to the quantity of cases packaged in a day, here are some tips from the vendors about how to purchase your supplies.
Question from The Equipped Brewer:
How many cans should you buy?
“I’ve seen small 7 bbl breweries buy a quarter million cans because they have the storage space and cash. One the opposite side I’ve seen very large breweries buy just enough cans for a one day run of seasonal beer. In general, you should strongly consider buying printed cans from Ball, Crown, or Rexam if you are going to can regularly and in sufficient volume. The can manufacturers require anywhere from a minimum order of 70,000 cans up to 150,000 cans of a single style. For example, 45 barrels two or more times per month of a single style. If you are canning less, then your mobile canner has shrink sleeved cans available for order quantities as low as 3,000 cans.” Mike Horn, Old Dominion Canning.
“Start small and build. You don't want to sit on a large inventory of cans.” Pete Rickert, We Can Mobile Canning.
In your opinion, are printed or shrink sleeves the way to go?
“While shrink sleeves are more expensive on an individual basis, the reduction in cash flow is significant. A minimum order of sleeved cans could cost less than $1,200 delivered, while your first order of a truckload of printed cans from a can manufacturer will cost over $20,000, not including graphics charges. Also, there are two other benefit of shrink sleeves. Number 1 is that the high definition graphics and colors available on shrink sleeves make for the most eye-popping cans on the market. Printed cans do not compare. Number 2, you can get your initial shrink sleeve cans in as little as 4–5 weeks as compared to the 8–12 week lead time for printed cans.” Mike Horn, Old Dominion Canning.
“Printed! If you can afford the minimum order of printed cans, then that's the best way to go. With a printed can you eliminate the cost of the label all together.” Pete Rickert, We Can Mobile Canning.
“Printed cans are definitely more cost effective for the customer, but labels are a good option for smaller breweries or those looking to split a canning run between multiple styles.” Lindsey Herrema, The Can Van.
Horn, of Old Dominion, points out that regardless of the amount of supplies you keep in stock, “At some point the cost of mobile canning will exceed the cost of doing it in-house; that line is somewhere around [filling] 60,000 to 100,000 cans per month, depending upon the brewery and how they measure costs.”
What Does it Cost to Buy a Canning Line?
Okay, now that we have heard from the mobile canning pros about costs related to mobile canning as well as at what point it actually makes sense to invest in your own machine -- let’s look at what it takes to invest in a canning line.
A couple vendors that I’ve been introduced to recently, Cask and Wild Goose Canning, both offer smaller breweries the option to get into canning at an affordable price. I learned that their customers are typically breweries and cideries that already have had experience with mobile canning.
“Usually when we get calls from a brewery, it’s not to weigh their options on mobile canning versus purchasing. It’s to get pricing either for budgetary planning purposes or they are ready to purchase. If they’ve been working with a mobile canner, they are more familiar with the canning packaging process and are usually ready to move forward with a Wild Goose system purchase,” said Michelle Dyson, Wild Goose Canning. Wild Goose's entry level unit is the WGC 50, which is a manual dual-head filler, starts at $30,000. Their WGC 250, which is a semi-automated 4-head filler, cans about 40 cans per minute, starts at $85,000. Their top-of-the-line WGC 600, is an 8-head filler that cans 95 cans per minute, starts at $165,000. Cask’s SAMS semi-automatic machine is only about $50,000. So a brewer can get into cans with a machine with great features, including fast speeds and extremely low levels of dissolved oxygen at a very affordable price. “That’s a small upfront cost. If you spread the cost of our machines out over a year or two, our machines are especially affordable,” said Peter Love, founder of Cask.
Boiling It All Down
The biggest difference between mobile canning and owning your own canning line really boils down to the labor and cost of owning the machine. The supplies are the supplies, and supply costs don’t vary much from vendor to vendor.
So if you take the $2,553.60 filling fee that I used in the example above and multiply that by the amount of times you think you’ll fill in a given year, does it makes sense to invest that money into your own machine and labor or does it make sense to outsource to a mobile canning company?
Some breweries and cideries will want to dip their toe in with mobile canning first and see how cans perform for them (while cans are a growing format in the craft industry, 6-pack bottles continue to remain the format that consumers pull out of coolers most often). Others who know that bottles will never be a format they invest in, will dive right in and invest in their own canning systems. “We have hundreds of customers around the world who’ve had great success with canned beer. So we advise brewers to go for it, have faith, trust in the idea, and run with it. Have no fear!” said Peter Love, Cask.
Images courtesy of The Equipped Brewer
If you liked reading this article, you may also like: Select the Right Automated Bottling Equipment
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The Equipped Brewer is an online publication dedicated to the success of young craft beverage companies, including breweries, cideries, distilleries, and wineries. The Equipped Brewer taps industry professionals for business insight, advice, and strategies that give you the edge in a challenging, competitive market. Whether you're an owner, head brewer, production manager, or operations manager, The Equipped Brewer will help you make smart decisions and build a thriving business.