Better Keg Management, Better Beer

April 1, 2005
Outsourcing keg management leads to greater brewer profitability.

Keg management is a time-consuming and costly task and takes away from brewers' main task: creating beers customers love. Kegs and barrels, made of stainless steel or aluminum, are widely regarded as commodities. MicroStar Keg Management (Denver, Colo.), a division of TrenStar, offers a keg fleet management service that lets brewers maximize their profits and expand their markets.

The system is straightforward. MicroStar provides state-of-the-art Sankey kegs in the quantities required to meet each of its clients' needs. If a brewery already owns these kegs, MicroStar will purchase them. Once the full kegs are shipped to the wholesaler, the administrative responsibilities associated with keg management are eliminated for MicroStar clients. Since brewers do not own the kegs, they do not need to engage in the post-sale tracking and retrieval (freight and other expenses) or the loss of any keg at the wholesale level. Brewers can then focus on making beer, servicing their existing accounts and expanding into new markets.

Michael Heidinger, production manager at the Great Lakes Brewing Co., a craft brewer in Cleveland, says cost and barrel inventory management are the reasons he uses MicroStar. Barrels can cost $100,000 to $200,000, and the farther they are shipped, the less likely they are to come back, he explains. Great Lakes owns its barrels and uses 1,100 barrels a month. Heidinger says he turns to MicroStar when his volume doubles at peak holiday times and during months when he runs short of barrels because they are slow to return.

While MicroStar works with more than 620 beer wholesalers in 48 U.S. states, keg barrel management is even more popular in the United Kingdom. TrenStar Inc. owns and manages 60 percent of the country's kegs. In the U.K. and Europe, TrenStar puts radio frequency identification (RFID) tags on aluminum and stainless steel kegs and casks to track location and container-use information for better control, visibility and asset utilization. The U.S. has a keg deposit system through distributors to keep track of kegs. Because of this system, RFID tags on kegs are not used in the U.S.

Coors Brewers Limited (CBL), Staffordshire, U.K.-based subsidiary of Adolph Coors Company (Golden, Colo.) has outsourced the ownership, procurement and tracking of kegs and casks to TrenStar Inc. CBL has a 15-year, " perfill" fee container services agreement with TrenStar. "The arrangement will provide opportunities for more effective use of cash, further debt reduction, and increased returns on capital," says Peter Kendall, CBL's chief executive officer. "The sale of our keg and cask inventory, together with the outsourcing of related services," he explains, "will improve our retail trade service levels, significantly increase container asset utilization and reduce container loss rates, all of which will help us drive sales and profitability."

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