As the number of breweries opening continues to grow, so does the competition. Quality of beer, quality of people, and branding are all important factors in helping determine the success of a brewery, and so is creative marketing. Hosting fun events at the brewery is a great way to not only stand out, but to also highly engage with your community. However, the more creative breweries get, the more risk is associated with these events. If your insurance carrier is paying close attention, some of these events may even be specifically excluded on your Liability policy, leaving your brewery exposed if any accidents occur. Athletic or active events, such as running, games, or yoga come with an even higher risk of participant injury. It only takes one serious incident to bring about a potentially large lawsuit.
In order to lessen your risk from any potential lawsuits, we suggest having each event participant sign a participant waiver form or "Prospective Release, Indemnity, & Hold Harmless Agreement." We've drafted up a sample form you can download below, and we encourage you to use it the next time your brewery has an event featuring participants, especially events of a more athletic or physical nature.
Many breweries, wineries, & distilleries have often rent their facilities for use by the public, including birthday parties, work events, reunions, etc. While these are typically good sources of revenue and are also a good public relations tool, they do present additional liability exposures to your business.
For breweries, wineries, & distilleries that lease their facilities to others, we recommend the use of a contract which details the terms and conditions of the rental and also provides that the lessee/rental party will hold the distillery harmless in the event of injury or other damages related to the use of the premises. When reviewing Rental Agreements, many contracts are not appropriately worded with needed protection or are incorrectly completed, often with provided spaces left blank. This document offers risk management guidelines to assist your organization in reducing your liability exposure. A sample rental contract is included with a hold harmless agreement that may be used in whole or as an example for your organization. Whether you use the sample agreement or develop your own, you should have it reviewed by an attorney. If you choose to create your own form, consider including the following points:
Any forms/contracts should be reviewed by an attorney for compliance with local laws and suitability to the particular needs of the organization involved. Once developed, the contract should be used for all rentals, even if the distillery is being used gratis or by a member. A copy of the contract should be given to the lessee and the original kept on file.
It has all the makings of a Hollywood mafia movie. Unidentified individuals broke into the SweetWater Brewery on Ottley Drive in Atlanta this June, hooked truck tractors to sitting trailers full of SweetWater beer and hit the road.
For beer lovers, we can tease a happy ending – as much of the $90,000 haul of beer was recovered. Unfortunately, after its recovery, SweetWater declared the beer unfit for sale due to quality control considerations.
This incident brings to attention the risk of theft breweries face — whether it’s from outsiders, or more commonly, brewery employees taking advantage of a golden opportunity. In fact, while it is unclear at this point if the SweetWater incident was an inside job, many brewery thefts — like in other retail sectors — are the result of employee dishonesty.
In this article, we look at common types of theft affecting breweries, including employee dishonesty, keg theft and cargo/transit theft. We also discuss how a brewery can reduce its risk exposure and what to look for in an insurance policy to make sure the brewery has the right coverage if it were to fall victim to theft.
Thirsty EmployeesEmployee theft is responsible for $18 billion or 43 percent of lost revenue for retailers in the U.S., according to a recent article from Fortune, which highlighted facts from the Global Retail Theft Barometer. In all, U.S. retailers lose roughly $42 billion annually from shrinkage – missing or stolen merchandise.
Employees may leave the gate open for a friend to quietly come in and smuggle out cases or kegs of beer. Breweries may not realize it, but regular theft insurance does not cover an event like this. Employee dishonesty, as it is known in the insurance industry, has its own coverage and it is a coverage that breweries want to make sure is included in their insurance policies. In many cases, the employee may not blatantly steal a truckload of beer, but they may swipe a few six-packs, brewing equipment, tools, kegs or have a little extra in the tasting room without keying the sale into the register.
Valuable KegsKeg theft is another risk exposure for breweries. According to the Beer Institute, a trade association that represents small and large U.S. brewers, each year more than 350,000 kegs are lost to the tune of a $50 million cost to the industry.
The empty kegs are valuable to thieves to sell as scrap metal or otherwise, particularly as new kegs sell for around $130 and a standard keg deposit now ranges from $10 to $50. From an insurance perspective, it is important for breweries to know the value of owned or leased kegs and to understand whether the keg is covered when it leaves the brewery premises.
The Cargo Transit Blame GameTransit is also a common area where theft can impact a brewery’s bottom line. An event similar to the SweetWater incident occurred at a Florida truck stop in October 2014 when thieves took off with a tractor trailer truck full of Miller High Life beers – 9,700 four-packs, the Atlanta Journal Constitution reported.
During transit, brewers cannot assume the onus is on the trucker if the beer cargo goes missing. Insurance coverage for beer missing during transit is not automatic. Brewery owners should have a written agreement with the trucking company, ideally transferring all risk to the trucking company and ensuring the trucking company has a sufficient limit of insurance to cover a potential loss. Breweries can also look into transit insurance coverage to make sure their beer is covered while it is on the road.
Tapping the Right Insurance CoverageWith risk exposures like this and the potential to lose $90,000 worth of beer as in the SweetWater incident, breweries need to make sure they have comprehensive insurance. Often the best policies can be found at a specialty insurer, focused on the beer, wine or spirits industry.
Specialty brewery insurers can also provide risk management tips to help breweries limit their risk exposure. While finding the right insurance partner is key to protecting a brewery’s assets, there are steps breweries can take to protect themselves, including:
• Train employees to be aware of employee theft and provide anonymous hotlines to report theft;
• Protect other merchandise with cages;
• Install security cameras and keep tapes for 30-60 days in case a loss is not immediately discovered;
• Install alarms and sufficient lighting;
• Paint numbers on tops of trailers or employ only those with aerial identifiers;
• Install blocking mechanisms on truck starters;
• Insist on written agreements with truck operators/distributors – transferring risk to them if possible;
• When brewing a higher quality beer, make sure insurance limits are still sufficient for the increased value of the beer.
Unlike a general insurer, specialty insurers know the brewery business and the intricacies of a comprehensive coverage plan encompassing everything from the brewing process, the value of higher quality beer, leakage, theft, equipment breakdown, employee dishonesty and transit, among other things.
Brewers should be able to spend their time focusing on brewing quality beer. Finding an insurance partner they can trust to ensure their brewery has comprehensive coverage at a competitive price will allow brewers to do what they do best – keeping our pint glasses filled.
This timely column was sent over from Paul Martinez, Brewery Pak Program Manager, Pak Insurance Programs. Martinez has 20 years of commercial insurance experience and 6 years of experience underwriting breweries. He travels throughout the U.S. and Canada visiting breweries providing risk management and loss prevention services for the brewery industry.