Hiring a Tank can be Cheaper than Purchase!

Posted February 3, 2020

Crazy statement! How can hiring a product possibly generate more long-term value for your company than the cost of buying it outright?

Well…… the reality is that most breweries look at a tank purchase as the cost of the tank itself, and completely ignore all of the sundry costs associated with actually getting the tank from the manufacturer to their business and also the cost of the install.

Typically, if buying from China (considered the cheapest option), there is the shipping cost, import taxes, pressure certificates, UK destination delivery, unloading of the container on site and the positioning of the tank in the brewery – as well as the valves and adaptors which, of course, are needed to operate the tank. On a typical 40hl tank this will add anywhere between 45-60% on to the initial “cost” of the tank.

Yes, having multiple tanks delivered in one go will obviously affect that percentage but the principle is still valid – “tank cost” is only a fraction of the true cost of having a new tank installed.

Compare the above with the Ninkasi Rental option.

Ninkasi reduces the import costs by always buying in bulk which not only benefits the shipping rates as container space utilisation is always maximised, but also allows the negotiation of preferential rates across all the other aspects of the ancillary costs. As this is Ninkasi’s main activity all unloading, delivery and positioning is carried out in house rather than incurring a secondary cost – all of which means that Ninkasi pricing reflects the savings it makes and pass these directly onto its customers.

Great you think, but it’s still a Ninkasi tank, and “I want to own it”.

My first thought is why? A businesses value is seldom in its asset base as this is always a depreciating factor. Particularly with Breweries, business value is always in the revenue generation, branding and growth potential i.e.  it’s the marketing and sales presence which is attractive to a buyer. I can’t think of a brewery that has been sold at a multiple of its brewery plant value, it’s always a multiple of revenue/profit, the value of the brew plant often does not even factor in the calculation.

However, in the UK we just like to own things – it’s in our nature and heritage – so if a brewery wants to own the tank no problem, and it will still cost less to do it through Ninkasi! Why not harness Ninkasi buying power and technical expertise, use our ability to remove costly barriers and we will happily work with clients to enable ownership in the future.

Still not sure? OK, well what if Ninkasi were able to sweeten the deal? One of the main benefits of using Ninaksi is the flexibility; if a brewery buys a tank – that’s the tank it has. If beer volumes increase and capacity is reached more quickly than forecast, the only option is to buy another tank. Not with Ninaksi, on just a call Ninkasi will swap a customer’s hired tank out for a larger one, it’s a very quick and simple process, often done in just one week.

Have you also considered, when a brewery buys a tank the impact on the business is always negative to cash flow immediately, and with a  wait of 4 months (or more) for the tank to arrive (compared to from 1 week with Ninkasi), the brewery is having to pay out between £25-£30k per tank without any revenue being generated to cover all the additional costs to deliver and install. None of that happens with Ninaksi as we smooth all the cash flow concerns. Initial payments are minimal with customers hire costs largely in line with tank usage/cash generation.

So, the brewery can keep £25k in the business and still have a tank generating an extra £10k per month revenue (based on 40hl). Therefore instead of having cash flow challenges, it is cash buoyant and can use this money to facilitate further higher margin ventures  e.g. increase tap room scale, invest in direct/additional marketing, employ a new sales manager that will take the business on to the next level etc.

Very simply, with Ninkasi the £25k tank now costs a brewery £260pcm, giving all the benefits detailed above, and leaving the option open to take ownership in the future for less than if the brewery had funded it through traditional asset finance.

Ninaksi was created to support the brewing community. We are passionate about the industry and as a small business have over 65years experience within the trade. If you would like to understand more about how hiring a tank can be cheaper than purchase, please get in touch, we look forward to hearing from you and supporting your business.


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