For the past decade, Financial Planning & Analysis (FP&A) leaders have repeated a familiar refrain: finance must focus on analyzing the business, not just reporting results. That guidance still holds and is now even more imperative given the brewing industry’s current conditions. With ongoing volume pressure, softer pricing power, continued shifts toward RTDs and non‑alcohol products, and greater channel volatility, it’s no longer enough for FP&A to explain outcomes after the fact. Financial planning must proactively take center stage in shaping decisions before capacity, spend and inventory are committed.

That shift requires two capabilities many brewers still treat as “nice-to-have”: rolling demand forecasting and scenario planning. In a market where demand signals change faster than annual budgets can absorb, forward-looking planning isn’t a process upgrade; it’s a resilience strategy.

The Industry Backdrop: Why Financial Models Are Breaking

For much of the past decade, brewery and beverage company financial models were built on assumptions that were stable enough to plan around: modest volume growth (or at least stability), predictable seasonality, incremental margin expansion through premiumization, and reliable pricing power. Those assumptions no longer apply.

A key inflection highlighted at the 2026 Beer, Wine & Spirits Summit was the industry’s weakening ability to “price its way out” of soft volume trends. When the demand curve reasserts itself, models that assume “take price, hold share” become structurally fragile and unrealistically optimistic. The implication is straightforward, if top-line growth is uncertain, discipline must move downstream to margin truth, cost execution, and capital allocation.

Volume Volatility Forces a New Approach to Forecasting

Brewers have always lived with volatility: weather, seasonality, distributor timing, promotional lift. What has shifted is the speed and diversity of these drivers, and how quickly they can invalidate an annual plan.

When SKU trends emerge (or fade) in months – how do we adjust?

When channel behavior shifts mid-year – how do we adjust?

When consumer affordability constraints tighten demand – how do we adjust?

The annual plan becomes less of a guide and more of a rearview mirror.

The most practical response is a move away from static budgeting to a rolling forecast cadence, updated frequently enough to incorporate leading indicators such as point of sale (POS), depletions, feature/display plans, and key commodity or freight inputs. The right cadence varies by business, but the principle is universal: the forecast has to adjust with reality.

Scenario planning then becomes the companion tool that makes rolling forecasts actionable. A good scenario set doesn’t aim to predict the future; it creates guardrails for decision‑making, what you’ll do if conditions strengthen, soften, or shift.  Knowing what the capacity and capabilities of the facility are becomes a critical understanding to define realistic scenarios.  First Key has supported many breweries with development of a Capacity Model which provides a dynamic decision-making tool to support FP&A.

Consider a brewery seeing a new SKU segment grow 25% over six months. The old approach locks a plan in November and hopes it holds through summer. The modern approach monitors early signs of deceleration and allows for adjustment early in the year by referencing to the Capacity Model, facilitating the reallocation of tank space, adjusting packaging schedules, and commercial support to the next most profitable opportunity or low-cost scenario.

The advantage isn’t just accuracy – it’s time.

Time to respond before the business is committed to the wrong production and spend posture.

Performance Management Beyond Revenue: Margin Truth, Mix, and Cost Execution

One of the most common FP&A failures in a down-volume environment is treating every lost barrel as equally harmful – all volume is not created equally.

A 3% case decline can be disastrous, or quietly margin‑accretive, depending on where it occurs. Losing low‑margin, high‑touch volume (e.g. deep-discount chain features, long-haul freight into fringe territories, or packages with weak line efficiency) can actually improve profitability, even while the top line softens. Meanwhile, a seemingly modest mix shift can erode profitability faster than raw case trends suggest.

Case Study:

Take a regional brewer with a strong on‑premise performance. If draft declines 8% and the business “replaces” that volume with incremental single‑serve package growth in convenience. Volume was stabilized!  That’s good right? The income statement tells a very different story.

In this case, the replacement volume has higher packaging costs, higher shipping complexity and costs, higher trade spend, and greater returns risk, all leading to lower contribution per barrel.

Performance management exposes that truth early, before the organization doubles down on volume that makes the business less profitable.

What matters now is not revenue, it’s contribution margin by SKU, package type, and channel, paired with a defensible, fully-loaded cost per barrel/case. This is where mature performance management separates what’s happening from what to do next.

As Scott Durnin, Senior Advisor at First Key, shares “Breweries often see all volume as equal but the reality is there are often large profitability differences between different brands, package types, and distribution streams.  Selling a pint in the tap room is very different than selling cases in a big box store.  Think of the extra cost that goes into packaging, shipping and distributing those two products.  Growth in either can be profitable but it is critical to know exactly how much and if the extra investment can be justified.  We often see this with smaller breweries who are growing and seeing a contract with a large, big box retailer as the golden ticket.  It could lead to higher volume output with less profitability overall.”  

A practical variance analysis should isolate:

• Volume (what changed in total demand)
• Mix (what shifted across brands, packs, and channels)
• Price (what was realized net of trade)
• Cost inflation (commodities, freight, labor, utilities)

Then it must translate each into decisions: which SKUs to support, which promotions to stop, which packages to protect for margin, and which capacity constraints to address.

Scenario planning belongs here, too. For example, if RTD volume is trending >10% above plan by mid‑Q2, the playbook shouldn’t be “celebrate and make more.” It should be:

• Confirm the contribution margin after co‑pack fees and trade
• Identify constraints and changeover losses
• Re-rank SKUs by margin per minute of line time
• Re-deploy spend from low‑ROI beer features into RTD execution where velocity proves out

Ultimately, performance management must tell uncomfortable truths about which brands, packages, and channels are earning the right to exist, and which are consuming capacity, working capital, and commercial attention without paying for it.

Capital Allocation in an Era of Uncertain Growth

For years, the default answer to competitive pressure was expansion: more cellar capacity, more packaging formats, more SKUs, more “optionality.” Many breweries were built or expanded based on peak demand assumptions that were rational at the time, when premiumization was rising, and declines could be offset with price and innovation. Now that growth is uncertain and volatile, the impact and cost of being wrong increases dramatically. A new tank, a new line, or a warehouse expansion isn’t just capex; it’s fixed cost, maintenance, labor, and utilization risk for the next decade or more.

Today, capital must compete harder for approval, and not simply by clearing a higher ROI threshold. The modern requirement is resilience: projects must perform across a range of plausible futures. Sensitivity analysis is no longer a finance appendix; it is central to the decision-making process.

A strong capital case now answers: What “states of the world” break this investment? If a can line automation project only works if beer volumes are flat-to-up next year, is it a good project, or a leveraged bet disguised as efficiency? Conversely, a project that generates value even if volumes decline (yield improvement, labor savings, energy reduction, freight optimization, complexity reduction) can be strategically superior even with a lower base-case return.

Best practice is moving from single‑point ROI to probability‑weighted outcomes: base, downside, and upside cases with assigned likelihood, plus payback under stress. In practical brewery terms: if the downside includes higher aluminum costs, slower craft velocity, and distributor inventory tightening, does the project still clear minimum returns?

But how do we do this?

First Key has worked with many clients to integrate scenario planning into a Capacity Model tool which has a visual dashboard which allows for comparison of multiple volume and mix scenarios with brewery operational capacity.  Scott Durnin, Senior Advisor at First Key, adds “Helping clients with development of this model tool has provided value creation to improve decision making by unlocking underutilized capacity, driving profitability, and phasing capital investment to align with the business.”

FP&A’s role is to institutionalize discipline, support profitability reviews, advise on asset utilization, and assess risk, all while acting as a partner in strategy.  The days of acting as a mere approver of “good enough” ROI should be over.

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This article is part of a First Key Insights Series highlighting the role of Financial Planning & Analysis (FP&A) within brewery and beverage companies.  The next article will focus on Innovation Economics and what Best‑in‑Class Beverage Finance Teams Are Doing Differently with practical approaches and case studies.