When procuring contract manufacturing services for non-alcoholic beer, the “price per can” on the quotation is often not a fixed figure. With the same beer and the same can format, unit costs may change significantly simply because the minimum order quantity increases from a trial-sales batch to a regular replenishment batch. However, a larger quantity is not always more cost-effective, as excess inventory, near-expiry risks, and tied-up cash can in turn consume the savings achieved on the procurement side.

To determine whether a minimum order quantity is reasonable, it is not enough to compare only the ex-factory price per can. A more accurate approach is to divide the order into one-time fixed costs, variable costs that change with production volume, and inventory holding costs. As the minimum order quantity increases, fixed costs are the first to be diluted. Once fixed costs have been spread to a relatively low level, the cost reduction from further volume increases slows down. At this point, sales certainty and inventory turnover cycles should take priority.

Why Does Cost per Can Decrease as the Minimum Order Quantity Increases?

Producing non-alcoholic beer is not simply a matter of changing the label on regular beer. Whether using methods such as restricted fermentation or dealcoholization, production requires beer confirmation, equipment cleaning, filling line changeover, packaging material verification, and quality inspection in advance. When the order volume is small, these tasks do not decrease proportionally with the number of cans, resulting in relatively high fixed expenses per batch.

A practical method for internal calculations is as follows:

Fully loaded cost per can = variable cost of beer and packaging materials + fixed cost per batch ÷ actual number of qualified cans + warehousing and capital carrying costs ÷ actual number of cans sold.

Beer liquid, cans, cartons, pallets, and similar items are major variable costs, while start-up, line changeover, testing, plate-making fees, or packaging document processing are closer to fixed costs. When the minimum order quantity is low, fixed costs are allocated across a limited number of cans, naturally resulting in a higher cost per can. As output increases, the same fixed cost per batch is absorbed by more finished products, and quotations generally decline. However, this does not mean that the price per can decreases by the same amount every time the quantity doubles.

First Distinguish Between the “Production Minimum Order Quantity” and the “Economic Order Quantity”

The minimum quantity a contract manufacturer can schedule for production only indicates that the order can be executed; it does not mean that the quantity is suitable for procurement decisions. The production minimum order quantity may be constrained by the filling line, minimum fermentation batch, packaging specifications, or packaging material supply. The economic order quantity addresses a different question: based on the expected sales rate, how much should be ordered to reduce cost per can without creating excessive inventory?

For non-alcoholic beer in particular, orders should not be placed based solely on the “lowest price per can.” Product channel positioning, consumer acceptance of the flavor, retail display conditions, and replenishment capability all affect the actual sell-through rate. If a large order reduces the cost per can only slightly but extends the inventory cycle by several months, the savings may not be sufficient to cover warehousing, interest on tied-up capital, promotional concessions, and potential write-off losses.

Packaging Procurement Often Determines the Cost-Reduction Breakpoint

For customized orders, packaging materials often reach minimum order thresholds earlier than the beer itself. Cans, can ends, labels, printed cartons, dividers, and outer carton printing may each have different supplier batch requirements. If procurement estimates the order solely based on filling volume, situations can easily arise where “the beer has already been produced, but a large quantity of a certain customized packaging material remains” or “production cannot be scheduled due to an insufficient quantity of packaging materials.”

The following points require particular verification:

• Whether the can is a standard can with labels or directly custom printed; the packaging material thresholds and methods for handling remaining inventory differ between the two approaches.
• Whether outer cartons must use dedicated printing, and whether standard cartons with labels can be used for the initial trial-sales batch.
• Whether packaging material losses are included in the purchase quantity, who stores the remaining materials after production, and whether they can be used for subsequent repeat production.
• Whether different flavors under the same brand can share certain common materials, such as carton specifications, can formats, or transport pallets.

When the market has not yet been validated for the first order, tying highly customized packaging materials to a small beer batch often leads to uncontrolled capital occupancy. A more prudent arrangement is to first determine which visual elements must be customized in one go and which parts can retain room for adjustment. Once feedback on packaging, flavor, and sales channels becomes stable, the purchase quantity can then be increased to a more favorable range.

R&D and Compliance Costs Should Not Be Judged Only by the First-Batch Quotation

Non-alcoholic beer involves alcohol content control, flavor stability, and confirmation of label information. If the formula, sweetness, aroma, or functional ingredients are still being adjusted, arranging excessive production volume for the first order may make it difficult to clear the remaining finished products and packaging materials should the formula or packaging information subsequently change. Therefore, the objective during the R&D confirmation stage is not to achieve the lowest possible cost per can, but to obtain clear repeat-production standards at an acceptable cost.

When reviewing quotations, expenses should be divided into two categories: “incurred only for the first batch” and “incurred for every batch.” The former, such as certain sampling, design adjustments, document reviews, and specific plate-making projects, may be reduced during subsequent repeat production. The latter, such as filling, testing, logistics, and standard packaging materials, will continue to apply. Combining both categories into one total price can easily overestimate the long-term advantages of large-volume orders and makes it difficult to determine the true marginal costs of the second and third batches.

Use Sales Volume and Cash Turnover to Determine an Acceptable Batch Size

Before approving an order, conservative and neutral forecasts can first be established based on confirmed monthly sales volumes; there is no need to pursue complex models. The key is to estimate how long it will take to sell out the batch at the normal sales pace, while also including production lead time, transportation and warehousing, and channel distribution time. If the estimated sell-through period is already close to the company’s acceptable inventory limit, the order should not be expanded simply because the contract manufacturing quotation still has room to decrease.

One practical comparison method is to calculate two adjacent batch sizes at the same time: the total cash outlay, cost per can, and estimated sell-through time for the smaller batch; and the additional cash required, savings per can, and additional inventory days for the larger batch. Only when the total savings generated by the additional volume can cover additional warehousing, tied-up capital, potential promotional discounts, and slow-moving inventory risks does increased production have financial value.

Repeat-production flexibility should also be included in the assessment. A contract manufacturing arrangement with stable beer production processes, the ability to coordinate multiple packaging specifications, and support for small-batch production may not offer the lowest unit price for the first order, but it may reduce losses from revisions after market testing. For brands still in the channel introduction stage, this flexibility is itself part of cost control.

When Requesting Quotations From Contract Manufacturers, Require a Breakdown to a Verifiable Level

When only a “tax-inclusive price per can” is provided, it is difficult to determine how costs will change after adjusting the minimum order quantity. A better quotation should at least distinguish between beer liquid, canning and packaging, customized packaging materials, testing or process treatment, warehousing and logistics, and should specify the applicable can format, capacity, carton specifications, whether tax is included, whether freight is included, and ownership of surplus packaging materials. For non-alcoholic beer, it should also be confirmed whether alcohol content labeling requirements, ingredient information, and nutrition information have been included in the label review scope.

The approval conclusion can follow a clear principle: for new products, first control risk with a batch size sufficient to complete market validation; after packaging and formulas have stabilized, reduce cost per can by consolidating common packaging materials, increasing repeat-production batch sizes, and optimizing transportation volumes. This delivers not the lowest superficial quotation, but a procurement cost that is closer to actual profit.