Resources & Insights

Fungal Spores in Your Brew

August 23, 2016
CCIG’s Morgan Mahoney

Tickets to the three-day Great American Beer Festival sold out quickly this summer. In fact, it took just 67 minutes to sell out this year, 10 minutes fewer than last year.

Coloradans certainly love their beer. Colorado has nearly 300 breweries, ranking third in terms of breweries per capita. Denver nowadays is known as the Napa Valley of Beer.

Yet while Coloradans consume an average of 30 gallons of beer each year, not every drop is always as good as the last. That’s a problem for the consumer, of course. But it’s a much bigger problem for the brewers, potentially forcing them to issue a recall that can easily cost much more than lost inventory.

It doesn’t happen often, but sometimes beer becomes contaminated during fermentation or bottling. The result is hundreds of thousands of dollars, even millions of dollars, in bad beer that, for one reason or another, has to be poured down the drain.

In the most dramatic instances, litigation ensues.

For example, the Boston Beer Co. a few years ago sued and received $20 million from its former glass bottle supplier to settle claims arising from a 2008 recall of beer bottles that could have contained small bits of glass.

More recently, 10 Barrel Brewing Co., which has pubs in the Northwest, announced a voluntary recall of one of its beers, Swill, after discovering that some of it may have been “experiencing secondary fermentation in the bottle, causing over-carbonation.”

10 Barrel not only removed bottles of Swill from retail shelves, but asked its customers to get rid of any Swill they already purchased – and to do so very carefully.

“If you have any Swill in your home, please do not open it, attempt to transport it, or return it to your retail store,” it said. “Dispose of the product by following these steps: (i) Before disposing of any bottles of Swill, please put on protective gloves and eye wear; (ii) Place all remaining Swill bottles in a closed box and place immediately in a secured dumpster or trash container outside.”

The problem? An errant enzyme.

Earlier this summer, Goose Island Beer announced it was recalling two more of its beers after confirming they were infected with a type of bacteria in the lactobacillus family, the second such recall the Chicago-based brewer had undertaken this year.

General liability policies typically include coverage that covers production costs and revenue lost to spoiled beer. But if that beer got as far as store shelves, brewers need what’s known as spoilage and contamination product insurance. The best policies will cover voluntary and involuntary recalls.

Such policies help cover the costs of decontaminating manufacturing equipment, the closure of a plant until government regulators allow it to resume operations, and even brand damage repair, including the expense of responding to any bad publicity that arises from a recall.

It’s hard to know exactly how many of Colorado’s breweries have spoilage and contamination product insurance, but it’s important for the industry to understand that general liability insurance does not come with this sort of comprehensive coverage.

While the deductibles are higher, spoiled and contaminated product insurance remains an affordable way to protect a brewery against what might be a rare but potentially devastating episode.

Morgan Mahoney is a CCIG Insurance Advisor. Reach him at or 720-330-7926.

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