Upon first entering Bengaro from the west you should make your way to the southwest corner of town, watching for three people.
Alonzo, wearing yellow robes, sells potions, elixirs and brews.
Kagan, wearing blue pants and a brown top, is an Avernite who will tell you about how he lost Giantslayer in the Giant's Forge.
Foxfire, wearing a green dress, can sometimes be found near the center of town. She sells you a key to the Monastery of Madness in Karnold Province, and tells you the location. This is the location of the Knowledge Brew recipe.
In the southwest corner of town is a house. Reading the bookshelf in the northeast corner of the house will cause a demon to appear. When you kill the demon it will drop a Wand of Acid.
Make your way up to the northeast corner of town, where you'll find two shops. The southern shop belongs to yet another Merry, and the northern shop is a Common Weaponsmith.