Nanobrewery System

My brother and I are starting up a Kansas City nanobrewery specializing in
German beers. We have developed a logo and some recipes but were in the planning stages of designing the physical brewery itself. We have looked at
several turnkey systems online and have decided to save money by building
the system ourselves. We would ideally like a 3-barrel brewery and as
simple a system as possible so we can do most of the work ourselves, but we
also would like to use automation for batch consistency. The plan is to spark an interest in our product and get our brand name established before we invest in a bigger system. That is why saving money at this stage is critical so we can make the big push once interest has been established. We are a
German-style brewery, and step mashing will be critical to several of our
recipes, so we want a system that will accommodate that. I was curious to see if their were any nanobrewers out there (or informed/opinionated homebrewers) who could offer advice based on their experiences.

We want to do this as cheaply as possible, maybe getting the tanks fabricated by a welder experienced in sanitary welding. Here are a list of questions I've come up to get an idea of the sort of system we should construct:
1. How do you maintain a steady mash temperature? Do you use an
automated mixer or a recirculating system?

2. Are you able to do step mashes on your system?
3. How many vessels does your system have? Mash tun, lauter tun and
boil kettle, or just mash tun and boil kettle?
4. Does your system require a tankless water heater?
5. Where did you get your vessels? Did you fabricate them yourselves?
6. How many pumps in your setup? Could you describe the basic process?
7. Do you have an automated control panel? If so, which brand do you
recommend? Electrical requirements of the control panel?
8. How do you do the vorlauf? Do you have a false bottom on your mash
tun?
9. What sources did you use in brewery construction and are there available sources that have diagrams/detailed blueprints of a smaller brewing system?

Thanks so much. I have already heard back from several nanobrewers so far and have been really impressed with the support of this small but dedicated community. Any help/advice would be appreciated.

Probrewer.com can probably help you better.

Do a 7 BBL system. 3 BBL is like shooting yourself in the foot.

Read this, please:

THE SMALL BREWING SYSTEMS PAGEPlease read this if you are considering a system smaller than 7 barrels

I agree that three barrels is too small. What I've been told is that you can't break even if you're smaller than 20, and I think that that's going to be REALLY true if you're interested in brewing german beers; you're going to incur high costs to store and lager a lot of beer, but then you'll be competing with imports and domestic craft lagers that sell for a dollar a bottle. Sours and belgians might be different - some of them go for $20 or even $50 a bottle. For anything else, I think three barrels is just not big enough.

Have you and your brother done anything with permitting yet? Do you have a location that's zoned appropriately? Have you considered the taxes you'll have to pay? I'm interested.

a lot of the answers to your questions are dependant on your specific situation. what is the background/expertise of you and your partners? have any of you worked in a commercial brewery before? or only homebrewing (no offense to homebrewers, but its quite a different animal)?

if you are thinking about designing your own systems, or even piecing it together yourself from off the shelf parts, atleast someone with engineering and thermodynamic experience on your payroll is a must. its very easy to get all the pieces of the puzzle, but to get them all to work nicely together is entirely different. there is a lot of math that goes into calculating flow rates for your exhaust system, water and pump pressure and flow requirements, cooling power needed for your chillers and refrigerators, how to quantify how well your CIP system works... if you have to sub-contract out for all of these little things, or even if you plan on learning as you go, you might as well just pay one contractor to do the entire job; someone who has done it before, can get it done correctly and on time, and can make suggestions that you might not have thought about, is sometimes worth the money.

fabricating tanks yourself is not as simple as buying the raw materials and paying a welder. when you want glycol or steam jackets, all sanitary polished welds, shadowless manways, etc... it gets expensive quick. then you need the tanks NSF and pressure certified. what happens if your welder isnt as good as you thought and he burns a hole thru a $2k sheet of steel? or if he forgets to polish a 1/2" weld section around a fitting that is hard to see and you loose several 300 gallon batches to infection before you figure out the cause? if they are your tanks, there is no one to call and ask for help or suggestions...

I saw a thread a few days ago here where a guy was starting his own nanobrewery in his backyard. Not sure on all the specifics as I've been to busy to continue reading the thread but I remember him saying he was doing 10 gallon batches, and would be breaking even at 15 gallons per month with his backyard brewery. I love reading threads like these! Good luck with it, your living out most of our dreams!

We (myself and two friends/fellow homebrewers) are getting ready to sign a lease for a nano in the next week or so with us taking on the space as of 1/1. Our rig is a 55 gallon so... roughly 1.5 bbl system.

I've always been curious as to what exactly "break even" means when that guy on the equip sales page says you can't run a brewery for less than 7 bbls (which I've seen before).

what about Epic Brewing up in Seattle? 1 bbl in 180 sq feet.

The Brewery | Epic Ales

So is that guy losing his shirt on a monthly basis??

I think it really depends on what "breaking even" means. Are you planning on quiting your job and making the brewery your sole source of income? (we're not... we're doing it as a "hobby brewery" first).

I think you need to first think about what you really want to get out of it in terms of financial reward and then try to back into that under worst, expected and best case scenarios.

i would concentrate on flushing out a business plan first and then match the equipment to it.

Wow... that sounded kinda preachy... didn't mean it that way at all.

I think it depends on how much you go crazy on the equipment and start up costs. I am quite sure there are folks breaking and making money even on small systems. It seems like when people make the jump , it's from 1 to 7 bbl. That seems overwhelming!!! There is a big difference in overhead and start-up for 0.5 or 1 bbl to 3 bbl and 7 bbl.

Have you checked Glacier tanks for 3bbl tanks...

Also of course depends on how much you can sell for. I am in a place where you pay $9 for a bomber of good local beer. $6 for a "pint" in a restaurant.

Good luck Cape!

I have been playing with Excel myself. My break even is pretty low, but I could sell beer for a lot. Also would be turning out a beer quickly. There are a lot of factors.

I guess of course there is a big difference between a side job and a full time job that pays the bills....a lot of guys with small systems do it for love , a few bucks and get to make good beer for free.

We have four 55 gallon fermentors so our back-of-the-envelope is that we'll have 9 1/6the kegs coming ready per week as we simply rotate fermentation on the four vessels.

You obviously can't fill a fermentor right to the top... with trub and other loss... we're assuming 45 gallons of beer per fermenter.

We already get 55 lb sacks of base malt for $29-$35 each... Hops, yeast, etc... say... I dunno... say $75 in "ingredients" per batch. Our total space cost on rent, untilities & insurance (don't underestimate your insurance costs) are going to run us about $550 a month.

You figure you can sell a 1/6th of "craft beer" for about $60 wholesale.

So... the way we are figuring it, we basically have to sell a little over one entire batch per month to "break even" and that is without any of the three of us taking out any cash. Anything we make will be put right back into the brewery. If we feel like we can sell more beer... we'll wait until the brewery can afford to expand itself... and we'll go from there.

I day dream on the probrewer classified forum a lot. I saw this yesterday Brew-Stuff.com, 7k for a 100 gallon system sounds really cheap, and check out Glacier tanks in Portland OR for 3.5 bbl fermenters. Stout tanks though was the cheapest. I priced a 3bbl system with 3 non-jacketed fermenters for ~15k, but it might take some time for them to get it to you.

What does your insurance run you and what does that cover..?

We have a million $ of "general liability" and $10k in property. The million protects us in case we blow up the building or if someone comes into the brewery, slips into the mash tun and drowns. The property is on all of the equip and it is running us about $1,500 per year.

We dont think we need a million but there was no real price difference between that and only $500 k.

We were required to carry at lease $500k under the terms of our lease agreement.

thanks.

Cape Brewing said:

what about Epic Brewing up in Seattle? 1 bbl in 180 sq feet.

The Brewery | Epic Ales

So is that guy losing his shirt on a monthly basis??

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You can probably call him & ask. I visited earlier this year. Nice guy.

We are in the early stages of figuring out our start-up costs, but the number one goal is to keep costs very low during this first stage of business. This endeavor will unfold in multiple steps, with the first step being the nanobrewery stage where we brew on a 1.5-3 barrel system, save on rent by either sharing space with another nanobrewery or business, build as much of the system ourselves, buy used tanks, utilize a mechanical engineer friend's advice and support, network with friends in the bar and restaurant industry and gauge demand to see if the step-up to microbrewery is feasible. Meanwhile, we will join the legions of local farmers, soda makers, carpenters and other small craft industries and promote the "buy local" ethic. To some it may seem fantasy but the to others the "small is beautiful" philosophy is a way of life.

I think it will be possible to at least break even or turn a small profit while we are building our brand and reputation in the Kansas City area. We will make mistakes, no doubt, and there's much learning to do, but the stakes and the costs will be low while we cut our teeth and gain experience. Blowing $100k on a professional 7 bbl system is not in the cards for us right at this moment. But I would rather establish myself in the market now and get started than wait several years for the right investment opportunity or my nest egg to grow. We have great recipes, detailed knowledge of the brewing process and science and most importantly the zeal to create beer that will be loved and quaffed by a receptive audience. I feel like an evangelist for the nanobrew cause and may be a overworked and underfed grump in a few year's time, but I'm still young and foolish enough to give it a shot.

bigbeergeek said:

Do a 7 BBL system. 3 BBL is like shooting yourself in the foot.

Read this, please:

THE SMALL BREWING SYSTEMS PAGEPlease read this if you are considering a system smaller than 7 barrels

Click to expand...

I am not a pro brewer by a longshot, but I don't buy this at all.

Cigar City has a 15 barrel brew kettle, 4 60 barrel conicals, and a bunch of smaller conicals, barrels, and assorted test batch equipment.

They seem to be doing very well for themselves.

philbert119 said:

I'm still young and foolish enough to give it a shot.

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Have you listened to any of the recent Brewstrong episodes on starting a professional brewing operation? There's a lot of good advice, detailed info etc, especially with regard to "how big do I need to be to succeed?" I appreciate your passion but I'd hesitate to let your enthusiasm/impatience undercut your chances of establishing a business that is designed to grow from the onset. It's worth the wait. Slaving night and day to break even is not a good business plan.

How you described it Philbert is exactly how we are planning our situation. We were able to find a very small space with extremely low rent so our overhead costs are very low. None of us are quiting our day jobs so our "break even" point is very very low.

The market isn't quite saturated yet but it feels like it isnt that far off either. For us, we can't justify dumping tens, possibly hundreds, of thousands of dollars into a start-up brewery without having any real reputation in the marketplace.

Like I was sayin before... You're definition of "break even" is the big question. For us, covering our hard expenses not counting labor is our break even.

If that is your definition, then I agree with the comment before that needing a 7 bbl brewery isn't accurate. That said, if you are looking to take something like two $60k salaries per year out of the biz... Then yeah, a 1.5 bbl is going to be tough.

Your definition of "break even" is the big question. For us, covering our hard expenses not counting labor is our break even.

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I guess that's true - if you're not quitting your jobs, and you're going to think of it as a hobby with the potential to turn into a business down the road. . . then sure, size isn't really an issue and I take back what I said before.

I'm still interested in licensing, though. It seems like you aren't considering a lot of the fixed costs that you'll run into (cost of licenses and taxes being the big two.) Also, does your insurance cover the product, or just your space? If you get even one frivolous lawsuit after a DUI or a hit-and-run - I'm a lawyer, so believe me, they happen - you'll want some kind of liability insurance, which is another fixed cost. At a minimum, are you going to incorporate the business to avoid personal liability?

Also, are you including the cost of equipment in your "break-even" calculation, or are you going to count that as a personal investment, and not a corporate start-up cost? I'm not asking to be a nudge, I'm genuinely interested!

Assuming that you're not depending on this brewery as your only source of income, I seriously doubt that 3 bbl will be too small. Before blindly condemning another man's brewery plans, at least attempt to find out the details of his plan. It really depends on what kind of brewery you're trying to open. I plan on opening up a taphouse (at least 20 taps). Do you any of you think that a 7 bbl system will effectively accommodate that? I think not, so let's not be too quick to judge this man's brewery plan without knowing the details. It's because of my local brewery's 3 bbl system that they're able to have more than 10 beers on tap at once. Don't believe me? You can call them at 719-528-1651. I think it's a good idea to start with 3 bbl and move up from there. It will be your proof-of-concept system to prove to yourself/others that you have your ducks in a row. It's exactly what I'm doing.

Listen very closely to the naysayers!They may think of possible complications before you do, so they may be saving your ass. I am grateful for them. However, don't let them discourage you. The people on HBT do not necessarily have any experience as probrewers, so make sure to listen to the real pros, e.g., brewmasters at your local breweries. That's what I do.

What kind of brewery are you trying to open... Do you intend to focus on distribution? Are you looking at a taphouse? Do you plan on serving food, as well?

All iof those costs are being considered. We are already working on our TTB license and our state ABCC licenses. Combined, the fees associated with them aren't huge numbers. I want to say the federal TTB is $500 (on of my partners is entirely in charge of that) and our state ABCC license is... $22. That's not a typo.

Taxes, sure... That is another bite but I am not sure what other "fixed costs" you mean. We built our own single tier 55 gallon HERMs system based on my personal 45 gal HERMS system and sourced the equip pretty cheaply. We're probably into equip for under $4k and that includes the four brand new 55 gal fermenters. We didn't go conical because I've never been convinced on the actual benefit other than bling factor. Much larger than 55 gallons... Maybe... But not at the size we are talking about. We will temp control ferm in a cold room.

The million dollar policy is a general liability policy. How is someone going to sue us for drunk driving?? We are not a pub or restaurant. We are only a brewery/manufacturer who will then sell directly to bars and restaurants in kegs.

Cape Brewing said:

All iof those costs are being considered. We are already working on our TTB license and our state ABCC licenses. Combined, the fees associated with them aren't huge numbers. I want to say the federal TTB is $500 (on of my partners is entirely in charge of that) and our state ABCC license is... $22. That's not a typo.

Taxes, sure... That is another bite but I am not sure what other "fixed costs" you mean. We built our own single tier 55 gallon HERMs system based on my personal 45 gal HERMS system and sourced the equip pretty cheaply. We're probably into equip for under $4k and that includes the four brand new 55 gal fermenters. We didn't go conical because I've never been convinced on the actual benefit other than bling factor. Much larger than 55 gallons... Maybe... But not at the size we are talking about. We will temp control ferm in a cold room.

The million dollar policy is a general liability policy. How is someone going to sue us for drunk driving?? We are not a pub or restaurant. We are only a brewery/manufacturer who will then sell directly to bars and restaurants in kegs.

Click to expand...

Of course they can't sue you for drunk driving if you don't serve them alcohol. In Colorado, in some cases, the place or person who provided the alcohol to the drunk driver may be responsible for any injuries the driver causes, if the person providing the alcohol knew or should have known they were serving a visibly intoxicated person.

BTW, congrats on making the move to pro. Cheers!

How is someone going to sue us for drunk driving??

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Easily: by filing a complaint in court. You're confusing winning a case with filing suit, which anyone can do for any reason - even stupid ones. The fact that you will self-evidently win doesn't mean that you can't be the victim of a nuisance suit and have to spend a lot of money defending yourself. In my wacky state a guy recently sued a brewery when he was injured by a defective bottle, Lost Coast Brewery was sued for selling India Pale Ale (an Indian claimed it was a hate crime), and a man in Brazil recently sued a brewery for turning him into an alcoholic. There are also more legitimate suits, like by the state for illegal fumes. You'll probably never have to deal with any of that crazyness, just be aware it's out there.

We didn't go conical because I've never been convinced on the actual benefit other than bling factor.

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Boy am I with you on that. It seems to me like conicals are great for getting your beer off the trub but, if you're packaging something quick like most beers, that's unnecessary. You can also reuse yeast more easily, I suppose, but I prefer top cropping.

BTW - what state is it that's just charging you $22, and how can I get in on that!

tesilential said:

I am not a pro brewer by a longshot, but I don't buy this at all.

Cigar City has a 15 barrel brew kettle, 4 60 barrel conicals, and a bunch of smaller conicals, barrels, and assorted test batch equipment.

They seem to be doing very well for themselves.

Click to expand...

I think Cigar City is a good example of a micro done right in many ways - not only do they make great beer but the 15bbl brewhouse allows them to expand production easily just by adding fermenters. From their site

OUR BREWERY
Cigar City Brewing is comprised of a 15 barrel (one barrel is 31 gallons) brewhouse occupying 6,600 sq. ft. of warehouse space in the Carver City-Lincoln Gardens neighborhood of Tampa.

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CC has about 600 bbl of fermenter capacity. A quick back of the envelope calc gives a theoretical capacity of 12000 bbl/year which can generate about $2.5 mil in revenue.. Which in turn is enough to cover labor etc for the 800 brews per year necessary to get there (that's 2.2 brews per day average).

This is exactly what the sound brewing page is referring to as "sized for success". What they are really trying to point out is that your inefficiencies go up exponentially as you get smaller. LABOR, Raw materials, installation cost vs your potential revenue, etc.

A 3 or 4 barrel microbrewery (wholesale production) is doomed to either fail, or enslave its operator with interminable hours and little compensation until he can upgrade his equipment to a large enough system to become profitable on. In many instances the venture self destructs and visits financial ruin upon the owner.

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Now with a 3BBL brewhouse, you would need to brew 1600 times per year to reach even 1M in revenue (not profit!) and you would need (wait for it!) about 83 fermenters (there's the $ for your bigger brewhouse right there..)

Going pro means you have many new responsibilities. Why suck the fun out of a hobby by turning it into a job that doesn't pay you any money?

Beers
-D

CnnmnSchnpps said:

I think Cigar City is a good example of a micro done right in many ways - not only do they make great beer but the 15bbl brewhouse allows them to expand production easily just by adding fermenters. From their site



CC has about 600 bbl of fermenter capacity. A quick back of the envelope calc gives a theoretical capacity of 12000 bbl/year which can generate about $2.5 mil in revenue.. Which in turn is enough to cover labor etc for the 800 brews per year necessary to get there (that's 2.2 brews per day average).

This is exactly what the sound brewing page is referring to as "sized for success". What they are really trying to point out is that your inefficiencies go up exponentially as you get smaller. LABOR, Raw materials, installation cost vs your potential revenue, etc.



Now with a 3BBL brewhouse, you would need to brew 1600 times per year to reach even 1M in revenue (not profit!) and you would need (wait for it!) about 83 fermenters (there's the $ for your bigger brewhouse right there..)

Going pro means you have many new responsibilities. Why suck the fun out of a hobby by turning it into a job that doesn't pay you any money?

Beers
-D

Click to expand...

How did you calculate those brewhouse revenues?

Just assuming 100 bucks a keg.. Don't take it to literally but you get the idea

BTW no ill will to anyone actually trying to make the nano system work. Best of luck to ya, but this is my reasoning for my own planning..

CnnmnSchnpps said:

Going pro means you have many new responsibilities. Why suck the fun out of a hobby by turning it into a job that doesn't pay you any money?

Beers
-D

Click to expand...

I think it comes down to personal preference on the approach and I don't think either is wrong... and I kinda think its crap to suggest one is.

Me and my two partners are going into our situation knowing we're not going to be pulling any real income out of the brewery for the time being. We shouldn't LOSE money but it's not as if we're going to be making material salaries either.

We could absolutely go huge or at least large enough that the capacity matches what we would need to make. But... with that comes a massive amount of risk that we have absolutely no desire to take on.

Why am I going to finance (either personally or through loans for the business... which is also ultimately 'personally') for a job that 1) I might not even like or 2) probably has a 50/50 shot of being successful??

I'm not about to take a couple hundred grand out of my family's pocket to roll the dice on a nano. If someone else wants to, that's totally up to them and I don't think there is a single thing wrong with that if that's what they want to do. For me though... I'll put up the whopping $3k that it has cost me so far to take a chance on establishing some sort of tiny brewery first.

There is no law that says you can't expand.

I would MUCH rather be able to say, "holy crap... we're actually selling beer! People seem to like it. We're earning a decent reputation. We can't keep up with demand so do we want to invest more heavily in this??"

OR... "Man, that was a nightmare. I didn't realize how much I would hate the stress of brewing professionally and now that I look at it, the market is too brutal for us. I'm glad I only forked over $3k to start and a couple hundred bucks a month. Oh well, it was worth a shot"

As opposed to... "Holy crap, I hate this. I quit a pretty decent-paying job for this??? And now I'm $200k in debt with a massive pile of brewery equip that I need to try to off-load for pennies on the dollar."

With the "large salaries" comes a large amount of risk. Doing it the way we are doing it and other are discussing comes with no real salary but a helluva lot less risk. Like I said... I think it comes down to personal preference on the approach and I don't think either is wrong... and I kinda think its crap to suggest one is.

BTW whats the retail price of a pint where you would sell a sixtel for $60? This seems low on my end and would kill my numbers. The craft/nano pints go from $6 here, and I'm not truly sure if that's a 16 or 14oz "pint."

I think some are thinking of this too big. Lawson's finest brewed in his sugar shack for years and has become well known, winning big awards, etc. He sells out a few cases of bombers each week and 8-9/bottle. So with a few grand in equipment, and $0 rent, he is making a little extra money for himself. He just expanded to 7 bbl I think. IT will be interesting to see where he goes from here. I know that many more restaurants are carrying his beer now.

I've been told by a couple of different bars where I know the bar managers really well that "craft beers" typically go anywhere from $60-$75 for a 1/6th. Obviously, if you're importing a St. Bernardus Xmas Ale or something, they'll go a lot more but for a "run of the mill" beer out of a local brewery, I haven't heard of them going much higher than that.

That was also backed up by a member of our HBC who is the beer manager at a pretty decent liquor store in our area.

For us... we're assuming the lowest price in order to build cushion into the numbers.

... but yeah... a "pint" is anywhere from $5 to $10 depending on the beer. Loose Cannon IPAs are $6 I think around the city but something like a Palo Santo will run you a bit more.

If you want to start a nano, come to Japan! Craft pints run anywhere from 10 to 20 USD in Tokyo!

Don't mean to rag on any one's plans btw, the debt and risk are real factors. But keep in mind that the potential rewards will be directly proportional to the amount of risk you take on, whereas the amount of head- and heart-ache will be constant regardless of the size of your brewery

Beers
D

thanks for the info. I'll try to work with those numbers. I'll have to ask some local nano brewers too.

CnnmnSchnpps said:

whereas the amount of head- and heart-ache will be constant regardless of the size of your brewery

Beers
D

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... and I don't really agree with that. Given the size of our situation, we're basically limited to one batch per week given our fermentation set-up. I don't see the head/heart ache of having to brew one batch per week and maintain the brewery among three guys as being "constant" with trying to maintain a 7bbl start-up, with a massive investment and your livelyhood hanging over your head, forcing you to push out every keg you can for the bottom line.

I'm not just trying to argue with you... it is just as I keep saying though... people start businesses for different reasons under different philosophies and I don't see any of them as necessarily wrong... it is just what it best suited for that particular person.

No worries, best of luck with your plans!

Beers
D

Are you incorporating? If not, will ATF allow you register as a brewery under a general partnership (which is what you'll be unless you create some other kind of business)?

Im just going to say.... I wish I was going pro now! you guys are living the dream, keep us informed of your progress so maybe I can learn something from what you did and go pro in the future.

It all depends on who your customer is...if you are selling 100 barrels a year and it is all in your taproom you can make money. $60 for a sixtel is high for wholesale unless it is a specialty. So if you are wholesaling 300 barrels a year from the same nano, it's going to be a lot of work for very little money.

There is also wholesale bombers if you can self distribute.

Selling bombers for, say, $3.50 is a more profitable than a $60 or even $80 sixtel.

Hand bottling is a lot of work but so is cleaning kegs.

You are just increasing the workload, and thus making your time less valuable. Nanos can make it, but it is best to find a niche. You are not going to survive in a competitive market hand bottling bombers. The whole idea of going bigger is just simple economies of scale. You don't start an excavation company with a spade shovel and you don't open a bank with $10,000, it's just not worth your time. Now say there are certain niches that even those can fulfill, like maybe a small payday loan company or hand dug grave sites. It could be far fetched, but it could work, just like nano breweries. I've worked in a small (10 BBL) production brewery, and we moved a lot of product wholesale. At the end of the day though, it was the margin in the taproom that made the money.