Starting a Craft Brewery

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neckbone

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I know we have at least one member that's starting his own craft brewery. Is there anyone else out there that is doing more than just dreaming about it?

Personally, I'm starting my business plan and doing the numbers for it. Looks like it's not the best time to start one, with the increases in hop and grain prices, but I've found out that there's really no "Best Time" to start anything. You just have to research, plan, budget, get money, and have a few different backup plans for when plan A doesn't work. If all goes as planned, you guys will be able to belly up to a bar in SC by 2009 and order a neckbone special. :tank: :ban:
 
I have frequently had idle dreams of starting up a brewpub. My wife is a total foodie and loves doing local farmers market shopping, as well as we both love watching shows like Ramsey's kitchen nightmares, learning what is good/bad about running the kitchen side of a restaurant. I think the biggest piece of information that I've kindof gleaned from thinking about stuff like that is that it needs to be a business first and a brewery second. If you don't have any schooling on how to run a business, you should hire someone who does. You can focus on the 'making beer' part, and let someone else manage how to run the business.

I currently work in a car service shop, and we're probably the most profitable one in the area, and its because most shops are run by mechanics who started a business, not a businessman who started a mechanics shop. We have people running the show who have great business acumen and it lets us be successful, follow the same path with a brewery.

I think the thing that scares ME most about it is that the only way I'd do it is if I opened up a brewpub, not a brewery. Thats two businesses in one, a restaurant and brewery. yikes.
 
Best of luck! I'm creeping closer to having my own business (not beer related) up and running, but we've were 4 weeks from go-live for five months. Now we are a week away and have been for a month!

Most of what I've read says getting permits and licenses are the biggest source of delays in brewing.
 
Yeah, the permit thing is why I'm looking at around 18 months until first batch is kegged.

I've been running an insurance agency for the past 10 years. I'm pretty sure I can handle the business part of the brewery. So, I plan on hiring a head brewer to do the main beer part. Of course, I'll be assistant brewer doing all the grunt work too.
 
neckbone said:
Yeah, the permit thing is why I'm looking at around 18 months until first batch is kegged.

Have you been working with an attorney on this? Depending on what state you're in, we're a necessary evil to get through Byzantine alcohol regulations. :mad:

[I'm a lawyer, but not in this field. If you PM with your location, I'll check around and see if I can find someone in your area].
 
Interesting timing for the post. I was just revisiting my old idea of creating a part time brewpub. The permits and crap should cost about 2 grand (depending on what state you are in and a variety of other factors- some places are significantly cheaper). Now, here's what I'm thinking.

If you are in an unincorporated area, you can eliminate one level of liquor control licensing. For example, I'd hate trying to get a permit to run a bar in Chicago- Yikes! Anyway, so you stay in an unincorporated part of town. Just you and maybe a pair of 50 gallon conical fermenters. You brew your beer once or twice a week and bottle it and toss it into mini kegs and whatever else you've got lying around for containers. Then, 4 or 5 times a year you hold a big shindig and sell your beer in 22 ouncers for 2 and a half bucks a bottle.

It covers your cost, you make a modest profit, people drink your beer and get to know your product.

For servers, you hire a couple of local strippers to work for tips. Hey all they're doing is delivering beer.

Maybe you make a special batch in anticipation of the World Series or Superbowl.

For advertisement, you take out ads in the local paper.

Try to "run out" of beer three quarters of the way through every event. It makes your stuff seem desirable. So people get there early and leave early. Otherwise you'll have drunks passed out on your lawn.

If there is leftover beer, let word out that you'll sell it next weekend to the first comer. 75 cents per bottle. Face it, you're still turning a slight profit. Maybe not when your time is involved, but..

Another way to get publicity is to hold a homebrew competition. The winner will be brewed for the next shindig. So, in the Spring shindig, your competition is open to summer beers. In the Summer shindig, you have people compete with Fall recipes. The winner gets brewed. This gets a lot of beer snobs around and they can help get the word out.
 
Actually, I'm leaning towards a true packaging microbrewery, not a brewpub. I've been in the restaurant business years ago. I don't ever want to be there again.

My projections are looking at 3000 bbls the first year, and expanding to 5000-7500 within 5 years. I'll be doing 15 bbl batchs min for these numbers.

Being a homebrewer myself, I'm definately going to support the homebrewers. I plan on holding a homebrewing contest every year. Maybe something like Sam Adams by actually brewing and distributing the winner as a seasonal each year.

Dsean,
I have not actually talked to an atty yet, but do plan on using one to get through all the gov't red tape that you guys voluntarily deal with every day.
 
Sir Humpsalot said:
Interesting timing for the post. I was just revisiting my old idea of creating a part time brewpub. The permits and crap should cost about 2 grand (depending on what state you are in and a variety of other factors- some places are significantly cheaper). Now, here's what I'm thinking.

If you are in an unincorporated area, you can eliminate one level of liquor control licensing. For example, I'd hate trying to get a permit to run a bar in Chicago- Yikes! Anyway, so you stay in an unincorporated part of town. Just you and maybe a pair of 50 gallon conical fermenters. You brew your beer once or twice a week and bottle it and toss it into mini kegs and whatever else you've got lying around for containers. Then, 4 or 5 times a year you hold a big shindig and sell your beer in 22 ouncers for 2 and a half bucks a bottle.

It covers your cost, you make a modest profit, people drink your beer and get to know your product.

Depending on your state/county, this may not eliminate any of the ABC-licensing requirements, plus, you'd have to get a brewer's license since you're selling your beer off-premises.

For servers, you hire a couple of local strippers to work for tips. Hey all they're doing is delivering beer.

They're employees, you have to pay them a minimum wage and all that. They could be independent contractors, but they'd still have to be paid the minimum wage and paper work would have to be kept.


I like your idea, but sadly, there are way too many government regulations to do it legally. I say this not to criticize or anything, but more to highlight how ridiculous the patchwork of alcohol-regulations in this country is. Hell, if you're purely a homebrewer, you can't even sell your beer to the local bar without going and getting a license from the ATF, the state, and probably the country you're in. Then each will require you to have a surety bond, a ****-ton of insurance, and god knows what else. Oh, and local zoning laws probably won't let you brew for profit in your own home. Oh yeah, even of you wanted to GIVE your homebrew to a bar to sell, you can't without the federal and state licenses.

Okay, I'll step off my soapbox now.
 
neckbone said:
My projections are looking at 3000 bbls the first year, and expanding to 5000-7500 within 5 years. I'll be doing 15 bbl batchs min for these numbers.

Have you read this interview? http://lewbryson.com/talkvictory.htm

Seems to me they have a good approach to a lot of things, one of which is the idea that you use small equipment and run it around the clock. This allows you to make small one-off batches. Of course, their definition of "small" is 50 barrels. And they run it around the clock and make 4 batches a day.

It's an interesting read if you haven't seen it already.
 
Most importantly, let's suppose you get the paperwork in order and brew your first batch. Who's going to buy it? Do you have connections with bars or restaurants?

How long can you afford to operate at a loss?

Do you have a recipe that people love? Something award-winning that people outside your friends have determined to be great?

Do you live in an area that's got a good craft-brew market?

Why would I buy your IPA, when I know and trust Sierra Nevada IPA?
 
Cheesefood said:
Most importantly, let's suppose you get the paperwork in order and brew your first batch. Who's going to buy it? Do you have connections with bars or restaurants?

How long can you afford to operate at a loss?

Do you have a recipe that people love? Something award-winning that people outside your friends have determined to be great?

Do you live in an area that's got a good craft-brew market?

Why would I buy your IPA, when I know and trust Sierra Nevada IPA?

These are really some of the most important issues to address before considering something like a micorbrewery. Much of the legalize can be gotten to and handled, it's the marketing that's difficult.

Most people start off with a brewpub (or some other similar business such as homebrew store, brew-on-premises or contract-brewing), before moving onto a true microbrewry with it's own label. It's important to build up a significant local customer-base, prior to moving onto a full-scale microbrewery.

What's the market saturation for microbreweries in the area? What's your target audience (demographics) and does the surrounding area have a population big enough to support your business? Being a homebrewer, I think we're a great bunch, but it's not necessarily the best audience, since most of prefer our beer to someone elses, not that you shouldn't market to them.

And then, of course, there is distribution, which is a entirely new set of nightmares.

If you decide to go the brewpub route, remember: FOOD IS KING. You're first priority should be the food you serve.
 
DSean said:
Depending on your state/county, this may not eliminate any of the ABC-licensing requirements, plus, you'd have to get a brewer's license since you're selling your beer off-premises.
No, my point is that it is on-premises. Some may call it a "lawn". Others would call it a beer garden.

There still are the Federal, State, and County requirements. They will suck 20-40 hours out of your life each year. If it's taking longer than that, you should probably hire someone more competent to handle those aspects. Plus, you'll have to pay whatever you pay your accountant.

As for dealing with bureaucracy, I think people just worry about it too much. I have experience dealing with the EPA, City of Chicago, State of Illinois, IRS, Cook County, and numerous other entities. I have negotiated a settlement for a client with a liquor control law violation and in the process met a few very knowledgeable attorneys and got to know the laws pretty well myself. I also set up procedures to meet all City of Chicago, State of Illinois, OSHA and EPA guidelines for starting an automotive repair shop.

I flat out simply do not understand why people complain about bureaucracies. I've never had a problem in any of my official dealings. And I never saw a problem that took more than 10 hours to hammer out.

Nowadays, the thing about these kinds of bureaucracies is that all of the information you need is pretty much commonly available on the internet. Unless you're the type who is afraid of numbers, afraid of reading rules, or afraid of filling out forms, it's really not all that time consuming assuming you have your ducks in a row and are well organized and are willing to do the work yourself. I mean, how long would it take you to fill out your own IRS 1040? Most folks that I know spend DAYS on their own. They stress about it. Me? Mine is done in under an hour. That includes a schedule C. It's just not a big deal. But people spend more time b*tching about it than they spend doing it.

I know a guy who runs a meadery with minimal support staff. And I know folks (not personally) who somehow miraculously manage to run tasting rooms for their wineries. For as ridiculous as most regulations are, they have a raison d'etre. Figure out where the real interest lies and you can generally work yourself into the right cracks in the rules to get what you want to work out.

They're employees, you have to pay them a minimum wage and all that. They could be independent contractors, but they'd still have to be paid the minimum wage and paper work would have to be kept.
To hire someone 4 times a year, I most certainly would not hire them as an employee. Think about it. Have you ever heard of an employee who works 4 days a year? You'll pay them, issue a 1099-MISC at the end of the year and be done.


I like your idea, but sadly, there are way too many government regulations to do it legally. I say this not to criticize or anything, but more to highlight how ridiculous the patchwork of alcohol-regulations in this country is. Hell, if you're purely a homebrewer, you can't even sell your beer to the local bar without going and getting a license from the ATF, the state, and probably the country you're in. Then each will require you to have a surety bond, a ****-ton of insurance, and god knows what else.

The surety/insurance aspect is one which I am not too up on. however, I'm assuming it's based on your projected production volume.

Oh, and local zoning laws probably won't let you brew for profit in your own home. Oh yeah, even of you wanted to GIVE your homebrew to a bar to sell, you can't without the federal and state licenses.

As for brewing for profit from home, I'll tell you what I see when I drive to work. I see houses on main streets with bakeries on the bottom floor and an apartment up top. I see a confectionery which runs the same way. At least where I live, combined retail establishments and residences are frequently conjoined. And in college a friend lived above a bar.



But anyway, yeah. It's just a silly dream. I'm aware of that.
 
Sir Humpsalot said:
As for brewing for profit from home, I'll tell you what I see when I drive to work. I see houses on main streets with bakeries on the bottom floor and an apartment up top. I see a confectionery which runs the same way. At least where I live, combined retail establishments and residences are frequently conjoined.

No a problem at all, if you're zoned to allow a brewery. They could care less what you do with the office space inside of it. What they do care about is:

  1. Sales
  2. Sanitation
  3. Waste (environmental issues)
  4. Product (beer, not 'shine)
They could care less about just about anything else. As long as you're not selling to minors and you are reporting your sales, you're up to date on sanitation and pass health inspections, you are responsible about your waste and how you dispose of it, and that you're selling what you're permitted to sell, they are happy.

In fact, if you live in an area that's trying to boom, you might qalify for developmental tax breaks. You can talk to your Chamber of Commerce and see what they would do if you name your brew after the town.
 
Cheesefood said:
No a problem at all, if you're zoned to allow a brewery. They could care less what you do with the office space inside of it. What they do care about is:

  1. Sales
  2. Sanitation
  3. Waste (environmental issues)
  4. Product (beer, not 'shine)
They could care less about just about anything else. As long as you're not selling to minors and you are reporting your sales, you're up to date on sanitation and pass health inspections, you are responsible about your waste and how you dispose of it, and that you're selling what you're permitted to sell, they are happy.

In fact, if you live in an area that's trying to boom, you might qalify for developmental tax breaks. You can talk to your Chamber of Commerce and see what they would do if you name your brew after the town.

Exactly. When you break it down, that's all it comes down to. Just bearing in mind that there are multiple governmental levels there to deal with.

But no, don't call it a brewery, call it a brewpub. or microbrewery. Different states have different names. In some states even the term "microbrewery" is reserved for businesses making rather large batches. But oftentimes, there's also a niche for businesses that make tiny quantities. In some states it must be incidental to the sale of food. Other states are less picky.

And of course, you must be clean and such, but I've never heard of any requirements that a business be open any certain number of days each year...
 
Sir Humpsalot said:
No, my point is that it is on-premises. Some may call it a "lawn". Others would call it a beer garden.

There still are the Federal, State, and County requirements. They will suck 20-40 hours out of your life each year. If it's taking longer than that, you should probably hire someone more competent to handle those aspects. Plus, you'll have to pay whatever you pay your accountant.

As for dealing with bureaucracy, I think people just worry about it too much. I have experience dealing with the EPA, City of Chicago, State of Illinois, IRS, Cook County, and numerous other entities. I have negotiated a settlement for a client with a liquor control law violation and in the process met a few very knowledgeable attorneys and got to know the laws pretty well myself. I also set up procedures to meet all City of Chicago, State of Illinois, OSHA and EPA guidelines for starting an automotive repair shop.

I flat out simply do not understand why people complain about bureaucracies. I've never had a problem in any of my official dealings. And I never saw a problem that took more than 10 hours to hammer out.

Nowadays, the thing about these kinds of bureaucracies is that all of the information you need is pretty much commonly available on the internet. Unless you're the type who is afraid of numbers, afraid of reading rules, or afraid of filling out forms, it's really not all that time consuming assuming you have your ducks in a row and are well organized and are willing to do the work yourself. I mean, how long would it take you to fill out your own IRS 1040? Most folks that I know spend DAYS on their own. They stress about it. Me? Mine is done in under an hour. That includes a schedule C. It's just not a big deal. But people spend more time b*tching about it than they spend doing it.

I know a guy who runs a meadery with minimal support staff. And I know folks (not personally) who somehow miraculously manage to run tasting rooms for their wineries. For as ridiculous as most regulations are, they have a raison d'etre. Figure out where the real interest lies and you can generally work yourself into the right cracks in the rules to get what you want to work out.


To hire someone 4 times a year, I most certainly would not hire them as an employee. Think about it. Have you ever heard of an employee who works 4 days a year? You'll pay them, issue a 1099-MISC at the end of the year and be done.




The surety/insurance aspect is one which I am not too up on. however, I'm assuming it's based on your projected production volume.



As for brewing for profit from home, I'll tell you what I see when I drive to work. I see houses on main streets with bakeries on the bottom floor and an apartment up top. I see a confectionery which runs the same way. At least where I live, combined retail establishments and residences are frequently conjoined. And in college a friend lived above a bar.



But anyway, yeah. It's just a silly dream. I'm aware of that.

It's a dream a think a lot of us share, so I wouldn't call it silly.

As for the bureaucracy discussion, it really depends on where you are. Here in Georgia, it's damn near impossible to open up a bar these days (especially in Atlanta) because of the bureaucracy and zoning issues. Other places, probably a lot easier. Other places, a lot worse [In Alabama, for instance, you can't have a true brew-pub unless the county that you are in allowed for them before prohibition].

Anyway, if you're curious about checking out some of the hoops that have to be jumped through for the alcohol industry, check this site out:

*edit: site removed - was more of a sales pitch. My bad - Sean
 
As said above, it all depends on your area. I have a lot of experience with the alcohol laws here in NJ (I have worked in the industry and my father owns a bar/restaurant). There is a ton or red tape, and permits can be very expensive. Once you start reading some of the laws, you realize just how rediculous some of them are, going as far as to where alcohol can be placed your store and where your cash register needs to be in relation to your packaged goods. It is truely unbelievable. In some states permits to serve alcohol are cheap. In NJ they are limited based on town population and sold as private property (like selling a house). Depending on the town prices can fetch anywhere from $100k to as high as $1million.

I just read Brewing Up A Business, by Sam Calagione (founder of Dogfish Head). Although I found the book more of a philosophical approach to how he started his business (rather than a how to guide, with financials and permiting info) it was still a good read. He is very passionate about his product, and you can see that in his writing. I would recommend it to anyone who wants to start a beer related business, or those of us who just dream about it.
 
this is a great thread. my long term goal is to start a brewery. the only thing thats holding me back is learning the process. i've never brewed beer before, but watched someone do it one day. thats what got me thinking.

i live in a very local oriented town and it would be a slam dunk. i have 3-4 connections in the local bars, we're a big bar town of about 10-15, and getting my foot in the door of 25% of them isnt a problem at all.......

the problem is, can i brew a beer that tastes good that the 22-28 year old crowd would like? everything else is in place to be a winner
 
udt89 said:
this is a great thread. my long term goal is to start a brewery. the only thing thats holding me back is learning the process. i've never brewed beer before, but watched someone do it one day. thats what got me thinking.

i live in a very local oriented town and it would be a slam dunk. i have 3-4 connections in the local bars, we're a big bar town of about 10-15, and getting my foot in the door of 25% of them isnt a problem at all.......

the problem is, can i brew a beer that tastes good that the 22-28 year old crowd would like? everything else is in place to be a winner

Oh my god, scuse me.....:)
 
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