10k USD to start a home brewing business. Possible?

[evrose]

Always nice to have a holes around. YOU are so worried about how people spell!!!!!! Does it make a difference ?

Only if you want people to take you seriously.

 

[NervousDad]

The brew magic system that Sam got started on is now ($7,000 + with shipping.) He said he had to turn out three batches a day, so you're looking at $200+ a day in just your base cost, doesn't include rent, insurance, lost beer due to infection… etc…
Working on such a small scale would require you to have a bunch of smaller fermentation vessels for each batch that you’ll do. You’ll need kegs, kegs washers, bottling equipment, fermentation temp control. The list just goes on and on.

I think dogfish already had a very rich family and had a lot of help to get his brewery off of the ground. It's not as easy to get a loan like it was back then.

Sabco does make a 2 bbl system but it will cost a lot more than 10k.
https://brewmagic.com/blog/nano-magic-by-sabco-2-bbl-rims-brewhouse

 

[ReverseApacheMaster]

I guess I can see how you get $10k into a batch or two of a contract brew but I don't see how you reach sustainability with that model, let alone profitability. Sure, you can get the beer packaged but then what? It seems much harder to get accounts with bars or bottle shops if you only have one or two runs of your beer than a stable brewery or at least stable output. If you burn through your cash then you have to sell enough beer to have the money to start another batch and then wait for that to make it's way back to you. This is impossible in a state like Texas where the tiered distribution system controls but it also seems challenging in a state that allows you to self-distribute or at least distribute direct to retailers.

I hear that there are some breweries that produce beer entirely by contract and have no physical location, so it is a feasible model.

 

[onthekeg]

I guess I can see how you get $10k into a batch or two of a contract brew but I don't see how you reach sustainability with that model, let alone profitability. Sure, you can get the beer packaged but then what? It seems much harder to get accounts with bars or bottle shops if you only have one or two runs of your beer than a stable brewery or at least stable output. If you burn through your cash then you have to sell enough beer to have the money to start another batch and then wait for that to make it's way back to you. This is impossible in a state like Texas where the tiered distribution system controls but it also seems challenging in a state that allows you to self-distribute or at least distribute direct to retailers.

I hear that there are some breweries that produce beer entirely by contract and have no physical location, so it is a feasible model.

Here in MN we can self distribute. I have 3 bars that will have kegged beer and the rest will be sold regionally, (all within MN) currently. The money from the first batch will finance the 3rd batch, so there will be a little more than 10k invested for the first month or two, but that will taper off if sales go well.

I am just doing it the opposite direction that most do it, where they start with brick and mortar then try and get their brand established. I will go the brick and mortar when it becomes feasible.

 

[Denny]

According to this http://probrewer.com/vbulletin/showthread.php?t=24441, running a nano brewery is no money, no fun, but somehow rewarding anyway. Read it.

 

[PIGMAN]

Subd I'm looking into it also but in ny. I found a building for $10,000 rent for the yr ($833 mo). I figured start with either 1bbl or if I can get money 3.5 bbl. Brew like 5-7 times a week. If its 1bbl n I sell 750ml bottles . U get about 165 bottles from 1bbl. Most places sell that size beer around here from $7-10 ea. So let's say I sell for $5 ea. 165 x $5. $825 for that 1bbl batch. Minus cost. I would say around $325 at most. So a profit of around $500x5(times a week) is $2500 week x4 weeks is $10,000 mo. I'm sure u can still make a decent profit out of that after all cost. Am I right?

I believe that NYS requires a distributor, and that cuts into the profit.

 

[integra93ls]

I believe that NYS requires a distributor, and that cuts into the profit.

Yes but that's why I said sell for $5 a bottle. There is still $2-5 more profit they can make on each bottle.

 

[Darwin18]

I'm putting together a business plan of my own for a microbrewery here in North Carolina and $10,000 is not even close to covering costs. You need to factor in construction costs (drains, venting, electrical work), permitting, zoning, and licensing before you can even think about the production side. A 1 BBL or 2 BBL system might seem large to a homebrewer but on the production side it's tiny. Sure you could brew 3 times a day 7 days a week, but when are you going to be package, selling, and distributing your beer? If you are successful, how are you going to handle increased demand? You can't add more hours to the day....

I'm not trying to rain on your parade, but if you are going to do this seriously (and you want serious answers) then you need to do a business plan. Or at least start one and see where it takes you.

 

[TyTanium]

Unbelievable. Are you really debating if he's a jerk on the internet? Grow up. It's the internet. If your feelings are hurt, well, I don't know what to say. I'm sorry. It's the internet.

Oh, and I'm a banker, and spelling does matter. And use at least a 50% discount rate on cash flows...tell me if you're profitable now. Only way to make it work is equity. You're operationally leveraged out the wazoo, so financial leverage is disaster, IMHO.

EDIT: Denny's link is a must read. If you enjoy it, go for it. If you're doing it as an investment...might think twice.

 

[integra93ls]

I think you can for close to $10,000.
You can get most of the equipment for around $3000 that's your new stand,pots,pumps,etc. You could get some plastic fermenters for around $200 ea. So maybe another $1500 for around 7 fermenters. RSent for a place (I found a place for $833 mo) not permits. Ttb cost $0 just have to get a brewers bond. Now ny state the annual fees cost less then $1000 for everything u need. And to start a corp around $300. So that's around $6600 and u have about $3400 left for odds and ends n unexpected stuff. So I think if u put the work into making the stand n putting everything together yourself u can save a ton of money.

 

[BrewKnurd]

Yes but that's why I said sell for $5 a bottle. There is still $2-5 more profit they can make on each bottle.

I encourage you to go talk to folks on probrewer.com. I think you will find that your expected profit margins on bottles are wildly excessive.

 

[integra93ls]

I encourage you to go talk to folks on probrewer.com. I think you will find that your expected profit margins on bottles are wildly excessive.

Still a profit at $3 a bottle just not as much.

 

[BrewKnurd]

Still a profit at $3 a bottle just not as much.

I think you will find 3 a bottle a wildly excessive estimate as well. The consistent message from successful brewers is that it is very hard to make money in retail.

 

[Yuri_Rage]

Knock off the name calling and bickering. First and only warning. Next offense will lead to a 3 day ban plus thread closure. Enough!

 

[jbeukelman]

Here's a link from Oregonlive which interviews several nano breweries: http://www.oregonlive.com/mix/index.ssf/beer/nano-breweries-put-great-care-into-little-batches.html

There are links to others at the bottom of the page. They might be helpful if you contact them.

I've done a lot of research on this subject, and it seems to me that the people who think it costs 200k+ are assuming that you are opening up a brewpub. Serving beer on tap, food, with a brick and mortar building. They usually quote construction costs in that 200k budget they mention. If that's the case, then yes, 10k won't even pay rent for a year.

If you are looking to brew beer in your garage, and distribute it yourself (btw, OR and WA allow you to self distribute) than 10k is feasible. You will have to keep your day job, and you'll likely brew everyday. The Internet is full of stories about breweries who started with 1bbl and upgraded to 3, then 7 then 15, etc etc. It can be done. It's a lot of hard work though.

If you plan to sell bottles, don't forget about all the extra work that goes into that. You'll be filling and labeling bottles by hand, unless you want to spend 20k on a used automated bottler.

I once looked into going the keg route. My Pale Ale recipe would cost around $50 a keg. Micro brewery kegs sell for around 130-150 (see: http://www.maletis.com/beer-dock-sales.php) So let's say a keg cost me 75, I could still sell it for 130 and make some decent $$.

Run the numbers. Shop around. Look for used equipment. Think of EVERYTHING and EVERY possible scenario. Write up a business plan. If it still looks good. Go for it!

--cheers

 

[Darwin18]

I think you will find 3 a bottle a wildly excessive estimate as well. The consistent message from successful brewers is that it is very hard to make money in retail.

Agreed 100%. To the OP, check out probrewer. They have a lot of online resources, guides, and a forum that is a ridiculous resource for professional and want to be professional brewers.

There are business plans for breweries floating around the internet. I'd take a look at a couple if I were you and see what you find. You may find a lot of information and costs that you hadn't expected. I hope you do it and are successful!

 

[Pono503]

Funny I stumbled upon this post. I live in Portland, OR and am in the process of all this now. I am into it for a while and I can tell you that $10,000.00 is not enough money. Not even for a small 1/2 bbl brewmagic system which is what I have. Feel free to PM me if you want to talk more. There is also an article in next Friday's Living section of the Oregonian that I am interviewed in that explains alot of the pains involved with it. If you are a member of the OBC, find me at the next meeting.

 

[SweetAmmonia]

Very nice Pono. I noticed your PM before I viewed the forum and saw your post. I'm not a member of the Oregon Brew Crew, but would be interested in checking out. Like I said I'm in the very early stages of this, mainly just asking questions and building a network of people I can talk to. Who knows, maybe I can find a few passionate people with money and the know how and we can all work together. Anything is possible with the right strategy. I just thought this forum was/is a great place ask questions.

 

[Pono503]

SweetAmmonia, the OBC hold monthly meetings at FH Steinbart's and will have a booth at the Oregon Brewer's Festival if you want to learn more about them.

 

[Boy]

I think OR is fairly well set up for smaller breweries and I am also doing some research on nanos. I really believe you could launch one for 20k in the right area with the right equipment and a few hook ups. Up by Mt Hood the area is classified as open zoning so things are a little more lax. We also have 13 bars/restaurants, 2 gas stations, and 1 grocery store with a massive beer selection(especially 22s). The bars also sell 22s. So if you found a cheap garage or shed to rent, skipped buying kegs and only bottled 22s, got a small labeler for around $200, and self distributed you could probably start small and fairly cheap. Plus it's a tourist area where local things can be pushed harder. This would however be more like a proof of concept instead of a full blown end game. But if you planned to only stay in the local area and exploit everything available you might see a decent profit. I believe this is why so many nanos are able to do well in so many small towns in OR.

Hook ups and cheap would be little things like making your on stand and system with a friend who welds or can get cheap metal. Building a cold room like John Beere. Find a good house yeast that will work with all of your beers at the same temp so the cold room can do the work of expensive glycol systems. Making inductor tank fermenters like Hess. Having Major malt/hop distributors within driving distance. And as always, Craigslist.

Granted a lot of this is still INCREDIBLY inefficient as far as labor. But it's a labor of love. It's a lot easier to recover from failing small than blowing 250K.

 

[Boy]

Forgot one last item but remembered after reading about Gordie. Background job. I work 40 hours in three days doing over nights. Gives me 4 days off to brew and numerous hours over night on the internet to do research and work on recipes. The 9-5 is probably not ideal to trying to brew on the side and start a brand.

 

[Phunhog]

Honestly I think that without a taproom the nano idea has very limited viability. I follow Healdsburg pretty closely on FB and it looks like he is only in two bars on a regular basis. I am guessing that with a 1 bbl system that is about what you could support. A tap room is where the money is being made. Once I realized that I have backed down from starting a nano in the immediate future. It just doesn't make financial sense to spend the time/money making beer but let someone else make the "big" money selling pints to the consumer.
In the meantime though I would suggest just getting your name and beer out there. I give away a lot of beer for other people's functions. It gets me a lot of positive exposure!! People just love to hear about some guy brewing really good beer out of his garage. I also have t-shirts that I sell to help cover the costs of the beer. I tell people that I can't legally sell beer but if you do like the beer to please consider buying a t-shirt. It's a win/win/win!! People get free beer, I sell some shirts that pay for at least some of my costs, and I get the exposure when people wear their shirts around town.

 

[Pono503]

I would 100% agree with the last comment on needing a tap room/tasting room. You will find it may be your only business until your name gets out there and are established as well as a tasting room will actually pay for your rent/lease on the building usually if done right. the profit margin on selling your own beer by the pint is much greater than selling it by the keg too. Just to give you a heads up, a bottom level keg washing system starts around 8 to 10 thousand so take that into consideration.

 

[red96jeep]

In maryland a brewery license costs 4k alone, and has to be renued yearly. Look into a business plan, price things out, see if you can do it. In my opinion "nano brewing" is a waste of time and money, you will never be able to produce enough volume to become profitable. 10k might be close to starting a homebrew store though.

 

[Pono503]

So I probably shouldn't share this but after a few IIPA's, what the hell. In Oregon, here is a break down of the costs. Insurance will run between $1,500 to $3000 a year approx., bonding is only about $200. For Workers comp, you will need to pay $3.60 per $100.00 payroll on a brewer, $.80 per $100.00 for outside sales guy (self distribution), $1.70 per $100 for tap room. No application fee for TTB, OLCC is $250.00/year for license code BP or $500/year for license code BRW & BRWNC plus and additional $2.60 per server. Oregon State Business license will run at different costs depending on how you register your business (ie: LLC, corporation, etc.) Keep on mind, on top of this you will need to pay your rent/lease on the building, renovation costs, costs to meet health code regulations, etc. Now once you are up and running you need to pay the man which means federal and state. State taxes are approximately $2.60 per barrel. I have lost the information on federal but it is easily found if you research it. So just to give you an idea, your start up costs not including equipment is easily going to surpass the 10K range. I will repeat what alot of guys have said already. If you want to be successful, get your business plan done and go from there. I am probably on the 20th revision to mine already just to get financials in order. The preparation work will take just as long and be just as hard as it will once you get things physically going. I guess if I was to give any advice it is to make dang sure this is something you really want to do for a living (meaning eat, sleep, breathe beer) before you do it. If you don't want the headaches, just make great beer at home and share with friends.

 

[Jaybird]

Thought I would post a little write up from Andrew.
Enjoy the read.....

Cheers
Jay

I've operated Parish Brewing Co. for over 2 years now, furiously brewing a nano-amount of beer. I get several emails every week from aspiring nano-brewers from all over the country and they all have the same questions about my experiences, my custom equipment, and other general info about starting a tiny commercial brewery. If the probrewer community would humor me, I'd like to use this as a place to get some FAQs documented since I cannot answer all of the emails I get with the full respect and well thought-out answers they deserve. Hopefully this can help some of you daydreaming out there get some answers. Some of these answers may not be what you want to hear, but they are based in fact and my actual experience. I know I would have appreciated some of this info before I embarked upon the nanobrewery path.

1.) Nanobreweries are not profitable. Well, at least if you have to sell at wholesale. The only way a nano can be in the black is if you can sell most or all of your production at full retail price. Even then the return will not justify spending the capital required to get it going. A nano will never, ever make enough profit to pay for organic growth of the brewery. Period.
1)(b) On the other hand, a nano is a great vehicle to get the investment needed to finance a viable craft brewery. In my opinion, that is the only rational reason to go through all of the trouble to build and operate a nano. If you do not have a plan to finance a viable larger operation, don't build a nano. The nano can be used to show real revenue and cost structure in your market, and can be extrapolated to any project size from there.

2.) You can use cheap equipment, like plastic fermenters, and make great beer. They will not last very long, and you have to be seriously anal-retentive about taking care of them and sanitization, but they work. I used some stainless drums found on craigslist for the brewhouse, etc. There are some creative ways to make brewing equipment in the 50 to 150 gal size range and don't be afraid to try something new. I mean, some of the finest brews in the world are fermented in a wood container. Think about that the next time you drool over that cherry, stainless jacketed conical fermenter that probably costs more than my entire brewhouse and cellar combined. Also, most of the money you will spend getting the nano going will not be on brewing equipment. The cost of kegs, walk-in cooler, operating capital, etc will all be likely more than 50% of your total startup cost.

3.) Save your money for another year or two and buy something bigger. Seriously, this is the best advice I can give. If your beer is halfway decent, you will sell way more than you can ever produce on a nano system. You will bust ass like you've never busted ass before and it will still not be anywhere close to being enough beer. Trust me. If your beer is good you will need more than a nano. If your beer isn't good, you probably wouldn't be reading this. Simply put a nano produces a painfully small amount of beer. Save your money for another year or two, get something at least bigger than 7 bbl brew length, and then send me a case of your finest when you realize I was right.

4.) Permitting is a bitch. There are lots of government agencies, and they all want a piece. Get used to it. You get no special treatment because you are a tiny, low cost operation. If they want you to put covers on your fluorescent lights, you better be ready to shell out for that manlift rental. Start talking to your respective agencies as early as possible. There is no best way to start, there is no road map. Every professional brewer on this forum has had to figure it out on their own, unfortunately. Go forth. Be brave. Approach your various govt agencies, be polite, and you will eventually get all of your permits and licenses in hand.

5.) Operating a nano every day isn't very fun. It makes a really fun hobby a painful job - a 2nd job that you work on the evenings and weekends. I know it seems like fun now. You need to have some serious stamina to keep up the pace required to work a day job and also the nanobrewery. I have a huge amount of respect for any of the other nano owners out there who have made it work. They will never get the credit they deserve from most of the craft brewing community for the pain and sacrifice it takes. Just because its a small brewery doesn't mean its any less work than a larger version. I only recently quit my day job to focus on our new large brewery, but until then I worked every weekend for over 2 years. Think about that for a minute. No more fishing. No Saints games. Countless hours of time lost with my toddler daughter and wonderful wife. Whatever you love to do beside brewing and drinking great craft beer, it will probably have to go on the back burner.

6.) It is incredibly rewarding to brew for a living and to hear someone say they love your beer - and that's totally worth all of the bull**** noted above.

Cheers!

__________________
Andrew Godley
Parish Brewing Co.
Broussard, Louisiana


--------------------------------------------------------------------------------

 

[ktblunden]

That's a great writeup. Thanks for sharing, Jay.

 

[Denny]

That's a great writeup. Thanks for sharing, Jay.

Guess you didn't click the link I posted....

 

[ktblunden]

Guess you didn't click the link I posted....

You're correct. I generally don't click on links unless I'm actively looking for information, which I wasn't in this case. But thanks for posting the link, it's great information, regardless of who posted it first.

 

[the_bird]

I hear that there are some breweries that produce beer entirely by contract and have no physical location, so it is a feasible model.

We went to a place up in the Finger Lakes a couple weeks back that did that. The beer happened to be atrocious, which is probably not going to be the case with every contract brewery but if you don't have the ability to quality control, that might prove to be an issue.

But, something like that is probably the only way to possibly get off the ground for those kinds of dollars, given the lawyers that you'll have to pay and the equipment that you'll have to buy and rent to be paid up-front and ingredients to be bought and everything else - and no cash coming back through the door for months.

So, I would probably look into contract brewers, but then it's a question of trying to get your beer sold!