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

[betarhoalphadelta]

One question for anyone who wants to do this -- What's your differentiation strategy?

So you're a good brewer. You've got some tested recipes that taste good. You know what? So does everyone else. You have an awesome IPA? So does everyone else. The American craft beer market right now is *INCREDIBLY* crowded. Brewing great beer with great execution *should* be enough to succeed, especially if you're working at the brewpub level and can generate some volume and sell your own. But as a nano? Unless you can develop a cult following for your beer, you're likely to be in trouble, and unless your beer is unique, you're not going to do that.

As an example, look at The Bruery. Patrick [& Tyler] had been a member of my homebrew club prior to starting professionally. They absolutely blew up from nothing in 2007, when they were still building the place, to today. How did they do this? By offering unique beers that you can't find anywhere else. And it was perfectly timed for the craft beer market, because it was just at the point where the "extreme beer" craze had hit. They make excellent beer, to be sure, but I firmly believe that their commercial success is due as much to the uniqueness as to the quality.

Like a lot of homebrewers, I have that thought in the back of my mind of "hey, maybe I could do that too!" But their style of brewing isn't my style of brewing. I mostly brew classic styles of beer. I think the quality of my beers is high, but I don't think there's much differentiation there, with the exception of the fact that I brew Gose and milk stout, which are two harder-to-find styles. But a good hefeweizen and an above-average IPA isn't going to be enough to get you noticed and to grow in size as a brewery in the crowded market we've got, you need differentiation.

 

[Phunhog]

You bring up a lot of great points but I don't know if differentation is necessarily a good thing. Some guys in my HBC want to start a nano that only brews barrel aged sour beers. I would venture to say that the vast majority of beer drinkers (BMC and craft) don't enjoy sour beers. So as a business I would think it would be incredibly hard to sell something that the majority of beer drinkers don't enjoy. Even you make really, really great sours the market is so small that to make any money you are going to have to really set your price point really high.

 

[OldWorld]

Prove us all wrong and do it...Remember Kurt and Rob sold cloudy beer that was said to be bad because of haze...now look where they are.

 

[onthekeg]

You bring up a lot of great points but I don't know if differentation is necessarily a good thing. Some guys in my HBC want to start a nano that only brews barrel aged sour beers. I would venture to say that the vast majority of beer drinkers (BMC and craft) don't enjoy sour beers. So as a business I would think it would be incredibly hard to sell something that the majority of beer drinkers don't enjoy. Even you make really, really great sours the market is so small that to make any money you are going to have to really set your price point really high.

Jolly Pumpkin does okay I think.. I agree though.:fro:

 

[BrewKnurd]

Jolly Pumpkin does okay I think.. I agree though.:fro:

Yeah, with 15 dollar bombers... That would be the really high price point that was referenced. if you can make a beer good enough to charge 15/bomber, then yes you can have success marketing to a niche market.

 

[red96jeep]

One question for anyone who wants to do this -- What's your differentiation strategy?

So you're a good brewer. You've got some tested recipes that taste good. You know what? So does everyone else. You have an awesome IPA? So does everyone else. The American craft beer market right now is *INCREDIBLY* crowded. Brewing great beer with great execution *should* be enough to succeed, especially if you're working at the brewpub level and can generate some volume and sell your own. But as a nano? Unless you can develop a cult following for your beer, you're likely to be in trouble, and unless your beer is unique, you're not going to do that.

As an example, look at The Bruery. Patrick [& Tyler] had been a member of my homebrew club prior to starting professionally. They absolutely blew up from nothing in 2007, when they were still building the place, to today. How did they do this? By offering unique beers that you can't find anywhere else. And it was perfectly timed for the craft beer market, because it was just at the point where the "extreme beer" craze had hit. They make excellent beer, to be sure, but I firmly believe that their commercial success is due as much to the uniqueness as to the quality.

Like a lot of homebrewers, I have that thought in the back of my mind of "hey, maybe I could do that too!" But their style of brewing isn't my style of brewing. I mostly brew classic styles of beer. I think the quality of my beers is high, but I don't think there's much differentiation there, with the exception of the fact that I brew Gose and milk stout, which are two harder-to-find styles. But a good hefeweizen and an above-average IPA isn't going to be enough to get you noticed and to grow in size as a brewery in the crowded market we've got, you need differentiation.

^^ what this guy said. There are more breweries operating in this country then ever before at any point in history according to the BA. According to the BA there are also thousands of breweries planning to open in the next calendar year. You have to create a niche for your product. Nano brewing (brewing on a scale less then 3bbls) for production is highly inefficient. Most breweries that produce beer sell a half bbl keg from 80-100 bucks to a distributor. Unless you have world class beer that can compete and best the perennial winners at GABF and WBC, you cant sell beer much higher then that regardless of the quality. This is why such a small production model is tough to run, you physically cannot brew enough beer to make it profitable, and you quickly realize you need to upgrade your system to a real 10, 15, or 20 bbl brewhouse. This requires substantial investment and defeats the purpose of a nano brewery to begin with.

You would most likely have the most success with a system that small being able to sell on premises where your margins are well over 400% But to do this you most often have to be classified as a "brewpub" and have food, unless you are in a state that allows you not to do so, food means running a restaurant as well which is a whole other bag of worms. Even then if you experience any success you'll still be looking to upgrade your brew system. DFH started brewing on a half bbl sabco system, brewing many times in one day 7 days a week. There is a reason they no longer use that system.

The brewing industry is about growth, grow or die. It is smarter to start with a larger system and grow into it then buy small and have to rebuy a year or two into the business just to stay afloat. If you look into a small brewpub, you have to draw a crowd by creating a niche through beer style, atmosphere, or other factors.

 

[kaconga]

I have been inside a nano brewery where the guy was doing 10 gallon batches. I marvelled at his largely empty brewing room and asked what kind of yeast he used. He said "mostly dry" and held up a couple packets of what looked like us-05. He definitely started for less than 10k but who knows how long he will stay open. Just because it can be done doesn't mean it is the best idea. The beer was ok but not special and the price point was a bit high. 3 New brewers starting up within 15 miles of him, if he survives the winter I will have to give him another try.

 

[user 98891]

There is an amazing brewery near my house that has a 1BBL system. They have to brew almost everyday of the week to meet demand. It's damn good beer too.

 

[ktblunden]

You would most likely have the most success with a system that small being able to sell on premises where your margins are well over 400% But to do this you most often have to be classified as a "brewpub" and have food, unless you are in a state that allows you not to do so, food means running a restaurant as well which is a whole other bag of worms. Even then if you experience any success you'll still be looking to upgrade your brew system. DFH started brewing on a half bbl sabco system, brewing many times in one day 7 days a week. There is a reason they no longer use that system.

I agree that a sell on premises facility is pretty necessary, but I don't think it has to be a brewpub. A new brewery just opened with a taproom a couple miles away from me and they have a nice setup and excellent beers. They've teamed up with some local food trucks to have food available most days they're open, plus there are a number of fast food places right around the corner that you can grab a to-go order and bring to the taproom to eat. Their margins are pretty low given that they're renting an industrial space and not dealing with food preparation at all.

EDIT: Though their system was surprisingly small, so I'm sure they'll be upgrading pretty soon.

 

[Denny]

There is an amazing brewery near my house that has a 1BBL system. They have to brew almost everyday of the week to meet demand. It's damn good beer too.

To me, that would be taking a fun hobby and turning it into wage slavery.

 

[red96jeep]

I agree that a sell on premises facility is pretty necessary, but I don't think it has to be a brewpub. A new brewery just opened with a taproom a couple miles away from me and they have a nice setup and excellent beers. They've teamed up with some local food trucks to have food available most days they're open, plus there are a number of fast food places right around the corner that you can grab a to-go order and bring to the taproom to eat. Their margins are pretty low given that they're renting an industrial space and not dealing with food preparation at all.

EDIT: Though their system was surprisingly small, so I'm sure they'll be upgrading pretty soon.

Your right, I only said brewpub because in my state you have to be classified as a "brewpub" to sell pints of beer. In Maryland liqueur laws are county by county so in some counties a brewpub does not need a kitchen, in others you have to have a food requirement to sell pints of beer.

 

[ktblunden]

Your right, I only said brewpub because in my state you have to be classified as a "brewpub" to sell pints of beer. In Maryland liqueur laws are county by county so in some counties a brewpub does not need a kitchen, in others you have to have a food requirement to sell pints of beer.

Ah, got it. One of the (very few) things California gets right is laws generally very friendly to small breweries.

 

[rico567]

We have a local startup nano that acquired a building last Fall, and they are still not done satisfying all the bureaucratic requirements. There are three guys, each with a piece: a brewer, a marketer, and a lawyer. They've put together a startup / pilot rig of 2 bbl., and plan to make a quantum leap from there once there is a demonstrated market in this area. They are self-distributing under the new law in IL, and have a tasting room in the same building as the brewery. This strikes me as well planned, well thought out, and I think it has a good chance of success. But they raised several times the amount mentioned in the OP, just doing a Kickstarter- quite apart from whatever other capitalization they may have. I realize that there are some states that may let you brew in your basement, but this isn't the 1990s when outfits like New Belgium and DFH started up. And, yeah, Jim Koch of Sam Adams fame was successful, but his rich father invested in Boston Brewing to make it happen.

I endorse the posts that say to do a business plan. Also see a lawyer.

 

[Phunhog]

To me, that would be taking a fun hobby and turning it into wage slavery.

I think I am already there.... I brew a lot and give a lot of beer away to friends. Which means it pretty much takes up the majority of my free time. Every day off I have some brewing related stuff too do. Today I stepped up a yeast starter, cleaned up a jockey box, cleaned fermenters. Tomorrow I brew. The next day off I bottle a bunch of beer and fill out comp entries. I am operating on the 10 thousand hours principle...which essentially says that to master something it takes 10 thousand hours. At this rate I should be a master in another 20 years or so