Failure to Launch a Brewery

[mcamera]

That's what makes it so interesting to visit new breweries for me. Some are very flashy but have mediocre beer, while others have very basic roots and make great beer. I live in Columbus, Ohio now and there were only 5 breweries open back in 2011. At the end of 2016 we had 40 breweries and I've heard of 5-6 more that are in planning! Soon we'll be the Portland of the Mid-west haha. Portland, Oregon has about 80 breweries.

 

[mcamera]

Thanks for giving it a read! It's still in the back of my mind, so we'll see what the future holds.
Cheers!

 

[dyqik]

Yeah, it's much less likely with residential zoning, I suspect. This was a change in the terms of the business/commercial/medical district zoning rules, and Massachusetts' definition of a farmer-brewer license helped as well, as it provides a pretty tight restriction that rules out a simple bar with no food selling liquor from a third party type operation.

 

[brian]

Thanks for sharing your instructive story! I think that ‘entrepreneur's drive’ winks at all of us home brewers at some time or another, and turning our hobby into a living has a lot of appeal. When I go to a brewpub and watch those guys at work, it seems like more fun and purpose than my office job. I have temper that with what I know – here in Cincinnati we’re saturated with craft breweries of every size, and a lot of brewing talent besides. Your article reminds me to be content for now with keeping a hobby as a hobby.
I’m glad to hear you got as far as you did, and got out when you did (for now anyway)…good lesson that simply being in a different locale can make a huge difference in legal compliance and the market - and that has to be part of one’s planning! Sounds like the dozen or so of regulators who got involved were not overly onerous. That dooms a lot of small businesses (a ‘helpful’ bureaucrat is not as good as ‘supportive’, but way preferable to ‘hostile’)
PS your story reminded of one on Slate a few years back – a couple opening up a coffee shop, and the reality turned out to be much more work than the idea. they didn’t get out in time...and apparently only thing that saved their marriage was going out of business :-D
http://www.slate.com/articles/life/a_fine_whine/2005/12/bitter_brew.html

 

[OneMorePint]

I laughed way too hard at this comment

 

[hopularkid]

Yea, distill instead of brew beer because you don't need chilling, tanks, space, etc. Sounds like you got it all figured out! hahaha!

 

[mcamera]

I've heard the same thing, that 7bbl is generally the smallest you want to go for a sustainable business. As you pointed out, there's definitely a better margin on selling your beer directly vs wholesale which can help make a smaller setup more reasonable even if it's not as efficient as a larger 10bbl system. However, I didn't have time to play bartender, while holding down a full time job, and launching a brewery. Or time to distribute that much beer for that matter.
My plan was far from traditional though. Since I was going to brew in my home, I would have no rent. I had no additional employees to pay since I was the brewer, delivery driver, and sales manager. I had an agreement to buy all of my ingredients directly from a local homebrewing store (only possible due to my small system!) which saved a LOT on shipping costs vs getting ingredients from wholesalers. Shipping is a larger expense than most would guess. Plus there was no 5 year contract like all the hops companies requested. I was only going to sell kegs to reduce consumables (bottles, caps, labels, boxes) and the time consuming process of putting all of those together. Just some of the things that helped me keep costs lower than normal, while selling my beer at the same price as other breweries. That's where I gained my workable margin.
A 10bbl system also wouldn't fit in my house and costs significantly more than a 1bbl sytem (at least initially as you mentioned). Although it might make more sense with a $250,000 budget, it's hard to jump into the brewing game that aggressively. The other garage brewery I mentioned also started with a 1bbl system and he's thriving today. So it is possible. Although he said he couldn't keep up with demand after just 3 months of brewing, he at least verified there was a demand for his beer before jumping to a larger more expensive system and subsequent taproom. It was smart of him to minimize his financial risk/burden at first to see if he could catch traction.
Toledo was very slow to catch onto the craft beer boom, so at the time there was definitely a demand. All of the local establishments I talked to were excited to hear there was going to be more local beer they could offer. Hell, a handful of breweries have opened since I moved 2 years ago. I had the timing right, but couldn't take the leap.
I do agree with your numbers and logic though for a more traditional startup brewery. Cheers!

 

[mcamera]

I have noticed more small distilleries popping up lately! There's probably some advantages, but I'm not that passionate about spirits. Even though I see the appeal of distilling, it's not quite for me .
Cheers!

 

[mcamera]

Thanks for sharing that article Brian. That is an interesting take on starting a new business. Isn't it funny how a dead dream and bankruptcy saved the marriage? Two negative, life altering events relieved them of enough pressure to save their marriage. Very interesting.
Glad you enjoyed my article too. There were times that my friend (that was helping me out with logistics) and I were frustrated with each other too. The biggest sore spot was the brewery name. We clearly had different tastes and that alone took us a couple months to choose. Cheers!

 

[luke]

I have a one barrel brewery in my garage in washington. I was lucky enough to get in before the connecting door rule you were talking about with your basement. Started with a plan of selling beer in the garage/taproom. Federal said it was ok, state said it was ok, county said ok as long as long as no neighbors complain. We were open for about 2 months friday and saturday only and a neighbor complained. So i had to shut the tap room part of it down. Now selling kegs to local bars until we can find a retail space. I quit my real job to focus on the brewery when i started this process. But have worked many odd jobs in between and now deliver sandwiches in the daytime and pizza at night while brewing once a week and going out and selling beer. Its a 50-60hour week and only the pizza and sandwiches at 35 hours a week make any money. The beer selling is just to get the name out there until we get our taproom. Plan going forward is to brew in the garage which we are legally allowed to do and get a commerical space to sell out of. And commercial space is not cheap and they want alot of guarantees. Even in an area like seattle which has very friendly brewery laws it is still very hard for a nano to get going and you have to go all in and not just with money.

 

[RichBenn]

When I read these stories and the bitching about "regulations", I'm a bit taken back with the lack of planning or "doing your homework".
The start of EVERY business is a business plan. This will tell you (and banks) whether it makes any sense ar all. If not, then eitther move to someplace that matches better to your plan or forget about it. Don't blame regulations because it didn't occur to you that neighbors (that zoning thing) don't want a brewery and all that goes with it next door. Homework is key, which I think is at least some of the author's point.
Generally there is a minimum size that one must have to pay for the time, money and effort involved. Alcohol and food are also more regulated businesses because of public health factors.

 

[mcamera]

That is a tough situation to be in. I hope you're able to find a location that fits your needs. I couldn't find a cheap enough retail space to support a small 1bbl brewery. I kept arguing with my city officials that I would NOT have a taproom in my neighborhood and that brewing in my basement was as disruptive as a family cooking a spaghetti dinner. But zoning laws are still laws and they said that being discrete wouldn't make a difference. Best of luck to you!

 

[xCSx]

at the end of the day i've considered this many times, I just want a really cool homebrew setup... and keep my engineering job...

 

[Failure to Launch a Brewe]

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