Just got an offer from a local brewery to do contract brewing

[jlaureanti]

I don't mean to be a skeptic, but I smell some shennanigans based on the OP's track record of posts....

And there's enough of us here in AZ to know the beer scene....

Not trying to sh!t on the OP, but his (your) threads seems to be, well, nevermind...

Good luck - go for it.

I would just like to say that I never once said that this was in anyway shape or form actually happening. All I said was an offer was made. I have no where near the capital right now to do this. All I wanted to know, was some of the pros and cons of doing contract brewing and what it actually was. I did say that I am in the process of filling out the applications (which I am) and that one day I would like to open a micro/nanobrewery. But that day is not anywhere near here. I also said that we are in the middle of negotiations, so I may have been drinking a little and exagerated a bit (a meeting is planned and I am also working on a business plan).

Ever put together a business plan?
I don't want to rain on anyone's parade, but it is VERY important to have a (business) plan so you know FULLY what you are getting into. Doesn't matter if it is twiddly-winks or beer.

I am currently trying to complete a business plan. Not the most enjoyable thing to do. I definitely see this as an unexpected bump.

I appreciate all the helpful links and information

 

[remilard]

I believe Jamil was saying that is the rule in California. It may not apply to Arizona. If you're interested in brewing your own beers and doing it all yourself, this may be an option for you. You could probably email him if you wanted to go down this path. Either way, good luck!

IIRC, Jamil mostly mentioned it in terms of the Feds.

 

[PanzerBanana]

I would suggest working out some sort of licensing deal with your recipe. Were for whatever compensation you decide upon, they are granted brewing rights to the recipe. However, I'm not sure what the man would have to say in that regard.

So if for brewing and legal convenience a brewer must own the rights to the formula, then you should get more compensation.

 

[JJL]

I have to agree with some of the others. This does sound like a small brewery trying to find a way to utilize extra capacity. Not that that is a bad thing. As long as you can come to reasonable terms that don't leave you with $30k+ in beer you can't sell. Just don't rush into this. Do the research. It does sound like you are going to be solely responsible for taking ownership, marketing and selling the beer. Just make sure you are willing and able to run a business at this point.

As for pricing, I don't know what a good contract brewing price would be, but figure you are going to sell a 6-pack at retail for $8.99. Which means you need to be able to sell it to a retail store for around $5 at the most. Which means you are going to need to pay less than $3 per finished 6-pack to make any type of profit after expenses. These calculations are working off of what I would consider the bare minimum profit margins.

 

[jlaureanti]

As for pricing, I don't know what a good contract brewing price would be, but figure you are going to sell a 6-pack at retail for $8.99. Which means you need to be able to sell it to a retail store for around $5 at the most. Which means you are going to need to pay less than $3 per finished 6-pack to make any type of profit after expenses. These calculations are working off of what I would consider the bare minimum profit margins.

So far the pricing is my main worry. Twigboy2000 had given me a link to probrewer.com and they have a ton of info in their boards about this subject. I was aiming to mainly keg all of the brew and they had a rough estimate of $70 a keg for the finished product. They didn't really specify whether the kegs were included or not.

 

[riverfrontbrewer]

pricing that I have seen from breweries to distributors:

6 packs - 50-60% of retail price

kegs - 50-60% of retail price, with a $30 keg deposit (keg deposits vary by state) distributors pass the $30 charge along to the liquor store or restaurant.

Your larger and more immediate problem is licensing/labeling/packaging supplies. Wanna do cans? Most suppliers want a minimum order of 500,000 printed cans.....not sure if this number is going up or down with the recent boom in craft breweries that are canning. Does this brewery have a canning or bottling line? Do they have a forklift/loading dock? Do you have a vehicle that can handle these types of pickups and deliveries? In AZ do you have to go through a distributor or can you self distribute? Have you looked into insurance requirements?

Good Luck!

 

[weirdboy]

Not sure if anyone has mentioned this yet, but you still need to be licensed to sell beer and pay taxes and all that even if you don't brew your own beer.