My opportunity to starting a small brewery - Advice?

[dmcman73]

I'm an IT guy at a small beverage company (not beer related) that's been home brewing for a year and a half now. Recently I had brought a few of my brews in for people to taste and have gotten some really good and positive feedback.

One of the guys here at work who is in the marketing department sees a possible business opportunity and has been reaching out to a lot of our label makers, who indecently are developing and producing labels for a good number of Craft breweries, and they have shown an interest in it as well.

The marketing guy wants to throw some seed money in and the label and ad manufacturers want to donate their resources to get things going as possible investors.

Does anyone with experience out there have any advice? I had laid out a 5 - 6 year plan (started the beginning of this year) to start a Brewpub on a small scale. I have a friend of mine who's husband is a chef that had shown some interest in becoming a partner with me with the brew pub. He would handle the restaurant part and manage it while I handled the bar/brewery portion of it. I was taking this plan slowly, laying out a precise business plan and scoping out the business sector. I figured that if the brewpub was successful that I would look into a small distribution later down the line, but until then, it would only be onsite sales of the beer.

Now that this other opportunity came up with some great resources, and lets face it, without a marketing team you can have one of the greatest products around, it won't sell as well as the crappy products that have great marketing behind it, should I go for it? I also have a few friends here that know the distribution aspect as well (warehouses, trucking company, billing, etc)

I know how to brew on a small scale and I feel I have my process down pat producing some really great beers. I even have an idea for a few beer styles and flavors that I want to develop as well. I also have access to some of the lab techs here that formulate flavors as well. I've read a few posts on here regarding some failures and also some successes as well.

So the big questions are:

1. Any advice?
2. Should I go for it?

Thanks!

 

[yeahfairly]

What's your plan as far as production size??? Most of the information I have read over the last two years suggests that if you are distributing anything less than 7bbl is a bad move.

 

[j1n]

You would probably get better feedback from probrewer forum than here. Those guys have taken the leap already, their insight is more valuable than ours since we are just home brewers.

 

[dmcman73]

Thanks j1n, I didn't know about that forum.

 

[Qhrumphf]

I don't want to be a wet blanket or anything, but positive feedback from friends is not enough. Much of the reason there's now talk about the diminishing quality of craft beer is because homebrewers hear their friends and coworkers say "this is really good, you should go into business" and they take the leap before they're ready.

1. Can you brew the same beer multiple times and have it come out the same way EVERY time?
2. Has your beer been lauded by OBJECTIVE tasters? Someone who has no duty or obligation to praise it to spare your feelings? Success in competitions is a good start. Of course, competition winning beer and sellable beer are not necessarily interchangeable, but it's better than "well my friends like it".

And that's leaving out the whole "running a business" part of it. Which if you're prepared for it, by all means. But I'd much rather spend my day in the brewhouse scrubbing and cleaning (because even then it's 90% of the job, but instead of cleaning a cooler or keggle mash tun you're cleaning out a much bigger system) than looking at spreadsheets.

But yes, look over to probrewer.com. They'll be more helpful on the pro aspect.

 

[Hello]

Echoing other's statements here but one thing you should really be able to do, like Qhrumphf wrote, is brew your beer with consistent results. If you're inconsistent then no marketing group is going to be able to save you. I think it is an exciting opportunity for you.

 

[brew_ny]

a good read from pro brewers


http://discussions.probrewer.com/showthread.php?24441-Nanobrewery-The-Lessons-I-ve-Learned



all the best

S_M

 

[dmcman73]

I don't want to be a wet blanket or anything, but positive feedback from friends is not enough. Much of the reason there's now talk about the diminishing quality of craft beer is because homebrewers hear their friends and coworkers say "this is really good, you should go into business" and they take the leap before they're ready.

1. Can you brew the same beer multiple times and have it come out the same way EVERY time?
2. Has your beer been lauded by OBJECTIVE tasters? Someone who has no duty or obligation to praise it to spare your feelings? Success in competitions is a good start. Of course, competition winning beer and sellable beer are not necessarily interchangeable, but it's better than "well my friends like it".

And that's leaving out the whole "running a business" part of it. Which if you're prepared for it, by all means. But I'd much rather spend my day in the brewhouse scrubbing and cleaning (because even then it's 90% of the job, but instead of cleaning a cooler or keggle mash tun you're cleaning out a much bigger system) than looking at spreadsheets.

But yes, look over to probrewer.com. They'll be more helpful on the pro aspect.

1. Yes, I am able to brew the same beer with consistent results. I take detailed notes each time I brew a certain beer and each time I brew it again, I follow it to a T and the results are consistent. I've also upgraded my fermenter to a Stainless steel conical with a temp controller in it to make sure that each time I ferment a beer, it's always kept at the same exact temp as a previous batch I made was kept at.
2. I have had people whom I've never met taste my beer and have the same praise. What I've done is given beers to friends or coworkers and bring it to their friends/families and have them taste it without telling them where it's from.

What the guys here now want to do is start bringing it to competitions and also to those craft brew shows and give out samples to see how it would do "out in the wild".

Again, this is all early stages, not something I would jump into. I understand that there are a lot of hurdles I need to clear such as licensing, making sure the general public likes the beer, etc. This is more of that an opportunity to push it now has arose to get things going to the first stage.

 

[Qhrumphf]

If you're able to consistently brew quality beer, then that's the first step. However, you'll notice in that pro brewer link that the "the lesson's I've learned" aren't about the beer, but rather all the other bullsh** that comes along with it. However many hurdles you'll think it'll take, double it, and then double it again. Same goes for effort. And cost. And time. And it won't be all fun in the sun drinking beer. If you're aware of it and prepared for it, then I say go for it. But if you've got delusions about the brewing business you'll be in for a rude, hard awakening.

 

[wilserbrewer]

How much hard cash seed money ya got? Or is this like a kick starter effort whereby you will seek investors?

 

[Peruvian802]

I'd recommend spending a week or more at a brewery/brew pub of the size you are thinking about. See what the day to day ops actually are. Next you have to figure out the market-did 3 new nanos just open in town, are all the bars empty around you, who is your audience?

 

[dmcman73]

I just read though that probrew link and everything he said is very familiar. My Father owned a deli that specialized in home made pasta, cheeses, sauces, etc. The amount of hours and work he and I put into that store for over 30 years was grueling at times, not to mention the long hours. This aspect of owning and running your own place is all to familiar and I know it from first hand.

I think I am going to go with my initial 5 year business plan, opening a brew pub. I know food, I had been dealing with it for over 30 years. I have a friend who is a professional chef and cousins who are still in the business that my father was in that can give me a lot of support. Also, I can get a license to sell onsite the brew and not have to deal with all the regulations with labels, distribution, bottling, etc. Just brew, ferment and pump it into the tanks right to the taps.

My first steps towards that would be to start going to shows with my brew to see how the public likes it. Also, I am looking into tasting rooms in my area that I can bring my beer too. If it passes those two "tests" for some time, I'll start on my next phase of it.

I figure with a restaurant portion of it, I can use that as a gauge of how much beer to produce, what I'll need, etc. If I'm out of the "today's special" craft brew, I'll have other beers on tap plus, people can enjoy the food as well.

 

[HarborTownBrewing]

I've thought about this sort of thing a lot, because I'm sort of in a veeeeery similar position as you.

I've given homebrew to many people: friends, family, co-workers, and people I do not know. The feedback is always positive, and 80% of the time they say "man, this is so good - you should open a brewery!" I love to hear it obviously, and it strokes my ego - let's be honest.

But after a while I've come to the realization that lots of people like it because:
A) it's fresh and unique
B) lot's of people don't realize you can make incredible beer at home.

I had a friend who was interested in funding a small brewery for me, and she took my beer to a beer tasting party to get honest feedback from complete strangers. I printed professional looking/feeling labels, so the appearance wouldn't be that of a homebrew. In turn, I was provided honest feedback: all of which was positive. So, discussions continued.

But at the end of the day, what mattered most??? MARKET DEMAND. It truly depends on how the market is where you are located. Here (Chicago), the market is pretty saturated to the point where the newest breweries are having a hard time getting distribution. Yet, there are some pretty horrible breweries that are still in the game because they were one of the first breweries to get started in the city. The bad ones have adjusted their brewery to be a place that sells "craft" beer, but they are now the kind of place where college kids go to party.

So long story short: lots of homebrewers are told they should open a brewery; the minority do it. The key is determining if the market in your area will support it.

 

[HarborTownBrewing]

Another thought, and this is a tough one to follow-through on if there isn't anything like this in your area, but just a thought:

I met a guy who has a licensed kitchen so that guest brewers could come in and brew on his site, and that their beer could be consumed at his bar. He featured a different homebrewer each week or so - basically until the keg would run out. He told me he wanted to help brewers get off the ground and figure out if the general public truly liked their beer (guy had lots of money and just did this kind of thing for fun to help people get started with business ventures). To figure out if people liked the beer, the homebrewer could hang out at the bar and hear people's reaction and feedback when they try the beer.

The proceeds from the beer were split 50/50 between the brewer and the owner. There wasn't really much money to be made, it was more or less just for feedback. That could be a great way to get honest opinions and feedback, AND to find out if someone will pay for it.

People love free beer - a true test is IF and HOW MUCH they'll pay for it.

 

[Roadie]

For some insight into what it takes check out this thread. https://www.homebrewtalk.com/f14/muddy-creek-brewing-co-brewery-build-start-finish-thread-444132/

These guys started a year ago and still aren't open. It's a real eye opener on some of the things required - like $25k on a sprinkler system in their instance which isn't even beer equipment related! Project out the time/money you think it will take and multiply by two.

 

[dmcman73]

That's just the thing though about the market, people are turning away from large or commercial brews that "sold out" so to speak and want local new beers. I see the trend all the time. There is a place called McSorely's in NY that's been around for centuries and they still have a huge wait list just to get into the place. They brew their own beer, only two types, a blonde and a dark ale, that's it. The serving sizes are small and the food they serve is OK at best. What gets people in there is the atmosphere. it's almost as if time stood still in the place. The beer isn't spectacular, but it isn't bad either. If you have the right location, the right atmosphere and the right advertising and the worst of places will do great. I know Pizzerias in my area that are just plain awful, but, people still go to it because it's just in a convenient place and good parking, mean while there are fantastic ones located half a mile away but aren't the easiest to get too.

I figured that if I start a brew pub, the restaurant can run until all the equipment was sourced, built and the appropriate licences were had. This way it's not an empty place with equipment costing money with nothing coming in to support it until the licensing was approved.

 

[Phunhog]

I think it really depends on what YOU are looking for and why you potentially want to start a brewery. I wouldn't start a brewery because I thought it would make a lot of money...most don't and you are "married" to the business.

 

[pdxal]

I just read though that probrew link and everything he said is very familiar. My Father owned a deli that specialized in home made pasta, cheeses, sauces, etc. The amount of hours and work he and I put into that store for over 30 years was grueling at times, not to mention the long hours. This aspect of owning and running your own place is all to familiar and I know it from first hand.

I think I am going to go with my initial 5 year business plan, opening a brew pub. I know food, I had been dealing with it for over 30 years. I have a friend who is a professional chef and cousins who are still in the business that my father was in that can give me a lot of support. Also, I can get a license to sell onsite the brew and not have to deal with all the regulations with labels, distribution, bottling, etc. Just brew, ferment and pump it into the tanks right to the taps.

My first steps towards that would be to start going to shows with my brew to see how the public likes it. Also, I am looking into tasting rooms in my area that I can bring my beer too. If it passes those two "tests" for some time, I'll start on my next phase of it.

I figure with a restaurant portion of it, I can use that as a gauge of how much beer to produce, what I'll need, etc. If I'm out of the "today's special" craft brew, I'll have other beers on tap plus, people can enjoy the food as well.

You do know that you still will have to go through all of the same TTB licensing and local/state licensing requirements that a distributing brewery does, right? It sounds from your post like you won't have as much to deal with, but you will.

 

[yeahfairly]

What the guys here now want to do is start bringing it to competitions and also to those craft brew shows and give out samples to see how it would do "out in the wild".
Again, this is all early stages, not something I would jump into. I understand that there are a lot of hurdles I need to clear such as licensing, making sure the general public likes the beer, etc. This is more of that an opportunity to push it now has arose to get things going to the first stage.

^This.... You seem to have the right idea.... Dip your toe in the water and see how it goes. There are numerous considerations and they are all pain staking and expensive; Capital, Licensing and Permitting, State & City Ordinances, Production space requirements, Brewing Equipment, Fermenters, Bright Tanks, Plumbing, Kegging Equipment, Bottling and/or Canning Equipment, Cold Storage, Grain storage, Suppliers, Labor costs, Advertising..... and On and On and On...... There are a few threads on here that chronicle the journey of a few Brave folks who dared to venture down the path. They are good reads!

 

[Darwin18]

I'll be another wet blanket. Homebrewing for a year and a half isn't probably even close to enough experience to brew a professional product on a constantly consistent basis. I'll get pooh-poohed but have you ever brewed for a competition? If you're not consistently scoring in the mid to high 30's then you probably need to work on the basics.

 

[masonsjax]

If it was me, I would look for an established restaurant that has the space to add on a turn-key brewery setup and try to partner up with them. They've already mastered the business side of things, have many of the permits and regulatory requirements out of the way, and have an established customer base. An add-on brewery offers the highest risk:reward ratio for both parties.

 

[bobeer]

I've thought about opening a small brewery in town here since there's already a few 1.5 bbl breweries around and they're all doing well. There's a 15 bbl contract only brewery down the road too that I could brew bigger batches on if need be. I've been brewing for going on 4 years and I still consider myself in the experimental stage. I'm still brewing beer styles for the first time and I've only rebrewed a handful of beers. Unless you have a 5 or so beers you plan on brewing constantly, and you've nailed them down to where you want them to be, I'd brew for another couple years, at least, to get more experience under your belt. It's a huge investment and risk to only have a year and half of homebrewing experience to then jump to doing much bigger batches for the public. If you can think you can do it right then go for it.

What I'm doing is entering as many competitions as I can and getting feed back from judges who have the pallet to tell me if my beers are good or not. I'm also trying to get down 5-10 recipes that I can brew throughout the year- seasonal's and all. Whatever you decide to do good luck! Small brew pubs and nano breweries can work if you do it right, are in the right area, and have a product that people will stand in line for. Have a solid business plan and anything can happen!

 

[KPSquared]

Take the number of hours you're working now and triple it. Take the money you're putting in your pocket now and divide by ten. 5 years from now you're either happy or dead.

 

[todd_k]

It sounds like you already have your mind made up. There are a lot of suggestions/questions/warnings being posted, I hope you are giving them considerable thought.
1 1/2 years of experience, IMO, is not enough. You'll need new equipment to produce larger batches. Startup costs are huge, even if you buy used equipment.
Don't most new restaraunts fail within the first year? What is your plan for your brewery if the pub fails before you can get the brewery finished?
I wish you good luck, I would love to be able to brew full time. Just be careful.

 

[Helloworld]

I don't want to be a wet blanket or anything, but positive feedback from friends is not enough.

This is an important statement to take note of. One of my friends that brews gets smoke blown up his ass all the time from friends and family about how good his beers are.

The last brew he did he deemed perfect and everyone agreed with him. He entered it into a BJCP sanctioned competition and did not place. One of the comments from a scoresheet was "bad fermentation."

OP, I do not mean to say your beer is bad, but it just goes to show that your friends and family may not have the most accurate palates.

 

[KPSquared]

Friends and family's opinion means NOTHING except and ego stroke. Consistent high scores... That's a start.

 

[tagz]

I'll be another wet blanket. Homebrewing for a year and a half isn't probably even close to enough experience to brew a professional product on a constantly consistent basis. I'll get pooh-poohed but have you ever brewed for a competition? If you're not consistently scoring in the mid to high 30's then you probably need to work on the basics.

+1 sounds like you have a handle on the business angle but I personally don't think you have enough experience. Imagine a home-cook that has a year and a half under his belt opening a restaurant. Or imagine you are running your brewpub and start looking to hire a head brewer. Do you really hire the guy who has 1.5 years experience?

 

[Gitmoe]

Not a brewery but I started a craft hard cider company late last year. Next month will be 1 year since I initially started really working on the project. We're scheduled to start production next month. 1 to 1.5 years is a good timeline to consider for getting your first batches in fermentors. We have to operate under a brewery license exactly the same as any other brewery around us. The process is long, difficult, and frustrating. Along the way I lost a partner, spent way more money than I anticipated even using the "double it" theory, had a million setbacks that at the time felt devastating, and that's all before we've made a single dollar.

I put in a 3bbl cider production system in my basement and we spent all summer going to festivals almost every weekend lugging kegs around and serving to the general public. Sure, I had plenty of family and friends tell me my cider was great. That doesn't mean anything. It wasn't until I put it in front of probably 15,000 people this summer that I felt we actually had something. We were converting people who never tried or didn't like cider into cider fans. People are emailing me asking to provide cider for their weddings and other events now. That's proof of concept. We spent over $1,000 just in product we gave away the last 4 months. That's what it takes.

I'm my harshest critic. I never like anything I make. It's never perfect enough for me. You sound a little complacent in accepting your beer is good enough to go commercial. I don't hear the drive to be the best. The craft beer industry is a ridiculously competitive market. I decided to open a cidery instead of a brewery 100% because of how competitive the beer market is in our area. You trip over a brewery every few miles in every direction. If you don't have the drive to be the best you might not make it very long. You have to look at the whole thing as a business, not a hobby. Forget you're making beer completely. Pretend you're making widgets. Make smart business decisions.

I love cider. I love traditional farmhouse ciders from France and Belgium more than anything. My company is making flavored ciders a million miles away from those traditional styles. I formulated recipes that will sell. It has nothing to do with what I like or what I want. It has everything to do with what the public wants and what they'll hand over their money to buy. I'm not making ciders anything near the sugar garbage Angry Orchard or Woodchuck makes. I have some morals.

Basically, it's really hard. If you have any delusions it's just going to be fun and games and you're going to love every minute then second guess what you're doing. Second guess it anyway. I woke up yesterday and without having any idea it was going to happen I spent $9,000 on something before lunch. Those are the days you'll have. Good luck. www.kurantcider.com

 

[Yooper]

My first steps towards that would be to start going to shows with my brew to see how the public likes it. Also, I am looking into tasting rooms in my area that I can bring my beer too. If it passes those two "tests" for some time, I'll start on my next phase of it.

I think that's a great start- but check the laws very carefully in your state. Most places that are licensed to sell liquor and beer are NOT allowed to have homebrew tastings on site, but state laws vary. Also, going to shows (unless they are homebrew competitions) and serving homebrew could be illegal as well.

 

[JohnSand]

I think you should go ahead. I've never started a business, but I also never achieved anything without trying. Be cautious, be thorough, study. But when an opportunity presents itself, you should at least look at it. I like your plan of taste tests and competitions. Winning some ribbons would mean a lot, to you and your investors. Study professional brew texts, talk to brewers. Good luck, I hope you make it work.

 

[Brettomomyces]

Forget you're making beer completely. Pretend you're making widgets. Make smart business decisions.

Totally this. I've had a couple opportunities to go pro, once as an hourly and the other as part owner and I realized I wasn't ready for it both times. Now I'm managing a foodservice opperation with 15 staff, multiple service areas and inventories and I still don't feel like I know enough to leap into a business venture. Maybe one day, until then it's nice to be working for a larger company that sends me a check every two weeks

 

[dmcman73]

I am just going to stick with my original plan, my 5 year plan. Within that 5 year plan, enter competitions, scope out the areas of businesses, make a concise business plan, etc.

I may even do what a few guys did in my area, they brew around 30 gallons in the early morning before heading off to work and they had gotten some type of a license to sell it by the growler. They do this all in their garages/sheds and have done pretty well. Most just break even, others make enough to upgrade their systems, at least that's what the news article stated. Some of these guys were unexpectedly approached by some bars to carry their beer after they heard about them from word of mouth. Not saying this would happen to me, but, hey, you never know. This way there is no risk, nothing to loose, if I don't sell any beer I still have my brew equipment to brew my own beer and no overhead.

 

[JohnSand]

Keep us posted. Many dream of starting a brewery, many established craft breweries started with homebrewing.

 

[tagz]

I may even do what a few guys did in my area, they brew around 30 gallons in the early morning before heading off to work and they had gotten some type of a license to sell it by the growler. They do this all in their garages/sheds and have done pretty well.

Not sure what state you live in but most places require the property to be zoned for business. You also have to have regulators come through to make sure you have exhaust fans, floor drains, etc. One local brewery I talked to had to be assessed by four different regulatory bodies. I wouldn't put "brew in shed" into your business plan.