Nano brewery startup help!

[Inhiding]

Hello everyone, just wondering if anyone could help me with a project I have going on. Last year I tried to start a beer company using contract brewing and ended up aborting it because the price was too high. Now I want to open a nano brewery, since Massachusetts shot down the bill to force owners of the farmers brewery license to produce 50% of the crops in the beer. If anyone has any information about running a nano brewery or any helpful information at all, please email me at your earliest connivence. Happy holidays and cheers!

Congrats to you on taking the first step, it is a scary one at that. I should know as I am about 6 weeks from getting my TTB license.

First step: Find a building and then check the zoning requirements with county, city etc etc.. I went this route and found several areas in which my nano could proceed in. I needed something in the "Commercial Retail" zoned areas of my town. The TTB requires a place to be rented for about 3 months during the licensing phase, so get the building cleared before you fill out any applications. This will save a lot of time back & forth. Trust me, I went through 3 building before I found my current location.

2nd Step: Check with your Alcohol & Beverage Control office and find out if you can distribute your beer or do you need a middle man. In California, I can retail my beer out in the tasting room, and sell to bars, restaurants, and stores on my own. I can keep most of the profits "in house" regardless of who buys the beer. Find out how long the ABC licensing process is. Ours was about 3 months, same as the TTB, so I had to get them going at the same time.

3rd: Filed a fictitious business statement so I could open a business bank account, and it was needed for the TTB.

4th: Get ready for the TTB paperwork. My application was 40 pages long by the time I sent it to them. Also the redundancy between the fed and state paperwork was a killer (surely there can be some streamlining somewhere).

5th: Get ready to have cash on hand to purchase equipment. A good source is probrewer.com. But you need to act fast and ask for references on the equipment. I was talking to one guy about a 7 bbl system, but he could not provide any references, as he stated once he sold the equipment he didn't follow up anymore. Red flag! He lost a customer with that statement. I chose a smaller system that pro breweries use as a pilot batch system that has consistency from batch to batch. That was KEY! I know I will have to do double brew days, but I feel better about being consistent.

6th: Spend more on the cold side, fermentation vessels & brite tanks, than you think you will need. Several 7 & 10 bbl brewers in the area have a choke point on fermenters, thus limiting them. I am going twice as big for the house beers (8 bbls) and smaller on the rotating beers (not sure about those sizes yet, but probably 4 bbls).

7th: Best way to make a small fortune in a nano is to start with a large fortune. (just seeing if you read this far)

8th: Good luck!! I'm sure there is more to offer. As i think of things i will post more...

Aaron
Cambria Beer Company (soon to be)

 

[Tyrone]

Congrats to you on taking the first step, it is a scary one at that. I should know as I am about 6 weeks from getting my TTA license.

....

Aaron
Cambria Beer Company (soon to be)

Now THAT is constructive feedback!

 

[Weizenwerks]

A brewing business is like any other business. It's 80% business skills and 20% about the product.

 

[nukinfuts29]

Part of the research you are talking about IS asking others who may have experience. I've learned more in my life and gotten farther in my career from "who I know" rather than what I know, and learning from people with similar experiences first hand. There is nothing wrong with throwing the line out on this forum to see if someone helpful will jump in while doing independent research at the same time.

Exhausting all options and examining whats under every stone is the best way to be successful. And, if you are trying to tell someone that examining what is under this stone, you are giving bad advice.

You should suggest to the OP that in addition to discussing this here, he or she should research independently as well. But, suggesting that they're not ready because they are searching here, is ignorant and misleading and counterproductive.

Asking INTELLIGENT and INFORMED questions is part of research. If he had come and asked specific questions indicating any type of personal effort, that would be a different story. He stated that last year he attempted to get into the industry, and had he done research then or since then I doubt his post would have been so generic.

You can all think I'm an a-hole if you want, but how many of you are pro or have tried to go there? It isn't easy. It SUCKS. And the amount of personal effort and investment requires a certain kind of individual, and his original post speaks of uninformed, lazy, etc which won't cut it.

 

[Phunhog]

A brewing business is like any other business. It's 80% business skills and 20% about the product.

+1 I think we all know of successful breweries who make "ho-hum" beer. Not bad but not great either. I want to start a nano but I know that knowing how to start and run a business is just as important as making great beer, maybe even more so.

 

[NobleExpBeer]

I agree reading some of the OPs other posts sounds as if he has never even done an AG batch just partials and extracts I could be wrong but that is how it reads. That is not to offend but I would think you need to get the basics down before going pro. Have you had any of your brews judged at a competitive level? You need feedback to make a product that someone would actually pay for more than once.

As for state laws you will probably find all that you need from your states website. Google that maybe?

Good Luck!

I've been brewing for about 3 years, I feel I have the basic skills, and with a little more research and help I could plan on starting this project in a few years. I'm not trying to open it tomorrow. I have entered contests and average a 42-43 on all of my submissions, so there is potential. Thanks for the help

 

[NobleExpBeer]

As someone who has done a TON of research into starting a nanobrewery I can tell you making beer is the easy part. It is the business end that will ultimately determine if you succeed. That is one reason why my plans are on the back burner. I need to learn a lot more about running a business. You also have to realize that no one really makes any money with a nano, but it can be a springboard to a future brewery. A nano makes a lot of sense that way. Do you want to risk 40k or 400K in a brewery? The other question is are you looking for a career change?

Thanks, I have a solid business background as well as a great business team to help with that part.

 

[NobleExpBeer]

WTF?!?

You drinking and posting?!? Nothing you wrote above can be construed as factual based on reality. Gotta love the intertubewebs.... Unless you know the OP personally you don't know his business acumen or brewing level. He asked a question on a forum for help and you came across (at least to me) as a pompous d!ck about whom we also don't know your bonafides.

Cheers!

Haha thanks, I have an BA in finance and am working in my MBA now

 

[NobleExpBeer]

First off, good luck on your quest - bringing a dream to fruition can be very fulfilling. That being said, I believe that sometimes some hobby jobs can turn out not as we planned - either not so good or very good.

On the first day of my MBA course we were asked what business was about - answers were the greater good, a great service, helping, etc... Of course, suddenly the obvious donned... make money. Period. All the rest may help you to achieve that, but making money is the goal. Unless it really IS a hobby job and you have piles of money sitting in a bank or a sock and don't need a salary.

Learn. About revenue, expenses, staffing, taxes, regulations and legal issues. I know this is really general, but that is what you must do and MUCH MUCH more. Prepare a business plan and be very complete to see if you can make money. One small example: making an obscure beer you like may make you and your brother happy, but you have to sell a lot of them just to pay the electricity. And then you have to be consistent so that if it catches on you can duplicate it on a regular basis.

Please do not see this as a negative, but as a positive. The idea excites me, for sure, but for the time being, and maybe forever, no thanks (for me).

B

Thanks for the help, I've entered contests and average scores in the high 40's, so I hope some people like it! My team and I are working on business plans now, we are hoping to have it up in a few years

 

[NobleExpBeer]

after reading through the posts (a lot of which not helpful and useless), continue to research and research until you feel confident.

Below is good website to read and changed my plans of wanting to open a Nano or even a Pico! There is a link on there where the owner goes through how inefficient it is to run a small brewery... its 15bbl or bust. But it really depends on what YOU want. Good luck.

Sound Brewing Systems, Inc

Thanks for the positive help

 

[NobleExpBeer]

Part of the research you are talking about IS asking others who may have experience. I've learned more in my life and gotten farther in my career from "who I know" rather than what I know, and learning from people with similar experiences first hand. There is nothing wrong with throwing the line out on this forum to see if someone helpful will jump in while doing independent research at the same time.

Exhausting all options and examining whats under every stone is the best way to be successful. And, if you are trying to tell someone that examining what is under this stone, you are giving bad advice.

You should suggest to the OP that in addition to discussing this here, he or she should research independently as well. But, suggesting that they're not ready because they are searching here, is ignorant and misleading and counterproductive.

Thanks! My team and I are doing a lot of research, but using all my resources like you mentioned is a good way to get others preceptives

 

[NobleExpBeer]

Congrats to you on taking the first step, it is a scary one at that. I should know as I am about 6 weeks from getting my TTB license.

First step: Find a building and then check the zoning requirements with county, city etc etc.. I went this route and found several areas in which my nano could proceed in. I needed something in the "Commercial Retail" zoned areas of my town. The TTB requires a place to be rented for about 3 months during the licensing phase, so get the building cleared before you fill out any applications. This will save a lot of time back & forth. Trust me, I went through 3 building before I found my current location.

2nd Step: Check with your Alcohol & Beverage Control office and find out if you can distribute your beer or do you need a middle man. In California, I can retail my beer out in the tasting room, and sell to bars, restaurants, and stores on my own. I can keep most of the profits "in house" regardless of who buys the beer. Find out how long the ABC licensing process is. Ours was about 3 months, same as the TTB, so I had to get them going at the same time.

3rd: Filed a fictitious business statement so I could open a business bank account, and it was needed for the TTB.

4th: Get ready for the TTB paperwork. My application was 40 pages long by the time I sent it to them. Also the redundancy between the fed and state paperwork was a killer (surely there can be some streamlining somewhere).

5th: Get ready to have cash on hand to purchase equipment. A good source is probrewer.com. But you need to act fast and ask for references on the equipment. I was talking to one guy about a 7 bbl system, but he could not provide any references, as he stated once he sold the equipment he didn't follow up anymore. Red flag! He lost a customer with that statement. I chose a smaller system that pro breweries use as a pilot batch system that has consistency from batch to batch. That was KEY! I know I will have to do double brew days, but I feel better about being consistent.

6th: Spend more on the cold side, fermentation vessels & brite tanks, than you think you will need. Several 7 & 10 bbl brewers in the area have a choke point on fermenters, thus limiting them. I am going twice as big for the house beers (8 bbls) and smaller on the rotating beers (not sure about those sizes yet, but probably 4 bbls).

7th: Best way to make a small fortune in a nano is to start with a large fortune. (just seeing if you read this far)

8th: Good luck!! I'm sure there is more to offer. As i think of things i will post more...

Aaron
Cambria Beer Company (soon to be)

Thanks for the help, it was great. And good luck as well, I look forward to trying it!

 

[jester5120]

i'm glad your going through with it. it's a dream of many brewers on here and i'm glad you didn't get discouraged by some of the dicks on here. good luck and i hope i see your stuff on store shelves soon

 

[ajbram]

I have entered contests and average a 42-43 on all of my submissions,

Thanks for the help, I've entered contests and average scores in the high 40's

Not to be nit-picky, but to me high 40s constitutes 47-49. Maybe you aren't bull****ting us, but I find it a stretch that someone who in another post didn't know what secondary fermentation was consistently scores 47-49/50 in contests. However, I do wish you luck. It's more about business than it is about brewing. After all, they manage to sell alot of BMC...

 

[NobleExpBeer]

Not to be nit-picky, but to me high 40s constitutes 47-49. Maybe you aren't bull****ting us, but I find it a stretch that someone who in another post didn't know what secondary fermentation was consistently scores 47-49/50 in contests. However, I do wish you luck. It's more about business than it is about brewing. After all, they manage to sell alot of BMC...

When I first stared I was averaging 42-43, my recent competitions I have received higher averages, 45-47

 

[DannPM]

Haha thanks, I have an BA in finance and am working in my MBA now

I also have my BA in finance and always thought MBAs were for folks who didn't have a business background (as I know a lot of the higher level undergrad material is repeated). What was the motivation? Am I incorrect?

 

[KozHops]

Take a look at Hess Brewing. They have done really well and are probably the exception not the norm. I've heard there are plans to turn the nano into a microbrewery within the next year or two. Their beers are excellent and they've been very successful.

I would say probrewer may be a better resource as that site is geared towards brewers that have made the jump and may have some valuable input about brewing professionally. Their discussion boards are very informative.

I would ask HBT about mash temps or yeast attenuation issues but not about brewing on the pro level (although there are a very few on here that have done it). Either way, best of luck.

 

[NobleExpBeer]

I also have my BA in finance and always thought MBAs were for folks who didn't have a business background (as I know a lot of the higher level undergrad material is repeated). What was the motivation? Am I incorrect?

I wanted to keep as many options open with an MBA.

 

[birvine]

Haha thanks, I have an BA in finance and am working in my MBA now

Ok, so you know how to work. LOL! Two years of heck!

B

 

[warex]

I have heard realistically 15 bbl is the minimum IF you want to actually turn it into a successful business. Nano's are cool but they don't make any money, or very little money. I want to start a nano too but I am lucky because I am not looking for another career. It would be strictly for fun...much like an artist or musician.

Sound Brewing Systems, Inc

1. In 24 years in this industry, we have seen NO evidence that a start-up microbrewery (meaning primarily wholesale sales, NOT a brewpub) is a viable business at less than 10 barrel size, and more realistically 15 barrel MINIMUM size. A micro will not become consistently profitable until it produces some thousands of barrels per year...3,000 or so is a ballpark number. You can't get there with a 3 or 4 barrel system. Do the math.

In my area we have three successful brewpubs running on 3 to 7 barrel systems. There is a big difference between wholesale and retail. Making 15 barrels at a time would actually drive them out of business. How easy do you think it would be for an unknown brewery to sell 450 gallons of beer while it is still in its prime. There is a lot to be said for selling your beer for $5 a pint instead of $3 a gallon.

 

[dmckean44]

Take a look at Hess Brewing. They have done really well and are probably the exception not the norm. I've heard there are plans to turn the nano into a microbrewery within the next year or two. Their beers are excellent and they've been very successful.

I would say probrewer may be a better resource as that site is geared towards brewers that have made the jump and may have some valuable input about brewing professionally. Their discussion boards are very informative.

I would ask HBT about mash temps or yeast attenuation issues but not about brewing on the pro level (although there are a very few on here that have done it). Either way, best of luck.

Hess is successful because nearly all their beer is served in it's tasting room at $4-$7 a pint. But even that just keeps the lights on and pays two employees.

 

[Phunhog]

I think having a taproom is the only way a nano can be successful. I have run some really basic numbers that went something like this....a 5 gal. keg of "ordinary" beer would cost approx 15-20 dollars to make. You might be able to distribute it to a bar/restaurant for 70-75 dollars but even that is on the high end. So you make about a dollar profit on every beer sold on a wholesale basis, or 50 bucks on a 1/6 bbl. The restaurant/bar of course turns around and sells it for 5 bucks a pint and make most of the money. MUCH better to have your own tap room and keep the profits in house. At least on a nano scale.

 

[KozHops]

Hess is successful because nearly all their beer is served in it's tasting room at $4-$7 a pint. But even that just keeps the lights on and pays two employees.

I would say that after year one you've managed to keep the lights on and pay two employees could be considered a success on the nano level.

 

[demijohn]

Nothing ruins the fun of a great hobby quicker than trying to turn a buck off it.

 

[Weizenwerks]

I think having a taproom is the only way a nano can be successful. I have run some really basic numbers that went something like this....a 5 gal. keg of "ordinary" beer would cost approx 15-20 dollars to make. You might be able to distribute it to a bar/restaurant for 70-75 dollars but even that is on the high end. So you make about a dollar profit on every beer sold on a wholesale basis, or 50 bucks on a 1/6 bbl. The restaurant/bar of course turns around and sells it for 5 bucks a pint and make most of the money. MUCH better to have your own tap room and keep the profits in house. At least on a nano scale.

I started as a nanobrewery with a one barrel system and am moving into building a new brewery as a microbrewery.

I was lucky enough to piggy-back off a 5,000 bbl production brewery for grain and hops. When I needed material I just added it to their order and they dropped the pallets on my trailer. I unloaded by hand.

I sell retail only on premises. I sell by the pint (true 16oz pints, not the 12oz shaker glasses) and growlers for takehome. Being able to buy hops and grain at the much lower prices of the bigger brewery dropped my cost per ounce production to $0.375/oz or $.60/pint. My pints sell for $5 and growlers are $1 off per pint at $16.

Cost to produce one barrel of beer is $148.80 per barrel. Round to $149 for easier math. There are 248 [true] pints in a barrel. One barrel of beer sold by the pint is $1,240 in revenue for a gross profit of $1,091 per barrel. Other overhead cuts it further but still doing very well. Last three years have been average of only 250 barrels.

I've been in business 4 years and saved as much as possible. With the microbrewery I'll finally be able to expand into keg sales to restaurants and bars. With the self distribution rules my state has allowing microbreweries to self distribute on premises, they have to come pick them up as I can't deliver. But that's not so bad as I don't have to worry about a truck, maintenance, driver, etc.

The biggest problem with brewing is meeting demand, especially with wholesale accounts. Your distributor needs that beer before they really need it and you better deliver or they'll drop you. What I'm planning to do is use the restaurant/bar sales as marketing. I'll let a small portion of my beers out into that market so that I get attention and customers will come to the tap room to try the others that are only available in the tap room, thus making me more money.

 

[DUSTIN2591]

I’d like to supply you some helpful info about the equipment so that you can make a clear budget for the brewery startup. If you are interested, you can PM me. kamasade# g mail (dot) com

www.zhongdeshebei.com
www.facebook.com/kamasade
skype: kamasade