Nanobrewery..Road to failure

[Denny]

What the heck are you talking about? This is terrible advice. The difficulty of starting a successful business has far less than to do with unjust laws than it has to do with the fact that succeeding in a capitalist system is MEANT to be hard work, and many are going to fail as a result. If OP wants to start a business with every fiber of his being, he should, and if he works hard, and is smart about his business steps, he can make it. He shouldn't risk his enterprise violating laws, and even if he did, in no way is it comparable to Rosa Parks.

*standing ovation*

 

[Denny]

I don't agree with you. But you bring up a very valid point.....enforcing homebrewing laws are so far down the priority list for any agency mainly due to the sheer number of laws that are supposed to be enforced. There are people who would argue that that is not the case....but still can't find any evidence of that. It reminds me of law that a local city is putting through regarding outside lightbulbs. You can be fined for not installing the right kind of lightbulb on your front porch!! Of course the city council freely admits that they don't have any money to actually enforce this law. Their feeling is that most people will follow the law...just because it's the law and the "problem" will be solved.

I agree with you about homebrewing laws. Bt if you start selling beer, you're not homebrewing and you're asking for trouble.

 

[kaconga]

Back to the original topic. I have been to probably the smallest nano I will ever see. He is doing 10 gallon batches! Some of his stuff is interesting but not that good (lemon cream ale) and some are boring but tasty (IPA) but all are made on a 10 gallon system. The tasting room has never been empty when I go in and he has been there for over a year now. I don't know if his financials are good but I don't think he is failing. A 2-3 bbl system would be much more viable but this guy has carved out his niche.

 

[Denny]

I also know a couple 10 gal. nano breweries. The people who run them need to keep their day jobs in order to survive. They spend every spare second brewing, packaging, cleaning, running beer to accounts, etc. for basically no money. Not my idea of how a business should work. BTW, I ran my own biz for 30 years.

 

[patthebrewer]

The world is full of nay sayers, most have no idea what they are talking about. Rather just reguritating some info they read somewhere. The only sucessful people out there are those who get off the couch of life, say f*ck it, and do it anyway!

 

[PDX_T]

The world is full of nay sayers, most have no idea what they are talking about. Rather just reguritating some info they read somewhere. The only sucessful people out there are those who get off the couch of life, say f*ck it, and do it anyway!

An idea only works if you're willing to try it, right? I'm cutting my teeth in the craft biz right now, dreaming of the day when I can run my own brew pub, but the road block I will always struggle with is capital. Even here in Portland, finding an investor will be tricky, and a small business loan from a bank looks disgusting right now. I may find a local restaurant to partner with as a way in. having premises already secured is a huge step. A lot of places start as a restaurant first for that reason.

 

[the_bird]

Oh, where's Cape?

" And, we think sticking your toe in the water is for weenies--starting a brewery is big risk-taking venture, and we haven't seen many become a success in the brutally competitive brewing business by starting out timidly."

http://www.soundbrew.com/smallfaq.html

 

[Denny]

The world is full of nay sayers, most have no idea what they are talking about. Rather just reguritating some info they read somewhere. The only sucessful people out there are those who get off the couch of life, say f*ck it, and do it anyway!

The world is also full of positive people who have no idea what they're talking about. There is nothing negative about looking at a situation realistically.

 

[Nightshade]

An idea only works if you're willing to try it, right? I'm cutting my teeth in the craft biz right now, dreaming of the day when I can run my own brew pub, but the road block I will always struggle with is capital. Even here in Portland, finding an investor will be tricky, and a small business loan from a bank looks disgusting right now. I may find a local restaurant to partner with as a way in. having premises already secured is a huge step. A lot of places start as a restaurant first for that reason.

Get out of PDX proper, that place is flooded with breweries, I would look at the outlying areas like Newberg, Sherwood, Tualatin, Wilsonville etc.

 

[Phunhog]

I agree with you about homebrewing laws. Bt if you start selling beer, you're not homebrewing and you're asking for trouble.

Like I said I agree that it is a bad idea BUT where is the evidence that that you are "asking for trouble"? Why don't we just say that the boogeyman will get you while you are sleeping? I am fine with the fact that it is against the law and obey the law. it just makes me cringe when people say things like "you will go to jail" or "you're asking for trouble" when there is ZERO history of anything like that occuring. I also cringe when people are so supportive of homebrewers in Miss. and Alabama when technically speaking they are breaking the law. Seems like a double standard that we support one illegal homebrewing activity but do not approve of another...

 

[the_bird]

The whole concept of "**** the law, just do it!" is nonsense.

Why are you going to sell your beer to? What bars are going to buy from you? You obviously aren't getting a distributor. Who are you marketing to? You going to run a speakeasy in your basement? What happens the first time there's a fight and the cops get called?

Reading Cape's experience, if you ever decide to go legit and you've been caught... it ain't going to happen. You'll never go legit, that's the first thing they're checking is for those types of crimes.

What if you're successful and want to expand? Where are you getting your capital from? You sure aren't getting a bank loan or an SBA loan, you're looking to borrow money from Big Vinnie.

How are you going to market your illegal enterprise?

Incidentally, did you happen to notice the brother homebrewer in Alabama who's got $20k in legal bills for... HOMEbrewing? You think they aren't going to be even worse if you're selling without a license? Now, we're talking FEDERAL charges, I'm sure those are a blast! 'Cause, you know... pretty sure that not paying taxes is the kind of crime that people DO go to jail for.

 

[libeerty]

Like I said I agree that it is a bad idea BUT where is the evidence that that you are "asking for trouble"? Why don't we just say that the boogeyman will get you while you are sleeping? I am fine with the fact that it is against the law and obey the law. it just makes me cringe when people say things like "you will go to jail" or "you're asking for trouble" when there is ZERO history of anything like that occuring. I also cringe when people are so supportive of homebrewers in Miss. and Alabama when technically speaking they are breaking the law. Seems like a double standard that we support one illegal homebrewing activity but do not approve of another...

Seriously, man, selling beer is such a far cry from making it for yourself. It breaks local, state, and federal laws. And these laws are enforced. Not to mention that at every level of selling beer you will need to work with other companies, each of which will likely not work with an unregistered, non tax-paying beer seller. If you think otherwise, and you honestly think homebrewing and selling beer commercially are both the same risk factor, you are painfully ignorant.

 

[Nightshade]

Seriously, man, selling beer is such a far cry from making it for yourself. It breaks local, state, and federal laws. And these laws are enforced. Not to mention that at every level of selling beer you will need to work with other companies, each of which will likely not work with an unregistered, non tax-paying beer seller. If you think otherwise, and you honestly think homebrewing and selling beer commercially are both the same risk factor, you are painfully ignorant.

This I agree with but there is a double standard that has been going on in the homebrew world as well as hbt in regards to allowing people located in states like MS and AL where homebrewing is illegal (until just recently). So a certain level of f#$k the law is acceptable but another is not?

Seems a strange line to draw.

 

[highgravitybacon]

Like I said I agree that it is a bad idea BUT where is the evidence that that you are "asking for trouble"? Why don't we just say that the boogeyman will get you while you are sleeping? I am fine with the fact that it is against the law and obey the law. it just makes me cringe when people say things like "you will go to jail" or "you're asking for trouble" when there is ZERO history of anything like that occuring. I also cringe when people are so supportive of homebrewers in Miss. and Alabama when technically speaking they are breaking the law. Seems like a double standard that we support one illegal homebrewing activity but do not approve of another...

I don't know if you noticed, but you're talking about HOMEbrewing. This thread is about commercial brewing.

 

[Phunhog]

Seriously, man, selling beer is such a far cry from making it for yourself. It breaks local, state, and federal laws. And these laws are enforced. Not to mention that at every level of selling beer you will need to work with other companies, each of which will likely not work with an unregistered, non tax-paying beer seller. If you think otherwise, and you honestly think homebrewing and selling beer commercially are both the same risk factor, you are painfully ignorant.

Homebrewing has been legal at the federal level for around 35 years. So for 35 years there has been laws regarding homebrewing....yet I still can't find a single case where someone has been prosecuted for for violation of these laws. One exception is the guy in AL and that was for just plain homebrewing and it was an individual state law. My point is that these laws are NOT enforced so telling someone they shouldn't do something because they will be fined/jailed is a scare tactic. There is no evidence of that occuring. But you still shouldn't do it because is against the law.

 

[flars]

I've been told so many times that even though my recipes are nice and my brew is a product that people would love to buy that if i go in as a nano brewery of less than 5bbl I will fail and if i don't have the backings to keep me and my bills covered for at least six months that again i will fail...i am so upset and no one to vent with so i decided to vent here... I love this country but its sad that our government (elected officials ) make it so hard for a.starting business to succeed .... I won't give in but today i am a little down..Tomorrow will be another day and i will start my day with a fresh head on my shoulders ...

Thanks for allowing me to vent.

Have you visited with your local chamber of commerce. They can be a good source of information and help with funding.

 

[homebrewdad]

Homebrewing has been legal at the federal level for around 35 years. So for 35 years there has been laws regarding homebrewing....yet I still can't find a single case where someone has been prosecuted for for violation of these laws. One exception is the guy in AL and that was for just plain homebrewing and it was an individual state law. My point is that these laws are NOT enforced so telling someone they shouldn't do something because they will be fined/jailed is a scare tactic. There is no evidence of that occuring. But you still shouldn't do it because is against the law.

Are you saying that the laws about beer sales are unenforced?

Homebrewing laws are not often enforced because it's tough to do so, and nobody is hurt. Beer sales laws ARE enforced, because the government isn't getting their tax revenue; they take this VERY seriously.

Selling unlicensed beer is a terrible idea.

 

[Phunhog]

Are you saying that the laws about beer sales are unenforced?

Homebrewing laws are not often enforced because it's tough to do so, and nobody is hurt. Beer sales laws ARE enforced, because the government isn't getting their tax revenue; they take this VERY seriously.

Selling unlicensed beer is a terrible idea.

I agree it is a terrible idea......but where are all the cases of brewers doing exactly that? Enforcement of a law implies that someone was actually caught doing the illegal activity. You can't enforce a speed limit but never write a ticket. I can't believe in the 35 year old history of legal homebrewing someone somewhere hasn't been tempted to sell some "under the table" and been caught...yet I can't find a single case where that occurred. Please don't think for a moment that I approve of or condone this. I don't!! What I question is the government's enforcement or apparently lack of enforcement.

 

[Denny]

"Under the table" is very different than trying to conduct a legitimate business.

 

[homebrewdad]

"Under the table" is very different than trying to conduct a legitimate business.

This. I'm sure plenty of guys have taken $20 for a case of homebrew, and this would be very tough to prosecute.

Starting up a nano without licensing is a far different matter.

 

[libeerty]

Homebrewing has been legal at the federal level for around 35 years. So for 35 years there has been laws regarding homebrewing....yet I still can't find a single case where someone has been prosecuted for for violation of these laws. One exception is the guy in AL and that was for just plain homebrewing and it was an individual state law. My point is that these laws are NOT enforced so telling someone they shouldn't do something because they will be fined/jailed is a scare tactic. There is no evidence of that occuring. But you still shouldn't do it because is against the law.

Seriously, you need to learn how to read a thread before chiming in with completely off-the-point nonsense. This thread is about opening a brewery and selling beer. That is the exact opposite of homebrewing. You know what homebrewing is, right?

 

[patthebrewer]

"Under the table" is very different than trying to conduct a legitimate business.

Sorry but Denny is 100% correct on this.....under the table...is one thing with landscapers, and the like....with alcohol....it's akin to moonshining, and very very illegal

 

[Phunhog]

You are right this thread has gone astray from the OP's thread. Somebody a few pages back kind of changed the subject......you know talking about Rosa Parks... and we all jumped in with our opinions.

 

[Piratwolf]

There are a few things I have found in researching this topic. People keep quoting Soundbrew, but two things need to be kept in mind. One, that advice is many years old, and the craft beer game is changing daily. Two, even they don't say you CAN'T succeed. What they say is that either you'll go broke (beer suck, bad location, etc.) OR you won't be able to keep up with demand and will have to upgrade. Sifting through the anecdotal evidence supports these two generalizations in many cases.

Moreover, if you talk to (or read about) the brewers who've succeeded by this route, they generally say it was backbreaking work and, if possible, you should start out no smaller than 10-15BBL. This is sound advice.

All that being said, I am left with two very real truths. I've never been afraid of working myself to death (and I'm lucky to have a supportive wife behind me!), and there's no way in hell I can borrow $750K-$1M to get my 15BBL brewhouse, fermenters, etc.

So I'm gonna have a run at starting small. (Yes, I'll keep my day job for the first 12 months at least...at which point I can better assess my chances for the long run.) I'm pretty sure I can raise the money for a 3BBL system, 6mos of rent, and reasonable marketing & merchandise. It'll likely be the hardest thing I've done, but it's what I'm passionate about...and if I don't take a shot at what I care about, what's the point of being alive?

 

[Denny]

I'm just gonna leave this right here....

http://www.oregonbusiness.com/guest-blogs/4075-the-economics-of-nanobrewing-

 

[Nightshade]

I'm just gonna leave this right here....

http://www.oregonbusiness.com/guest-blogs/4075-the-economics-of-nanobrewing-

PDX has so many breweries it is easy to get lost in the shuffle of mediocrity that plagues its brewhouses lately, so that article does not surprise me in the least. There are many markets where a 3-7bbl system is more than enough for many years...unless you are looking for distribution, then I will easily concede that anything less than a 15bbl is gonna drive you mad.

 

[Piratwolf]

I'm just gonna leave this right here....

http://www.oregonbusiness.com/guest-blogs/4075-the-economics-of-nanobrewing-

"So where does that leave nanobrewing? Basically as a foot in the door. If there is intense enough local demand for craft beer and enough beer nuts out there who will go off in search of nanobrews, some local bottle shops and pubs that will serve nanobrews, and a robust enough demand to be able to charge premium prices, then I suppose it can be a way to try and build up some funds to pay for future expansion. If any place does, Portland certainly meets the above criterion. I mean a city that can support Alan Sprints' passion for 17 years could certainly support a nanobrewery or three. But I agree with Jeff, nanobreweries are just a stepping stone — even those who think they will remain small, will soon find the tide of economic forces carrying them along.

But the good news is that very little has to be ventured so that even if it is lost, not much damage will be done."

I think this is pretty much what I just said, Denny. Thank you. I hadn't seen that particular iteration.

Two things further, for me: my area is still pretty much a desert when it comes to craft beer, and I can sell most of my beer at retail (no distributor early on). Then I have "proof of concept" and can take solid numbers and records to the bank for a loan (debt = tax write off, equity does not)--or else I lose, but as the article said, "not much damage will be done."

 

[Phunhog]

I believe Jamil reached the conclusion that a nanobrewery could work if you had a tap room and sold all of your beer out of it. No distribution means a lot less headaches i.e. finding and keeping accounts, keg management, getting paid, more employees, etc. I bet all/most 15 bbl breweries would love to sell all their beer in their own tasting room at 5 bucks a pop vs. selling a 1/6 keg to a bar at the equivalent cost of 1.25- 1.50 a beer. Talking to a part owner of a 15 bbl brewery and he said it was the tasting room where they make the money. They do ok distributing but it a highly competitive market in SoCal and you are constantly fighting for tap/shelf space.

 

[passedpawn]

It seems that there is a great demand for regional craft beer. I think there is a lot of potential for nanobrews. Push the regional aspect, get your locals to love you, and you will succeed.

Craft beer is huge, but there is no room for distribution. There are too many. But if you don't mind staying local, there's lots of room at the trough.

The nature of craft beer is to buy locally. It's a dream for the small guy. A dream. Look for untapped markets. They are out there.

 

[blueseamonkey]

Try and do an assessment of all your likely costs and regular expenses for each potential system size. From that you can try to work out how much each pint/litre/gallon/keg of beer will cost you to brew, package and sell. Make sure you then leave a healthy margin on top for unexpected problems and things you have forgotten about.

Some market research - checking beer prices in the area, even just giving people some of your homebrew and asking them how much they'd be willing to pay for it, will give you an idea of what kind of prices you can expect to charge. Perhaps even take some (free) samples of your best homebrew round to some local bars and ask the owners/managers if they'd be willing to consider stocking your beer if you went pro. Wholesale prices will be significantly less than retail so you need to take that into consideration - but the advantage with selling to bars is that the location of your brewery is somewhat less crucial. That way you might be able to save a lot in rent.

Once you know how much your beer will cost you and how much you can charge for it - then you can work out how much you will need to brew in order to make a decent income. If you can brew that amount on a tiny system - then I say go for it!

I am in the planning stages for a micro/nanobrewery here in the Philippines. I have several advantages over the OP in that craft brewing has barely started yet in this country while interest in craft beer is taking off; labour costs are very low; land is cheap; and the amount of money I consider a good income will be much less than what most people in the US need (my current salary is only about $700 a month.) There are disadvantages too - high utility costs; cheap competition (though only mass-produced yellow lager; ) no local malt, yeast or hops so everything has to be imported; a lack of 2nd hand equipment that could be fashioned into something useable.

Looking at all my probable expenses and potential revenues I reckon I can just about make enough to live on with a 200Litre/batch system, (sorry I don't do gallons/barrels) brewing 3 times a week - if I sell my beer in bottles to local bars, resorts and restaurants.

But I am hoping to raise enough cash to afford a 500-700L system instead - even if I can only afford enough tanks to brew once a week initially. That way I can keep my day job, brew once a week and if my calculations are correct I'll make nearly double the money from my beer compared to my job! Then in a year or 2 - if my beer is popular enough - I can simply buy a few more fermenters and move to full-time brewing.

I have no interest whatsoever in running a bar or restaurant (though my wife might one day,) plus I can't afford the rents on decent commercial lots with high traffic, so this will be purely a distribution brewery.

Sorry this has turned into such a long post but at least its somewhat on topic