Questions from A college Student Part 2:

[Daniel Murphy]

Hello everyone. I recently posted a few weeks ago talking about an entrepreneurship class that I'm involved in. My current project revolves around solving and issue or creating a business idea within the craft brewing space. My initial idea was to create local competitions/events for homebrewers to land mutual brewing contracts with larger brewers. I want to help homebrewers get some income and money for their side hobby/passion. After receiving a lot of feedback I realized that many homebrewer's hate the idea of these competitions in today's world since they tend to be looking for the next popular trendy drink, aka IPA's right now. Additionally, I found out many homebrewer's don't want to upscale at all, they brew for the simple love of it. Trying to take their beer to the next level required too much overhead, and then in the long haul would take the enjoyment out of brewing.

My new idea instead revolves around a stand-alone brewery. This brewery would only sell local beer from homebrewers. We would sign a mutual contract with the homebrewers. The contract would be constructed in a way that there is no upfront cost for the homebrewer to sell their beer in our establishment. In return, they wouldn't get a cut of the revenue until we pay for the equipment maintenance and ingredient costs. Once we've covered expenses we would enter a split revenue contract. Additionally, after researching this past week, I discovered that some breweries do variable pricing for their beers. Meaning, the brews that are more popular will cost more, thus incentivizing people to try out new and lesser-known beers on tap. I liked the idea of this business a little more than my past iteration, solely because it no longer revolves around competitions. If homebrewers are interested in gaining some income, notoriety, and feedback they can apply for a spot in the brewery. There's no downside as they won't need to pay, and if their brew sells well they can make decent money from the contract. If the homebrewer has hopes of growing their brand it can serve as an excellent springboard, while if they aren't as interested in that, it doesn't hurt to have some extra money.

Again, I don't know many homebrewers in my area so this is serving as my main source of feedback on these ideas. I would LOVE to talk to any and all of you is possible more in-depth about this and other ideas I've had. I would also just love to sit down and talk with you all in general about homebrewing to educate myself more on the industry as a whole. Any and all feedback is more than welcome whether positive or negative. I'm here to learn, the more honest a reply is the more beneficial it is for me. Thank you for all the support on my last thread!

 

[Daniel Murphy]

Hello everyone. I recently posted a few weeks ago talking about an entrepreneurship class that I'm involved in. My current project revolves around solving and issue or creating a business idea within the craft brewing space. My initial idea was to create local competitions/events for homebrewers to land mutual brewing contracts with larger brewers. I want to help homebrewers get some income and money for their side hobby/passion. After receiving a lot of feedback I realized that many homebrewer's hate the idea of these competitions in today's world since they tend to be looking for the next popular trendy drink, aka IPA's right now. Additionally, I found out many homebrewer's don't want to upscale at all, they brew for the simple love of it. Trying to take their beer to the next level required too much overhead, and then in the long haul would take the enjoyment out of brewing.

My new idea instead revolves around a stand-alone brewery. This brewery would only sell local beer from homebrewers. We would sign a mutual contract with the homebrewers. The contract would be constructed in a way that there is no upfront cost for the homebrewer to sell their beer in our establishment. In return, they wouldn't get a cut of the revenue until we pay for the equipment maintenance and ingredient costs. Once we've covered expenses we would enter a split revenue contract. Additionally, after researching this past week, I discovered that some breweries do variable pricing for their beers. Meaning, the brews that are more popular will cost more, thus incentivizing people to try out new and lesser-known beers on tap. I liked the idea of this business a little more than my past iteration, solely because it no longer revolves around competitions. If homebrewers are interested in gaining some income, growing their brand, and receive feedback they can apply for a spot in the brewery. There's no downside as they won't need to pay, and if their brew sells well they can make decent money from the contract. If the homebrewer has hopes of growing their brand it can serve as an excellent springboard, while if they aren't as interested in that, it doesn't hurt to have some extra money.

Again, I don't know many homebrewers in my area so this is serving as my main source of feedback on these ideas. I would LOVE to talk to any and all of you is possible more in-depth about this and other ideas I've had. I would also just love to sit down and talk with you all in general about homebrewing to educate myself more on the industry as a whole. Any and all feedback is more than welcome whether positive or negative. I'm here to learn, the more honest a reply is the more beneficial it is for me. Thank you for all the support on my last thread!

 

[bracconiere]

This brewery would only sell local beer from homebrewers.

PABST blue ribon was brewed by miller until inbev (the devil) got them, and laugunitas is inbev now too....seems to work for the big boys....

 

[RPh_Guy]

I use brewing techniques that most US commercial breweries aren't interested in pursuing (Low Oxygen Brewing) because of the added cost.
I make styles of beer that most US commercial breweries aren't interested in brewing (sour beer with Brettanomyces) because of concerns for cross-contamination.

Furthermore I am college educated and have a sizable income already (similar to most home brewers interested in making quality beer I believe), so I am not interested in taking any risk for a chance at making beer commercially, especially since it would decrease the enjoyment of the process.

All that said, if there were some local place where I could submit a sample and then if they were interested would brew the beer to my process and recipe specifications and give me money for it ?? Heck yeah I would be interested. I just don't see that happening because of the reasons I mentioned. Furthermore, general interest is probably not as high as you may expect. Last year in my county (pop. 308k in 2017, and right next to Cleveland with 1.249 million) there was a competition where they hinted the winner would be brewed commercially, and there were only about 8 entries or so.
One other thing to think about is that (from my understanding) recipes cannot be protected as intellectual property.

Hope this helps!

P.S. "notoriety" -- might want to check the definition of this word.

 

[bracconiere]

wait i swear i posted to this?

here it is https://www.homebrewtalk.com/forum/threads/questions-from-a-college-student-part-2.675512/

 

[RPh_Guy]

wait i swear i posted to this?

here it is https://www.homebrewtalk.com/forum/threads/questions-from-a-college-student-part-2.675512/

There's a glitch in the Matrix.

 

[bracconiere]

There's a glitch in the Matrix.

lol, i'm glad i haven't lost my eyes and i'm not the writers....

 

[Vale71]

There's a glitch in the Matrix.

More like a troll on the loose.

"Daniel Murphy" = "Casey Cartwright"?

 

[RPh_Guy]

More like a troll on the loose.

"Daniel Murphy" = "Casey Cartwright"?

Nah, Daniel's posts look like an actual human wrote them.

I'd assume the double post was just a mistake.

 

[doug293cz]

Duplicate threads merged.

doug293cz
HBT Moderator

 

[Mike_kever_kombi]

Man, I hate to be a Debbie downer, and certainly don’t want to poop in anybody’s punch bowl, but you asked for honest feedback and opinions, so here it is.

This idea is no better than last, and probably worse.

This is my opinion and some reasons why, so you have something to work with.


First, one does not simply rent a space and buy a stainless steel pot and BOOM you are a brewery. By your own admission you are not a brewer, but a “business man”. This is not a negative, and in many ways a positive. You will however need to a brewer as a partner, or at the very least a well compensated employee. These type of arrangements often bud successful businesses in many different areas.

I have not checked on regulations lately, but it used to be you had to get everything in place and operational before you could receive federal approval. Depending on your set up, the brewing system alone could cost anywhere from tens to hundreds of thousands of dollars just in equipment costs. This does not include installation of said system, which could easily cost as much or more than the equipment itself.

Then you have the space. You are paying rent/lease/mortgage on a space the entire time. This means you are not generating revenue while paying on the space. Some spaces can take years to get approval, you can almost guarantee at least 1 year minimum. At $5000/month rent you are $60k in the hole before the door even opens.

Then you have site improvement costs, unless you magically find a building that is perfect as is. Spoiler alert, you won’t. So expect to spend another significant chunk of change getting the building and maybe parking lot ready, again while waiting on approval and not generating revenue. Then there is the draft and bottling/canning equipment.

Do you plan on having just a tap room where you can serve your product, or do you plan on bottling/canning and distributing your product. If serving on premise, you will need a bar, coolers, tables, benches, draft system etc.

If canning you can probably get a mobile canner to package your product, but depending on state laws, and the 3 tier distribution system, you may not be able to get that product to market, or at least not without another major battle.

Opening a brewery isn’t a defecto money printing operation. If your product is ****, then you will not be around long. When you first open you will have initial buzz, and people will come in droves just to check it out. Getting them to come back is another story. You will also need employees to serve all these people. Did you partner with a brewer to open, or did you hire one to help you set up operations. If you hired out that is another expense you have been paying without being able to generate revenue.

So now here we are, opening day, and you are a 1/4 mill plus in debt, and you want to turn joe homebrew loose on your $100,000 brew rig, who has never brewed on a system of that scale in his life? How is that going to work? He brews on your system as an employee? I don’t think you could sub contract him out, because he is not the holder of license, you are. Do you just use his recipe and your partner/employee brewer does the actual batch? How do you determine what gets brewed without a “competition”?

Are you just going to brews Bob’s mango habanero porter, Jim’s asparagus & celery wit beer, Joe’s broccoli hefe? Is it first come first served as far as who’s recipe gets brewed. Is your hired brewer being okay with not brewing any of his own recipes? Homebrew recipes doesn’t scale linearly, so you need to know how to make the necessary adjustments to turn a 5 gallon batch in to a 10 barrel recipe. Don’t count on a home brewer to know how to make those adjustments.

You say there is no risk on home brewers end, as he just shows up with his recipe, which on the home brew level involves a metric **** ton of hops. So to scale up his recipe results in a metric **** ton of metric **** tons of hops, that total $6500 for that batch. Not including grain, water, electric etc. you are okay with that kind of outlay, when you are already $250,000 in debt?

And you say that the home brewer doesn’t get money until ALL of your upfront costs, and continuing costs are covered? How does that work? His beer is always on tap? you would need a few months minimum to pay off that debt, and that timeline is assuming everything goes better than expected. What if that brew isn’t selling? Does that brew get pulled and Replaced? Does the home brewer receive any compensation?

You say it would give home brewers a way to launch their brand. That is not entirely accurate, as it would be your brand. You hold the license, not them. They would need to be an employee of your brewery to actually brew the beer to be sold. So again, do you want someone not familiar with a commercial system running yours? In your case I assume you will have multiple brewers unfamiliar with the system brewing on it. What could possibly go wrong there?

Homebrewers already have the option of “gypsy brewers” that would allow them to build their brand. Like RPh said, a lot of us that are actively trying to make the best beer possible we can, already have substantial money in our systems, and already have well paying jobs.

https://beerconnoisseur.com/articles/gypsy-brewing-contract-brewing-defined

Coming from my perspective, if I am looking to build a brand without opening my own brewery I would just pay a gypsy brewer, and I honestly do not think I would be willing to give up my day job to go brew beer for you on a promise (hope) of recompense sometime in the future. And what would the return on that be? As a businessman you certainly are not giving me the lions share of the pie.

Cleveland area used to have a gypsy brewery brought to use by the fine folks at platform in the old Leisy Brewery building. I don’t know if that is still around after the sale last year.

 

[mongoose33]

Read @Mike_kever_kombi 's post above. You brew beer and sell it without a license. It's not easy to get one.

I am at that stage where I was toying with the idea of selling my homebrew. I have friends who want to pay me commercial sixpack prices for my beer, a local bar owner wants to sell it....

...except I don't have a license. And my understanding is the same as Mike's: you need everything in place before the Feds will grant you one, and on top if that, it's not at all uncommon for that approval to take six months.

There's a simpler way--if you have a taproom attached to the brewery and you only sell the beer in that taproom, the regulations are easier. That's the route I've discussed with the local bar owner--I'd brew on-site and the beer would only be sold there.

Daniel, if this is just for a class project, I can see why you're going the direction you're heading. But if you're mildly serious about this as a business venture, I suggest you either develop a relationship with a good home brewer who can take you through the steps--or better yet, do some brewing yourself.

It's often easy for us to dismiss problems because, to us as outsiders, they don't look difficult. But just as often there are elements of the process that are land mines if you don't handle them properly.

For instance, if you're brewing commercially even at a small scale you need some sort of fermentation temp control. How would you implement that? Where? Where will you store grain? What will you crush it with? How will you handle the dust? How will you clean up? Will your floor have a drain so the inevitable spills of water and wort have a place to go, or will it be mop city?

I'd love to just be able to give that bar owner 5-gallon kegs of my beer to sell, but it's not possible. I have demand, but the hurdles are high.

**********

There's at least one other side to the coin. When I was discussing this with the local bar owner, I asked what beer would be sold for. There are about 48 12-ounce bottle equivalents in a 5-gallon keg of beer. If the beer is sold for $6 a pint, what proportion of that do I get as brewer? It's likely you'd lose 10 percent of the beer to overpours, clearing the tap, things like that.

So the question is, if I brew, say, 10-gallons of beer, what do I need to get to make this worth my time? The cost of 10 gallons of beer is likely to be $40-60 just in ingredients. Then include PBW costs (cleaner), sanitizer costs, electricity, then the cost of me cleaning the kegs when they're done. And other consumables like paper towels, mops, water.

It's easy to get lost in the romance of all this, but the devil is in the details. To brew and keg a single 10-gallon batch, including cleaning the brew kettles, the fermenter when it's done, and the kegs when they return....we're probably talking 8 hours of my time at least. So what hourly rate do I need to make it worth my while? $15 an hour?

So....thinking out loud....$15 x 8 hours is $120. Add the ingredient and consumables costs; that's at least another $60. So i need to get at least $180 per 10-gallon batch, and none of that is recovering the multi-thousands of dollars of costs I have in the setup.

Depending on how this all shakes out, and the details can be worked out, I might do this simply for the thrill of having others pay money for my homebrew. But as to getting rich doing this--no. Not at the homebrew level.

 

[Daniel Murphy]

Nah, Daniel's posts look like an actual human wrote them.

I'd assume the double post was just a mistake.

Yeah I somehow managed to post it twice. My computer was acting up on me last night

 

[Daniel Murphy]

Man, I hate to be a Debbie downer, and certainly don’t want to poop in anybody’s punch bowl, but you asked for honest feedback and opinions, so here it is.

This idea is no better than last, and probably worse.

This is my opinion and some reasons why, so you have something to work with.


First, one does not simply rent a space and buy a stainless steel pot and BOOM you are a brewery. By your own admission you are not a brewer, but a “business man”. This is not a negative, and in many ways a positive. You will however need to a brewer as a partner, or at the very least a well compensated employee. These type of arrangements often bud successful businesses in many different areas.

I have not checked on regulations lately, but it used to be you had to get everything in place and operational before you could receive federal approval. Depending on your set up, the brewing system alone could cost anywhere from tens to hundreds of thousands of dollars just in equipment costs. This does not include installation of said system, which could easily cost as much or more than the equipment itself.

Then you have the space. You are paying rent/lease/mortgage on a space the entire time. This means you are not generating revenue while paying on the space. Some spaces can take years to get approval, you can almost guarantee at least 1 year minimum. At $5000/month rent you are $60k in the hole before the door even opens.

Then you have site improvement costs, unless you magically find a building that is perfect as is. Spoiler alert, you won’t. So expect to spend another significant chunk of change getting the building and maybe parking lot ready, again while waiting on approval and not generating revenue. Then there is the draft and bottling/canning equipment.

Do you plan on having just a tap room where you can serve your product, or do you plan on bottling/canning and distributing your product. If serving on premise, you will need a bar, coolers, tables, benches, draft system etc.

If canning you can probably get a mobile canner to package your product, but depending on state laws, and the 3 tier distribution system, you may not be able to get that product to market, or at least not without another major battle.

Opening a brewery isn’t a defecto money printing operation. If your product is poopy, then you will not be around long. When you first open you will have initial buzz, and people will come in droves just to check it out. Getting them to come back is another story. You will also need employees to serve all these people. Did you partner with a brewer to open, or did you hire one to help you set up operations. If you hired out that is another expense you have been paying without being able to generate revenue.

So now here we are, opening day, and you are a 1/4 mill plus in debt, and you want to turn joe homebrew loose on your $100,000 brew rig, who has never brewed on a system of that scale in his life? How is that going to work? He brews on your system as an employee? I don’t think you could sub contract him out, because he is not the holder of license, you are. Do you just use his recipe and your partner/employee brewer does the actual batch? How do you determine what gets brewed without a “competition”?

Are you just going to brews Bob’s mango habanero porter, Jim’s asparagus & celery wit beer, Joe’s broccoli hefe? Is it first come first served as far as who’s recipe gets brewed. Is your hired brewer being okay with not brewing any of his own recipes? Homebrew recipes doesn’t scale linearly, so you need to know how to make the necessary adjustments to turn a 5 gallon batch in to a 10 barrel recipe. Don’t count on a home brewer to know how to make those adjustments.

You say there is no risk on home brewers end, as he just shows up with his recipe, which on the home brew level involves a metric poopy ton of hops. So to scale up his recipe results in a metric poopy ton of metric poopy tons of hops, that total $6500 for that batch. Not including grain, water, electric etc. you are okay with that kind of outlay, when you are already $250,000 in debt?

And you say that the home brewer doesn’t get money until ALL of your upfront costs, and continuing costs are covered? How does that work? His beer is always on tap? you would need a few months minimum to pay off that debt, and that timeline is assuming everything goes better than expected. What if that brew isn’t selling? Does that brew get pulled and Replaced? Does the home brewer receive any compensation?

You say it would give home brewers a way to launch their brand. That is not entirely accurate, as it would be your brand. You hold the license, not them. They would need to be an employee of your brewery to actually brew the beer to be sold. So again, do you want someone not familiar with a commercial system running yours? In your case I assume you will have multiple brewers unfamiliar with the system brewing on it. What could possibly go wrong there?

Homebrewers already have the option of “gypsy brewers” that would allow them to build their brand. Like RPh said, a lot of us that are actively trying to make the best beer possible we can, already have substantial money in our systems, and already have well paying jobs.

https://beerconnoisseur.com/articles/gypsy-brewing-contract-brewing-defined

Coming from my perspective, if I am looking to build a brand without opening my own brewery I would just pay a gypsy brewer, and I honestly do not think I would be willing to give up my day job to go brew beer for you on a promise (hope) of recompense sometime in the future. And what would the return on that be? As a businessman you certainly are not giving me the lions share of the pie.

Cleveland area used to have a gypsy brewery brought to use by the fine folks at platform in the old Leisy Brewery building. I don’t know if that is still around after the sale last year.

Hey Mike! This is exactly the feedback I'm looking for. I appreciate the time you took to formulate such a response. I've finally gotten into contact with a handful of homebrewers here in my college town so I'll hopefully be able to learn a lot from them in regards to the process, scaling, etc. This was just a potential idea I was having. I don't plan on seriously pursuing this venture outside of this class. This kind of feedback is what I need to hear though so I really appreciate this. I'll take your responses into consideration before the next shift of my ideas. I considered that there would be quite a large upfront cost and figured I would have to partner with a brewer to even potentially get the idea moving along. This was a drastic shift away from the initial idea. Because of the immense overhead and lack of knowledge of the industry in general, I wouldn't seriously pursue this idea. I just wanted general feedback on the idea as a whole, this was super valuable. Thanks again!

 

[Daniel Murphy]

Read @Mike_kever_kombi 's post above. You brew beer and sell it without a license. It's not easy to get one.

I am at that stage where I was toying with the idea of selling my homebrew. I have friends who want to pay me commercial sixpack prices for my beer, a local bar owner wants to sell it....

...except I don't have a license. And my understanding is the same as Mike's: you need everything in place before the Feds will grant you one, and on top if that, it's not at all uncommon for that approval to take six months.

There's a simpler way--if you have a taproom attached to the brewery and you only sell the beer in that taproom, the regulations are easier. That's the route I've discussed with the local bar owner--I'd brew on-site and the beer would only be sold there.

Daniel, if this is just for a class project, I can see why you're going the direction you're heading. But if you're mildly serious about this as a business venture, I suggest you either develop a relationship with a good home brewer who can take you through the steps--or better yet, do some brewing yourself.

It's often easy for us to dismiss problems because, to us as outsiders, they don't look difficult. But just as often there are elements of the process that are land mines if you don't handle them properly.

For instance, if you're brewing commercially even at a small scale you need some sort of fermentation temp control. How would you implement that? Where? Where will you store grain? What will you crush it with? How will you handle the dust? How will you clean up? Will your floor have a drain so the inevitable spills of water and wort have a place to go, or will it be mop city?

I'd love to just be able to give that bar owner 5-gallon kegs of my beer to sell, but it's not possible. I have demand, but the hurdles are high.

**********

There's at least one other side to the coin. When I was discussing this with the local bar owner, I asked what beer would be sold for. There are about 48 12-ounce bottle equivalents in a 5-gallon keg of beer. If the beer is sold for $6 a pint, what proportion of that do I get as brewer? It's likely you'd lose 10 percent of the beer to overpours, clearing the tap, things like that.

So the question is, if I brew, say, 10-gallons of beer, what do I need to get to make this worth my time? The cost of 10 gallons of beer is likely to be $40-60 just in ingredients. Then include PBW costs (cleaner), sanitizer costs, electricity, then the cost of me cleaning the kegs when they're done. And other consumables like paper towels, mops, water.

It's easy to get lost in the romance of all this, but the devil is in the details. To brew and keg a single 10-gallon batch, including cleaning the brew kettles, the fermenter when it's done, and the kegs when they return....we're probably talking 8 hours of my time at least. So what hourly rate do I need to make it worth my while? $15 an hour?

So....thinking out loud....$15 x 8 hours is $120. Add the ingredient and consumables costs; that's at least another $60. So i need to get at least $180 per 10-gallon batch, and none of that is recovering the multi-thousands of dollars of costs I have in the setup.

Depending on how this all shakes out, and the details can be worked out, I might do this simply for the thrill of having others pay money for my homebrew. But as to getting rich doing this--no. Not at the homebrew level.

Hey, mongoose! This was a great response! And yes, this is only for a class project. I won't be seriously pursuing any of the ideas I have in this class, but we are required to reach out and talk with people in the industry. You and Mike have provided me with very valuable feedback regarding the actual viability of such a business. I had considered there would be a large amount of things I would need to accomplish upfront before getting anywhere, and that's just the tip of the iceberg. Then to add in maintenance and the actual brewing would be a nightmare. I think for the next iteration I'll go back to something more technical and less labour intensive. I appreciate you taking the time to respond!

 

[danielthemaniel]

Hello everyone. I recently posted a few weeks ago talking about an entrepreneurship class that I'm involved in. My current project revolves around solving and issue or creating a business idea within the craft brewing space. My initial idea was to create local competitions/events for homebrewers to land mutual brewing contracts with larger brewers. I want to help homebrewers get some income and money for their side hobby/passion. After receiving a lot of feedback I realized that many homebrewer's hate the idea of these competitions in today's world since they tend to be looking for the next popular trendy drink, aka IPA's right now. Additionally, I found out many homebrewer's don't want to upscale at all, they brew for the simple love of it. Trying to take their beer to the next level required too much overhead, and then in the long haul would take the enjoyment out of brewing.

My new idea instead revolves around a stand-alone brewery. This brewery would only sell local beer from homebrewers. We would sign a mutual contract with the homebrewers. The contract would be constructed in a way that there is no upfront cost for the homebrewer to sell their beer in our establishment. In return, they wouldn't get a cut of the revenue until we pay for the equipment maintenance and ingredient costs. Once we've covered expenses we would enter a split revenue contract. Additionally, after researching this past week, I discovered that some breweries do variable pricing for their beers. Meaning, the brews that are more popular will cost more, thus incentivizing people to try out new and lesser-known beers on tap. I liked the idea of this business a little more than my past iteration, solely because it no longer revolves around competitions. If homebrewers are interested in gaining some income, growing their brand, and receive feedback they can apply for a spot in the brewery. There's no downside as they won't need to pay, and if their brew sells well they can make decent money from the contract. If the homebrewer has hopes of growing their brand it can serve as an excellent springboard, while if they aren't as interested in that, it doesn't hurt to have some extra money.

Again, I don't know many homebrewers in my area so this is serving as my main source of feedback on these ideas. I would LOVE to talk to any and all of you is possible more in-depth about this and other ideas I've had. I would also just love to sit down and talk with you all in general about homebrewing to educate myself more on the industry as a whole. Any and all feedback is more than welcome whether positive or negative. I'm here to learn, the more honest a reply is the more beneficial it is for me. Thank you for all the support on my last thread!

Hello!

This is a very exciting idea and something I would totally try to take advantage of as a homebrewer that would like to go professional but I dont have the means to open on my own yet. Choosing your market would be critical as some areas would not have enough homebrewers willing and able to participate. My main concern with this idea is the legality of it. As a homebrewer I know I cannot produce beer and sell it to a bar to then sell to its customers. I know your concept is a profit sharing model but I dont think a homebrewer could legally profit off of it's own beer even if it is sold by a licensed brewery. Of course the financial roadblocks that have been mentioned are just as daunting as well. Margins are tough for breweries that keep all of their profit, much less for one that splits the profit. As a consumer and homebrewer, I love the concept. From a business and legal perspective, I dont think its feasible.

 

[Daniel Murphy]

Hello!

This is a very exciting idea and something I would totally try to take advantage of as a homebrewer that would like to go professional but I dont have the means to open on my own yet. Choosing your market would be critical as some areas would not have enough homebrewers willing and able to participate. My main concern with this idea is the legality of it. As a homebrewer I know I cannot produce beer and sell it to a bar to then sell to its customers. I know your concept is a profit sharing model but I dont think a homebrewer could legally profit off of it's own beer even if it is sold by a licensed brewery. Of course the financial roadblocks that have been mentioned are just as daunting as well. Margins are tough for breweries that keep all of their profit, much less for one that splits the profit. As a consumer and homebrewer, I love the concept. From a business and legal perspective, I dont think its feasible.

Hello Daniel! Yes, this is some advice I've been hearing from several people regarding the legality of things. This was one thing I hadn't fully considered. I thought about it briefly, but after looking more into rules and regulations I've found that it would be quite difficult to create this sort of concept. I think I'll attempt to try a shift back into more of a technological idea that would require less upfront work and way less legal issues! Thanks for taking the time to respond though I really appreciate it!

 

[Velnerj]

Looks like your ideas are getting shot down due to feasiblity... I feel you man, I remember those days in college trying to hammer out a project and then getting hit by roadblocks.

Good ideas don't come overnight and it's great to have a platform like this to get the feedback that you are getting. So why not poll the audience for ideas? Test the market, see what the needs and demands are. Often times good ideas come from improving what already exists rather than reinventing the wheel.

I have seen only a couple of operations that function as a homebrew shop, tap room and a DIY home brewery. These are places that allow you to come and brew a batch of homebrewed beer on their premises. They sell equipment, ingredients and of course the finished product--beer.

It's inviting for novices and experienced brewers alike. For the beginner they get to use good equipment under the tutelage of experienced brewers. For the expert it's an opportunity to try new equipment and get away from the wife and family, and possibly pawn off the cleaning to your business (cutting brew time down).

This concept already exists, as I said earlier, but it's not very common and I'm sure it could be upgraded and tweaked to become novel.

Not trying to take over your project but simply offering ideas that might lead you in a more reasonable direction.

Good luck with your project.

 

[madscientist451]

My new idea instead revolves around a stand-alone brewery. This brewery would only sell local beer from homebrewers. We would sign a mutual contract with the homebrewers. The contract would be constructed in a way that there is no upfront cost for the homebrewer to sell their beer in our establishment. In return, they wouldn't get a cut of the revenue until we pay for the equipment maintenance and ingredient costs. Once we've covered expenses we would enter a split revenue contract.

You need to take a look at the federal Fair Labor Standards Act. A brewery is an industrial operation, anyone that works there (except the owner) is considered an employee and must be paid hourly wages in a timely manner to comply with the law.
Its possible you could get an employee to work for minimum wage until the brewery turns a profit. I ran my own business for a decade (not brewing-related) and I know many people in the industrial HR field and the general consensus is that employee issues are the biggest and most costly problem any business faces.
If you are hiring people at minimum wage, with a promise to pay more later, you are almost guaranteed to have problems with attendance and performance.
Insurance and injury claims are another important consideration. Anyone who is injured while performing brewing related tasks is going to be treated as an employee no matter what contractual terms have been agreed to, so workman's comp. and liability insurance will have to be paid for.
There's a small brewery near me that has an opening for an assistant brewer.
I'm not applying for the job for 3 reasons: I'd have to take a massive pay cut, and can't afford that; The owner seems like a nice guy, but people that work there say he's not so nice to the employees; I really don't like the beer they serve and don't want to be part of an outfit that produces a below average product.
10 or so years ago a small nano brewery opened near me in a rented garage space with a roll up door, no seating, no atmosphere and the laws at the time prevented them from selling beer by the glass. They sold 1/2 gallon growlers for $8-10 and always sold out. The owner was holding down a full time day job, so you could only get beer there after he got off work and on weekends. He had to subsidize the operation with his paycheck while waiting for various licensing approvals but he somehow got it done and kept the operation going.
The owner went on to open a brewpub that has been successful.
Perhaps the single owner nano brewery concept will be a better fit for the project you are considering?
Here are the steps to make it work:
-Quit school and get training driving 18 wheel trucks
-Work like hell for a couple of years and save $100,000 (this is entirely possible)
-Rent a space for your nano brewery and apply for all the licences. Keep driving the big rigs to pay the rent and other expenses at the brewery.
-One you have the licences, scale back the truck driving and brew part time, open 4 evenings a week and on week ends.
-Do this for a couple of years, show a balance sheet that shows a profit and then get investors to put up the money for a brew pub.
Does this sound like a lot of work and too much sacrifice of your personal time?
Yup, that's what it is, that's why most people are satisfied with a 40 hr/week job and don't really want to be an entrepreneur.

 

[VirginiaHops1]

Your problem is going to be the legality of trying to allow homebrewers to profit with the business. Business licenses are no joke. There is a place in my area where you can go brew on their equipment, and then they'll package it for you. They have lots of beers on tap(brewed by them) and I swear I thought I had heard someone say they would occasionally put some of the clients stuff on tap, but their website doesn't indicate that at all.

https://www.thecraftob.com/

However, I'm sure that could easily be done especially if the brewery 'assisted' in some capacity with the brewing process. But I really don't think there would be any way to funnel any payment to the homebrewer, legally. It would really have to be just for exposure I guess. This place in my area seems to be doing ok so I don't think your idea is terrible, just might not be feasible the exact way you originally envisioned.

 

[Jim R]

Here are the steps to make it work:
-Quit school and get training driving 18 wheel trucks
-Work like hell for a couple of years and save $100,000 (this is entirely possible)
-Rent a space for your nano brewery and apply for all the licences. Keep driving the big rigs to pay the rent and other expenses at the brewery.
-One you have the licences, scale back the truck driving and brew part time, open 4 evenings a week and on week ends.
-Do this for a couple of years, show a balance sheet that shows a profit and then get investors to put up the money for a brew pub.
Does this sound like a lot of work and too much sacrifice of your personal time?
Yup, that's what it is, that's why most people are satisfied with a 40 hr/week job and don't really want to be an entrepreneur.

Then of course, you could take that $100,000 and invest it very conservatively in a 50% stock, 50% bond market and when you retire in 40 years you would have $1.5 million. Then you could add an additional $20k per year and have $5.5 million at retirement with no work and no risk and just make good beer for yourself at home.

In other words, you jump on the back of the Walmarts, Apples, etc. and let them do all the work and take all the risk. Just sayin for comparison.

 

[HB_ATL73]

Then of course, you could take that $100,000 and invest it very conservatively in a 50% stock, 50% bond market and when you retire in 40 years you would have $1.5 million. Then you could add an additional $20k per year and have $5.5 million at retirement with no work and no risk and just make good beer for yourself at home.

Go take your common sense elsewhere!

 

[danielthemaniel]

Hello Daniel! Yes, this is some advice I've been hearing from several people regarding the legality of things. This was one thing I hadn't fully considered. I thought about it briefly, but after looking more into rules and regulations I've found that it would be quite difficult to create this sort of concept. I think I'll attempt to try a shift back into more of a technological idea that would require less upfront work and way less legal issues! Thanks for taking the time to respond though I really appreciate it!

No problem. If you ever find a loophole, let me know haha. It's a really cool concept!

 

[bracconiere]

with no work

but then you'd end up an alcoholic like me.....

 

[lump42]

Personally I have no desire to ruin anymore hobbies by trying to make money / save money with them. I've tried multiple times before and it sucks the fun out. I also have no desire to brew on larger equipment, or deal with brewing automation more than a simple timer to preheat water. Some home brewers appreciate the simplicity that brewing can be.

This idea of contract brewing is already functioning in a similar manner in other countries (Brazil IRC). They're setup more as coop breweries. They all have their own licenses and ingredients, but share their equipment, facilities, and tap room. IF their brand/ brewery grow too big they move on from the coop brewery and build out their own space.

 

[VirginiaHops1]

You need to take a look at the federal Fair Labor Standards Act. A brewery is an industrial operation, anyone that works there (except the owner) is considered an employee and must be paid hourly wages in a timely manner to comply with the law.
Its possible you could get an employee to work for minimum wage until the brewery turns a profit. I ran my own business for a decade (not brewing-related) and I know many people in the industrial HR field and the general consensus is that employee issues are the biggest and most costly problem any business faces.
If you are hiring people at minimum wage, with a promise to pay more later, you are almost guaranteed to have problems with attendance and performance.
Insurance and injury claims are another important consideration. Anyone who is injured while performing brewing related tasks is going to be treated as an employee no matter what contractual terms have been agreed to, so workman's comp. and liability insurance will have to be paid for.
There's a small brewery near me that has an opening for an assistant brewer.
I'm not applying for the job for 3 reasons: I'd have to take a massive pay cut, and can't afford that; The owner seems like a nice guy, but people that work there say he's not so nice to the employees; I really don't like the beer they serve and don't want to be part of an outfit that produces a below average product.
10 or so years ago a small nano brewery opened near me in a rented garage space with a roll up door, no seating, no atmosphere and the laws at the time prevented them from selling beer by the glass. They sold 1/2 gallon growlers for $8-10 and always sold out. The owner was holding down a full time day job, so you could only get beer there after he got off work and on weekends. He had to subsidize the operation with his paycheck while waiting for various licensing approvals but he somehow got it done and kept the operation going.
The owner went on to open a brewpub that has been successful.
Perhaps the single owner nano brewery concept will be a better fit for the project you are considering?
Here are the steps to make it work:
-Quit school and get training driving 18 wheel trucks
-Work like hell for a couple of years and save $100,000 (this is entirely possible)
-Rent a space for your nano brewery and apply for all the licences. Keep driving the big rigs to pay the rent and other expenses at the brewery.
-One you have the licences, scale back the truck driving and brew part time, open 4 evenings a week and on week ends.
-Do this for a couple of years, show a balance sheet that shows a profit and then get investors to put up the money for a brew pub.
Does this sound like a lot of work and too much sacrifice of your personal time?
Yup, that's what it is, that's why most people are satisfied with a 40 hr/week job and don't really want to be an entrepreneur.

I have no intention of ever opening a brewery but I do listen to alot of podcasts, mainly to try to glean brewing knowledge. But they guys sometimes talk about the business side too. One theme that comes up alot is nanos are a horrible business model. Almost impossible to be profitable at such a small scale. It can be used as a proof of concept to at least show revenue but most of the guys who opened a brewery and are dooling out advice have said go as big as you possibly can to start

 

[jready]

My dad always said that there are four personality types. Smart, Stupid, Motivated and Unmotivated and everyone is a combination of two of those. He said your successful entrepreneur are the stupid motivated people because they don’t know they can’t do it.

I would guess that the majority of folks who brew their own beer and enjoy sharing it with their friends have at least the fleeting thought of opening a brewery. I know I have. Your concept is novel and heck this is just a project but who’s to say it can’t work? Brewpubs were illegal in DE before dogfish head started. I have a friend who started the first legal distillery in Texas and made a butt ton of money.

Follow your passion, it may not be this but whatever it is do it. There will be plenty of time to be an adult later. If this works out and you make millions at least be cool and be a paid sponsor!