PART ONE
HomeBrewTalk readers: This was written to a relative who was considering opening a brewery; my hope was they would not repeat the same mistakes. This "Requiem for a Brewery" is my take on why they failed. YMMV as they say.
Comments are welcome. You may disagree with me—you’ll be wrong, of course
—but some of this is certainly arguable. It’s my view, which you can take with as large a grain of salt as you like.
The names have been changed to protect the innocent. And the guilty. The brewery was in a relatively small rural college town, about 11000 people. Maybe half the population is college students. Here are some lessons I learned.
To: <my relative>
I was part of a local brewery that was open only a short amount of time. They made a number of crucial mistakes that, in my estimation, caused their collapse. Here’s a description of those, as well as some other things related to brewing as I see it.
Hopefully this will help you. If you have never brewed beer, your only hope is to retain someone who knows what they’re doing. Operating a brewery is complicated, far more than people think. Among the things that are important include: recipes, brewing processes, how often you clean your tap lines, your processes for cleaning and sanitizing brewing equipment, how you clean kegs, how you transfer beer from fermenter to kegs, how you test various parameters in brewing…and a dozen more, including those related to business model.
If you have never brewed beer, do not jump into this with both feet. You have a lot of research to do, and your success will depend on many things including who’s doing the brewing for you.
As some have said, there are easier ways to lose money than opening a brewery.
I’d like to think I’m a competent brewer; I have 124 batches under my belt. I have a conical pressure fermentation vessel (Spike CF10), use a RIMS system for managing mash temps, control fermentation temperature with a glycol chiller, and have a 5-tap beer setup in my basement. And other fairly high-level technical things.
But I don’t know everything. I’m continually learning. You need someone whose attitude is similar. You’ll see why I think that below.
Every time I brew beer I try to do one thing better than last time. Every…single...time. It’s not a bad approach to follow if you want to produce excellent beer—or excellent anything, for that matter. If you find a potential brewmaster who thinks they know it all, or can’t do anything better, perhaps continuing the search would be in order. I expand on this below.
“Local” Brewery opened in mid-August 2023. They were closed one day shy of 3 months of operation. Here is a list of issues that contributed to their closure.
The owner of the brewery worked with a brewmaster who’d been home brewing since the 90s, and had done some brewing in a small operation at the university here. But his knowledge of brewing seemed to have stopped at the end of the 1990s. I don’t know everything about brewing but I was repeatedly amazed at what he didn’t know. It was as if he thought he knew it all and didn’t need to continue to learn. This attitude hurt the business and was a part of what led to its rapid downfall.
It’s hard to say which of these issues was most important, but if I had to pick one, it was that their business model and operation was premised on distributing beer to local and area bars. They apparently assumed, much like Field of Dreams, “if they brewed it, they would come.”
However, competition for tap handles in bars is intense. Not only does the wholesale price factor into the equation, but often distributors will comp various spiffs in exchange for getting one of the bar’s tap handles--spiffs like tickets to a professional sports game, or a free keg to start, or whatever it would take to get this beer on that bar’s draft tower.
Anticipating huge demand for their beer was one thing but having NO contracts or agreements in place at the outset also contributed. It reflected an arrogance summarized by this: “If you brew it, they will come.” Wow. They had no idea how competitive the brewing business is.
The original brewery had 42 barrels (!) of fermentation capacity—two 7-barrel fermenters, and two 14-barrel fermenters. Their brew vessel was 7 barrels which meant the 14-barrel fermenters could be filled with two consecutive brews. Not uncommon, and not wrong.
That’s an enormous capacity for a brewery just starting out and with no track record, and it meant that the capital costs for all that capacity created a higher break-even point than should have been the case. It would have been far smarter to do, at most, a 7-barrel fermenter and supplement that with a 1-barrel and 3-barrel system. Then, and only then, if demand indicated it, expand the operation. I would have started with no more than a 3-barrel system.
They did have a 1-barrel brewing setup, which virtually all startup breweries should have. Why? Two reasons: it provides a smaller system on which to experiment and develop recipes, and it allows for more specialty beers to fill out tap handles of the taproom. A smarter business strategy would have been to start small and once demand for their beer was demonstrated, then increase capacity.
But they didn’t do that. Why? I don’t know.
Speaking of the taproom, it was very small. It had a seating capacity of only 30 (!); six of those seats were at the rather small and crowded bar, and the remaining 24 seats were in four six-person booths. This was a problem as a 6-person booth could be commandeered by a couple, reducing effective capacity.
Small tables that could have been pushed together for larger groups would have made more sense, or perhaps small booths supplemented by tables.
If you’re starting to get the sense that they didn’t really think this through, that’s probably correct.
Another thing that was shocking: they were surprised that neither the college students nor the local bars who catered to them seemed interested in their beer. My experience is that most college students are different from craft beer drinkers in two ways: First, most college students don’t really like craft beer; it’s too hoppy, too dark, too bitter, too…flavorful. Second, most college students are more interested in cheap beer for a cheap buzz. When a local bar offers small pitchers of Busch Light for $4, or tallboy cans of other beers for $2, how many college students are going to pay $5 and $6 for a pint of craft beer?
Answer: very few.
The first beer they produced at a high volume was an IPA. It wasn’t a good beer. It had neither sufficient malt backbone nor enough bitterness. Aroma was not great, and at best it might have been rated as a C-minus beer. Of the original 14 half-barrels of this beer that were brewed, over 11 remained full after 3 months. Beer drinkers would try one and virtually never have a second one.
Brewers make mistakes, and sometimes batches get dumped because they…just didn’t work out. It happens. But rather than deal with this flagship beer’s lack of palatability, they kept it on tap, apparently thinking they had to, somehow, some way, recover the costs of brewing it.
Well, no. First impressions are important, and this first impression suggested that either they didn’t know how to brew or couldn’t tell a good beer from a crappy one. Either way, very few beer drinkers had a second one.
What should they have done with that IPA? There were several possibilities: one was to dump it and brew another one that people would buy. I would have done this.
A second option was to brew another version of the IPA, make sure it had a serious malt backbone, make sure it had serious bitterness, make sure it was dry-hopped to ensure a great aroma, and then blend it with the beer that wouldn’t sell.
A third option was to use commercially available amendments (Yakima Valley has these) and dose the beer with these amendments to add flavor and aroma.
But they did nothing with it, keeping nearly a dozen kegs full of a beer that wouldn’t sell.
How many people entered that taproom and ordered that IPA only to be taken aback by its lack of quality? And how many people did they tell?
If you have a beer that won’t sell, it should tell you something. Use that knowledge.
I believe the only true way to tell if people like a beer is this: do they have a second one? You can imagine featuring your beers at a party; someone tries a beer and tells you it’s “really interesting” or some such platitude; then when your back is turned they dump it into a potted plant and ask “what else do you have?” But nobody has a second one—either right away or later--except for one reason: they LIKE it. Very few had a second glass of that “Local” IPA.
This idea has to be separated from a person’s lack of interest in a beer as being related to style. There are certain styles I don’t care for, Belgians being one such style. That doesn’t mean a Belgian is bad if I don’t like it, it’s a style and palate thing.
But if nobody is having a second glass of something you’ve brewed, you’d better learn from that.
There are people who believe judged competitions are an effective way to evaluate beer. I stopped believing that years ago after two things:
First, my brewing club used to have “throwdowns” where we’d all brew a particular style and then have people judge the results. The judges didn’t have a beer in the competition. One time I submitted an Amber that I thought was pretty good. But it didn’t win. I tasted the winner and was shocked to detect off-flavors in it. Mine had no such problems. But it didn’t win. So much for the judges.
The second thing was discovering someone who submitted the same beer under two names to the same national competition. One set of judges evaluated one of the entries, another set judged the other entry.
One of the entries won second place; the other was panned by the judges.
They were the same beer.
That ended my concern about competitions. IMO, those awards are only useful for marketing purposes; I have no faith in judges’ ability to be effective in judging beers. What matters is this: do people like it, and do they have another?
HomeBrewTalk readers: This was written to a relative who was considering opening a brewery; my hope was they would not repeat the same mistakes. This "Requiem for a Brewery" is my take on why they failed. YMMV as they say.
Comments are welcome. You may disagree with me—you’ll be wrong, of course
—but some of this is certainly arguable. It’s my view, which you can take with as large a grain of salt as you like.The names have been changed to protect the innocent. And the guilty. The brewery was in a relatively small rural college town, about 11000 people. Maybe half the population is college students. Here are some lessons I learned.
To: <my relative>
I was part of a local brewery that was open only a short amount of time. They made a number of crucial mistakes that, in my estimation, caused their collapse. Here’s a description of those, as well as some other things related to brewing as I see it.
Hopefully this will help you. If you have never brewed beer, your only hope is to retain someone who knows what they’re doing. Operating a brewery is complicated, far more than people think. Among the things that are important include: recipes, brewing processes, how often you clean your tap lines, your processes for cleaning and sanitizing brewing equipment, how you clean kegs, how you transfer beer from fermenter to kegs, how you test various parameters in brewing…and a dozen more, including those related to business model.
If you have never brewed beer, do not jump into this with both feet. You have a lot of research to do, and your success will depend on many things including who’s doing the brewing for you.
As some have said, there are easier ways to lose money than opening a brewery.
# # #
Brewing beer is pretty easy. Brewing great beer is not that easy.I’d like to think I’m a competent brewer; I have 124 batches under my belt. I have a conical pressure fermentation vessel (Spike CF10), use a RIMS system for managing mash temps, control fermentation temperature with a glycol chiller, and have a 5-tap beer setup in my basement. And other fairly high-level technical things.
But I don’t know everything. I’m continually learning. You need someone whose attitude is similar. You’ll see why I think that below.
Every time I brew beer I try to do one thing better than last time. Every…single...time. It’s not a bad approach to follow if you want to produce excellent beer—or excellent anything, for that matter. If you find a potential brewmaster who thinks they know it all, or can’t do anything better, perhaps continuing the search would be in order. I expand on this below.
# # #
“Local” Brewery opened in mid-August 2023. They were closed one day shy of 3 months of operation. Here is a list of issues that contributed to their closure.
The owner of the brewery worked with a brewmaster who’d been home brewing since the 90s, and had done some brewing in a small operation at the university here. But his knowledge of brewing seemed to have stopped at the end of the 1990s. I don’t know everything about brewing but I was repeatedly amazed at what he didn’t know. It was as if he thought he knew it all and didn’t need to continue to learn. This attitude hurt the business and was a part of what led to its rapid downfall.
# # #
It’s hard to say which of these issues was most important, but if I had to pick one, it was that their business model and operation was premised on distributing beer to local and area bars. They apparently assumed, much like Field of Dreams, “if they brewed it, they would come.”
However, competition for tap handles in bars is intense. Not only does the wholesale price factor into the equation, but often distributors will comp various spiffs in exchange for getting one of the bar’s tap handles--spiffs like tickets to a professional sports game, or a free keg to start, or whatever it would take to get this beer on that bar’s draft tower.
# # #
Anticipating huge demand for their beer was one thing but having NO contracts or agreements in place at the outset also contributed. It reflected an arrogance summarized by this: “If you brew it, they will come.” Wow. They had no idea how competitive the brewing business is.
The original brewery had 42 barrels (!) of fermentation capacity—two 7-barrel fermenters, and two 14-barrel fermenters. Their brew vessel was 7 barrels which meant the 14-barrel fermenters could be filled with two consecutive brews. Not uncommon, and not wrong.
That’s an enormous capacity for a brewery just starting out and with no track record, and it meant that the capital costs for all that capacity created a higher break-even point than should have been the case. It would have been far smarter to do, at most, a 7-barrel fermenter and supplement that with a 1-barrel and 3-barrel system. Then, and only then, if demand indicated it, expand the operation. I would have started with no more than a 3-barrel system.
They did have a 1-barrel brewing setup, which virtually all startup breweries should have. Why? Two reasons: it provides a smaller system on which to experiment and develop recipes, and it allows for more specialty beers to fill out tap handles of the taproom. A smarter business strategy would have been to start small and once demand for their beer was demonstrated, then increase capacity.
But they didn’t do that. Why? I don’t know.
# # #
Speaking of the taproom, it was very small. It had a seating capacity of only 30 (!); six of those seats were at the rather small and crowded bar, and the remaining 24 seats were in four six-person booths. This was a problem as a 6-person booth could be commandeered by a couple, reducing effective capacity.
Small tables that could have been pushed together for larger groups would have made more sense, or perhaps small booths supplemented by tables.
If you’re starting to get the sense that they didn’t really think this through, that’s probably correct.
# # #
Another thing that was shocking: they were surprised that neither the college students nor the local bars who catered to them seemed interested in their beer. My experience is that most college students are different from craft beer drinkers in two ways: First, most college students don’t really like craft beer; it’s too hoppy, too dark, too bitter, too…flavorful. Second, most college students are more interested in cheap beer for a cheap buzz. When a local bar offers small pitchers of Busch Light for $4, or tallboy cans of other beers for $2, how many college students are going to pay $5 and $6 for a pint of craft beer?
Answer: very few.
# # #
The first beer they produced at a high volume was an IPA. It wasn’t a good beer. It had neither sufficient malt backbone nor enough bitterness. Aroma was not great, and at best it might have been rated as a C-minus beer. Of the original 14 half-barrels of this beer that were brewed, over 11 remained full after 3 months. Beer drinkers would try one and virtually never have a second one.
Brewers make mistakes, and sometimes batches get dumped because they…just didn’t work out. It happens. But rather than deal with this flagship beer’s lack of palatability, they kept it on tap, apparently thinking they had to, somehow, some way, recover the costs of brewing it.
Well, no. First impressions are important, and this first impression suggested that either they didn’t know how to brew or couldn’t tell a good beer from a crappy one. Either way, very few beer drinkers had a second one.
# # #
What should they have done with that IPA? There were several possibilities: one was to dump it and brew another one that people would buy. I would have done this.
A second option was to brew another version of the IPA, make sure it had a serious malt backbone, make sure it had serious bitterness, make sure it was dry-hopped to ensure a great aroma, and then blend it with the beer that wouldn’t sell.
A third option was to use commercially available amendments (Yakima Valley has these) and dose the beer with these amendments to add flavor and aroma.
But they did nothing with it, keeping nearly a dozen kegs full of a beer that wouldn’t sell.
How many people entered that taproom and ordered that IPA only to be taken aback by its lack of quality? And how many people did they tell?
If you have a beer that won’t sell, it should tell you something. Use that knowledge.
# # #
I believe the only true way to tell if people like a beer is this: do they have a second one? You can imagine featuring your beers at a party; someone tries a beer and tells you it’s “really interesting” or some such platitude; then when your back is turned they dump it into a potted plant and ask “what else do you have?” But nobody has a second one—either right away or later--except for one reason: they LIKE it. Very few had a second glass of that “Local” IPA.
This idea has to be separated from a person’s lack of interest in a beer as being related to style. There are certain styles I don’t care for, Belgians being one such style. That doesn’t mean a Belgian is bad if I don’t like it, it’s a style and palate thing.
But if nobody is having a second glass of something you’ve brewed, you’d better learn from that.
# # #
There are people who believe judged competitions are an effective way to evaluate beer. I stopped believing that years ago after two things:
First, my brewing club used to have “throwdowns” where we’d all brew a particular style and then have people judge the results. The judges didn’t have a beer in the competition. One time I submitted an Amber that I thought was pretty good. But it didn’t win. I tasted the winner and was shocked to detect off-flavors in it. Mine had no such problems. But it didn’t win. So much for the judges.
The second thing was discovering someone who submitted the same beer under two names to the same national competition. One set of judges evaluated one of the entries, another set judged the other entry.
One of the entries won second place; the other was panned by the judges.
They were the same beer.
That ended my concern about competitions. IMO, those awards are only useful for marketing purposes; I have no faith in judges’ ability to be effective in judging beers. What matters is this: do people like it, and do they have another?
# # #
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