Sell Yourself as a Microbrewery

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Sir Humpsalot

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Being under-employed, I've just been toying around with crazy thoughts lately. Here's one.

For Illinois you would need:
Equipment to brew 30 gallon batches
A couple of kegs.
A kegerator
A working vehicle

Go to a restaurant who is already serving alcohol, Bring many homebrews. Get in touch with the owner. They already pay $500 a year for their liquor license. Tell them that if they pay the additional $550 to get a brewpub license, you will bring over and install a working kegerator.

Once a week, or once a month, depending on how often you are needed, you brew at home, then deliver the cooled wort to their premises where you pitch the yeast and stick it in a closet.

You make one, maybe two "house" beers that are unique just to the restaurant. They can sell 6 packs for another revenue stream.

It costs them a mere $500 a year to serve a unique product that nobody else has. You pitch it to them by saying, "I can create a beer that perfectly accompanies the majority of your dishes... your restaurant's style. I can match it to your clientele, to your regional specialties.

You get paid one dollar per pint... the cost of pretty much any other "import" beer. With 31 gallon batches (1 barrel), that's $310 per night of brewing, plus a quick trip to rack the beer and again to keg it, minus the ingredient cost.
 

WortMonger

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Wow, I am going to ask about this at our country club. They are just getting into kegs or Sam Adams and other stuff and go through a 5 gallon keg twice a week so I am sure I can brew the required 1500/yr gallons needed to get your brewing permit.
 

Revvy

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Sounds like an interesting idea...But somehow I think the "rev'noor's" or BATF, or whoever is in charge of booze sales would have something to say about it.

I'm sure there's some taxation from distributers that would get cut out of some state or federal revenue stream....

Or insurance/liability, or Health Department or something. Otherwise people would be doing it already.

But I could be wrong.

Good luck with that.
 
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Sir Humpsalot

Sir Humpsalot

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wortmonger said:
Wow, I am going to ask about this at our country club. They are just getting into kegs or Sam Adams and other stuff and go through a 5 gallon keg twice a week so I am sure I can brew the required 1500/yr gallons needed to get your brewing permit.
You shouldn't need a brewing permit. You are delivering wort, not beer, to the restaurant. THEY are the brewers because it is their premises where you pitch the yeast. Therefore, they simply need a brewpub license unless they intend to sell their beers elsewhere.

As for the revenooers, they already have their hands in that cookie jar. That's why the brewpub license costs twice as much as a liquor license.

I doubt this would work well as a restaurants only beer(s). I doubt a restaurant owner would have that much faith in you. However, it seems to be a relatively simple thing to set up a kegerator and brew a few batches to offer in addition to the usual BMC. The pay, $300 per batch, would be pretty good. It'd be an awesome thing to stick on the menu too. And they can offer growlers if they wanted.
 

Orfy

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If I am not mistaken (don't know US law)

If you pitch the yeast YOU are making beer for non personal use.
You are selling beer.
You need a licence.
You need to pay tax.

The only way you could do it is if they employ you.
Then you/they need to pay tax.

I don't see a way round it.
 
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Sir Humpsalot

Sir Humpsalot

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orfy said:
If I am not mistaken (don't know US law)

If you pitch the yeast YOU are making beer for non personal use.
You are selling beer.
You need a licence.
You need to pay tax.

The only way you could do it is if they employ you.
Then you/they need to pay tax.

I don't see a way round it.
No tax dodge here. You ARE making beer for non-personal use. That's why you pay for the brewpub license. It's $1,050 a year here in the state of Illinois. That's roughly double the cost of an ordinary liquor license.
 

mot

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check out this place in IOWA
http://www.worthbrewing.com/

very small 10 gallon scale, I will be making a trip down there soon as I am not to far away. Sucks that they have a ABV law though nothing over 5% i think it was

THis guy was also interviewed on basic brewing radio, he talks about start up costs, how often he brews etc.
 

Orfy

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But if they pay you for the beer then don't you have to pay tax on the beer as well as tax on your profit.

While the pub may sell a pint of beer at £1.50, 60p of that goes straight to the Exchequer in beer duty and VAT.
Then the profit is taxed!
 
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Sir Humpsalot

Sir Humpsalot

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orfy said:
But if they pay you for the beer then don't you have to pay tax on the beer as well as tax on your profit.



Then the profit is taxed!
They're not paying me for beer. They're paying me as an independent contractor to provide on-site brewing at their facility. I bring my own supplies (including wort) and brew on their premises just like any other independent contractor would do (such as a cleaning service, a window washing service, a garbage removal service, etc.)

The on-site brewing, of course, is pretty much just pitching the yeast and tucking it away in the closet, but if they wanted to boil the wort on site as well, that could probably be accomplished as well.
 

Brakeman_Brewing

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Wouldnt your home where the brewing is done need to be inspected and passed by food health and safety people?

Thats a pretty cool idea and concept though, but somehow I feel like it may be a little more complicated I dunno
 

Orfy

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Got it.

They are prducing the beer so they pay the taxes instead of the producer, distributor.
Are they going to want to do that?

Why pay you a $/pint when they can buy it in tax paid for probably not much more if they are going to have to pay the tax.

Does it work differently in the US?
 
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Sir Humpsalot

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orfy, I think it works a bit differently here. Most beer is bought through a distributor who pays taxes on the beer. Brewpubs, from everything I can tell at this time, are a bit different. It sort of seems like the idea behind it is that brewpubs pay very little in alcohol taxes, allowing them to build up a business and a name for themselves. Presumably the tax dollars will come rolling in once they have made something tasty for which there is demand. Clearly, there's no sense in taxing the heck out of a single-barrel brewery when the potential is for much more. The other catch on this is that without additional add-on licenses, they are ONLY permitted to sell the beer they brew. They need a regular liquor license if they also want to sell BMC and wine (and another if they want to sell liquor). And it's only when they sell to a distributor that taxes come into play. It actually seems to make a small micro-mini brewery like this feasible.

Good question, stimey. I don't know the answer to that, to be honest. However, if the home did have to pass inspection, then I would just move my kettle and MLT over to the restaurant and brew on their premises after hours. No big deal. Presumably these are generally restaurants, not bars, that I would be pitching the idea to. Therefore, I could start my brewing by 10 or 11pm, be done by 6am, be cleaned up and out of there by 7:30.

Back to the food inspections question. I will have to look into that. Either way is doable. I know some foods aren't required to undergo inspections. For instance, spices are unregulated. And since the wort isn't actually, itself, food or beverage, I don't think I would need to be inspected. Obviously, for instance, grain isn't inspected. We wouldn't expect that the place that mills the grain would have to be inspected, would we? Well, in my idea, I'm not actually supplying the beer. I'm just modifying the grain and removing the break and adding a preservative.... getting it ready to be used at an approved premises to make beer.
 

flowerysong

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Sir Humpsalot said:
For instance, spices are unregulated.
The FDA would be shocked to learn that their regulations regarding identity, storage, and packaging of spices don't exist.

Sir Humpsalot said:
Obviously, for instance, grain isn't inspected.
I'm sure the USDA would be fascinated to discover this, as they appear to be under the impression that it is.

Your wort that you supply the restaurant would be exactly like any other foodstuff the restaurant buys; it's not legal for someone to sell them fish that they processed on their uninspected and unlicensed back porch, and it's extremely unlikely that it's legal for you to sell them wort that you produced in your uninspected and unlicensed kitchen. Almost invariably, foodstuffs for commercial use (sale to patrons, for example) have to be inspected and licensed at every stage from the field to the table.
 
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Sir Humpsalot

Sir Humpsalot

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flowerysong said:
The FDA would be shocked to learn that their regulations regarding identity, storage, and packaging of spices don't exist.



I'm sure the USDA would be fascinated to discover this, as they appear to be under the impression that it is.

Your wort that you supply the restaurant would be exactly like any other foodstuff the restaurant buys; it's not legal for someone to sell them fish that they processed on their uninspected and unlicensed back porch, and it's extremely unlikely that it's legal for you to sell them wort that you produced in your uninspected and unlicensed kitchen. Almost invariably, foodstuffs for commercial use (sale to patrons, for example) have to be inspected and licensed at every stage from the field to the table.
Easy enough then. Just drag in your brew wares and use it in their kitchen. It's just an extra 30-40 minutes of set up.

But I don't think you're exactly correct here. A guy I know personally used to have a storefront selling beef jerky. The FDA didn't inspect his production, they didn't care, because he wasn't involved in interstate commerce. Sure, when he advertised that he would ship out of state, then a whole **** storm erupted and the Feds came knocking. Then he stopped advertising that service and they went away. You see, he wasn't involved in interstate commerce, so the feds couldn't touch him.

Now as for state requirements, that will need to be looked into. There is no question in my mind that the state requirements are substantially less onerous and people have succeeded in bringing small portions of their residence up to "code".
 

flowerysong

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Sir Humpsalot said:
Easy enough then. Just drag in your brew wares and use it in their kitchen. It's just an extra 30-40 minutes of set up.
Is to laugh. Have you even looked at *any* of the TTB regulations regarding breweries?
 
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Sir Humpsalot

Sir Humpsalot

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flowerysong said:
Is to laugh. Have you even looked at *any* of the TTB regulations regarding breweries?
Well, I read through 27 CFR 25. It's not nearly as complicated as I suspected. But then, in a past life, I have been an attorney and studied and critiqued international tax transactions for the IRS. Capitalization of Intangible Assets was my specialty. This stuff is a cake walk.

I am fun at parties.
 

Revvy

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Sir Humpsalot said:
Well, I read through 27 CFR 25. It's not nearly as complicated as I suspected. But then, in a past life, I have been an attorney and studied and critiqued international tax transactions for the IRS. Capitalization of Intangible Assets was my specialty. This stuff is a cake walk.

I am fun at parties.
Then make it happen...you might be given birth to a whole new cottage industry...

What would this be called a "sub-micro brewery" a "pico-brewery?"
 

Brewpastor

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How will you keep books on your ingredients related to the various locals? The paper work for production and sales is fairly tight. I also know a certain spot or area has to be bonded for the holding of the beer, so each local would have to keep that space open for you.

I would not be surprised when push comes to shove if they don't require you to have a license, In which case you should open up the Winnebago Brewing Company.
 

Brewpastor

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Actually it sounds like a crazy amount of work, running from one place to the other, brewing, carbonating , transferring, cleaning. The work of a brewer in one location is bad enough, but a whole chain... that could run you very thin, especially if you are only doing a couple kegs at a pop. We had a 28 bbl system and it was work all the time.
 
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Sir Humpsalot

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I respect and appreciate your input as a veteran, BP. :mug:

I'm still running through the day-to-day insanities, trying to get a picture of it. Keep your thoughts coming, by all means.

To start, I would be contemplating one location and I would be doing it solely with the goal of breaking even as a hobby. Of course, yeah, the paperwork and hassles are the same regardless of quantity. However, what you would learn from that could potentially be worth a lot. And, once you have the paperwork down to a system, you would basically have a template. You could practically run off a second copy, change the name, and be up and running with a second or third one.

A little secret I've discovered is that even complicated paperwork is manageable if it looks similar enough to paperwork you've already done. In other words, keeping 8 sets of books for nearly identical companies is less than twice the work of doing it for 1.
 

Revvy

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Brewpastor said:
Actually it sounds like a crazy amount of work, running from one place to the other, brewing, carbonating , transferring, cleaning. The work of a brewer in one location is bad enough, but a whole chain... that could run you very thin, especially if you are only doing a couple kegs at a pop. We had a 28 bbl system and it was work all the time.
Yeah...I bet they said the same thing to Ron Popeil when he introduced bald spot remover in a can...and look where he is today! :fro:

 

ohiobrewtus

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Sir Humpsalot said:
Easy enough then. Just drag in your brew wares and use it in their kitchen. It's just an extra 30-40 minutes of set up.

But I don't think you're exactly correct here. A guy I know personally used to have a storefront selling beef jerky. The FDA didn't inspect his production, they didn't care, because he wasn't involved in interstate commerce. Sure, when he advertised that he would ship out of state, then a whole **** storm erupted and the Feds came knocking. Then he stopped advertising that service and they went away. You see, he wasn't involved in interstate commerce, so the feds couldn't touch him.

Now as for state requirements, that will need to be looked into. There is no question in my mind that the state requirements are substantially less onerous and people have succeeded in bringing small portions of their residence up to "code".
Selling beef jerky off of your back porch isn't exactly the same as being a restaurant owner that has to pass regular health inspections and follow guidelines to a "T" or be shut down. In Ohio there are restaurant health codes, then there are Brewery codes on top of that for a brewpub.

My family has been in the restaurant business for 40 years, and I work at a food manufacturing plant. The guidelines are certainly in place (in Ohio anyway) to prevent this from being anything other than a major PITA.

I like the way you think though. :rockin: :rockin:
 
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Sir Humpsalot

Sir Humpsalot

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ohiobrewtus said:
Selling beef jerky off of your back porch isn't exactly the same as being a restaurant owner that has to pass regular health inspections and follow guidelines to a "T" or be shut down. In Ohio there are restaurant health codes, then there are Brewery codes on top of that for a brewpub.

My family has been in the restaurant business for 40 years, and I work at a food manufacturing plant. The guidelines are certainly in place (in Ohio anyway) to prevent this from being anything other than a major PITA.

I like the way you think though. :rockin: :rockin:
Don't forget to differentiate between the discussion of wort production and the discussion of restaurant/brewpub issues. I really don't think wort production would be all that onerous so long as you are in-state only. You aren't even a brewery if you just make wort. So in that regard, you are actually very much like the beef jerky guy... selling a food product in-state only.

Then it's just a matter of transferring to restaurants for sale... and restaurateurs already know about those regulations because they live with them everyday.

FWIW, I believe Rock Bottom Breweries do exactly this. They produce the wort off-site, then truck it in and make their extract beer on site.
 

Brewpastor

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My bottom line advice: Keep it as a hobby.

I sometimes think it would be fun to go back into the game, but then reality sets in and I know I am happy making my own.

But that is just me.

I like the idea of contracting with a local brewery and then selling the kegs they produce for you, but that too has its issues...

Don't try this at home...
 

sirsloop

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This sounds great at first glance. You will have to pay tax on your income earned, regardless if its from beer sales or contract pay from this restaurant. Another issue I see is that you have no control over the second half of the brewing process. If you spend all this time and effort to set up the restaurant, but the owner puts the fermenter next to his 400° oven, you're screwed. He'll call up complaining that they beer sucks and it'll fall apart.

Lol... Title 27: Alcohol, Tobacco and Firearms... good luck ;)
 

Matt Foley

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There is a per barrell tax in there somewhere. Gotta be paid by someone. Either you or the reseraunt. Isn't there? Or is this a state by state rule. I know I have read that somewhere.
 

TerapinChef

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Here's a bit of a twist for you...I'm an avid homebrewer and happen to work in a restaurant. We are actually located in an old mansion, and I've often thought about how nice it would be to use one of the old rooms in the basement as a lagering cellar. What would be the difficulty in the restaurant obtaining a brewpub permit, having our existing equipment inspected, and using the facilities to brew on a small scale level? At our busiest times, it would be a max of 10G/week of any brew, and if more than one were kept on tap, it really wouldn't require that much of my time to brew it for them...the only investment for them (that I can think of from reading this thread) would be the brewpub licence, a few cornies, and my time/ingredients. Anyone with any knowledge of the brewpub game feel free to chime in here....
 
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Sir Humpsalot

Sir Humpsalot

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TerapinChef said:
Here's a bit of a twist for you...I'm an avid homebrewer and happen to work in a restaurant. We are actually located in an old mansion, and I've often thought about how nice it would be to use one of the old rooms in the basement as a lagering cellar. What would be the difficulty in the restaurant obtaining a brewpub permit, having our existing equipment inspected, and using the facilities to brew on a small scale level? At our busiest times, it would be a max of 10G/week of any brew, and if more than one were kept on tap, it really wouldn't require that much of my time to brew it for them...the only investment for them (that I can think of from reading this thread) would be the brewpub licence, a few cornies, and my time/ingredients. Anyone with any knowledge of the brewpub game feel free to chime in here....
If your profit from brewing is less than a half a million, I believe the so-called "per barrel" tax is a flat $500 as far as the Fed is concerned. That's basically a "subsidy" (actually a tax break) for small micro-breweries. And of course, there may be state taxes to consider.
 

MNBugeater

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I live in a very small community. Less than 1000 people. I am know around town as a homebrewer and the topic of providing my homebrew on tap in 1 of the 2 restaurants in town has come up.

In fact the similar concept posted by the OP is the idea i had looked into.

Most of the hurdles are just that...red tape that you can get over. Not AROUND..but over. Quite legally. You can indeed sell a food product to a restaurant and they can prepare and serve the final product. i.e. You sell them wort, unfermented, etc and they complete the preparation an serve. So far so good.

Here is the rub as mentioned in earlier posts. Yes, as a food (wort) seller you would need to have your entire setup inspected by the health department and receive a food inspection certification along with all the NSF approvals for the facility that you prepare food (wort) in. The kicker..this CANNOT be in your home. Not only would i have to create a separate building to do this, but it more than likely cannot be on my residential property as it is zoned residential, not commercial.

This is pretty much where my "oh this might be fun" idea stopped. Even though nearly every time i frequent the ONE restaurant in town the owner asks me to bring in a keg and hell GIVE away just so i can have my beer available when i come in...
 

BrianTheBrewer

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After reading all of your posts I have learned a bunch tonight, thank you.

As for my own opinion, I look at it like this...
You want to sell your beer or own your own brewpub???
Find some rich F##K that will invest in you and you better be able to sell.
 

HexKrak

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Actually Panzer it's been done. I remember a story recently I saw about a guy who was running a sub-micro-brewery out of some space in the back of a coffee shop. I think in the story the brewer owned the coffee shop, but never the less it shows that it's possible if you can convince the bar/restaurant owner to give it a go. Of course you'd have to fill out all the TTB stuff, and get it approved, and probably fork over the licencing cost or work it out in a detailed contract with the business owner. You'd also have to brew on premises amongst other complications. I've been thinking about chatting up the bar owners that I'm acquainted with and seeing about getting some business going.
 

Revvy

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Actually Panzer it's been done. I remember a story recently I saw about a guy who was running a sub-micro-brewery out of some space in the back of a coffee shop. I think in the story the brewer owned the coffee shop, but never the less it shows that it's possible if you can convince the bar/restaurant owner to give it a go. Of course you'd have to fill out all the TTB stuff, and get it approved, and probably fork over the licencing cost or work it out in a detailed contract with the business owner. You'd also have to brew on premises amongst other complications. I've been thinking about chatting up the bar owners that I'm acquainted with and seeing about getting some business going.
You're talking about my write up and pictures about Sue's in Michigan aren't you?

https://www.homebrewtalk.com/f5/smallest-brewpub-202767/
 

Sparky

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Thanks for the great thread. Ironically, the solution is there, you just don't realize it. Off to finish up the business plan. MooHoooHaHa
 
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