Should New Breweries Have A Dump Fund?

Should new breweries have a "Dump Fund?"
It's becoming more and more common...
Whether I'm out trying a new brewery in my town or while I'm traveling...
I get excited for the experience, order a pint of whatever sounds good, and take a sip.
My brow furrows and my lips make a disapproving gesture.

Searching For The Perfect Pint
The beer is bad.
Usually there's a huge flaw. Often diacetyl, phenols, or acetaldehyde. Sometimes there's not just one flaw; it's the entire beer that's off - from the recipe, to the ingredients, to how it was stored and served.
If I close my eyes I might think I'm tasting one of the many below-average (we'll say to put it nicely) homebrews I judge in competitions.
Except those are homebrewers. I never say anything insulting on those score sheets and always provide helpful feedback for the brewer.
This brewery's beer, on the other hand, is something I paid for. And it should taste much better than an ill-fated homebrew entry.
Even my most non-beer geeky friends notice the poor quality at new breweries. That's when you know it's a problem.
Look, I get it:

• Opening a new brewery is crazy expensive (I've never heard of a start up brewery staying under budget).
• Breweries rarely open on time and they have countless people asking when they're going to open their doors. Not to mention restless investors. There is tremendous pressure to start pouring.
• When you invest all that money into equipment, permitting, renovations you need dough. You need to sell beer!

So far consumers seem OK with being guinea pigs. Especially when it's a neighborhood brewery, the locals are more lenient.
The attitude is one of, "Hey, we know you're new and you're still getting the kinks out. We like you guys and support you, so we'll put up with sub-par beer until you figure things out."
And that's totally cool. It's something I really respect about the craft beer community, and I've been a willing participant myself.
Except that the problem is getting worse, and consumers are getting impatient. Here in Colorado, 64 new breweries opened in 2014. There are over 100 more in planning.
How long will consumers be willing to play guinea pig? Not long is my guess. When there are so many high quality options, why be a beta-tester for bad beer?

Expect Quality In Every Pint
Which leads me to my main point: When you open a brewery, you need to serve good beer from day 1.
The problem is often a lack of skill and experience. A lot of brewery owners jump into it without having worked at a professional brewery, gone to brewing school, or even before becoming a top-notch homebrewer.
But even a highly skilled homebrewer needs to learn how to brew on a professional scale. It's a totally different ballgame and takes time to learn the new equipment and process.
With that in mind, I suggest new breweries have "dump fund." It's for learning your system and dialing in your recipes.
Budget for a certain amount of batches that you're simply going to dump out because they're not ready for serving to the public.

Good Quality Beer Equals A Great Reputation
If batch #1 turns out delicious, great! Serve it. Just consider it a bonus.
Maybe some breweries do this already. I don't know and I'd be interested to hear how often this happens. This is what a pilot system is supposed to be for, except these start up breweries are so small that they are essentially pilot breweries themselves. Or if they are using pilot systems (most likely a homebrew system), something goes massively wrong when it's scaled up to the big system.
All I know is that there are many breweries serving their early batches that are clearly not ready yet.
Yes, this is easy for me to say when it's not my money on the line. A brewery owner is probably groaning right now over the added expense of this idea.
Or is it more expensive?
What about first impressions? What is the long-term cost to your reputation for serving bad beer?
As Will Rodgers said:
"It takes a lifetime to build a good reputation, but you can lose it in a minute."
Whether it's a dump fund or not, the point is this: The time is coming when a brewery can't open with bad beer and survive in the marketplace. In fact, it may already be here.

 

[Roboutwest]

Thanks for another really stimulating article Billy, this is a very relevant topic.
As a home brewer who went through the transition to professional craft brewing under the direction of a very experienced head brewer, I think I have some other insights to add. Firstly, as regards finance, in our country (Aus) it was possible for us to get the tax back for dumped batches, although it wasn't easy. Losing the cost of the ingredients alone isn't such a disaster. That said, in the crazy pressure of the market in a boom, doing that is a last option.
I agree with comments above that many customers are not as picky as we brewers and our head brewer could critique any beer to an extraordinary degree, well beyond the issue of saleability. That's as it should be. As an industry craft brewers are striving for the absolute best, while many of the public are actually still developing their craft beer palates. As such, many of these minor "faults" went past without comment from customers. What I learnt that I had never really considered as a home brewer was the various options between dumping and releasing that are available in a production brewhouse.
At home, I would dump the beers, but at work I was amazed how progressively blending a beer over a few weeks could result in a beer I could not detect as different from the original. If the beer was further off base, a custom batch could be brewed that balanced out the flaws. Beers can be tweaked in the dry hop, other flavours can be added (fruit etc) and the resulting beer can be released in-house as a special.
I think that wider knowledge of these techniques could ameliorate a lot of the issues we are seeing from startups.

 

[blueseamonkey]

I agree completely with this article. I am in the process of (very slowly) building up a nanobrewery business here in the Philippines, but its trial and error along the way. I am brewing only 10 gal batches to start with, which means if I brew a batch that I feel is even slightly below par, I will not sell it. I'll drink it myself, occasionally share with friends, but always with the caveat that this is not up to standards of what I want to sell.
I hope to brew 3 or 4 beers on a regular basis, with a few more as occasional specials. So far I have two recipes that are big hits, a third that's almost there and 2 more that need some work.
It would all happen quicker if I could give up the day job, but the brewery isn't big enough to pay my bills yet.

 

[wzd]

Some breweries do. I know that Avery actually recalled beer that developed off flavors weeks after bottling. It soured I believe, and it was not supposed to be a sour, it was a Russian Imperial Stout that was barrel aged. They named their recent Barrel aged Russian Imperial Stout 'Black Eye' in homage to their earlier attempt!

 

[ArizonaGoalie]

Great article and I agree. I'm in San Diego County where new breweries are opening literally every week. My patience is growing thin and first impressions are huge.
With so many proven, high-quality options available, if my first few tasters have missed the mark, I'm very unlikely to ever be back. At least I won't be back until I see they've been around a year or more and I hear good things.
This recently happened to me with 3 out of 4 new breweries I visited. They simply weren't ready. There are quite a few others who opened, beer was okay, but they weren't prepared to sustain it. Running out of core offerings, low on funds, and unfriendly service have zero room in this craft beer climate.
Again, great article and dead on!

 

[Phunhog]

@BillyBroas I don't think bad beer will turn off a new craft beer drinker. They don't have anything to compare it to. If they like it they drink it....flaws and all. I think we have all seen new craft beer drinkers cringe at a well made hoppy DIPA and say how disgusting it is. They don't know what they don't know! Now an engaged beer drinker (which most are not) might now come back and give the beer a bad rating on BA or RB.

 

[Shortbus901]

The best breweries are already doing this. I've sent 120bbl tanks down the drain before because it was out of spec. Didn't even have any significant flaws besides being a little under-attenuated. As a professional it drives me up the wall when I visit a brewery serving terrible beer. It makes us all look bad.

 

[Opiate42]

Definitely. There's a brewpub not far from me that has something they call "The Parkdale Bomber" on tap, supposedly brewed with the local area's personality in mind, and personality it has in spades. It's a pretty funky neighbourhood in many ways.
But the bomber is garbage, not the cool good funky to match the area at all. Even my non-beer-snobby partner was grossed out by it. It was something I'd be embarrassed to serve up to my guinea pig buddies at home when I usually put out the disclaimer "ok dudes I have no idea how this crud is going to taste but here you go". They know it's going to be weird and possibly bad, but hey let's go!
And this place was charging $7 a pint for it.
Bad funk.

 

[madscientist451]

I've had crap beer from established well known breweries as well as startups. My first time in a brewery, I'll order a tasting flight. My usual experience is I like one or two a lot, one or two I can't believe they are serving and the rest are just ok.
Its very unusual to find a brewery where all the beers are above average.

 

[crazyirishman34]

@CA_Mouse Actually you are completely wrong. The brewery doesn't pay tax on beer until it goes into the tax determination vessel. What that vessel that happens to be is determined by the brewery. So we use the final package to determine tax. That way we only pay tax on the beer that we can sell. Also you don't pay tax on it until it leaves the brewery.

 

[crazyirishman34]

One issue is craft beer is way under priced. I am always amazed that people are more then happy to pay $15 for a bottle of crappy wine but a well crafted barrel aged stout they whine about paying $10 for the same sized bottle. If the margins weren't so thin it would be much easier to dump a batch

 

[Livingthedream]

@BillyBroas If you live in Colorado you may be familiar with Locavore in Littleton. They actually made a beer that didnt come out right and ended up selling it for like $2 a pint. It wasnt even that bad. I can appreciate what they did though.

 

[tgmartin000]

This is why I usually don't visit a brewery until they've been up for 6 months.

 

[mag00n]

@ThinBrewLine Ignorant statement

 

[BreezyBrew]

You see this all too often. Breweries are often made up of brewers and investors. Since it's a commercial venture, who has the money will make the decisions. If investors really aren't beer people who don't listen to the brewer or people seasoned beer people, they won't be around for very long.
Right now, at least in my area, new breweries are doing well that don't make all that great beer. The demand is inelastic and people go there regardless.

 

[Paul_Aris]

Even some of the poor quality micro brewed beers I have had were still more enjoyable than a domestic light.

 

[allentwnguy]

@poptarts
$4 a pint??? Around here (Buffalo) prices start at $5 even for the "new" beers called Experimentals. More often the price is $6 and $6.50. Some bars that specialize in beer, that don't brew, get limited edition kegs from craft brewers and charge... I've seen $8.80. The kicker is now for the bigger brews they serve 12oz. And as the article says some not so great.
On the bright side all of this was the push I needed 2 years ago to homebrew. Follow the "rules" hit your numbers and you can produce a beer far superior to what the big guys make at a fraction of the cost. My most expensive brew to date was my Christmas/Holiday Stout. Xmas Xtra a Chocolate Cherry Stout. It had just enough C&C flavor to give a hint of Chocolate and Cherry (not a fan of fruit laced beer.) At 9.2% ABV it cost just about $65 to make, roughly $1.75 for a true 16oz glass.
Will I visit a Tap Room? Hell yeah I like to check out the competition! Big Ditch Brewing is constructing their Tap Room / Restaurant now. But I have already tasted one of their beers and it left me wanting.

 

[Cyclman]

Great article. I travel around the country, and am very careful in reading reviews before going to a brewpub or brewery. I have had some utterly fantastic beers- beers that inspired me to step up my homebrewing and try things way outside my comfort zone.
And I have had some horrible beers, too. Beers that can't compare with an extract kit brew- they'd be better off going to the LHBS and buying kits! There's a bubble, and the weak will die off. But quality brew will survive and thrive, it will evolve to a higher plane, if that's possible.

 

[wskee]

Admittedly I only have homebrewing experience but I 100% agree and this article addresses a real issue. Customers line up before the building is finished and I am sure that expenses are often higher than expected when opening but I would most definitely bake test batch expense into my opening budget if I were to open a brewery.
I would think that it's a no-brainer that anyone starting a new brewery without solid commercial experience would plan on using an appropriate pilot system, unless they can afford to dump full size batches, and know how the pilot translates to the main system before you pkg for retail.
I own that this is just my opinion as an enthusiastic homebrewer but I would never serve anything that I was not proud of to friends or fellow homebrewers unless it was to get feedback. Some customers do not really care or have a palate for flaws and they just like going to their new neighborhood brewpub but some of these places may soon start to fade away with the competition growing at such an aggressive rate.

 

[mattmmille]

It's a good idea...but definitely somethiing that is discussed with investors from the very beginning. Some people are the pencil-pushing, bottom line kind of accountant-types. They don't get the big picture and don't plan for the long term. It's hard to turn down money, but that kind of pressure is counterproductive.
I worked in restaurants for many years and I saw many "corporate upper management" decisions to cut portions, sub cheaper ingredients and let go service personnel when profits dipped; instead of recognizing that they need to step up the game...better training, enforcing policies, weeding out bad employees and replacing them with good, changing somelow selling menu items, etc.
It was taught to us that a good experience was likely to be relayed to one of two other people. A bad experirence was likely to be told to 6 to 8 others. And that was BEFORE Google, Yelp, Urbanspoon, Chowhound, tripadvisor, etc.
It is important to make sure the beer is high quality...and the overall experience is positive: efficient and friendly service, knowledgable staff, comfortable environment, etc. I had good beer at a very well respected brewery recently, but the service people were heard to be complaining about the way the management was running the tap room. They were ill-tempered and seemed bored to serve. It was understaffed, crowded and uncomfortable. I had travelled hundreds of miles and there were "behind the counter" items that you had to be on a list to buy...no exceptions. Nothing other than standard brews to take home. I plan on visiting a different brewery next time I'm in that area.
There's just a lot more to opening a brewery and taproom than brewing good homebrew and getting some money together.

 

[kickflip_mj]

Sadly I am finding this left and right. They deserve to be out of buisness for serving such crap.

 

[bolus14]

Totally agree with giving honest feedback. In a lot of cases I think it's a matter of most people struggle with tasting the nuances. For others, many Homebrewer or those that enjoy truly good beer that know crap when they taste it can really help growing local breweries.
Many head brewers will admit they don't know it all and are willing to talk about their recipes, process etc if you show interest and they're not slammed busy at the time. I once talked to a local brewery owner about their Oaked Dubbel for 30-45 min. Everything from how he made his own Candi syrup, to different yeast strains he had tried, to the mouthfeel. He appreciated my feedback, said he wished he could get more like mine rather than everybody telling him it was good.

 

[Capt_Yellow]

I didn't see any mention of the dishonesty of the brewery. If I order a $6 pint of oatmeal stout, I shouldn't be served 12 oz. of $1 amber ale. If they're not delivering style-wise or price-wise, they've stolen from me and I have no desire to go there again. That's different than not liking the style and has nothing to do with me complaining, although I will review on Beer Advocate for the next guy.