Where to find brewmasters?

[joe6pack]

Man, if you are dead set on this, you will need to be VERY close to a BIG college, preferably with a large graduate school (year round customer base). And don't forget you actually have to make some profit, so if the beer is dirt cheap, that means selling a lot of food.

Honestly I think you could buy kegs of BMC for the same cost that you could make your own swill beer for. This will also drastically reduce overhead and then if/when you have to shut down, you will have less equipment to liquidate.

Good luck.

 

[BrianTheBrewer]

Man, if you are dead set on this, you will need to be VERY close to a BIG college, preferably with a large graduate school (year round customer base). And don't forget you actually have to make some profit, so if the beer is dirt cheap, that means selling a lot of food.

Honestly I think you could buy kegs of BMC for the same cost that you could make your own swill beer for. This will also drastically reduce overhead and then if/when you have to shut down, you will have less equipment to liquidate.

Good luck.

I agree with the big college thing...no doubt.

 

[andyi]

Seriously man....there is no talking you out of it...you should just go for it.

It's not that. If on paper I can see that this is an unprofitable enterprise, then I'll go no further. So far though, everything I've looked at indicates that this is still try-worthy but there remain many unknowns hence my OP.

 

[Gregredic]

Do you know that if you are going to be selling this beer, there will be health department oversight also???

 

[BrianTheBrewer]

Well man as I said if you got the loot then we should sit down and talk because I live in the Boston area where good beer is a key $$$$$$ maker. I would love to open my own place someday but dont see myself haveing that kind of money anytime soon as im getting married next year, finishing up school and working all the time.

 

[The Pol]

Um, I think it is a great idea, contrary to everyone else here. I think that the business plan is pure genious. NO other micro has ever attempted making cheap beer and selling it for less than BMC. You have a niche and should exploit it.
Id be up for an apprenticeship under your head brewer when you get this thing going!

 

[andyi]

Just a quick question to the OP....do you happen to be a college student writing a paper and are having us list out all the downside factors? This is just about the only way I can see it.

No, I'm genuinely interested in opening a brewery. I originally wanted info on finding brewers since then I could pin down the exact costs of everything and see if that's feasible. The "downside factors" were unsolicited

I understand the general difficulties of running a business since I run one right now.

 

[fat x nub]

Well man as I said if you got the loot then we should sit down and talk because I live in the Boston area where good beer is a key $$$$$$ maker. I would love to open my own place someday but dont see myself haveing that kind of money anytime soon as im getting married next year, finishing up school and working all the time.

i wouldn't even liek brewing this beer. day in and day out you would be brewing **** beer. That is un-homebrewer like

 

[Edcculus]

Not to discourage you, but this is an interesting read put together by our own Brewpastor:

Don"t try this at home: A day in the life.

 

[andyi]

Contact your local ABC or ATTB if you don’t know who they are you still have a ton of work to do.

Planned on it, they call it the TABC down here

 

[sidneysaintpe]

I don't know where to start!
I am an MBA student and have done a lot of research on the beer industry. First, why do you want to enter into a price war with the macro brewers?? I ask this because, 1. They WILL win and 2. Beer is price inelastic! Demand is NOT affected by price! This is shown in multiple studies:

Ornstein and Hanssens (1985) -0.142
Nelson (1999) -0.200
Nelson (2003) -0.174

As you lower price, demand barely moves so, in effect, you are just transferring economic value to the consumer for nothing + attracting the attention of the big brewers who will crush you if you start to gain any kind of traction!! You must keep price integrity of your respectable beer segment!

I ran multiple regressions on all types of data (California) and saw that the only thing that affects beer demand there is TPI (personal income). My results showed that overall beer demand is not affected by price BUT as people made more or less income they traded up to craft beer or down to macro swill accordingly. People will drink beer in all economic conditions; what beer they drink is only determined, more or less, by their income. Everything else was statistically insignificant!

Further:

From Texas Alcoholic Beverage Code Title 3, Ch. 12;

"Brewpubs are not allowed to distribute (self or otherwise) in Texas. Shipping breweries can self-distribute if they manufacture less than 75,000 bbls of beer per year. You need a manufacturer's license in Texas to make "beer" defined as less than 4% ABW. You need a brewer's permit to make "ale" defined as more than 4% ABW. The 75,000 bbls is calculated as total "beer" and "ale"."

So you can self-distribute as long as you aren't a brew pub or produce more than 75,000 bbls a year.
However, the 25% that distributors tack on should not be looked at in a vacuum. You must look at your ability to achieve the same market penetration for that cost. You can not due to the economies of scale and scope the distributors enjoy. This is a distributors value-add!
Even then it is highly unlikely that a distributor will pick you up until you build sales on your own (especially due to the massive consolidation in the wholesaler industry)
Good luck!

 

[The Pol]

I still think it is a good idea, forget these naysayers and throw some money at it...

 

[joe6pack]

^ What he said.

 

[andyi]

Not to discourage you, but this is an interesting read put together by our own Brewpastor:

Don"t try this at home: A day in the life.

Yeah, I've read that before since I found it linked in another thread. My lessons from this:

1. Don't use crappy old equipment.
2. "Lesson number two: Don't get high on your own supply." (Five points for naming the movie )

 

[The Pol]

It is a solid idea... do it, throw some money at it... get the best of the best equipment and someone that will do all that they can to operate it efficiently, it will work.

 

[sidneysaintpe]

What is solid about it?
His pricing and strategy go against the macro and microeconomic realities that exist.

 

[The Pol]

It is a great idea... I think he has researched it and has a good plan. He is a business man, like he said, he should strike while the iron is hot!

 

[Gregredic]

Hes being scarcastic.

 

[The Pol]

No no, not me... serious, this dude needs an answer... and I am saying yes, do it, let us know how it turns out.

 

[sidneysaintpe]

OK got it. You were beginning to scare me

 

[Revvy]

No no, not me... serious, this dude needs an answer... and I am saying yes, do it, let us know how it turns out.

Or are you just looking to pick up his equipment dirt cheap when it fails?

 

[Gregredic]

I thought The Pol was really fishing for that brew master job.

 

[The Pol]

I will be his brewmaster... no problem. I will use my HERMS as a pilot brewery... I will also put up some of my own money... on certain terms!

 

[andyi]

I don't know where to start!
I am an MBA student and have done a lot of research on the beer industry.

I appreciate your input but the data you cite is a bit too "sterile." It assumes that the beer is sold in a store next to dozens of other similar products.

First, why do you want to enter into a price war with the macro brewers?? I ask this because, 1. They WILL win

Napkin math based on this tells me that you'd have to sell about 100 milllion cans a year before reaching 1% market share. I might be a tad bit crazy, but not that crazy.

So you can self-distribute as long as you aren't a brew pub or produce more than 75,000 bbls a year.

That's almost 25 million cans of beer so I'm safe at least for the first year

 

[The Pol]

I say do it, even if you have to take out a second mortgage to get nice new equipment... I dont know why no one has ever tried this.

 

[Gregredic]

You have still yet to address the health department issue.

 

[BrianTheBrewer]

It is a great idea... I think he has researched it and has a good plan. He is a business man, like he said, he should strike while the iron is hot!

While the iron is hot??!! Hahahahahahaha

 

[The Pol]

He only has to sell 200,000 cans of beer to make $100k... which will cover his operating costs for about 6 months... so he only has to sell like a half million cans of beer a year to break even. It is a great idea dude... I have only ONE other idea that is better... start your own Low Cost Airline... that would be slightly more profitable.

 

[sidneysaintpe]

The data looked at all beer and then was broken down by each beer segment; including beer sold at brewpubs, as well as all on and off premise accounts.

So your strategy is to stay below the radar of the macro brewers? To make a profit on a low margin product you must push volume. As you push volume (to make any money) you will draw attention to yourself. But you haven't laid out your full plan so I can not analyze it further.

Not sure why you want to cut price on a product that is price inelastic? It should only affect demand in the short run. You are assuming beer behaves like most consumer products. It does not.

But lets say it does....

McKinsey and Company looked at this issue and found a 5% decrease in price requires a 17.5% increase in volume just to break even! This equates to a price elasticity of -3.5:1. In the real world normal consumer goods have an elasticity of -1.7:1 MAX. This is why price cutting rarely works and only results in unnecessary low margins.

 

[BrianTheBrewer]

You have still yet to address the health department issue.

Yet to address the health department issue??!! Yet to address the $ issue. The crap beer issue. The actually reason he believe he will make money issue. There are soooooo many issues I could bring up that it would take me a week to type them here....