What to consider when opening a brewery?

March 14, 2007 10:20 AM

I think my town could support a microbrewery. Where do I start? What are some considerations?

I live in Gainesville FL, the home of the University of Florida. UF has somewhere in the neighborhood of 50k students. We have a fairly beer-savvy community. Between the students, the townies, the grads that never leave and the alumni that come every football season, this town loves beer. We have pubs that feature 200+ beers. We have multiple stores that carry rare american craft and microbrews, many people drink belgian ales, one pub has a belgian on tap. We have an active homebrewing club and a successful home brewing supply shop. There are 2 brew pubs (If you count Hops as one).

I have NOT dug into the legislation yet, obviously that should be my first priority. How do I even start that? Where do I go?

Ignoring laws for one second, what else do I need to consider? I'm on pretty good terms with a number of local restaurant owners, I think I could get some start up money. How do I create a business plan, where do I get the "numbers" from? Is there a resource for getting information on similar projects/businesses?

Though I'd eventually like to run a pub of some sort, I'm imagining a straight brewery that distributes to local stores and bars.

I haven't decided whether bottling or kegging is the way to go, I imagine that bottles would lead to easier distribution. I'd want to minimize initial costs and just focus on one method or another.

Help me flesh out my hazy ideas or point me in the direction of some good resources.

Finally, I don't think this will work unless I can put out a bottle that is at least as cheap as Sam Adams to the consumer. What scale would I have to reach to begin making beer rather cheap/profitable. I'd like to be able to compete with common premium beers sold at most restaurants.

Thanks.

posted by Telf to Work & Money (13 answers total)

previously
posted by junkbox at 10:43 AM on March 14, 2007

Best answer: Check out the Brewers Association website, particularly their bookstore. They just published a new book, The Brewers Association's Guide to Starting Your Own Brewery. That should be as good a start as any. A more case study-like book is Book Brewing up a business : adventures in entrepreneurship from the founder of Dogfish Head Craft Brewery.

Finally, the Brews & Views BBoard is a superb resource for homebrewers and craft brewers alike.
posted by cog_nate at 11:01 AM on March 14, 2007

Have you ever brewed yourself? That’s probably where you should start. In order to develop a recipe for your beer, either you, or someone you employ, is going to have to have some actual craft brewing experience.

As for costs, all commercial breweries have to spend quite a bit of money on quality control, ensuring that each batch is consistent in terms of aroma, color, taste, yield, alcohol content, etc.
posted by ijoshua at 11:12 AM on March 14, 2007

Best answer: Avoid bottles at the outset. Bottling lines are a huge expense and a major hassle. You might actually think about canning your beer, which is a new trend in microbrewing.

You should not rule out a pub, either. Most brewers I know wish they had some way to sell direct to the public. In fact, it's often the cash from an on-site restaurant that keeps them going at the outset.

And what ijoshua said. Try making your own beer first. The very best microbreweries in America are run by entrepreneurs who actually love brewing (as opposed to just making money).

Sam Calagione of Dogfish Head Brewery in Delaware wrote a very good book on the business (it's actually a decent read even if you're not into brewing).
posted by sixpack at 11:38 AM on March 14, 2007

Best answer: Another vote to start making your own beer, in 5 gallon batches, in your kitchen or wherever.

Cog_nate's links are good and probably what I would've pointed out if he hadn't already. That said, a lot of these are about starting a brewery, i.e., place where you actually make beer with your own hands. This is a huge capital expense and, as you'll discover in your skunkworks brewery, getting up to speed with sanitation and temperature control can actually be quite difficult.

I went to a lecture by Jim Koch where he told us that he actually started by perfecting an old family recipe in his kitchen, picked a name and designed some labels, and then started contracting out the actual brewing to existing facilities like the regional Anheuser-Busch brewery. Yes, you read that right: the original Sam Adams was made in a Bud brewery. This is because those breweries have lots of capacity and very good brewers, no matter what you think of the product they usually turn out.

A lot of craft brewers turn up their nose at contract brewing, but if you're more interested in getting your product in stores ASAP, it can really be the way to go, at least at first. Once you have a receptive market, you can open your own brewery/brewpub/whatever. Of course, you can instead go the grassroots way, open the brewpub, and see who shows up. It's just that it's a big investment up front and requires a lot of additional expertise, particularly if you're more interested in package distribution rather than, well... giving people the brewery/pub experience.

Something to consider, anyway.
posted by rkent at 12:34 PM on March 14, 2007 [1 favorite]

Best answer: “contracting out the actual brewing to existing facilities”

This is how Terrapin has operated for several years. They only last month announced plans to establish their own facilities in Athens, GA. According to ABH, they’re spending on the order of $1 to 2 million for retrofitting a warehouse.
posted by ijoshua at 1:21 PM on March 14, 2007

Response by poster: Great answers guys. The canning and the contract brewing are two options I had not considered.

Terrapin is actually one of the breweries I want to get some info on as I think the market in Athens would be comparable to Gainesville.

I forgot to mention in the original post, but I've been brewing for about 2 years now.

Keep the ideas coming. Warnings and other considerations are welcome as well.

I'm going to look over these books.
posted by Telf at 2:12 PM on March 14, 2007

Sam Calagione of Dogfish Head Brewery in Delaware wrote a very good book on the business (it's actually a decent read even if you're not into brewing).

I'm lucky to be relatively close to Dogfish Head, and I recently went to a Dogfish Head tasting run through a local beer & wine bar and hosted by none other than Sam himself. He knows the business through and through, and has done extremely well for himself while making great beer that he loves first and foremost. His book will be a great resource.
posted by The Michael The at 2:49 PM on March 14, 2007

Response by poster: Bought both of the recommended books above. I Sam's book was already on my wishlist at Amazon.

A brew pub is my ultimate goal, but would just complicate things right now.
posted by Telf at 4:09 PM on March 14, 2007

Best answer: I would recommend Brewery Planner as a good general purpose overview by people who have been there, done that. It's a bit old now, but the articles are pretty timeless and cover things you need to give some thought to, like cleaning, distribution and wastewater disposal (you can look inside at Amazon). It was interesting reading their blanked-out business plan, which you can deduce was prepared by the people who started Fish Brewery in Olympia, WA.

(Read what happened next here - it's a useful read)

I think Sam's book is more geared to the MBA / entrepreneurial set than someone who really wants to know what it's like to start a brewery. The big things are finance and working capital, and Sam just sort of breezes over money. Sam's book is more about creating a niche for yourself, and he's pretty inimitable. He does have good comments on operating a brewpub, which, as has been noted before, is actually a pretty good way to operate - picking up the full margin for your production is a good place to be. But remember you need a chef and a restaurant operation as well as a brewery.

I am a partner in a 10-barrel brewery in the UK. There are definitely some differences to the US (our regulatory regime is not nearly as onerous as the ATF regs). I would just put the reality check in place - running a brewery is hard graft. Physical work. Selling beer. Quality control. Work all the hours. Think million-plus in capital cost (depending on what you want to do). It's not glamorous, but it is very rewarding. And, hey, free beer...

I think your market sounds attractive and would be surprised if someone had not already given it a look. Do your market research. Another good pointer you'll take from the Brewery Planner.

There was an interesting podcast from two women who are starting a gluten-free brewery in Arkansas. Their brewery site is here, and the podcast can be found here (scroll down to January 18, 2007 episode).

Good luck!
posted by sagwalla at 9:06 AM on March 15, 2007

Response by poster: Every single response to this post was incredibly helpful. Thanks for the good advice. I eventually ordered:

Starting Your Own Brewery
Brewing Up a Business
Beer School

The second 2 are considerably less specific than the first title, but seem like they will give me some ideas of the difficulties involved.

Sagwalla,
I'm listening to the podcast right now, interesting stuff.
posted by Telf at 12:37 PM on March 16, 2007

Telf - FWIW, I was not that impressed with the gluten brewery's proposition, but I found their enthusiasm refreshing. I am sure that brewery economics are different in the US than in the UK, but I did not see a convincing case for investment or even think of asking for a copy of their business plan to look at it in more detail. I think their plans are too ambitious given the market for their product (and the effort they would have to make to sell into the market). I think a more sensible approach for them would be to aim lower and grow. But you read from Sam's book that this is a recipe for lurching forward and involves tremendous risks - both financial and in terms of product consistency.

I once looked at investing in the Baderbrau brewery in Chicago. Their broker effectively talked me out of it. As I understand Goose Island eventually bought their assets after they crashed and burned. There are superstars in this industry, but there are also a lot of ordinary folks trying to eke out a living.

Cheers!
posted by sagwalla at 3:47 PM on March 19, 2007

Response by poster: I think that I'm going to bite the bullet and enroll at the Siebel Institute. It's a decent chunk of change, but will probably be a great learning experience in both the brewing and business aspects.
posted by Telf at 8:58 PM on March 21, 2007