Let’s Do It, NOW!

For BeerNexus.com


It’s always seemed like a great idea, you’ve dreamed about how much fun it would
be, but you’ve hemmed and hawed about it, had a million and one excuses and
never put it into motion. It’s certainly not easy, but if it’s something you want to do,
then make a decision.

And of course while you’ve been mulling over opening a brewery, thousands of
others have done just that, opened breweries to the point where we now have about
6,000! So did you wait too long is the market saturated? Well in some places it might
be, but the interesting thing about the craft brewery scene is that we, craft beer
lovers, get all excited when we hear a new brewery is opening and want to go try
them, which is a good thing. And the opposite of competition seems to have
happened in many places, where there are two or three brewery tasting rooms not
too far from each other. We don’t want to travel and just visit one, we want to visit two
or three. So having more breweries actually seems to have helped some areas
become destinations for us, which in turn has been better for all the breweries also.

So the window to continue to open breweries doesn’t appear to have closed yet. Now
that doesn’t mean if we have a downturn in the economy that we won’t see a bunch
closing. I’m guessing the margins are thin and if we consumers have to tighten our
belts that should hurt brewery tasting rooms/on premise sales and consumption like it
does restaurants during a downturn.

So what do you need if you if you truly want to go ahead with it. I started making my
list but also figured there must be more info online and sure enough there is.
First and probably foremost would be PASSION. If you’re not passionate about
brewing why would you bother. If you think you can be the next Goose Island or Devil’
s Backbone, etc. and get bought out by one of the mega brewers then you’re wasting
your time. That’s not passion, that’s circumstance and it’s probably easier to get
struck by lightning. And you gotta love it because it’s going to take a lot of something
else you’ll need…

TIME. So you’ve homebrewed on the side and others love it, so you’ll just ramp it up
a little…NOT. This will be a business and brewing on a large scale will take more of
your time than you can imagine. In addition to the actual brewing, which will be on a
large scale now, think about the time needed for talking to customers in your tasting
room, going out and hawking to bars if you’re not going to sign up with a distributor;
assuming one would take you, all the financial issues and paperwork…to name a
few.. Owning any business is a time consuming effort, but before we get into that
detail let’s talk about what you need next.

A PLAN. Any business has or at least should have a master plan and without one you
don’t really know what the next steps or obstacles will be. What is your vision and are
you committed to it? Expect to do lots of market research, as you need to understand
how you should fit in. And you need something to define what you expect success to
look like. The more detail the better which means you’ve really thought it through; a
one pager does not cut it. And clearly understand that a plan does not guarantee
success, as some of the bigger craft breweries who had a plan wound up on the
auction block when their projections didn’t pan out and couldn’t recover; Smuttynose
and Green Flash to name a couple of recent ones. Expect to spend a lot of time
writing and rewriting your plan before its ready.

An important aspect of your Plan needs to be an accommodation for growth. If you
make great beer and are attracting more craft beer lovers you’ll need to produce
more beer so need the ability to expand both actual square footage and brewing
capacity or you could get stuck.

CASH or at least some investors who are willing to back you. You need a building, so
there’s rent and utilities every month. You’ll need to renovate it, so construction
costs. You’ll need brewing equipment, which if you’re lucky you’ll find some good
used equipment, if someone is going out of business or upgrading, but at the rate
they’re opening that might not happen.  I read somewhere a new 30 barrel system
could run hundreds of thousands, which seems high, not to mention having someone
transport those big shiny vessels to you. There will be legal expenses for setting up a
corporate structure; filing with the feds, filing with the state, getting permits and
licenses, insurance, a website, tap handles, glasses and t-shirts, etc.. Understanding
startup costs is critical also since you may not get your license till your brewery is
completely setup and running, so you may not sell a drop of beer for a period of time
after you start.

And then there’s ONGOING CASH, since you will need to probably pump back any
“profits” to continue to grow until you reach a certain stage; i.e. don’t expect to be
living off your profits for quite a while, opening a brewery is not a get-rich-quick
scheme. I’ve read where some breweries start with $250K and really skimp along to
make it and others with a $1M or more and quite a few different issues can affect
that. And by the way, do you have a job that you’ll still be doing forty hours a week
and this is really a sidelight or is this your true focus?

There’s another really important issue to address upfront; are you planning to open
a “regular” brewery where you may bottle or can and sell off premise or a Nano brew
where basically everything you make you will sell on premise. A Nano is a much
cheaper way to get a start but it’s also very limiting if everyone has to come to you to
taste your beer.

LOCATION. Well you already live somewhere and unless you’re planning to move,
then you’re probably looking in a general area. Older unused buildings, such as
factories, banks, post offices, etc. have been great places for some breweries to find
adequate space. And there are many brewers who make a home in industrial strip
malls. Usually you have a wide open space to work with and can more easily tailor it
to your needs. And keep in mind that some areas will not have a lot of space
available or at a reasonable cost for your needs. I had to laugh when the Hoboken
Brewery opened up. They said well there’s no brewery in Hoboken, NJ so let’s start
one, initially contract brewed and then had trouble finding space to put a brewery in
Hoboken…really; go back to the planning stage, do not pass Go, do not brew beer.

Since we just mentioned it, many brewers start by contract brewing; having another
brewery brew their beer. In one sense it’s a great way to start as you can be working
on a location after you’ve established yourself. Of course as your business is
expanding you’ll be taking on all the aspects of location, construction, equipment,
etc. Obviously there are pros and cons to both approaches…hope that’s in your plan.

So a really well thought out plan is critical.

And giving some thought to the styles of beer you’ll brew should be on your list.
Maybe you brew something that fits into an underserved or new segment of the
market. I do think there might be one out there which younger entrepreneurs wouldn’t
necessarily recognize.  We craft beer drinkers and lovers span decades from the 20’
s through the 70’s. Those at the latter end of the spectrum probably don’t drink as
much as they used to and probably stay away from the 10-14% Russian imperial
stouts. You can’t have many of those and still walk straight, not to mention some of
these folks are definitely on medication where they shouldn’t be drinking a whole lot.
So why have I never seen a NA craft beer? Yes non-alcoholic! I think it fits in with the
trend to the lower ABV lagers we’re seeing come out, but with some reasonable
taste. Drinking a good tasting beer, even without the alcohol, is worthwhile when you’
re hanging out with friends, being social or just sitting on your deck on a hot summer
day.

And there is another issue the older craft beer drinkers might appreciate a little help
with. To put it bluntly…regularity. Yes sometimes that can be an issue. I’ve seen lots
of crazy things in craft beers, except for one fruit, which could be the answer…the
prune. Why have I never seen a prune lager or a prune ale or a prune IPA? You can’
t tell me it won’t taste good as you really don’t know till you’ve tried it. I can see this
really catching on with the older generation of craft beer drinkers . And a little
marketing savvy could also help. Call it “Regular” beer instead of prune. Then you’d
have a great slogan; Stay Regular with Regular! Maybe this might catch on more for
craft breweries in Florida or Arizona, but again I haven’t seen anyone try it.

Okay so that’s a quick primer, even with some bonus ideas for you. I’m sure others
will chime in with other thoughts, but hey all I ask is you make good beer and
acknowledge my prep work for you with a brew or two…not much to ask…




Glenn DeLuca writes about beer and culture of drinking. He may
be reached by writing thebigG@beernexus.com.

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Glenn DeLuca
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