Jump from homebrew to a brewery

[Mastoras007]

Hello everyone.
I thing i'm reeady to jump in, next months runing a goverment funding for startups.
The idea is to greate a super small brewery manage everything from 1 person (me)
Low cost low production of 500 liters batches brewing 4-5 times per month selling max 100 kegs per month (1st target)
2 fermentors 1 bbt, 50 kegs
Do you think will be manageable?

 

[Brew Cat]

Hello everyone.
I thing i'm reeady to jump in, next months runing a goverment funding for startups.
The idea is to greate a super small brewery manage everything from 1 person (me)
Low cost low production of 500 liters batches brewing 4-5 times per month selling max 100 kegs per month (1st target)
2 fermentors 1 bbt, 50 kegs
Do you think will be manageable?

Do you have a market?

 

[J A]

A) Government funding???? You are obviously NOT livin' in the USA!!!!

B) It ain't easy or necessarily profitable but can work

I've run the numbers that it takes to get to square one in terms of a small bewery/taproom in an active market:
- 3.5 barrel system with 3 fermenters and 60 batches per year
- 1500 sq ft total space, 30-seat taproom retrofit for floor drains, etc to cover ATF and state regs
- 60% production goes to taproom sales, 15% canned for to-go, 25% keg sales (keg sales totally unprofitable at this level but help with brand-building)
- Food sales of at least a few hundred per week
- somewhere near $250K for bare bones start up cost, deferred repayment for 1 year, repayment over 5 years or so if 6% interest (would likely be 2x that)
- 1 assistant/ bartender wages are pretty minimum.

That scenario breaks even if the taproom sales are robust and everything goes right. Also involves investing many 10s of thousands in facility upgrades that you walk away from if and when you expend or move.

 

[Brew Cat]

A) Government funding???? You are obviously NOT livin' in the USA!!!!

B) It ain't easy or necessarily profitable but can work

I've run the numbers that it takes to get to square one in terms of a small bewery/taproom in an active market:
- 3.5 barrel system with 3 fermenters and 60 batches per year
- 1500 sq ft total space, 30-seat taproom retrofit for floor drains, etc to cover ATF and state regs
- 60% production goes to taproom sales, 15% canned for to-go, 25% keg sales (keg sales totally unprofitable at this level but help with brand-building)
- Food sales of at least a few hundred per week
- somewhere near $250K for bare bones start up cost, deferred repayment for 1 year, repayment over 5 years or so if 6% interest (would likely be 2x that)
- 1 assistant/ bartender wages are pretty minimum.

That scenario breaks even if the taproom sales are robust and everything goes right. Also involves investing many 10s of thousands in facility upgrades that you walk away from if and when you expend or move.

Not sure what government funded entails. But some states and municipalities often pitch in. Maybe some low interest loans

 

[Mastoras007]

A) Government funding???? You are obviously NOT livin' in the USA!!!!

B) It ain't easy or necessarily profitable but can work

I've run the numbers that it takes to get to square one in terms of a small bewery/taproom in an active market:
- 3.5 barrel system with 3 fermenters and 60 batches per year
- 1500 sq ft total space, 30-seat taproom retrofit for floor drains, etc to cover ATF and state regs
- 60% production goes to taproom sales, 15% canned for to-go, 25% keg sales (keg sales totally unprofitable at this level but help with brand-building)
- Food sales of at least a few hundred per week
- somewhere near $250K for bare bones start up cost, deferred repayment for 1 year, repayment over 5 years or so if 6% interest (would likely be 2x that)
- 1 assistant/ bartender wages are pretty minimum.

That scenario breaks even if the taproom sales are robust and everything goes right. Also involves investing many 10s of thousands in facility upgrades that you walk away from if and when you expend or move.

Complete different project.
I have discussed again in the past the idea here.
I'm from Greece, things is to different here.
I'm talking just for selling kegs not a taproom, there are not taprooms here.
Total investment cost with alot of self working will be about 40-50k not more, ( i don't have to pay for licence here)
Monthly costs no more than 1000€ without any employees, (increased depending sales)
60 kegs per month for 70$ each (that price is cheap, cheapest cost 65$)
I can do 4200$ per month - expenses will be profitable
Don't have your mind American, is to different here I know because i have discussed again here in the past the idea with others.

In my city there is only 1 brewery selling kegs, we are very big city
Those things are new stuff here

 

[Sandy Feet]

"there are not taprooms here" OUCH! That would suck.
Hopefully, your process has gotten better, and you have the item needed to keep everything sanitized and at the right temperature.

 

[Zambi]

It's very difficult to assess from the outside.
Just a couple of questions come to mind
Are you sure you can sell that many kegs, every month?
How are you going to work the kegs? Deposit system? Returnables?

How is your quality and quality control going to be? Is your product comparable or better than that of the competition?
Is your quality consistent enough, meaning is your "beertype 1" going to taste the same today as the keg you sell in 3 months time?

Only you can answer that. Whichever way you go: I hope it works for you

 

[Mastoras007]

"there are not taprooms here" OUCH! That would suck.
Hopefully, your process has gotten better, and you have the item needed to keep everything sanitized and at the right temperature.

Ye no tap rooms, maybe 2-3 hole country

 

[Mastoras007]

It's very difficult to assess from the outside.
Just a couple of questions come to mind
Are you sure you can sell that many kegs, every month?
How are you going to work the kegs? Deposit system? Returnables?

How is your quality and quality control going to be? Is your product comparable or better than that of the competition?
Is your quality consistent enough, meaning is your "beertype 1" going to taste the same today as the keg you sell in 3 months time?

Only you can answer that. Whichever way you go: I hope it works for you

I'm not sure for anything!!!
Stainless steel returnable, I will deliver and pick up the empty
Summer time we have a lot of tourists in the area, to many beach bar
Im not sure but 60-100 legs is a number i can get

 

[Sandy Feet]

I started homebrewing (well, the right way) after we got a bunch of taprooms, and I learned what good beer was supposed to taste like.
Those are my social outlet these days, and I honestly don't know what I would have done without them this last year.

 

[Bigbre04]

Honestly your math isnt going to work out. and that is FAR too much work for 1 person. Im brewing right now. ill dig in when i get an opening.

 

[Mastoras007]

In

Honestly your math isnt going to work out. and that is FAR too much work for 1 person. Im brewing right now. ill dig in when i get an opening.

You mean to much work for 4 brews per month? Or to much work to build the brewery?
I'm here to hear everything, I'm a homebrewer right now i have no idea from commercial brewing

 

[J A]

If you have good equipment and the infrastructure is in place and you can get by with brewing once a week, I imagine that one person could do the work. Two fermenters is minimum and you would probably having a brite tank to move beer to for kegging. In the US, it's necessary to have an "excise tank" that's inspected for accuracy that must be used to determine the amount of beer produced for taxation purposes. That can double as a brite tank.

My limited experience tells me that there's no gradual process for making the transition. Whatever you know as a homebrewer is probably less useful than you think. The basic process is the same but execution is very different. Handling150 gallons of boiling wort is drastically different from handling 5 or even 10 or 20. If something goes wrong, it doesn't result in a bit of a mess, it can put everything out of commission for days or longer. Also, physically moving 3 or 4 hundred pounds of wet, spent grain after a mash becomes something of a chore compared to lifting a heavy bag out of a pot. Wastewater from cleaning and sanitizing has to be handled as a hazardous material.

I'd say that the brewing is the easy part. The constant cleaning; dealing with kegs coming and going out; filling, moving and storing kegs; equipment upkeep and maintenance; paperwork and bookkeeping; deliveries; marketing and advertising. BTW...you have to account for your kegs being somewhere else most of the time. You're assuming that your kegs will come back within 2 weeks time and in usable condition and in time for cleaning and sanitizing. I wouldn't want to risk that. I'd want 3 or 4 batches worth of kegs at my disposal just in case. If you have a source where you can buy them on short notice you can build up your supply as needed.

And the main thing is to understand whether your market will actually support your efforts...tourist area means seasonal demand. Your beer is not the only one on tap and is unknown. Will your clients sell enough to keep you in business? ...25 bars with 30 seats each will go though something like 3000 bbl per year as a conservative estimate. Your 200+ bbl production could probably find a place in that market but it wouldn't happen immediately. And the beer better be really good - first time, every time!

Best of luck!!! I wish I had to opportunity to do something with lower investment and overhead. In most markets in the US, the real estate, rent, and overhead cost is onerous, not to mention the cost of the build out and equipment.

 

[Mastoras007]

the US, it's necessary to have an "excise tank" that's inspected for accuracy that must be used to determine the amount of beer produced for taxation purposes. That can double as a brite tank.

This work do the Bbt is necessary for calculating tax etc.

you have to account for your kegs being somewhere else most of the time. You're assuming that your kegs will come back within 2 weeks time and in usable condition and in time for cleaning and sanitizing. I wouldn't want to risk that. I'd want 3 or 4 batches worth of kegs at my disposal just in case. If you have a source where you can buy them on short notice you can build up your supply as needed.

Thats something I'm worried about, how many kegs i need to buy? I was thinking about 60 its legit to have stock 60-100 kegs and always full fermentors+bbt?

And the main thing is to understand whether your market will actually support your efforts...tourist area means seasonal demand. Your beer is not the only one on tap and is unknown. Will your clients sell enough to keep you in business? ...25 bars with 30 seats each will go though something like 3000 bbl per year as a conservative estimate. Your 200+ bbl production could probably find a place in that market but it wouldn't happen immediately. And the beer better be really good - first time, every time!

There are to many bars here in my city, a hour drive from my city there are hundreds of beach bars, most of them about 80% selling just the cheapest draft beer, our standard here is to low, few only have ever tried a fresh beer, i think my simplest recipe, just a blonde ale , is way better than those beers, and the price will be almost the same!
As business i think the numbers is reachable, i was managing a business for 10 years, i close because COVID, anyway i want to say that i have a lot of experience at business part, managing a business,
but 0 experience as a professional brewer.
As you say the transition will not be gradual but instant, but anyway i must start from somewhere

 

[J A]

This work do the Bbt is necessary for calculating tax etc.

Thats something I'm worried about, how many kegs i need to buy? I was thinking about 60 its legit to have stock 60-100 kegs and always full fermentors+bbt?

There are to many bars here in my city, a hour drive from my city there are hundreds of beach bars, most of them about 80% selling just the cheapest draft beer, our standard here is to low, few only have ever tried a fresh beer, i think my simplest recipe, just a blonde ale , is way better than those beers, and the price will be almost the same!
As business i think the numbers is reachable, i was managing a business for 10 years, i close because COVID, anyway i want to say that i have a lot of experience at business part, managing a business,
but 0 experience as a professional brewer.
As you say the transition will not be gradual but instant, but anyway i must start from somewhere

There are a lot of online resources. Also, you might really benefit from finding a good consultant. There are many who specialize in brewery startups and even a session or two might open your eyes as to what you should expect.

It's usually the case here that small breweries will get set up and brew a number of test batches while the licensing and permitting process(es) are in the works. That way they can be sure to have the problems worked out before they try to sell any beer.

Your homebrewed may be great but you have to find out how to reproduce the quality at a much, much bigger volume. It could easily take a number of trial batches to achieve the type of beer that you can sell. Also, mastering the process of packaging the beer is a very different set of skills. One bad keg can lose a customer for good. As homebrewers, we're used to corny kegs with ez-open tops and complete access to cleaning. Half-barrel Sanke-style kegs that are used by bars are very different indeed.

Keep an open mind and positive attitude.

 

[Brew Cat]

Sounds like a saturated market. But you know better than us.

 

[Mastoras007]

There are a lot of online resources. Also, you might really benefit from finding a good consultant. There are many who specialize in brewery startups and even a session or two might open your eyes as to what you should expect

It's usually the case here that small breweries will get set up and brew a number of test batches while the licensing and permitting process(es) are in the works. That way they can be sure to have the problems worked out before they try to sell any beer.

thats greate ideas

 

[J A]

Regarding your potential market, tourists are not loyal customers. They come and go and are not worried about what sort of beer is on tap. They're enjoying the beautiful surroundings and sapphire waters and incredible food and culture (I really want to visit Greece some day ). Try to guage the enthusiasm for your product by doing some marketing research. It's very possible that the bar owners are very happy selling the cheapest draft beer and don't see the need for a better, more expensive product. Because we as homebrewers really appreciate and enjoy good beer, doesn't mean that the feeling is universal. Very many people will try a glass of your best beer side-by-side with the basic commercial draft beer and find no discernable difference.

Surely there is a large population of local customers who will drink beer during the off season and they might be proud to support and enjoy something that's brewed in their hometown. That's the loyal customer base that will keep you going. As for the tourist class, you're totally dependent on the bartender on duty to sell your beer. Every single foreigner who steps up to the bar is going to ask the barstaff (who is a chiseled Adonis or a ravishing Aphrodite - they're always beautiful in a beach town ) for a suggestion. If your beer is the local attraction, he or she will be quick to suggest it. Your job is to keep the bar owner/manager and staff interested in your product. You're selling to middlemen, not to drinkers.

 

[Mastoras007]

It's very possible that the bar owners are very happy selling the cheapest draft beer and don't see the need for a better, more expensive product.

thats true! thats hapening right now, theree is no competition, beer is not the reason for someone go to a spesific beach bar, they are all ful anyway! there is not in our culture ''local beer'' it's new, we are not germany or czech, we produce alot of wine, and some other drings but not beer.
last years we had explosion of breweries from 40 to 70 in 2 years, i watch them growing very fast and all of them, exept few probably, they evolve fast, starting small and geting big factories, in my city is just 1 open 6 years ago, its like a small factory, beers not so good, to my opinion, i avoid to dring them, they selling expencive and the locals suporting, but there is not competittion!

 

[J A]

thats true! thats hapening right now, theree is no competition, beer is not the reason for someone go to a spesific beach bar, they are all ful anyway! there is not in our culture ''local beer'' it's new, we are not germany or czech, we produce alot of wine, and some other drings but not beer.
last years we had explosion of breweries from 40 to 70 in 2 years, i watch them growing very fast and all of them, exept few probably, they evolve fast, starting small and geting big factories, in my city is just 1 open 6 years ago, its like a small factory, beers not so good, to my opinion, i avoid to dring them, they selling expencive and the locals suporting, but there is not competittion!

Go get 'em man!!! I'll find a cheap plane ticket and come over and help you get set up!!!