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General Category => Going Pro => Topic started by: Thirsty_Monk on March 15, 2012, 11:41:26 PM

Title: Another view about commercial Nano brewing.
Post by: Thirsty_Monk on March 15, 2012, 11:41:26 PM
Here is post from ProBrewer:
http://www.probrewer.com/vbulletin/showthread.php?p=77810#post77810
Title: Re: Another view about commercial Nano brewing.
Post by: nateo on March 16, 2012, 02:54:02 PM
I spent an afternoon crunching the numbers, and it became apparent that anything under 3bbl would most likely end up being a money pit, even with optimistic estimates.

Brewing is an industry. Economies of scale make a big difference very quickly.

The guy who posted that does mention that it can be useful as a "proof of concept" thing to get the brewery up and running, but any business plan involving nanobrewing should either have outside capital planned into it, or not plan on being able to pay yourself for you time.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on March 16, 2012, 09:16:24 PM
Man, that guy hit the nail on the head. I could have wrote that. FTR I have been suggesting teh "proof of concept" thing on small systems from the beginning. On anything smaller than a 7-10 bbl system that is all you will be doing. If that is what a brewer is trying to do I say go for it. But just understand the amount of free labor it takes to float such an endeavor.
Title: Re: Another view about commercial Nano brewing.
Post by: a10t2 on March 16, 2012, 09:27:22 PM
I'm actually considering setting up a .5-1.5 bbl pilot system. Economically, I can't justify doing that instead of just putting the money into the full-size system, but it would be fun to have around for pilot batches and one-off beers down the road.

Realistically, I think my 10 gal home system will be our "pilot system".
Title: Re: Another view about commercial Nano brewing.
Post by: nateo on March 17, 2012, 09:17:45 PM
I know it's apples-to-oranges, but I asked about production volume over on winepress.us (a site for amateur and small wineries), and I thought the response was interesting:

"My advice is to start small and let sales drive your future volume increases. Running out of wine and putting up a sign that says sold out is far better that putting up a sign that says "selling our wine cheap because it's not very good and we overproduced and can't sell it". Of course you're sign won't say that but this is modern America and customers are very perceptive. When a winery is constantly running promotions and sales there is a subtle message of desperation sent that devalues the brand. When you put up the sign that says sold out the underlying message is "this stuff is damn good and you should have gotten off your butt and bought some when it was available and next time you see it available you'd better buy a case before it's sold out again."

Who knows? Maybe if you're really marketing saavy you can turn ultra-low production into a selling point, and command a high price for you beer.
Title: Re: Another view about commercial Nano brewing.
Post by: hopfenundmalz on March 17, 2012, 10:43:03 PM
I'm actually considering setting up a .5-1.5 bbl pilot system. Economically, I can't justify doing that instead of just putting the money into the full-size system, but it would be fun to have around for pilot batches and one-off beers down the road.

Realistically, I think my 10 gal home system will be our "pilot system".

One of the local places does this.  They often feature beers brewed under the supervision of the brewers that are on tap one night a week.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on March 18, 2012, 01:01:11 AM


Who knows? Maybe if you're really marketing saavy you can turn ultra-low production into a selling point, and command a high price for you beer.

Wow. And here I've been trying to undercut Natty Lite all this time.  ;)
Title: Re: Another view about commercial Nano brewing.
Post by: nateo on March 18, 2012, 01:24:09 AM
Wow. And here I've been trying to undercut Natty Lite all this time.  ;)

Ommegang comes to mind. I have no idea how much money they make, but I've never seen their beers on tap or in 6 packs.

Belgian beers in general sell for much more per liter than any 6 packs I've seen.

Anyway, it was just something I thought was interesting.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on March 18, 2012, 12:35:18 PM
I was just being a smart aleck (drinking all day brings that out in me) - I agree with you 100% and that is the model we follow. In some restaurants we have the most expensive beer on tap. There is a feeling of prestige that goes along with paying a little more. Of course, you also have to have quality to back it up.
Title: Re: Another view about commercial Nano brewing.
Post by: Jimmy K on March 19, 2012, 08:13:29 PM
I know it's apples-to-oranges, but I asked about production volume over on winepress.us (a site for amateur and small wineries), and I thought the response was interesting:

"My advice is to start small and let sales drive your future volume increases. Running out of wine and putting up a sign that says sold out is far better that putting up a sign that says "selling our wine cheap because it's not very good and we overproduced and can't sell it". Of course you're sign won't say that but this is modern America and customers are very perceptive. When a winery is constantly running promotions and sales there is a subtle message of desperation sent that devalues the brand. When you put up the sign that says sold out the underlying message is "this stuff is damn good and you should have gotten off your butt and bought some when it was available and next time you see it available you'd better buy a case before it's sold out again."

Who knows? Maybe if you're really marketing saavy you can turn ultra-low production into a selling point, and command a high price for you beer.

I think that is easier for a winery which has a seasonal/annual product. Customers know that you can't just 'buy more grain' and the culture is more geared towards customers buying for storage (even if it is just short term).   
Title: Re: Another view about commercial Nano brewing.
Post by: morticaixavier on March 19, 2012, 08:26:12 PM
I know it's apples-to-oranges, but I asked about production volume over on winepress.us (a site for amateur and small wineries), and I thought the response was interesting:

"My advice is to start small and let sales drive your future volume increases. Running out of wine and putting up a sign that says sold out is far better that putting up a sign that says "selling our wine cheap because it's not very good and we overproduced and can't sell it". Of course you're sign won't say that but this is modern America and customers are very perceptive. When a winery is constantly running promotions and sales there is a subtle message of desperation sent that devalues the brand. When you put up the sign that says sold out the underlying message is "this stuff is damn good and you should have gotten off your butt and bought some when it was available and next time you see it available you'd better buy a case before it's sold out again."

Who knows? Maybe if you're really marketing saavy you can turn ultra-low production into a selling point, and command a high price for you beer.

I think that is easier for a winery which has a seasonal/annual product. Customers know that you can't just 'buy more grain' and the culture is more geared towards customers buying for storage (even if it is just short term).

This is where that all important 'Estate' label would come into the equation. If you are growing your own grain and hops it becomes a seasonal product as once your crop is gone it's gone.
Title: Re: Another view about commercial Nano brewing.
Post by: deepsouth on March 19, 2012, 09:08:08 PM
thanks for posting.
Title: Re: Another view about commercial Nano brewing.
Post by: morticaixavier on March 19, 2012, 10:02:03 PM
thanks for posting.


??
Title: Re: Another view about commercial Nano brewing.
Post by: nateo on March 19, 2012, 11:31:16 PM
I came across these guys the other day: http://www.crookedstave.com/

Looks like they're trying to do pretty much what I was describing. Who knows if it'll work out for them.
Title: Re: Another view about commercial Nano brewing.
Post by: garc_mall on March 20, 2012, 09:03:21 PM
I came across these guys the other day: http://www.crookedstave.com/

Looks like they're trying to do pretty much what I was describing. Who knows if it'll work out for them.

I don't know how successful he is money wise, but he makes a mean saison. I picked up a bottle when I was in Colorado, and it was tasty.
Title: Re: Another view about commercial Nano brewing.
Post by: nateo on March 20, 2012, 09:49:12 PM
I don't know how successful he is money wise, but he makes a mean saison. I picked up a bottle when I was in Colorado, and it was tasty.

He's started since I moved from Denver. If I were still there, I'd probably get a Reserve membership. I'm heading out in May for a friend's wedding, so I'll pick up some of his bottles.
Title: Re: Another view about commercial Nano brewing.
Post by: wiley on March 21, 2012, 12:23:05 AM
I don't know how successful he is money wise, but he makes a mean saison. I picked up a bottle when I was in Colorado, and it was tasty.

He's started since I moved from Denver. If I were still there, I'd probably get a Reserve membership. I'm heading out in May for a friend's wedding, so I'll pick up some of his bottles.

They're doing some pretty interesting things with saisons and funky beers. I believe he's an alt prop with Funkwerks -- not certain, but I believe he has his own foudres and is working at opening his own place. One more option/route that isn't "Nano"...
Title: Re: Another view about commercial Nano brewing.
Post by: beersk on March 21, 2012, 03:24:52 PM
thanks for posting.


??
I think he's referring to the original post.
Title: Re: Another view about commercial Nano brewing.
Post by: nateo on March 21, 2012, 03:31:26 PM
They're doing some pretty interesting things with saisons and funky beers. I believe he's an alt prop with Funkwerks

As an aside, Funkwerks made the most disappointing beer I've ever tried. It was ok, but uninspired. A pretty run-of-the-mill Saison. I tried their New Zealand-hopped version too, which was better, but also unremarkable. I expected so much more from a brewery called "Funkwerks."
Title: Re: Another view about commercial Nano brewing.
Post by: suprchunk on April 02, 2012, 04:46:33 PM
When you put up the sign that says sold out the underlying message is "this stuff is damn good and you should have gotten off your butt and bought some when it was available and next time you see it available you'd better buy a case before it's sold out again."

Sadly I think this is the trend with most brewers nowadays. Too many wine people came into the industry and saw how that worked with wine, now they are doing it with beer. Darklord anyone? Kate the Great? Reserve Societies? The 'exclusivity' or the 'I-got-it-and-you-didn't' crowd is becoming larger each year.

Now there are some good beers that are sold out because they are good. And they seem to try to make more each year. Demand for those have grown semi-organically because the beers are really good. But the 'special release' mentality is going to end up hurting more than it helps.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on April 02, 2012, 05:09:10 PM
I don't think it is sad at all, I think it is good and clever marketing. Nothing to be sad about unless you miss out!
Title: Re: Another view about commercial Nano brewing.
Post by: a10t2 on April 02, 2012, 05:20:37 PM
Darklord anyone?

A beer that's sold *only* on marketing if ever there was one. Damn near undrinkable IMHO.
Title: Re: Another view about commercial Nano brewing.
Post by: jmcamerlengo on April 02, 2012, 05:27:48 PM
Major just out of curiousity do you think 3 bbl system would survive in a brewpub? With say 75 seats?

Im assuming 5 bbl per year per seat. That'd mean Id have to brew 3 times a week. No distributing everything would be sold by the pint or growler from the pub.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on April 02, 2012, 05:52:18 PM
i think it is feasible, especially if you add a guest tap or three.
Title: Re: Another view about commercial Nano brewing.
Post by: wiley on April 02, 2012, 06:00:52 PM
Sadly I think this is the trend with most brewers nowadays. Too many wine people came into the industry and saw how that worked with wine, now they are doing it with beer. Darklord anyone? Kate the Great? Reserve Societies? The 'exclusivity' or the 'I-got-it-and-you-didn't' crowd is becoming larger each year.

Now there are some good beers that are sold out because they are good. And they seem to try to make more each year. Demand for those have grown semi-organically because the beers are really good. But the 'special release' mentality is going to end up hurting more than it helps.

I have to agree with Keith -- it's all marketing, and if it drives more sales for craft beer, go for it... so long as the marketing / campaign doesn't blur the lines of truth.

I do, however, agree that this type of marketing lends itself to furthering the 'beer snob' mentality (which the industry could do with less of), but IMHO that has more to do with the consumers and less to do with the brewers/breweries. Any harm caused is the result of consumers and their need to feel better than the next guy. Could brewers/breweries do more to foster a more inclusive message? Sure -- but at the end of the day, they're trying to create excitement and buzz for their brands in order to stay relevant and competitive, which I can't find any harm in...
Title: Re: Another view about commercial Nano brewing.
Post by: boulderbrewer on April 08, 2012, 05:08:48 AM
I will give you another example, I will be brewing 7bbl of beers and double brews etc. and if I want to do something crazy it is only going to be a 1/2bbl because that is the size of my pilot (homebrew) brewery. I understand the want for it all the time but somethings are just a once in a lifetime thing. I can't tie up a bright tank for 7 months till the RIS is ready! but bet your sweet butt I can condition a 1/2 barrel easy for 7 months.
Title: Another view about commercial Nano brewing.
Post by: majorvices on April 08, 2012, 05:32:28 PM
This is exactly why I have basically two brew systems. One 2.5 bbl and the other one 15 though right now I am only filling seven bbl fermenters.
Title: Re: Another view about commercial Nano brewing.
Post by: micsager on May 03, 2012, 03:51:08 PM
I'm actually considering setting up a .5-1.5 bbl pilot system. Economically, I can't justify doing that instead of just putting the money into the full-size system, but it would be fun to have around for pilot batches and one-off beers down the road.

Realistically, I think my 10 gal home system will be our "pilot system".

I'm gonna brew on my 10gl TopTier system.  For us, it's still gonna be a hobby, but one that makes a little money, or at least helps pay for itself.  We've now got two committments for taps at local places, and that's all we really need.  I've done the math on this and even with the serving places doubling their money, I can still make enough to pay for this to pay for itself.

We have no delusions of quitting our day jobs.  And have got our sytems down where we can brew 2, 10 gallon batches in less than 8 hours.  And if things work out, we have a line on 3, 30 gallon used boilermakers for under $500. 

Title: Re: Another view about commercial Nano brewing.
Post by: a10t2 on May 03, 2012, 04:00:35 PM
I've done the math on this and even with the serving places doubling their money, I can still make enough to pay for this to pay for itself.

Let's see if I can do this without using numbers...

If you mean that you're planning on charging half of retail for your kegs, that's quite a bit more than is typical. More than double the typical wholesale price here in CO, actually. Which is why the conventional wisdom is that it isn't possible to turn a profit on a system that size.

Of course, if you've already worked out pricing with your customers, just ignore me.
Title: Re: Another view about commercial Nano brewing.
Post by: micsager on May 03, 2012, 04:05:08 PM
I've done the math on this and even with the serving places doubling their money, I can still make enough to pay for this to pay for itself.

Let's see if I can do this without using numbers...

If you mean that you're planning on charging half of retail for your kegs, that's quite a bit more than is typical. More than double the typical wholesale price here in CO, actually. Which is why the conventional wisdom is that it isn't possible to turn a profit on a system that size.

Of course, if you've already worked out pricing with your customers, just ignore me.

I've worked out pricing for one of them.  And assuming they get a full 40 pints out of each keg, they will almost triple their money.  I just said "double" to make it easy.  Plus, there will always be some waste from bad pours and such. 
Title: Re: Another view about commercial Nano brewing.
Post by: anthony on May 03, 2012, 04:06:50 PM
Ironically, I have been looking at these numbers quite closely as our tasting room where we planned to sell 4, 8, and 16oz samples of the beer has come under quite a bit of attack by local residents.

In our market, with my overhead (rent, utilities, etc.), using the standard sixtel pricing in our area, I would need to wholesale 500 barrels per year to break even. That is a lot of brewing on any system less than 10 barrels. That is self-distributed of course, if I had to use a distributor, it would be more.
Title: Another view about commercial Nano brewing.
Post by: denny on May 03, 2012, 04:14:36 PM
Ironically, I have been looking at these numbers quite closely as our tasting room where we planned to sell 4, 8, and 16oz samples of the beer has come under quite a bit of attack by local residents.

In our market, with my overhead (rent, utilities, etc.), using the standard sixtel pricing in our area, I would need to wholesale 500 barrels per year to break even. That is a lot of brewing on any system less than 10 barrels. That is self-distributed of course, if I had to use a distributor, it would be more.

Not to mention that's just breaking even.  I can't imagine you wouldn't want a return on your investment and effort.


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Title: Re: Another view about commercial Nano brewing.
Post by: a10t2 on May 03, 2012, 05:03:08 PM
I would need to wholesale 500 barrels per year to break even. That is a lot of brewing on any system less than 10 barrels.

That wouldn't be an unusual pace (3.2 brews/week) even on a 3 bbl system. On a 7 bbl or 10 hL system it would be positively leisurely.
Title: Re: Another view about commercial Nano brewing.
Post by: jeffy on May 03, 2012, 09:21:03 PM
Nobody seems to mention the fact that brewers tend to give away a sizeable amount of their "product" at festivals, dinners and other marketing events.  I think you need to figure some of that into the estimates, too.
Title: Re: Another view about commercial Nano brewing.
Post by: Thirsty_Monk on May 03, 2012, 10:33:19 PM
I would need to wholesale 500 barrels per year to break even. That is a lot of brewing on any system less than 10 barrels.

That wouldn't be an unusual pace (3.2 brews/week) even on a 3 bbl system. On a 7 bbl or 10 hL system it would be positively leisurely.
Self distribution takes a lot of time.
I have hard time maintaining 250 BBL/year self distributing.
Unlike in brewpub where people come to you.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on May 03, 2012, 10:38:44 PM
We've actually stopped giving away beer for most events unless there is some serious recompense. We make the festivals pay now, too. It doesn't make sense for the fest to make out like a bank heist while the brewery is only there under the guise of "marketing their product". Without the diverse breweries pedaling (often times) their rare and special beer, the festivals have no attraction. It isn't the fests offering marketing for the breweries - it's the other way 'round. So why would we give them free beer? Screw 'em if they don't wanna pay for it.

Now, charity may be a different case, but even then a discount is normally what we offer.
Title: Re: Another view about commercial Nano brewing.
Post by: a10t2 on May 03, 2012, 10:56:27 PM
Self distribution takes a lot of time.
I have hard time maintaining 250 BBL/year self distributing.

That's a good point; I wasn't thinking about one man operations.

Obviously there would be a lot of specific market factors to consider, but my intuition is that for all but the smallest of nanos it makes financial sense to pay an employee (near) minimum wage to do distribution. Skilled vs. unskilled labor and all that.
Title: Another view about commercial Nano brewing.
Post by: majorvices on May 03, 2012, 11:09:31 PM
It's not worth it to me to self distribute. Our distributor does a much better job distributing our product, plus we are all over the state. Who has time to drive a twelve hour round trip every week or two, plus clean lines (our distributor does that) plus grab empty kegs, etc? Not me. I'd rather be brewing.

Oh, also, there's the refrigerated trick I don't have to buy. Plus I can unload my product on them and they can hold it in their ginormous cold room. And they send me a check or two every month - no collecting from several different sources.

They do a hell of a lot for us, print banners or posters for free, go in halves on glass ware, clean lines, deliver tap handles, etc., etc.

Distribution is one headache I don't want to have to worry about.
Title: Re: Another view about commercial Nano brewing.
Post by: hopfenundmalz on May 04, 2012, 01:06:41 AM
Refrigerated trick?  :o
Title: Re: Another view about commercial Nano brewing.
Post by: hopfenundmalz on May 04, 2012, 01:11:58 AM
Ironically, I have been looking at these numbers quite closely as our tasting room where we planned to sell 4, 8, and 16oz samples of the beer has come under quite a bit of attack by local residents.

In our market, with my overhead (rent, utilities, etc.), using the standard sixtel pricing in our area, I would need to wholesale 500 barrels per year to break even. That is a lot of brewing on any system less than 10 barrels. That is self-distributed of course, if I had to use a distributor, it would be more.
Dark Horse here in MI made 9300 barrels last year with a 7 bbl system.  Not a nano, but you can be making a lot of beer with a system of modest size.
Title: Re: Another view about commercial Nano brewing.
Post by: a10t2 on May 04, 2012, 01:22:50 AM
It's not worth it to me to self distribute.

Yeah, but you're a tall kid in a very shallow pool, Keith. Most micros would kill to get that kind of attention from a distributor.
Title: Re: Another view about commercial Nano brewing.
Post by: Thirsty_Monk on May 04, 2012, 02:49:11 AM
It's not worth it to me to self distribute.

Yeah, but you're a tall kid in a very shallow pool, Keith. Most micros would kill to get that kind of attention from a distributor.
Then that is flattering for me.
I have a distributors stopping by every now and then.
I am still reluctant but the day might be getting closer when I will go with one of them.

I still think that self distribution is very important for start ups.
Part of it is necessity and part of it is marketing and brand building.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on May 04, 2012, 03:36:27 AM
It's not worth it to me to self distribute.

Yeah, but you're a tall kid in a very shallow pool, Keith. Most micros would kill to get that kind of attention from a distributor.
No, not necessarily. Our distributor does help us out a lot. Our beer makes them money. Maybe other breweries don't understand the power they wield. OTOH we are not in the same market as many other regions. Not a tight market, competition wise. For now any way.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on May 04, 2012, 03:44:11 AM
Wait, maybe that's what you meant by tall kid shallow pool. My bad.  :P
Title: Re: Another view about commercial Nano brewing.
Post by: tschmidlin on May 04, 2012, 06:41:01 AM
Dark Horse here in MI made 9300 barrels last year with a 7 bbl system.  Not a nano, but you can be making a lot of beer with a system of modest size.
You might want to check those numbers Jeff - that works out to brewing more than 3 times per day, every single day of the year.
Title: Re: Another view about commercial Nano brewing.
Post by: hopfenundmalz on May 05, 2012, 05:44:52 AM
Dark Horse here in MI made 9300 barrels last year with a 7 bbl system.  Not a nano, but you can be making a lot of beer with a system of modest size.
You might want to check those numbers Jeff - that works out to brewing more than 3 times per day, every single day of the year.
Yeah, that was wrong, in 2010 they made 6179 bbls on the 7 bbl brew house. A 20 barrel came on line midway in 2011.  Does 6179 still sound too much? Read about them here-

http://www.michiganbeerguide.com/

click on the view Michigan beer guide, read the Jan. Feb. issue.

Title: Re: Another view about commercial Nano brewing.
Post by: tschmidlin on May 05, 2012, 06:30:02 AM
Dark Horse here in MI made 9300 barrels last year with a 7 bbl system.  Not a nano, but you can be making a lot of beer with a system of modest size.
You might want to check those numbers Jeff - that works out to brewing more than 3 times per day, every single day of the year.
Yeah, that was wrong, in 2010 they made 6179 bbls on the 7 bbl brew house. A 20 barrel came on line midway in 2011.  Does 6179 still sound too much? Read about them here-

http://www.michiganbeerguide.com/

click on the view Michigan beer guide, read the Jan. Feb. issue.
Yes, 6179 per year on a 7 bbl system still seems like too much.  I believe it, but I don't believe it is something anyone should try to replicate ;)
Title: Re: Another view about commercial Nano brewing.
Post by: hopfenundmalz on May 05, 2012, 11:26:30 AM
Dark Horse here in MI made 9300 barrels last year with a 7 bbl system.  Not a nano, but you can be making a lot of beer with a system of modest size.
You might want to check those numbers Jeff - that works out to brewing more than 3 times per day, every single day of the year.
Yeah, that was wrong, in 2010 they made 6179 bbls on the 7 bbl brew house. A 20 barrel came on line midway in 2011.  Does 6179 still sound too much? Read about them here-

http://www.michiganbeerguide.com/

click on the view Michigan beer guide, read the Jan. Feb. issue.
Yes, 6179 per year on a 7 bbl system still seems like too much.  I believe it, but I don't believe it is something anyone should try to replicate ;)
The article said they were doing 4 to 5 brews a day.
Title: Re: Another view about commercial Nano brewing.
Post by: hopfenundmalz on May 05, 2012, 02:22:49 PM
How about Paw Paw brewing in Michigan, 277 barrels on a Sabco 1/2 barrel system.  They did brew shifts, and now have a 7 barrel production system.
Title: Re: Another view about commercial Nano brewing.
Post by: majorvices on May 05, 2012, 03:37:10 PM
Insane people.