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Ask the Experts: Patrick Rue

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duncan:
Patrick Rue started homebrewing in 2003 during his first year of law school, which ignited a passion for great beer and the creative process of brewing. He followed his passion and founded The Bruery, which began production in 2008. Celebrating its third year in business, Patrick's role at The Bruery has changed from doing just about everything to managing a company of 35 talented individuals. Recent accomplishments include opening The Bruery Provisions, a craft beer, wine and cheese store/tasting room in Old Towne Orange. The Bruery is distributed in 21 states and four countries. The Bruery strives to be a leading creative force in the craft brewing world.

duncan:
Dan asks:
I am wondering what it takes to open a small brewery. First, what size system is considered small or how many barrels would be small? I would rather do smaller batches so I could have more varieties to choose from, but not so small that there is no profit. Also, how easy would it be to expand if need be? Second, what is a rough estimate on start up costs (equipment and permits)?

Thanks,
Dan

Patrick answers:
The term "small brewery" has many meanings these days. Nanobreweries are becoming more common, and the startup microbrewery is also quite small.

Nano brewers are typically under 100 BBL per year and brew on a system of, let's say, 4 BBL, and often times 1 BBL or less. Nanobreweries are proving that they can be a start to a viable business by building a reputation with minimal investment, but in most cases nanobrewers aren't able to quit their day jobs as the revenue often doesn't leave enough cash to pay themselves at the end of the day. To start a nanobrewery, I've heard $50,000 - $150,000 in startup funds is sufficient as long as you're doing most of the construction yourself, and you still have a "day job". In my opinion, the best nanobrewery model is to sell everything in-house through a tasting room so the revenue is based on retail dollars, not sales to the distributor (or self-distributed). Of course some homework is involved to make sure the state / county / city you're in will allow this.

A microbrewery is brewery producing under 15,000 BBL per year, and most microbreweries are much smaller than this. The typical system size for a microbrewery will be 7-15 BBL, and well funded startups might have a 30 BBL system. A modest startup would be in the $500,000 range, and a well capitalized startup would be in the $1,500,000 range. The difference between these ranges is whether you're starting out with new or used equipment, the size of the system, whether you're able to do your own construction, whether you have a "day job" or not, how many employees you plan to have, how expensive your rent will be, and ultimately how much beer you intend to sell in the early years.

The more beer you can produce, the greater the scale of economy, the faster you can get to profitability, and the faster you can grow the business. On the other end, if you're not interested in fast growth but more of a lifestyle business, your business model should be getting profitable making the least amount of beer with the least amount of startup funds. It's easier to raise money in the first scenario than the second, though.

Hope this helps!

Cheers,
Patrick Rue
The Bruery

duncan:
Graham asks:
Thanks for the opportunity to gain insight from someone who has done what many of us probably dream of. My question is about how you determined if there was room in your target market for another brewery? I dream of opening a brew pub/craft brewery in the next 2-3 years (after that I think I'll be getting too old...) but I really don't know how to go about ascertaining the market potential in my area. There are a few craft breweries that distribute in this area although the large breweries still dominate the bulk of the market. Did you just jump in blindly or did you do any sort of analysis to determine that there was room for another brewery? Or, did you decide that it didn't matter because your product was differentiated enough that you weren't in direct competition with anyone anyway?

Thanks,
Graham

Patrick answers:
I find that most markets still have room for more craft breweries. More than ever, beer bars and craft beer retailers want more variety and the trend towards buying local continues to strengthen.

The Bruery is located in Orange County, CA which had about 21 breweries when we opened in 2008. Most of those were brewpubs, and the production breweries didn't have much of a presence on tap handles at the local beer bars. I didn't do a great amount of research on what the market will bear because our initial focus wasn't so much on just Orange County. When we opened, we started selling in San Diego, Orange County, Los Angeles, Riverside, and San Bernardino counties, and within the first year we were distributed in several states. Our goal was to be at maximum capacity from the start, so we had to expand into new markets rather than focus all of our attention at home. Since our goal is to brew very distinctive beers, this approach has worked for us. If we only brewed more basic styles, our ability to enter markets outside of our local market would have been limited.

Cheers,
Patrick Rue
The Bruery

duncan:
Matt asks:
Hi Patrick, I have been working on a business plan, marketing plan, financial plan, etc. to start a brewpub for the past three years. Before starting my own company I would like to work or even volunteer somewhere else to truly know what to expect. Do you have any advice on how to go about getting this experience or what kind of place would be best? Luckily, I am moving to Austin this fall, so my options will greatly expand from New Orleans. Also, I am somewhat familiar with The Bruery and its beers, what sort of places did you work beforehand? How long was the planning stage?

Thank you!
"LeprekaunBrewer"
Matt

Patrick answers:
I think the best approach would be to volunteer / intern for several breweries. If you get a paying job for a brewery and don't have any professional brewing experience, you'll likely start at the bottom washing kegs or on the packaging line, and it may take some time before you get an opportunity to learn what you wanted to learn. I'd also recommend you spend some time working at a restaurant and perhaps helping out in the back of the house operations of a restaurant (payroll, bookkeeping, financial projections, marketing, etc.).

I graduated from law school in 2006, worked for my family's business for a few months while I was writing my business plan, and I spent a few days at local breweries and brewpubs learning their approach to brewing. Most of my experience came from homebrewing, which is very different than brewing on a larger system and trying to maintain excellent quality standards. After my limited experience, I decided it was a great idea to hire someone who had worked for several years as a brewer, so Tyler (our Head Brewer) came on as the first employee a few months before we opened (in May of 2008). It took roughly one year of planning (not full time), and one year of construction / bureaucracy maneuvering to get The Bruery open.

Cheers,
Patrick Rue
The Bruery

duncan:
Andy asks:
I like anything on the grill and have been grilling with fruits lately - oranges, lemons, pineapple. I love how the caramelized sugars sweeten the fruit. I would like to add these flavors to a beer - something Belgian inspired. My questions are:

* How to prepare the fruit - grill, freeze and smash?
* Where to add - mash, primary fermentation, secondary?
* How much to use on a per gallon basis?
Thanks for your support of the homebrewing community.

Cheers,
Andy

Patrick answers:
There are a lot of options when it comes to fruit, but I'll try to keep it brief.

Fresh fruit will often have wild yeast on the skins, and will likely have some bacteria that could potentially spoil a non-funky beer. If you're going for a clean beer, then adding fresh fruit at the end of the boil, or adding an aseptic fruit puree in secondary are the best approaches. If you are adding it to a funky beer (brettanomyces / bacteria influenced), then well washed fresh fruit added to secondary could add an additional layer of complexity. Aseptic purees are often of great quality and make the process of adding the fruit very easy.

Whether to smash the fruit or not will depend on how long the fruit will be in contact with the beer. If you're looking for a quick infusion (if adding to the boil, or in the secondary just a few days before racking), then blending the fruit before adding will help get the most out of the fruit. If it's for a funky beer that will have fruit contact for several months, then adding whole will probably do the trick as the yeast and bacteria will break the fruit down.

Dried fruit (unsulfured, no sugar added, no oil added) can also work well when there's going to be extended contact with the fruit.

Frozen fruit can sometimes lend that "freezer burn" taste, so make sure the fruit tastes good before you add it. One advantage of frozen versus fresh fruit is that freezing will burst the cell walls of the fruit, making it mix with the beer a bit quicker than fresh fruit would.

As far as how much to use, it all depends on how much fruit flavor you want! I've found that I need to add more fruit than I thought to get the flavor I'm going for, but I like a lot of fruit flavor.

Be careful with citrus fruits though, the pith (white skin between the peel and the fruit) can contribute astringency.

Hope this helps!

Cheers,
Patrick Rue
The Bruery

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