[nateo]

It's not just beer that's growing. Craft beer isn't only competing with macro beer. Craft distilling is growing, "soda-booze" malt liquor products are growing as fast as craft beer too. There are only so many dollars people spend on booze, and most booze is bought by a really small proportion of drinkers. In my psychopathology class, when we were talking about alcoholism, the number was something like 80% of all booze sold is bought by 10% of the total number of drinkers. Almost everyone has a glass of port at Christmas, but hardly anyone drinks heavily.

So small shifts in taste amongst the booze-hounds can have huge impact on demand for specific segments of the alcohol market.

[phunhog]

I think breweries better get used to getting a smaller and smaller piece of the market share. Part of the problem is that everyone thinks they are going to make money with a brewery....at least enough to support themselves.  This is where I think we can learn from the wine industry. Many, in fact I would say most, wineries/vineyards are started by people who made their money somewhere else.  I have looking at the plethora of new wineries in my general area and most, if not all, are started by people in their 40's-60's.  Most are only open 3 days a week and have very limited distribution.  I see this as the future of breweries.....not a 15bbl brewery that is trying to get their beer in every store, bar, and restaurant in sight.

[micsager]

That's probably not a typo. All the cool kids are starting severely under-capitalized breweries.

I wonder if all these new "pro" brewers will siphon off business from properly run breweries, ruining not just their own business, but several others as well. Hopefully they'll go under quickly enough that the good breweries who deserve the business can stay afloat.

Interesting take. 

I don't think any brewery "deserves" business. 



 

[micsager]

I think breweries better get used to getting a smaller and smaller piece of the market share. Part of the problem is that everyone thinks they are going to make money with a brewery....at least enough to support themselves.  This is where I think we can learn from the wine industry. Many, in fact I would say most, wineries/vineyards are started by people who made their money somewhere else.  I have looking at the plethora of new wineries in my general area and most, if not all, are started by people in their 40's-60's.  Most are only open 3 days a week and have very limited distribution.  I see this as the future of breweries.....not a 15bbl brewery that is trying to get their beer in every store, bar, and restaurant in sight.

+1  Nice post.

[nateo]

Interesting take. 

I don't think any brewery "deserves" business. 

I think if your brewery has horrible chlorophenol problems, or sells infected beer, you "deserve" to go out of business. You're doing the entire craft industry a disservice by selling s***ty beer, as well as siphoning off sales that would otherwise support a good brewery that knows what they're doing.

[majorvices]

I think breweries better get used to getting a smaller and smaller piece of the market share. Part of the problem is that everyone thinks they are going to make money with a brewery....at least enough to support themselves.  This is where I think we can learn from the wine industry. Many, in fact I would say most, wineries/vineyards are started by people who made their money somewhere else.  I have looking at the plethora of new wineries in my general area and most, if not all, are started by people in their 40's-60's.  Most are only open 3 days a week and have very limited distribution.  I see this as the future of breweries.....not a 15bbl brewery that is trying to get their beer in every store, bar, and restaurant in sight.

I hear what you are saying except they are two entirely different business models. How many people are going out to local pubs and ordering local wines? How long does it take to produce a wine as opposed to a beer? I think there are things in both industries that can be borrowed and/or copied, but at the crux of the issue they are two different business models entirely.

IMO you have a lot of pico breweries who are either going to succeed because they have great beer and great passion to work for pennies or are going to fail because, regardless of the quality of the beer the brewers are going to decide the passion is not worth the loss of freetime and weekends.

[micsager]

Interesting take. 

I don't think any brewery "deserves" business. 

I think if your brewery has horrible chlorophenol problems, or sells infected beer, you "deserve" to go out of business. You're doing the entire craft industry a disservice by selling s***ty beer, as well as siphoning off sales that would otherwise support a good brewery that knows what they're doing.

Oh I certainly believe some breweries deserve to go "out of business,"  I just don't think any deserve to be in business.  They must earn it.  Every day. 

[majorvices]

Interesting take. 

I don't think any brewery "deserves" business. 

I think if your brewery has horrible chlorophenol problems, or sells infected beer, you "deserve" to go out of business. You're doing the entire craft industry a disservice by selling s***ty beer, as well as siphoning off sales that would otherwise support a good brewery that knows what they're doing.

Oh I certainly believe some breweries deserve to go "out of business,"  I just don't think any deserve to be in business.  They must earn it.  Every day.

Shouldn't that go for every business? Except Microsoft, of course.

[micsager]

Interesting take. 

I don't think any brewery "deserves" business. 

I think if your brewery has horrible chlorophenol problems, or sells infected beer, you "deserve" to go out of business. You're doing the entire craft industry a disservice by selling s***ty beer, as well as siphoning off sales that would otherwise support a good brewery that knows what they're doing.

Oh I certainly believe some breweries deserve to go "out of business,"  I just don't think any deserve to be in business.  They must earn it.  Every day.

Shouldn't that go for every business? Except Microsoft, of course.

Most certainly.  (even microsoft)  I just didn't think my first post was clear.   

[majorvices]

Interesting take. 

I don't think any brewery "deserves" business. 

I think if your brewery has horrible chlorophenol problems, or sells infected beer, you "deserve" to go out of business. You're doing the entire craft industry a disservice by selling s***ty beer, as well as siphoning off sales that would otherwise support a good brewery that knows what they're doing.

Oh I certainly believe some breweries deserve to go "out of business,"  I just don't think any deserve to be in business.  They must earn it.  Every day.

Shouldn't that go for every business? Except Microsoft, of course.

Most certainly.  (even microsoft)  I just didn't think my first post was clear.

But .... obviously we have given Microsoft a pass. Just look at Windows 8. I have it on my computer. And it sucks!

[Thirsty_Monk]

Linux.

And now back to original post.

[a10t2]

Craft beer is  growing at about 15% per year. ... 10% of the new demand is  176858 bbl, or 483bbl per new brewery.

That sounds reasonable given that most of those breweries are on 15 bbl systems or smaller. Especially when you factor in how many are doing 1 bbl or less. Unless you're a large packaging brewery, doing 500 bbl in your first year is solid. It's well above what I've forecasted.

[nateo]

No one knows what the future will hold, but there's a concept called "sensitivity analysis." A static sales (or growth) forecast may make your business look profitable, but a very small difference in sales could make a big difference in whether your business is profitable. Same thing with projected growth.

Some parts of the business plan might be relatively robust, for instance it's common for construction or plant costs to end up being much larger than anticipated, but the company is still profitable even with twice the start-up costs.

There's no "one size fits all" solution, but I've seen a lot of business plans that just create one static projection of sales, and the whole thing would fall apart if they don't hit their overly-optimistic numbers. That's not to say you should be as conservative as possible, because risk = reward. The safest thing is to not open a brewery at all, but that's not always the best solution.

[phunhog]

I think breweries better get used to getting a smaller and smaller piece of the market share. Part of the problem is that everyone thinks they are going to make money with a brewery....at least enough to support themselves.  This is where I think we can learn from the wine industry. Many, in fact I would say most, wineries/vineyards are started by people who made their money somewhere else.  I have looking at the plethora of new wineries in my general area and most, if not all, are started by people in their 40's-60's.  Most are only open 3 days a week and have very limited distribution.  I see this as the future of breweries.....not a 15bbl brewery that is trying to get their beer in every store, bar, and restaurant in sight.

I hear what you are saying except they are two entirely different business models. How many people are going out to local pubs and ordering local wines? How long does it take to produce a wine as opposed to a beer? I think there are things in both industries that can be borrowed and/or copied, but at the crux of the issue they are two different business models entirely.

IMO you have a lot of pico breweries who are either going to succeed because they have great beer and great passion to work for pennies or are going to fail because, regardless of the quality of the beer the brewers are going to decide the passion is not worth the loss of freetime and weekends.

I agree. That is why I suggested that if you want to open a pico/nano brewery to make your money somewhere else first.  That way the brewery can essentially stay a hobby and not become a "job" since you aren't relying on it for your income. 

[nateo]

I agree. That is why I suggested that if you want to open a pico/nano brewery to make your money somewhere else first.  That way the brewery can essentially stay a hobby and not become a "job" since you aren't relying on it for your income.

I've often thought, whilst brewing, that a lot of local, state and federal paperwork would make my hobby so much better.