[deidre888]

http://discussions.probrewer.com/showthread.php?24441-Nanobrewery-The-Lessons-I-ve-Learned


Great, great article. I believe I have my answers. I've been collecting data on this topic for a while, including speaking directly to two nanobrewery owners: one who borrowed to start his nano and the other who saved up all the cash to buy the equipment outright.  They both had extensive support structures to keep the breweries going, but no available capital for expansion, which was a red flag to me (from an analysis standpoint.)

I've got to accept that my primary business design (to quote the article above) is 1B, because that's an attractive model to the type of investors I've identified. A nano allows you to show the possible investors you've already got clients and the market you're focusing on is viable:
"1)(b) On the other hand, a nano is a great vehicle to get the investment needed to finance a viable craft brewery. In my opinion, that is the only rational reason to go through all of the trouble to build and operate a nano...The nano can be used to show real revenue and cost structure in your market, and can be extrapolated to any project size from there."

To summarize my findings, for anyone else looking closely at the business structure of a nano (in contrast to the romance of just owning a brewery):

1. A nanobrewery is only a viable source of revenue (after all expenses) if you can self-distribute. You can be self-sustaining, but don't expect you'll generate a growing amount of revenue to replace a consistent salary.
2. A nanobrewery should only be used to show you can generate capital so that you can significantly increase your investment capital to pump into the equipment necessary for expanding production and operational expenses. Nanobreweries will be too labor intensive to be a long-term plan.
3. (And I learned this at the NHC) The demand may spike, so just start with a 7BBL system with room for expansion and conditioning tanks.
4. Clearly outline in the business plan how this progression works.
5. You may not want to, but the market clearly shows that a good source of revenue is an IPA product.

Thanks again everyone for your patience with this research progression and you professional input. Greatly appreciate your help.

Cheers,
Deidre

[majorvices]

Haven't read the entire thread, but all I can say is this (having done it): If you don't mind working on a nano level for 1-2 years (and I'm talking about ~3bbl or less) for a year or two for free, and not make any money, and fund the gig out of your own pocket, even lose money, and you do this to prove a concept to attract loans or investors to grow to the next stage (and don't mind working long hard hours at that next stage for a fraction of what your 9-5 job paid), then go for it. Otherwise, don't try it. Find some investors and open a real brewery (and make damn sure you know how to run one or find someone who does!)

[reverseapachemaster]

I think you've received some really great advice here, in particular with the risk of going keg-only to local accounts. If you're going for an English-themed brewery I think you have to look at cask ale as a strong vein of your business. You can serve your English standards but cask ale has that "extreme" pull on a lot of craft drinkers that will drive business, if your market has a demand for it. You can easily offer a lot of variance in your beer line up just by dry hopping those casks with different hops or spicing in the cask. Of course, if there's not a big draw for cask beer you should not waste your money buying separate cask equipment and wasting beer.

I'd also look seriously at using those local accounts as marketing for your tap room. You will build a local following and build your brand through your local accounts even if you are not making a lot of money off of it. However, you can find a balance between letting those accounts build your name and driving their customers into your taproom. As others have said, your margins on kegs will be razor thin but a $4 pint in the tap room is a substantially larger margin. If you are leveraging a lot of cask beer you don't even need a large draft system to finance or support.