Author Topic: Pro opinion on Nanobrewery proposition  (Read 8075 times)

Offline deidre888

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Pro opinion on Nanobrewery proposition
« on: July 01, 2013, 02:40:21 PM »
Hello,
Some time ago I came to the realization that working in the craft beer industry was where I wanted to be.  However, over time, I also realized that being an entrepreneur was a big part of my vision, and I'm now doing the work necessary to open a nanobrewery.

Based on all the research I've done and training I've received, any product you're trying to sell requires you to know what market you're trying to sell to. My vision is to keg only and be a local beer provider to restaurants (in particular gastro pubs) in my area.  I've already talked to some owners and they're thrilled with the idea of being able to purchase very locally made beer. ("Thrilled", is an understatement. There's a lot of bugged eyes and, "When are you opening??!!" noises, because they're looking to differentiate from other restaurants that have cheaper food and are craft ale drinkers.)

The beer style will be very "English" so, definitely a lower hop and alcohol profile than a lot of American beers. 

After attending the 2013 NHC: Going Pro panel, I left with a question (or questions) I'm hoping other pros could add insight on.

Questions:
1. Can I stay a nanobrewery and still make enough money to stop my day job?
2. Is it too late to pursue the market with a milder beer profile? In other words, has the craft beer market taught craft beer drinkers that "good" beers are essentially IPAs and anything else is just not as good if it doesn't have 40+ IBUs?

I've got to be clear here, I'm not looking for an ideological discussion. I'm truly trying to understand how difficult my distribution road will be if I'm not creating "extreme" beers.  Making beer, giving local people jobs and producing a quality delicious product has become my calling; I'm just trying to better understand what it'll take for my vision to come true. I'm not afraid of hard work, I'm just old enough to understand I want to work hard and smart, with emphasis on the smart.

I greatly appreciate any and all insight pro brewers, especially those who started their own brewery can offer.

Thanks,
Deidre

Offline In The Sand

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Re: Pro opinion on Nanobrewery proposition
« Reply #1 on: July 01, 2013, 03:50:32 PM »
Questions:
1. Can I stay a nanobrewery and still make enough money to stop my day job?
2. Is it too late to pursue the market with a milder beer profile? In other words, has the craft beer market taught craft beer drinkers that "good" beers are essentially IPAs and anything else is just not as good if it doesn't have 40+ IBUs?


1. Not unless you have a lot of startup capital and plans to do something beside distributing. There are larger margins in your taproom.

2. No it's not too late for something different from an IPA.
Trey W.

Offline denny

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Offline Jimmy K

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Re: Pro opinion on Nanobrewery proposition
« Reply #3 on: July 01, 2013, 05:12:04 PM »
There is a recent trend in session beers as a reaction to extreme beers, which are really only the eye candy for most breweries anyway. But trying to be a nano that only fills kegs might be crazy. The margins are thinnest on kegs. Most nanos sell from a tap room because pints have the highest margin.  Not that you can't do it, but make sure you have a sound business plan before trying (do that anyway).
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Offline jamminbrew

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Re: Pro opinion on Nanobrewery proposition
« Reply #4 on: July 01, 2013, 05:13:43 PM »
First off, I want to wish you the best of luck in your venture. I spent the last year trying to open my own brewery, only to have my investor pull out at the last minute.

1) Nano breweries are tough to make a living on. I have a good friend who runs a nano, and his last year's profit was only 30K. He still works his day job, and the profit goes to paying for his server, and his wife helps out as well. He has a 1 bbl system, with 10 1 bbl fermentors. They are undergoing an expansion, but that is on top of the cost of opening this brewery to begin with. My advice, is to go as big as you can. Best profits come from selling pints in a taproom, or from volume.

2) I love a variety of styles, and love to see such in a brewery. Don't limit yourself to one style, but it isn't necessary to follow the mainstream. Most beer drinkers aren't craft beer drinkers, and don't like to deviate too far from their comfort zones. My advice: Cater to both. Have some small batches of the IPAs, honey chocolate coconut coffee porters, hibiscus licorice oaked blonde, and the like, but do keep to your vision of milder English styles to satisfy the masses. It's not about how wild you can get with a brew, it's how well you can sell what you make.

And again, best of luck, I hope you succeed!
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Offline deidre888

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Re: Pro opinion on Nanobrewery proposition
« Reply #5 on: July 01, 2013, 06:40:31 PM »
Many, many thanks to everyone for their insights. I greatly appreciate it, because every little bit of information helps--especially real world examples.

Thanks everyone.

Cheers,
Deidre

Offline Thirsty_Monk

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Re: Pro opinion on Nanobrewery proposition
« Reply #6 on: July 01, 2013, 06:44:06 PM »
Deidre,

The smallest brewery I would consider opening is 3BBL. Double size of fermenters.
With 3 BBL do only taproom sales.
I do not know your market but do the math.
There is 124 pints in 1/2 BBL (124*price of the beer you sell in the taproom=)
If you would be selling 1/6BBL kegs (the most expensive package in keg/draught market)
(3*price per keg over the someone else draught line=)
Draught market is the most labour intensive with least margin.
People talk the talk but they might do not buy your beer when it is available. There is still price of kegs, tap handles, lost kegs.... Do you have to sell thru disrtibutor?

Yes you can make it without doing IPAs.
Yes you may quit your day job but you need to have a good wife that is VERY supportive, who caries health insurance and brings stable income to pay the rent and food and gas. And you will be volunteering for yourself for couple of years.

I did not mean to rain on you parade but that is the reality.

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Offline deidre888

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Re: Pro opinion on Nanobrewery proposition
« Reply #7 on: July 01, 2013, 07:39:03 PM »
There is a recent trend in session beers as a reaction to extreme beers, which are really only the eye candy for most breweries anyway. But trying to be a nano that only fills kegs might be crazy. The margins are thinnest on kegs. Most nanos sell from a tap room because pints have the highest margin.  Not that you can't do it, but make sure you have a sound business plan before trying (do that anyway).

Thanks you for this! I've been so blinded by either kegging or large bottle production as a primary distribution. In my training, that was the primary focus (in fact nanobreweries didn't even exist at the time I went to brew school.) The tap room idea was on my radar, but the expenses associated with building one that's highly appealing to the public seemed a hard sell to investors, given the capital I'll need for equipment and the operational costs associated with establishing a solid customer base Yr 1 - 3. 

However, now this accumulating feedback is making me want to revisit the numbers. I'm trying to avoid the top 3 reasons breweries go under: 1)Inconsistent/bad quality beers, 2)Insufficient capitalization, 3)Over-estimation of demand; but risk is part of this entire endeavor and if I've got to extend my plan to include an additional revenue stream I can make that a part of the overall strategic plan.

Thanks again!

Offline anthony

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Re: Pro opinion on Nanobrewery proposition
« Reply #8 on: July 01, 2013, 07:45:13 PM »
You have to know your market very well. In my market, selling Dark English Mild, Ordinary Bitter, etc. is a HUGE uphill battle versus selling American IPA, Black IPA, etc. I can literally move 1.5-3x more of the hoppy beers than the session ales. You can choose to either go with the flow or establish your own position in the market. I haven't completely given up on session beers in our lineup but I've realized making them more than 1 or 2 selections of 8 selections is probably not a good idea.

Offline anthony

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Re: Pro opinion on Nanobrewery proposition
« Reply #9 on: July 01, 2013, 07:47:24 PM »
And honestly, start as big as possible. Make your taproom less awesome and spend more money on equipment. Originally we were going to be doing 1.5 BBL, then we went up to 3 BBL, then 7 BBL. As a result we have such a piecemeal, kludged together setup that brewing is a lot more of a pain versus if we had just started with a proper 7 BBL system in the first place.

Offline deidre888

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Re: Pro opinion on Nanobrewery proposition
« Reply #10 on: July 01, 2013, 08:04:28 PM »
Deidre,

The smallest brewery I would consider opening is 3BBL. Double size of fermenters.
With 3 BBL do only taproom sales.
I do not know your market but do the math.
There is 124 pints in 1/2 BBL (124*price of the beer you sell in the taproom=)
If you would be selling 1/6BBL kegs (the most expensive package in keg/draught market)
(3*price per keg over the someone else draught line=)
Draught market is the most labour intensive with least margin.
People talk the talk but they might do not buy your beer when it is available. There is still price of kegs, tap handles, lost kegs.... Do you have to sell thru disrtibutor?

No, I don't have to sell through a distributor. In NY state you can self distribute up to 60,000 bbls. You can apply for the license at the same time you apply for the microbrewers license. They are very receptive to small brewers here.

Quote
Yes you can make it without doing IPAs.
Yes you may quit your day job but you need to have a good wife that is VERY supportive, who caries health insurance and brings stable income to pay the rent and food and gas. And you will be volunteering for yourself for couple of years.

How about I stick with my boyfriend, before I get a wife? ;)
I'm not ready to give up on the whole male population, just yet.  ;D

All jokes aside, I'm a business analyst in the "real world" and haven't been particularly naïve about the cost of living since I was 11, which was the last time I didn't have a job. Nevertheless, I continue to appreciate everyone's input as I craft the development and production strategy.

Thanks!
Deidre

Offline Alewyfe

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Re: Pro opinion on Nanobrewery proposition
« Reply #11 on: July 01, 2013, 08:24:09 PM »
" I have a good friend who runs a nano, and his last year's profit was only 30K. He still works his day job, and the profit goes to paying for his server, and his wife helps out as well. "........SCAREY!

A most common problem with small business owners...understanding difference between profit and gross margin.
Salaries are an expense item...there are no profits until they are paid, including your wifes and you own, and there is something left in the bank. Any other way of looking at it is delusional. Don't fall into that trap. When you're loving what you're doing it's too easy not to put a value on your own time.

Diedre, if you're a business analyst, this is most likely preaching to the choir.
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Offline Jimmy K

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Re: Pro opinion on Nanobrewery proposition
« Reply #12 on: July 02, 2013, 05:53:37 AM »
All jokes aside, I'm a business analyst in the "real world" and haven't been particularly naïve about the cost of living since I was 11, which was the last time I didn't have a job. Nevertheless, I continue to appreciate everyone's input as I craft the development and production strategy.

That's great - I just tripled your chances in my head.
 
 
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Offline svejk

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Re: Pro opinion on Nanobrewery proposition
« Reply #13 on: July 02, 2013, 07:59:31 AM »
Here is a discussion on probrewer.com that you might find interesting:

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

Good luck with your project!

Offline In The Sand

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Re: Pro opinion on Nanobrewery proposition
« Reply #14 on: July 02, 2013, 11:19:47 AM »
Here is a discussion on probrewer.com that you might find interesting:

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

Good luck with your project!

Great thread.
Trey W.