Author Topic: CSB (Community Supported Breweries)  (Read 1428 times)

Offline morticaixavier

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CSB (Community Supported Breweries)
« on: December 06, 2013, 08:54:43 AM »
So what are everyone's thoughts on this model? CSA (Community Supported Agriculture) seems to be going strong after a decade or two run up. Farmers running CSA's make a heck of a lot closer to a living wage than those working for the wholesale market. They face a lot less risk each year as well already having much of their income pledged or even delivered regardless of actual yield.

Of course a lot of breweries can retail their product easily anyway but they still face the risk of opening the doors to the crickets and sitting on barrels of good beer as it goes bad (although from comments on another thread that may not be a problem right now). Also, many of the CSBs I have seen so far offer a set volume of product for your membership so the brewer does not gain the protection against major product losses that the farmer gets either.

So for the small start up brewer does the CSB model provide any of the benefits that the CSA model does for a small farm? If you could pre-sell memberships could this not provide a big boost over the first major barrier to entry into the business? Namely the cost of facilities/equipment.

I can also see how potential investors, seeing a pre-sold customer base might be more willing to risk their money with a new brewery.

But what about as beer drinkers/lovers. Would you pay up front for a years worth of beer? I imagine a lot of folks would at first at least to support a new brewery, a local brewery, a friend/relative, whatever. But, assuming the beer was good enough, would you re-up at the end of the initial term?

What considerations might make you more or less likely to re-up?

It's an interesting business model especially in this age of the 'local' and 'slow' food movements.
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Offline micsager

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Re: CSB (Community Supported Breweries)
« Reply #1 on: December 06, 2013, 09:10:23 AM »
So what are everyone's thoughts on this model? CSA (Community Supported Agriculture) seems to be going strong after a decade or two run up. Farmers running CSA's make a heck of a lot closer to a living wage than those working for the wholesale market. They face a lot less risk each year as well already having much of their income pledged or even delivered regardless of actual yield.

Of course a lot of breweries can retail their product easily anyway but they still face the risk of opening the doors to the crickets and sitting on barrels of good beer as it goes bad (although from comments on another thread that may not be a problem right now). Also, many of the CSBs I have seen so far offer a set volume of product for your membership so the brewer does not gain the protection against major product losses that the farmer gets either.

So for the small start up brewer does the CSB model provide any of the benefits that the CSA model does for a small farm? If you could pre-sell memberships could this not provide a big boost over the first major barrier to entry into the business? Namely the cost of facilities/equipment.

I can also see how potential investors, seeing a pre-sold customer base might be more willing to risk their money with a new brewery.

But what about as beer drinkers/lovers. Would you pay up front for a years worth of beer? I imagine a lot of folks would at first at least to support a new brewery, a local brewery, a friend/relative, whatever. But, assuming the beer was good enough, would you re-up at the end of the initial term?

What considerations might make you more or less likely to re-up?

It's an interesting business model especially in this age of the 'local' and 'slow' food movements.

Interesting idea.  Hard to say how it would all work out, that's for sure.  We have three basic beers that we brew.  And the two places that have our beer on tap do order ahead of time, and I brew those beers based on what the customer has ordered.  But it's all done on a handshake type deal.  In this state, I think prepaying would be illegal on the wholesale side.  Not sure about retail.

Offline morticaixavier

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Re: CSB (Community Supported Breweries)
« Reply #2 on: December 06, 2013, 09:26:07 AM »
I'm sure there would be state by state considerations and those would for sure influence how to structure your program.

I've seen folks do it like a 'mug club' where members simply pay 1/2 pint prices for a full pint and more like the box of vegetables model where you go to the taproom or other central location and get your growler filled. Another had a very complex arrangement in which you could take your 'share' in a variety of ways from a 1/3 to 1/6 bbl keg down to a punch card for pints in the tap room

I think the pre-pay option wouldn't work for a retail account like your bar customers mic because they have to take a risk on that purchase anyway when they fork over the bucks for the keg. To ask them to take that risk all at once at the beginning of the year would likely be just too much.
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Offline mtnrockhopper

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Re: CSB (Community Supported Breweries)
« Reply #3 on: December 06, 2013, 09:56:32 AM »
Warning - basically brain vomit...

A friend of mine is opening a CSB in Vermont called Burlington Beer Company. CSB members get a series of limited release specialty beers through the year, so it's not even close to a year's worth of beer. I think the benefit of this style CSB (for the brewery) is in identifying and building relationships with customers than providing funding for the brewery. Although I'm sure it does mitigate some risk and money upfront is always preferable.

Around here anyway, CSA mostly provide a set volume of food/week. During a good year, the farms may give some bonuses members, but they sell a lot of it too. Likewise, when a farm can't meet it's commitment, members get very frustrated. But farms operate on a cycle that breweries don't have to worry about. They pay expenses in the spring, work through a long growing season, and then get paid when the crop matures. There are few ways around this, but the CSA provides a way to get paid when the farm is putting out expenses. An established brewery produces year round, so it won't benefit as much from the cash flow advantage. Still, it might help it get started when no money is coming in.

I don't think a CSB would be a good way to fund equipment/facility expenses. It's basically a loan from your customers, but it's a loan that will be paid off within the year. So I think it's wise to use it for certain expenses like ingredients, not for expenses you'd rather have years to pay off, like fermenters. It might encourage investors to see CSB memberships, but I wonder if the time you're looking for investors is long before the time you're looking for CSB members (which would be sold when the brewery is almost or is open).

I'm surprised that I haven't seen a Kickstarter where people could pre-purchase beer from a yet-to-be-opened brewery. Then again, you might need controls to prevent everyone from redeeming their purchase in the first weeks after you've opened. The last thing you want after going through the expense of building a brewery is to be giving away large portions of your first batches (ie paying back those loans) at a time when you're cash flow is probably poor. Not that it can't, or shouldn't be done. It's just I think a CSB owner would have to carefully plan what the money goes towards and how repayment will affect sales.

Then again, if I owned a brewery and somebody asked if I'd rather be paid today or last month...
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Offline morticaixavier

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Re: CSB (Community Supported Breweries)
« Reply #4 on: December 06, 2013, 10:15:47 AM »
Burlington Beer Company is one I am watching. Going to stop by there if they are open next time I'm home.

Of course, when I say a 'years worth of beer' I mean some beer each month through out the year. a 'Years worth' can mean a lot of different things to different people.
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Offline thatgeekguy

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Re: CSB (Community Supported Breweries)
« Reply #5 on: December 06, 2013, 12:08:54 PM »
Black Star Co-op in Austin Texas is a successful brewpub that follows this path, waitstaff gets paid a living wage, they don't accept tips and utilize self-directed work teams. Oh, and they make some pretty good beer as well....
I'm only here for the beer....

Offline mtnrockhopper

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Re: CSB (Community Supported Breweries)
« Reply #6 on: December 06, 2013, 12:42:58 PM »
Burlington Beer Company is one I am watching. Going to stop by there if they are open next time I'm home.

Of course, when I say a 'years worth of beer' I mean some beer each month through out the year. a 'Years worth' can mean a lot of different things to different people.
True. And I think it's a very small pool of people who'd prepay for an actual year's worth of beer and want it to be all from the same brewery.

I'd join a CSB for a new brewery to support them. For a CBS at an established brewery I'd want to feel I was getting something in return. Access to special releases, discounts off regular prices, etc.
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Offline morticaixavier

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Re: CSB (Community Supported Breweries)
« Reply #7 on: December 06, 2013, 01:34:03 PM »
Black Star Co-op in Austin Texas is a successful brewpub that follows this path, waitstaff gets paid a living wage, they don't accept tips and utilize self-directed work teams. Oh, and they make some pretty good beer as well....

that looks really cool. I'll have to watch them as well.
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Offline Jeff M

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Re: CSB (Community Supported Breweries)
« Reply #8 on: December 06, 2013, 08:24:22 PM »
I was thinking about running a kickstarter for my brewery when we are ready to take out loans etc for extra startup funds.  offering differently timed growler fills(once a week, once a month etc etc) was one of the things i was toying with.
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Offline Thirsty_Monk

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Re: CSB (Community Supported Breweries)
« Reply #9 on: December 06, 2013, 09:21:29 PM »
I think it is mixed bag. Beer is luxury item for non luxury price. Ask yourself if you would pay let say $500 a year for this. I think this is way above the beer price point and you would have to do a lot of education.

Check this brewery.
http://houseofbrewsmadison.com/csb-info/
He is in Madison WI. This is very educated and liberal city of about 200,000.
Last I heard he had 9 subscribers.
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Offline reverseapachemaster

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Re: CSB (Community Supported Breweries)
« Reply #10 on: December 07, 2013, 10:29:46 AM »
Kickstarter will not allow you to sell beer through their program in exchange for funding.

Is this similar to breweries that do membership programs where you receive a certain number of beers plus first dibs on other releases? Or is it a commitment to receive a large portion of beers from the brewery? I joined the Bruery's membership program for next year. I think it guarantees us nine beers plus first rights to buy several other releases plus discounts on all purchases at the brewery. My wife travels out to California for business almost every week so she can mule it back to Texas for us. It's worth it to get some rare beers but I'm not sure I'd commit to prepaying for a case of a standard release every month, especially since I homebrew.
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Offline morticaixavier

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Re: CSB (Community Supported Breweries)
« Reply #11 on: December 07, 2013, 04:18:59 PM »
Kickstarter will not allow you to sell beer through their program in exchange for funding.

Is this similar to breweries that do membership programs where you receive a certain number of beers plus first dibs on other releases? Or is it a commitment to receive a large portion of beers from the brewery? I joined the Bruery's membership program for next year. I think it guarantees us nine beers plus first rights to buy several other releases plus discounts on all purchases at the brewery. My wife travels out to California for business almost every week so she can mule it back to Texas for us. It's worth it to get some rare beers but I'm not sure I'd commit to prepaying for a case of a standard release every month, especially since I homebrew.

there is at least one new crowdsourcing site that does allow the sale of beer or at least beer club memberships as part of the campaign.

I'm not actually talking specifically about anything at this point more just trying to find out what people think about the idea. I've seen several that do what you are talking about with the bottle club and at least one that plans on brewing something new for each installment so there would not be any 'standard' brew.

But that is one aspect for sure, X number of special bottles a year plus first rights on other releases etc.
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Offline morticaixavier

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Re: CSB (Community Supported Breweries)
« Reply #12 on: December 07, 2013, 04:20:29 PM »
I think it is mixed bag. Beer is luxury item for non luxury price. Ask yourself if you would pay let say $500 a year for this. I think this is way above the beer price point and you would have to do a lot of education.

Check this brewery.
http://houseofbrewsmadison.com/csb-info/
He is in Madison WI. This is very educated and liberal city of about 200,000.
Last I heard he had 9 subscribers.

I actually contacted him about his project and he was fairly terse and dismissive in his email so I let it go. I'm sure it's a hard stressful thing to be starting a new business and I didn't want to push it. But if he is not getting the support he was looking for I can see how that would be even more stressful.
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Offline Thirsty_Monk

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Re: CSB (Community Supported Breweries)
« Reply #13 on: December 07, 2013, 07:19:10 PM »
I think it is mixed bag. Beer is luxury item for non luxury price. Ask yourself if you would pay let say $500 a year for this. I think this is way above the beer price point and you would have to do a lot of education.

Check this brewery.
http://houseofbrewsmadison.com/csb-info/
He is in Madison WI. This is very educated and liberal city of about 200,000.
Last I heard he had 9 subscribers.

I actually contacted him about his project and he was fairly terse and dismissive in his email so I let it go. I'm sure it's a hard stressful thing to be starting a new business and I didn't want to push it. But if he is not getting the support he was looking for I can see how that would be even more stressful.
He started at about the same time when I did. I do not hear too much about it so I would say it is not working.
I have send you a PM with my opinion.
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Bohemian Dark Lager
Smoked Bock
MaiBock
American Brown Ale
Marzen
Root beer

Offline Alewyfe

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Re: CSB (Community Supported Breweries)
« Reply #14 on: December 07, 2013, 07:21:58 PM »
7 Devils Brewery in Coos Bay sold investor pints at $100 ea. They limited to 300. All proceeds went to employ/ hire local artisans to supply items to the pub. Local muralist did a wonderful antique type mariners map painting on the outside of the building. Woodworkers crafted the interior tables and bar. Glass blower crafted a custom chandelier for the taproom. The place is just lovely.

All holders of an investor pint are entitled to one free pint any Weds. or Sun. for a year. They limited it to 300 as they were concerned about being too crowded. They are slammed busy on Weds and Sundays. Most people come in with friends and relatives in tow. It has worked very well for them. All pints sold out prior to the official opening.
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