[MDixon]

IIRC Highland Brewing Co in Asheville, NC went 10 years before they finally saw the black. 10 YEARS!

[dougdever]

Doug, that's a great, thoughtful analysis!  Thanks for chiming in and I'll bookmark your site for future reference.

I can't take credit for the website... it is not my site.  I ran across it while investigating starting a brewery some time ago and this thread reminded me of it.  Thanks though!

[bbump22]

Why not pursue a dream?  I think this line says it best: "Debt kills small breweries." 
http://www.soundbrew.com/projectnotes.html

If I had an extra $500,000 just sitting around, I'd be more than happy to pursue the dream.  That is sort of the problem with this industry... You can't just open a storefront and start making and selling small widgets.  There is significant capital required to acquire property, purchase a brewhouse, a mind bending amount of red-tape (although with the explosion of craft brewing, most state agencies are really good about getting you pointed in the correct direction and walking you through the process - unlike say 10-15 years ago when the people working there didn't know the process either), and you will be operating at a loss until you can build a distribution channel.  So, if you were leveraged with $450,000 of debt at 8% on a 10 year commercial business loan, you're looking at something like over $5400 in debt service each month.  If you are serious about doing this, you have to ask yourself, how long can you sustain that and draw a salary for yourself until you start turning a profit? 

So on a 15 bbl system, you're brewing about 35 kegs at a time.  Assuming you can sell those out regularly, you have a new problem: your choke point - how many fermentation vessels do you have and how long your beer is going to sit in them.  Should you have spent the money for a 30bbl system initially instead - instead of going through the whole capital improvement process again to upgrade your brewhouse.

Anyways... I might be rambling a bit - but you get the idea... lots of things to think about and a lot of risk. 

I absolutely agree with you Doug.  Good, realistic info.  I would imagine that opening a production brewery or brewpub would require large amounts of equity, etc as you indicated.  The site provided was very informative as well. 

Even with this knowledge, I think folks looking to start small by opening a nano brewery would understand their production limitations and so forth.  Those opening a nanobrewery might have a different distribution strategy as well.  They might aim to bottle a majority of their beer and might only have one or 2 tap handles around town.  The timeline is the same though, regardless of the size.  But obviously the upfront Capital requirements will be less with a smaller brewery, but still required (min. $20k).  I know of a nanobrewery in the Northwest that broke black after being open just a few months (at least that's what he told us).  He also lives at home and still works part-time, but he is building a following and pursuing his dream. 

I know some folks would discourage opening a nanobrewery because of all the hard work that is involved without making any $ to show for it, but I know of several breweries in the Northwest that started off on 1/2 bbl systems and expanded to 10 bbl.  Off the top of my head I can think of Two Beers, Schooner Exact, and Big Al's.  But at some point in order for them to expand, I know they had to find more capital/investors, etc, etc. So it always will come back to $, no doubt about that.  But I think that for some nanobrewery entrepreneurs, their intent of starting a nano is to show future potential investors that you are committed to success, that there is a strong following of customers that like your beer, and that while the risk is still high, the payoff could be big.  Then they could perhaps expand from there. 

Just some of my thoughts.  Now if I could only find that $20k I had. 

[boulderbrewer]

Thanks for some up front numbers. What everyone needs are numbers. You have to realistic about your numbers. Dreams are something, but anyone who has ideas has to be realistic. Good luck to all of you. You should also need to think out of the box,equipment wise that is a good way to do that. I hope to see all that try on the other end.

Great Luck Brothers and Sisters.

[gimmeales]

Numbers are important, but with something like a brewery, there are so many variables they can only help in a very limited way until you actually start crunching them yourself (a friend and I are currently putting together a business plan for a Brewpub, just for a sanity check on the whole thing).  Doug's overall assessment is lucid and realistic from what we've been able to learn, but again, are you going Nano, larger Production Brewery, Brewpub?  All have vastly different considerations not just in general setup and expertise needed.  How easy will the local authorities be to work with?  Who are your customers?  What will your rent be?

These are all big questions leading me to not 'pursue the dream', because I have just enough age and responsibility (wife, kid, mortgage) under my belt that I am far more risk averse than I would have been ten years ago (of course, then I hadn't then stumbled into this fascinating and addicting world of brewing beer).  Yes, starting a brewery on a shoestring budget can and will continue to work, but they are by far the exceptions to the rule and generally succeed because of an uncommon blend of skills, personality, hard freakin' work AND good doses of luck along the way.

[majorvices]

I will say it is possible to open a brewery for a lot less than 500K (though 20K is no where near enough, either.) Staying in business .... well, I let you know in a year or two. 

One thing I will say is that it helps to have good partners. There are lots of hurdles and, when taken in one chunk, they seem unmanageable. But if you divide the tasks up and take them one at a time you start to see that one by one the hurdles are able to be cleared. I wouldn't let anyone tell you that you can't do it, because that is simply BS. The odds may be against you, but that doesn't mean it is impossible. I wouldn't suggest, however, attempting it alone unless you are extremely resourceful.

[bbump22]

I will say it is possible to open a brewery for a lot less than 500K (though 20K is no where near enough, either.) Staying in business .... well, I let you know in a year or two. 

One thing I will say is that it helps to have good partners. There are lots of hurdles and, when taken in one chunk, they seem unmanageable. But if you divide the tasks up and take them one at a time you start to see that one by one the hurdles are able to be cleared. I wouldn't let anyone tell you that you can't do it, because that is simply BS. The odds may be against you, but that doesn't mean it is impossible. I wouldn't suggest, however, attempting it alone unless you are extremely resourceful.

Thanks Keith,

What's a realistic number for startup costs when opening a nanobrewery running on a 1 bbl system?

[glitterbug]

I will say it is possible to open a brewery for a lot less than 500K (though 20K is no where near enough, either.) Staying in business .... well, I let you know in a year or two. 

One thing I will say is that it helps to have good partners. There are lots of hurdles and, when taken in one chunk, they seem unmanageable. But if you divide the tasks up and take them one at a time you start to see that one by one the hurdles are able to be cleared. I wouldn't let anyone tell you that you can't do it, because that is simply BS. The odds may be against you, but that doesn't mean it is impossible. I wouldn't suggest, however, attempting it alone unless you are extremely resourceful.

Thanks Keith,

What's a realistic number for startup costs when opening a nanobrewery running on a 1 bbl system?

$499,998 

[majorvices]

What's a realistic number for startup costs when opening a nanobrewery running on a 1 bbl system?

It's going to depend a lot on what kind of facility you get and what kind of improvements the local authorities impose on you. Our place is 500 bucks a month for the first year and then it will go up to 1000. We have to instal a wet area (with floor drains) and a catch at the street so that the city can see what we are dumping in their sewer. We also ended up hiring an architect to be sure we were building everything to code (wasn't cheap, but perhaps cheaper than doing all the work twice).  The great thing is most of these improvements will be able to role over into our larger system which we hope to start building within 6 months of starting up. I guess theoretically you could launch with around 20K but, keep in mind, you will only be spinning your wheels on a 1bbl system. The goal is to grow and I believe you really need a 7bbl system to be at all profitable. So any improvements you are forced to make might as well work for a larger capacity brewery or you will end up spending money twice and redoing your work. Our projection shows up spending around 40K for the first year but that number will most likely go up.

[bbump22]

What's a realistic number for startup costs when opening a nanobrewery running on a 1 bbl system?

It's going to depend a lot on what kind of facility you get and what kind of improvements the local authorities impose on you. Our place is 500 bucks a month for the first year and then it will go up to 1000. We have to instal a wet area (with floor drains) and a catch at the street so that the city can see what we are dumping in their sewer. We also ended up hiring an architect to be sure we were building everything to code (wasn't cheap, but perhaps cheaper than doing all the work twice).  The great thing is most of these improvements will be able to role over into our larger system which we hope to start building within 6 months of starting up. I guess theoretically you could launch with around 20K but, keep in mind, you will only be spinning your wheels on a 1bbl system. The goal is to grow and I believe you really need a 7bbl system to be at all profitable. So any improvements you are forced to make might as well work for a larger capacity brewery or you will end up spending money twice and redoing your work. Our projection shows up spending around 40K for the first year but that number will most likely go up.

I knew the investment in my wife would pay off one day!  She's an architect. haha.  Thanks for the good information -  I too have heard from a professional brewer that it would take a 7 bbl to be profitable.  But have also heard and seen folks start at 1 bbl, then work out deals with breweries that let them brew on their larger 7 bbl system and eventually move up to 10 bbl. But your right, growing is the goal.  I have seen the opposite happen to where brewers start out too big..

[narvin]

Pull a Mikkeller... brew on other people's systems. A friend of mine started doing this, and with some good contacts in the distributor (and local beer) business, his beer is appearing on tap in every good bar in the region.  He started local, but his next beer is a collaboration Saison with 't Hofbrouwerijke in Beerzel (Belgium).  Just goes to show you that there's a huge demand for good beer in a place like Baltimore : ).

[richardt]

Consider contract brewing.  Read this great article about Pete's Wicked Ale's history (FYI, article is 13 years old).
Simply, sell the best beer you have.  Going this route seems to cost less $$$ and has fewer hassles (e.g., no outlay for the brew pub, equipment, staff, HR issues).  Those can come later if you are successful and desire to proceed.

What I like about this option is that, in theory, it keeps the costs down (esp the overhead) and lessens the operational and HR headaches while pursuing the dream.  This is a big deal if your resources ($$ and/or partners/management) are limited.

I may do this one day--I do have the occasional daydream about it.  But, first, I need to be a better and more consistent brewer.  And my kids are more important than my desire to have a brewery.

[denny]

Even with contract brewing, you still face the hardest part....getting the beer sold.  You have to convince distributors and wholesalers to take a chance on your unknown product when what they carry is already selling.

[tubercle]

Here is one guy in my hometown that was able to pull off the contract brewing thing. This is probably the exception to the rule though.

http://www.homebrewersassociation.org/forum/index.php?topic=2093.msg24695#msg24695

[richardt]

Even with contract brewing, you still face the hardest part....getting the beer sold.  You have to convince distributors and wholesalers to take a chance on your unknown product when what they carry is already selling.

Shouldn't be hard for someone credible and reknown like you--when are you going to mass-produce the "Denny's RyePA"?