[bluesman]

ROT...7bbl is break even and 15bbl is safely profitable if you are efficient and have a good business plan. Sales are required. 

[punatic]

Not meaning to pick nits:

1 beer barrel = 31 gallons
31 gallons x 1/6 = 5.17 gallons

I guess the extra 0.08 gallon is lagniappe.

The "1/6 bbl" sankeys I've used are not converted cornelius kegs.  They are fabricated as sankeys - no removable lid.

[edit] Cat paws walked on the keyboard and added .25- to my post, above,  while I was distracted.  I noticed the typo in ccarlson's response below.  My cat Andy is not so good with volumes and math. [/edit]

[majorvices]

Cleaning is a bit tricky if you don't own an actual keg cleaner (which I plan on purchasing eventually, but they costs about $15,000 for the one I want). ... Takes about 4-5 hours to clean/sanitize about 60 kegs.

It's all about perspective. I can clean maybe 5-6 kegs/hour since we have to pull the stems (in the sixtels, for half-barrels we just debung them).

Nucking Futz, I say.  Why don't you just build a keg cleaner? PM me if you wanna see pics of mine.

[ccarlson]

Not meaning to pick nits:

1 .25-beer barrel = 31 gallons
31 gallons x 1/6 = 5.17 gallons

I guess the extra 0.08 gallon is lagniappe.

The "1/6 bbl" sankeys I've used are not converted cornelius kegs.  They are fabricated as sankeys - no removable lid.

.08 gallons may be lagniappe, but if you're picking nits, .17 gallon is worth getting excited about. That's almost 22 ounces or a very nice glass of beer.

What I have is definitely not a converted Corny. To be honest, I have a hard time believing that buying/converting a corny is much cheaper than buying a new one, when you buy in bulk.

[morticaixavier]

Not strickly beer business related but the basic structure I have always used when deciding not to go in to business for myself again is that whatever product you are selling you have to be able to sell it at a price that covers all costs related to production + whatever hourly rate you wish to bring home. And if self employed remember this includes close to 50% for taxes and another chunk if you want health insurance.

so if it costs you 15 bucks to make 5 gallons of beer and it takes 6 hours to make it (Including clean up and everything) plus buying the kegs (Which should be prorated over several uses say 2 bucks a use figureing on 25 uses or so) and you want to actually bring home 10 bucks an hour (So you have to earn more like 20 or 25) you end up with a per keg price to the consumer of

 $15 = ingredients
   $2 = wear and tear on kegs
   $2 = wear and tear on other equipment
$150 = your labor over 6 hours

you would have to charge the buyer $169.00 for that keg of beer. kind of steep. If you can make 10 or 20 gallons in the same 6 hours and get your ingredient costs down by a significant factor perhaps you could get to this for 20 gallons

 $30 = ingredients (this represents a 50% reduction in ingredient cost)
  $8 = wear and tear on kegs
  $2 = wear and tear on equipment (assuming it's not any harder on the equipment to do 20 gallons than it is on 5)
$150 = your labor (still only 6 hours, this might be optimistic)

so they you are talking $190.00 for 4 kegs which is maybe more doable for the market. call it 50 bucks a keg. that means the bar owner can make a gross sales of about $800.00 on the 4 kegs at 5 bucks a pint. I don't know the industry so I don't know what labor/equipment costs etc look like for a bar owner but 400% markup is not unreasonable.

so at a 20 gallon batch level you might (big maybe there) make a living if you can do that 4 or 5 times a week and nothing bad happens.

[majorvices]

so at a 20 gallon batch level you might (big maybe there) make a living if you can do that 4 or 5 times a week and nothing bad happens.

I guess that is assuming you are brewing out of your house with no overhead. Not a lot of places will let you do this. You usually need a locally zoned and approved facility.

[punatic]

Just a thought:
If you sell through the 3-tier system you realize only a fraction of the price the consumer pays to drink your beer.
If you sell through your own brewpub you realize all of the price the consumer pays to drink your beer.

3 tier:
Brewer → wholesaler (markup) → retailer (markup) → consumer

Brewpub:
Brewer → consumer

[majorvices]

OTOH Brewpub has way more overhead than distributing brewery. And you have to have very good food to be a successs, which means wait staff, kitchen help to be paid, including massive overhead cost of kitchen and dining room. The nice thing about having a distributor is they do a lot of the work for you. Granted, they get a portion of your profits.

[punatic]

OTOH Brewpub has way more overhead than distributing brewery. And you have to have very good food to be a successs, which means wait staff, kitchen help to be paid, including massive overhead cost of kitchen and dining room. The nice thing about having a distributor is they do a lot of the work for you. Granted, they get a portion of your profits.

You need a distributor that will be willing to work to promote your product.  One of the main complaints I hear from small brewers is their distributors do little to promote their beer.  Often distributors focus their promotion efforts on their high volume - more popular beers.

It's great when you get a wholesale house to carry your product, but it sucks when they don't do much to get you placements - and they're the only one who carries your beer.  In that case be prepared to spend a lot of time promoting your beer and servicing accounts that carry it.

[majorvices]

Yeah, well - it depends on the distributor. It's not really our distributor's job to promote our beer, but they do it anyway. They compete against other distributors for tap space so they will push your beer, especially when you have a quality product.

The other things you may not understand is that the distributor buys our beer from us directly. So when he has it in his ware house it behooves him to move it onto a tap somewhere.

Reagrdlesss, I looked into starting a brewpub but the operating costs where was more than I could ever afford, lert alone the stupid local laws I'd have had to deal with. A distributing brewery is way more affordable and much easier to get off the ground if your starting capital is less than a million bucks or so. 

[Will's Swill]

OTOH Brewpub has way more overhead than distributing brewery. And you have to have very good food to be a successs, which means wait staff, kitchen help to be paid, including massive overhead cost of kitchen and dining room. The nice thing about having a distributor is they do a lot of the work for you. Granted, they get a portion of your profits.

On the gripping hand, the latest "brewpubs" around here generate most of their profit from the tasting room, at least at first, with no food at all.  For a small start up, this seems like a reasonable approach without the low margins of distribution.

[tschmidlin]

OTOH Brewpub has way more overhead than distributing brewery. And you have to have very good food to be a successs, which means wait staff, kitchen help to be paid, including massive overhead cost of kitchen and dining room. The nice thing about having a distributor is they do a lot of the work for you. Granted, they get a portion of your profits.

On the gripping hand, the latest "brewpubs" around here generate most of their profit from the tasting room, at least at first, with no food at all.  For a small start up, this seems like a reasonable approach without the low margins of distribution.

Yes - provided a tasting room is legal in your locale.  You've got to do the research and find your own path based on your circumstances.

[majorvices]

Exactly. If a tasting room (or better yet, "to-go" growler fills) are legal in your area then that is a better approach. We are working hard to try and get the tap room concept legalized here in my state. But so far, no luck.

As far as brewpubs go, the real lure to a brew pub is usually the food. Of course the beer geeks will seek it out for the beer but in a lot of instances the beer is just a novelty. If you don't have good food you won't stay in business no matter how great the beer is. It is challenging enough to run a brewery - you really need a good partner to run the restaurant side.

[bluesman]

Exactly. If a tasting room (or better yet, "to-go" growler fills) are legal in your area then that is a better approach. We are working hard to try and get the tap room concept legalized here in my state. But so far, no luck.

As far as brewpubs go, the real lure to a brew pub is usually the food. Of course the beer geeks will seek it out for the beer but in a lot of instances the beer is just a novelty. If you don't have good food you won't stay in business no matter how great the beer is. It is challenging enough to run a brewery - you really need a good partner to run the restaurant side.

Wood oven pizza, a really good burger, some specialty sandiches and damn good creative appetizers is a winning combination of pub fare. I'm sure you could find someone talented enough to work with you Keith. 

[punatic]

My point exactly;  Brewer → consumer is the best option by far.  

True, some distributors are better than others, but if distributors aren't there to promote your product, what service do they provide to desevre such a large piece of the pie?  Storage and transportation?  There are less expensive ways to do that.  It is a government mandated skimming operation (in addition to the government's own skimming via alcohol taxes).

Having worked on all three tiers of the 3-tier system, I can tell you it sucks for the producer and the consumer.  Producers make less for their efforts. Consumers spend more for their product.  What value is added between the two?

Wholesalers have a powerful lobby to protect their position.  Witness their heavy resistance to direct shipping.

Anchor distills a very nice rye whisky.  I heard Fritz Maytag speak about his whisky and the 3-tier system at a craft distillers conference.  He made some excellent points on the matter.  I got the impression he is not a big fan of it.  The American Distilling Institute had a video of Fritz's talk up on their website.  If I can find it I'll post a link.