Opening up a microbrewery

Betho · #1 05/07/08, 04:56 PM

A sort-of spinoff of the cheesemaking thread.

Assuming one had the cash reserves available for any equipment & set up costs necessary, would this be a feasible operation for somone (or several someones in a partnership) who have developed a couple really great recipes as hobbyists? Thoughts?

**highlands** · #2 05/07/08, 05:47 PM

No recipes, sorry, but a thought: One of your waste products will be boiled grain. It costs money to dispose of that in the landfill. Save by composting it or hooking up with a pig farmer who will feed it to their animals.

Cheers

-Walter
Sugar Mountain Farm
in the mountains of Vermont
http://SugarMtnFarm.com/blog/
http://HollyGraphicArt.com/
http://NoNAIS.org

Jen H · #3 05/07/08, 05:48 PM

In WA state, getting your permits to manufacture and sell alcohol is a long, intricate process. If anyone in the partnership has any ties at all to a separate retail business, you may be denied outright.

A lot depends on the individual inspector you deal with at the state level.

The federal permits are a breeze, it's WA state that's difficult.

Husband and I had our permits to open a hard cidery -- took a full year to get them and you wouldn't believe the financial paperwork the state needed to see. We had to give that up because we were managing a store that sold beer and wine. (we have since purchased that store) The specific name of the law we ran afoul of is "tied house". Costco has a lawsuit against the state to overturn that law, but until (or unless) Costco wins our hard cidery is dead in the water.

Having said that, obviously people do get approved and go on to do well. Just get ready for a long, tedious process.

LisaInN.Idaho · #4 05/07/08, 05:55 PM

My husband's friend here in north Idaho did it and his microbrewery is wildly successful. He even has his own delivery trucks now and his beer has been winning national awards. We're proud because we were smart enough to invest some money into his expansion.

wyld thang · #5 05/07/08, 06:10 PM

IN my sort of small town in Oregon(30,000) we have two breweries(McMenamins and GOlden Valley) both have restarants(McMenamins have many restarants over the PNW). There was a third, but it folded--it also had a restarant, but way crappy food(really cool space though, great for music).

I'd say MOST of the small breweries in Oregon also have restarants on site. Lots of good beer out there. Just an observation about the restarant tie-in, it must be very hard to start up a brewery without the extra money a restarant brings in to support while you get off your feet. There is a great Bones and Brew Festival in Portland, you can sample and see how you stack up.

I don't know how hard it is to translate a recipe into huge batches. My hub makes beer too, and he says his is just as good as a lot of micros(I don't have a refined beer palate). He's got a real good sense of taste and smell for that, knows how to tweak ingredients. I keep telling him he needs to go be a brewmaster.

We have a wine festival in our town, and Golden Valley was making $$ hand over fist selling beer (rednecks can only take so much wine I guess!).

LisaInN.Idaho · #6 05/07/08, 06:13 PM

I'd hoped that my husband's friend would start a restaurant with his brewery (he used to be in the restaurant business) but he won't...and he has no problems with business.

Bink · #7 05/07/08, 06:15 PM

Quote:

Originally Posted by LisaInN.Idaho

My husband's friend here in north Idaho did it and his microbrewery is wildly successful. He even has his own delivery trucks now and his beer has been winning national awards. We're proud because we were smart enough to invest some money into his expansion.

Oh? Which brewery?

LisaInN.Idaho · #8 05/07/08, 06:20 PM

Laughing Dog Brewing.

Bink · #9 05/07/08, 06:27 PM

I'll have to keep my eyes open, then. It may not make it this far yet, but if he's winning national awards, I bet some of my beer geek friends have heard of it.

Jen H · #10 05/07/08, 06:30 PM

Quote:

Originally Posted by LisaInN.Idaho

Laughing Dog Brewing.

Oh, their beer is excellent!

LisaInN.Idaho · #11 05/07/08, 06:40 PM

It is good. I just called DH and asked him to bring home a 6 pack of the IPA.

sgl42 · #12 05/07/08, 08:15 PM

i'd guess that having a "great recipe" is a relatively small part of being a successful microbrewary. Lots of sales and marketing, and lots of good management, and a fair amount of luck.

Also, there's the competition, location, and timing. Probably 20 yrs ago, there were relatively few microbrewaries, and starting was a little easier. Today, it's probably much harder to get established. Re: location -- if you're close to an area where microbrews are popular (I'd guess near resort towns, for example), you'll have better luck. Lastly, re: timing, if the economy is headed into a recession, and people are struggling and looking for ways to cut expenses, it's probably a particularly bad time to start selling a high-end discretionary item.

--sgl

Betho · #13 05/07/08, 09:34 PM

sgl - you are absolutely correct. The people here in question (not myself) have quite a bit of business experience in many different facets. Great sales skills, tons of management and project experience, and marketing. In terms of the skills involved, the people who are considering this endeavor have a really fantastic mix of applicable skills that would make it so they could have great success in whatever endeavor they choose... this is one of several that have been discussed but I was curious because I like this idea.

Jen - thanks for the great info! That's good info and might end up being the biggest obstacle. I think at this point I'm trying to see whether there would be a market. I don't think they would want to do a restaurant unless they outsourced that to someone else but seeing that the market might just be there (it would be in NE WA, probably not too far from Lisa's friend) it may or may not be worth checking in to.

A co-worker makes mead with her husband and she said something similar, although in her case she said it was because they didn't consider mead beer or wine and no one could decide which sort of permit they would need. Odd, huh!

Jen H · #14 05/08/08, 12:14 AM

Quote:

Originally Posted by Betho

A co-worker makes mead with her husband and she said something similar, although in her case she said it was because they didn't consider mead beer or wine and no one could decide which sort of permit they would need. Odd, huh!

Not odd at all, having been through the process twice now.

Once to try to get the manufacturing license, once to get the retail permit for the store.

The retail permit is a whole lot easier to get than the manufacturing permit is.

Your co-worker might have better luck with the state if she describes mead as "honey wine" -- there's a meadery in Bellingham and that's the definition they used to get their approval.

WA state doesn't like "hard cider" either. We had all sorts of fun conversations about the difference between hard cider and apple juice.

**clovis** · #15 05/08/08, 01:20 AM

I think it could be a wonderful idea.

The key is to keep your overhead and start up costs in check.

I attend a ton of foreclosure auctions. You really wouldn't believe that people spend what they do when starting a food business. It is mind boggling. It truely is.

If I had a dollar for everytime I heard an auctioneer say "This was bought brand new less than a year ago, and the owner paid $10,000 for it...", I would be a very rich man.

It is unbelievable to know that people will buy a $12,000 double door cooler for a brand new business, an untested idea, when a nice used one can be bought for less than $2500.

The smart business person figures out how to make do with used equipment. A stainless cream seperator will work great for small batches of micro, for example. Pay cash for what you can afford to start, and then buy what you want/need once you have the cash in your hand.

The smart business person also avoids debt at all costs, and avoids expensive rents and leases.

It is just too risky to bet your finances for an unproven, difficult, finnicky market...start small, and pay cash as you go. The millions you can earn will be much easier to obtain without worring over high start up costs.

Clove

suzyhomemaker09 · #16 05/08/08, 08:04 AM

Quote:

Originally Posted by clovis

A stainless cream seperator will work great for small batches of micro, for example.

Clove

Just curious as a fledgling beer / wine maker how a cream separator is used in the process?

mnn2501 · #17 05/08/08, 08:14 AM

Quote:

Originally Posted by LisaInN.Idaho

I'd hoped that my husband's friend would start a restaurant with his brewery (he used to be in the restaurant business) but he won't...and he has no problems with business.

As someone who has both managed and owned restaurants, your husbands friend sounds like a smart man -- I got out of the business 10 years ago and am soooooo glad I did.

**clovis** · #18 05/08/08, 09:33 AM

Quote:

Originally Posted by suzyhomemaker09

Just curious as a fledgling beer / wine maker how a cream separator is used in the process?

To my understanding, you would be using the tank as a small batch processor. These are commercial grade, and still very expensive, last I heard. The key is that they are stainless.

I don't know a thing about the micro business. Years ago, I sold packaging glues, and called on brew houses, big and small.

It appeared to me that the folks making the most money were using paid for equipment. I knew some guys that were raking in cash, hand over fist, using cream seps for their production. They were set up in an old warehouse with low rent.

You wouldn't believe the number of people trying to be big shots in the microbrew business that couldn't pay for a $75 bucket of labeling glue. These were the folks that had bought all the finest equipment to start, including monsterous copper clad tanks costing $90,000 each, and leased the highest end locations. These were the people with a leased Lexus sitting in the lot, and always bragged how great business was. You could always tell who was really making it. You just get a feel for a sick business, and when their account says pre-pay only, well, you get the picture.

What made the creams seps so great, according to them, was the ability to switch production as demand changed. They were also marketing "wise", because they could pre-sell the smaller batches, garnering a higher price, and creating demand for their product.

Clove

Betho · #19 05/08/08, 11:28 AM

Quote:

Originally Posted by clovis

To my understanding, you would be using the tank as a small batch processor. These are commercial grade, and still very expensive, last I heard. The key is that they are stainless.

I don't know a thing about the micro business. Years ago, I sold packaging glues, and called on brew houses, big and small.

It appeared to me that the folks making the most money were using paid for equipment. I knew some guys that were raking in cash, hand over fist, using cream seps for their production. They were set up in an old warehouse with low rent.

You wouldn't believe the number of people trying to be big shots in the microbrew business that couldn't pay for a $75 bucket of labeling glue. These were the folks that had bought all the finest equipment to start, including monsterous copper clad tanks costing $90,000 each, and leased the highest end locations. These were the people with a leased Lexus sitting in the lot, and always bragged how great business was. You could always tell who was really making it. You just get a feel for a sick business, and when their account says pre-pay only, well, you get the picture.

What made the creams seps so great, according to them, was the ability to switch production as demand changed. They were also marketing "wise", because they could pre-sell the smaller batches, garnering a higher price, and creating demand for their product.

Clove

You know, I think in general this really applies to any business as well. You bring up some really great points on this. I've seen it happen myself in other stypes of businesses. Granted, you do need proper equipment but no reason to buy everything brand new when you can get something used that will do the job just fine for half the cost. Of course, I'm also the anti-debt person so I'd always advocate "making do" until you can afford to pay for something in cash.

**clovis** · #20 05/08/08, 12:15 PM

I totally agree about "making do" until you can afford to buy with cash.

You will do just fine, should you proceed with your venture.

The great thing about micro brewing is the potential for huge margins on what you make. Since it is a consumable and affordable, it is within the grasps of an every day consumer.

I wish I could remember the name of the guys that I have refered to in my earlier posts. I have often wondered how they faired over time. Seems like they had been in the biz for 5 years or so when I met them. You should have seen the place they had. Most would have considered it as a joke. It was an old warehouse, that had been added on to over the years. Nothing in the place matched. The whole place was nothing but hodge-podge, but it was paid for and it worked like a charm! Their desks were folding tables. They applied labels by hand, and I think they labeled every Thursday night. Everyone chipped in to help, including their mom's and neighbors. They were going to buy a labeler when they got $6000 to buy one.

They really had the business. They sold retail any time someone was their during the 40 week, but they advertised 'store hours' as being on Fridays. There was a constant stream of customers, usually paying in cash. They had a four case maximum per customer, but I am not so sure it wasn't just a ruse or marketing ploy.

Good luck!!!!

Clove