I took a bit of a break from brewery planning the last few weeks to build out my own pilot brewery. Along with wanting to help other brewers put out great beer, I am also passionate about my own recipes. In the end, this will only be a 1/2 Bbl brewery, but will give me the facility space to fine tune my beer, and as a secondary benefit, help me cost out the smaller studio spaces in the larger facility. More details to come…along with a bit of a teaser….I might have found the perfect commercial space for the start-up.
So, a bit of a blow this week, with the major profit center of the brewery usurped by a MUCH larger facility. Even if I could have planned and funded this brewery by the end of this year I still would have had much of my contracts disappear as soon as this large contract facility opened. So…..where does that leave me? Renewed focus.
Funding the facility early through contract only business would have been great, but it was off target from what I really wanted to do with this brewery. The real concept here is brewing success for local brewers. So how? I think the only solution is to have a public taproom. I had planned for a taproom originally, but only have it open for tours or special events. Without the contract income coming in, I need another revenue stream. I think public taproom is the only way. This adds an additional advantage, brewers immediately have their beer available to the public. I would also like to go a step further. Rather than just one commercial sized facility, I think this brewery should have non-professional space. A true studio for practicing and refining before you go public.
Apparently, U-Brew spaces require only slightly more insurance than any commercial property. Now imagine a home brewer, working out of a space in the studio, perfecting recipes with the help of professional staff. Once a small batch is ready, it goes on tap under the studio’s license (Craft Beer Studio presents: XXX). If the beer is successful, the brewer makes more. If it becomes successful enough, he moves to the full scale brewery.
Home brewers could simply work out of the studio. Rent the room for 1/2 a day to make a beer on near professional gear, with near professional process. They could simply use it as their home brewery. However, those looking to take a shot at the commercial market, would have the ability to put a beer on tap and see what happens.
I think the combination of studio space for non-pro brewers, connected with a commercial facility, and a true tap room is the future of this plan. Time to make a few more calls. Stay tuned.
This weekend the Boston Globe ran a story about Dan Lanigan from Lord Hobo and his plans to open a 100% contract brewery on the North Shore. It sounds like he has already secured funding for this 18 million dollar facility. If successful, this would pound a serious coffin nail in the profit center of my business plan. Providing contract capacity in the state was the basis for this plan and the best way to fund the service side of the business. I have not thrown in the towel but this is not great news for my plans. I wish Dan well, of course, in his plans as the industry in MA is in desperate need of capacity. However, without the services side of the equation, area brewers will lose out on something that would have helped many beyond just available capacity.
After talking to several brewers, industry specialists, and insiders, the numbers for starting this business are beginning to settle down. I have several pages of tables and spreadsheets attempting to track all expenses and foreseen capitol investments. Right now with all of those various lines added up, it look like $750,000 is the magic number for what I am trying to do. This gets a fully operating brewery and 1 year of operating cash, with a little breathing space for unforeseen issues.
There is still a lot of work to be done to the business plan around the market and operation of the business. I continue to focus on that daily, but it is nice to have a number to talk about when asked.
After talking to a few brewers, to get the most bang for the buck in a 100% contract brewery, and be able to compete with the larger operators, a 30Bbl brew house is a better option than just 15Bbl. It lowers the man hours for getting you up to larger batches, but still runs at 15Bbl for the brewers just starting out. I’m re-contacting my previous vendors to get adjusted quotes to see where that puts me for start up capitol requirements. Rough guess…another 100k.
A few numbers have been adjusted since I last posted. I’ve split the offerings at the facility to better accommodate established brewers who just need spare capacity. So dropping the 15bbl batch rate to a competitive price with no consulting services.
I also adjusted my cellar design to allow for more flexibility, and therefore more batches per month. This drove down my cost per barrel and allowed me to lower the batch rate with consulting by $500 per 15Bbl.
I’ve been talking to a local brewer here in Mass for a couple months now. He has been an invaluable resource for cost information, and has gone out of his way to help me better hone my numbers. It has resulted in some realizations about the economics of brewing and just want it takes to be successful. I am undeterred, and continue to work my way through the business plan. I did, however, want to take a moment to thank Matthew for this excellent opportunity, and wish him luck in the ramp up of his new facility.