Starting a brewery

[schredder]

New to the forum. Long-time fan of beer and the business of brewing. Have been doing some soul-searching and giving some serious thought to starting a small brewery or partnering with an existing one.

I don't have a lot of $ and perhaps more importantly, experience in running my own business. However if, after doing some serious homework, I feel there's a chance, I'm willing to put it all on the line. Pipe dream? Maybe. Life-changing, certainly. I either have to do it or rule it out and move on. Can't think of any suitable half-measures.

I welcome any sage advice, pointers, stories of past successes or failures, fair warnings, sober second thoughts, etc. Thanks!

[matt7215]

start homebrewing (if you dont already) and volunteer at your local micro. you will quickly figure out if you want to own/run a brewery.

[Jon Walker]

I guess the big question is...what do you bring to the table? People who start breweries need money. You can't make a serious attempt to get off the ground without at least $250,000. More money will be needed after that (we ballparked the cost of a startup brewery in Ontario at about $1 Million in another thread recently). So if you don't have money then you have to partner with those who do. The idea of joining an existing brewery and bringing little money to the table would only make sense for them if you had skills they currently lack. Major marketing background, MBA, track record in the industry, master brewer credentials, etc. But from your post I'm unclear that you are coming at this with anything other than interest and desire. If that's the case then nobody will back your venture and/or partner with you...unless you have a crazy billionaire in your back pocket who just wants to splash the cash on a dream.

My advice to you would be to;
1) Learn the craft of making beer. If you haven't already then start brewing your own beer working up to full mash that you can complete, start to finish, without help.
2) Join a homebrew club. Meet fellow beer enthusiasts who you could team up with and whom, eventually, you might be able to pool talents and resources in order to move a brewery project forward.
3) AND/OR raise $250k of your own money or from investors/venture capitalists. VERY hard to do especially if you have no prior experience or track record in the industry or as an entrepreneur.
4) Get a job working for an existing brewery and learn the business from the inside.
5) Take some of the courses available through colleges and universities that instruct students on either brewing or the business of brewing.
6) Watch "Dragon's Den". Nobody invests in the guys with the dream and the desire who have no proven skill set, have no proof of sales, no pre-existing product and no unique and tested business model.

Bottom line...everybody who posts here loves beer and many dream of one day owning their own brewery. What prevents most from realizing that goal is very simple...finances. Brewing is a very competitive industry with short margins for start ups and prohibitive startup costs. There has to be a solid business plan in place to gather the needed resources, a great team in place to execute the plan and make good beer and then the infrastructure, financial reserves and business acumen to drive the enterprise into profitability. Even then it's an uncertain proposition and a long term investment.

Sorry to be the sober voice that counters your obvious enthusiasm. It's great to dream, and many dreams do eventually become reality, but I believe that in order to have a real chance at this you have a lot of steps to take first. Good luck with it. Invite me to your grand opening one day.

[schredder]

Thanks for both replies, so far.

I have some limited experience home brewing, something I plan to pursue more vigorously in the near-term, regardless of whether a real business comes of it. Have also thought of volunteering or working with a local craft brewery as a logical step to get some much-needed experience. I've considered a few that I'd like to get in touch with already.

I could likely come up with about half the $250k - a ballpark startup figure I've heard before - to get something started, but I think you hit on a critical point about building a solid team.

I wouldn't think of doing this on my own. I know where my strengths and weaknesses lie, and recognize that given stiff competition and a short supply of cash, tireless dedication by a small group of like-minded people, with multiple talents, is the essential ingredient, but no guarantee, to success.

Other than the raw passion, I think what I bring to the table - for now anyway - is close to 20 years of education and experience in marketing and finance, and an understanding of what it takes to make a business successful. I know that would get me booted off the Dragon's Den in a hurry, but it's my starting point.

I appreciate the advice. Keep it coming. I have to build some momentum, and knowing what to look for (and look out for) is very helpful.

Cheers.

[Tapsucker]

I'm curious, have you identified a 'hole' in the market that you want to fill?

We all have our favorite beer styles that we can't get enough of. Is this where you are coming from?

[schredder]

No specific product that I feel desperately lacking, just an opportunity that's ripening by the day.

At the risk of stating what most people already know, from all I can tell, a growing segment of the market is leaning more and more toward locally-brewed craft beers, not unlike budding interest in locally grown/raised food products. More people are putting more thought into what they're consuming and are willing to pay a premium for quality. I think this trend (not fad) will only pick up steam in the coming years. Further, I think greater competition creates a sort of virtuous cycle; a higher number of craft brewers leads to greater awareness of the category among consumers, which leads to product trial and purchase, leading to growth in demand overall, and inviting more entrants still. Lather, rinse and repeat until some sort of equilibrium is reached.

If anything, I think the "hole" for a new startup may be in finding and filling a suitable geographic area that hasn't been tapped as well as others yet, generating some regional loyalty, creating a first- or early-mover advantage, then branching out from there.

My two cents anyway.

[Tapsucker]

No specific product that I feel desperately lacking, just an opportunity that's ripening by the day.

At the risk of stating what most people already know, from all I can tell, a growing segment of the market is leaning more and more toward locally-brewed craft beers, not unlike budding interest in locally grown/raised food products. More people are putting more thought into what they're consuming and are willing to pay a premium for quality. I think this trend (not fad) will only pick up steam in the coming years. Further, I think greater competition creates a sort of virtuous cycle; a higher number of craft brewers leads to greater awareness of the category among consumers, which leads to product trial and purchase, leading to growth in demand overall, and inviting more entrants still. Lather, rinse and repeat until some sort of equilibrium is reached.

If anything, I think the "hole" for a new startup may be in finding and filling a suitable geographic area that hasn't been tapped as well as others yet, generating some regional loyalty, creating a first- or early-mover advantage, then branching out from there.

My two cents anyway.

No offense (or perhaps a small one), but you sound like a MBA. I usually follow the theory that if you have an excellent business you want to shut down, hire a MBA.

That said, I think you are attempting to see a bigger possibility in this business and I think you are on the right track. I don't think you will get the right feedback from hardcore beer geeks like at this forum, though. We tend to be more inspired by recipes than business models. It's a bit like trying to commercialize the arts, there will always be those who feel it's a heresy (including me).

I think you should start by looking at the business models of companies like Steamwhistle, Mill Street and maybe Big Rock. They have been able to sell some great beer as well as so-so beer, but with a consideration to craft quality to an emerging buyer. Some would call them gateway products.

You could produce excellent product that is not too challenging and tap/grow the market. But, as others have mentioned, be ready to pour in a lot of seed money and time. This is becoming a mature business that you can't just luck out in anymore.

[schredder]

No offense (or perhaps a small one), but you sound like a MBA.

I am, but I didn't think it was that obvious. Haven't sunk any companies yet, but I still have plenty of time

Anyway, thanks for the pointers. I realize most forum members have no interest in swapping business models, but reckon a few might have given this sort of venture a go or may wish to in the future.

Very deep pockets and/or patient investors seems to be a recurring theme to getting things off the ground and surviving through the first few years. I have neither at the moment. One insider I spoke with said get ready for about seven years of pain. Good to pick up what I can from the wins and losses of others.

Among my next steps is meeting more owner/operators to learn more about what they chalk their successes up to beyond simply great beer, which I'm sure they all claim. Failing all else, I'm sure it will be a fun project to research.

[dutchcanuck]

Hey Schredder,

In all honesty keep us up to date on what you find. I know I day dream about running my own brewery, but am well aware that I could never raise the start up capital necessary to get something like this off the ground. I would, however, love to volunteer or intern at a start up or established craft/micro brewery. God knows I've tried and been ignored several times. Best of luck to you!

Cheers,
DutchCanuck

[matt7215]

Hey Schredder,

In all honesty keep us up to date on what you find. I know I day dream about running my own brewery, but am well aware that I could never raise the start up capital necessary to get something like this off the ground. I would, however, love to volunteer or intern at a start up or established craft/micro brewery. God knows I've tried and been ignored several times. Best of luck to you!

Cheers,
DutchCanuck

its funny when you go to a brewery and say "hey do you want me to work here for free" only to hear "no thank you, we are a struggling start up microbrewery but we also hate free labour"

its happened to me twice.

also, i no longer work for the only brewery that ever paid me for any work i did there. the beer industry is too funny to even talk about.

[SteelbackGuy]

Hey Schredder,

In all honesty keep us up to date on what you find. I know I day dream about running my own brewery, but am well aware that I could never raise the start up capital necessary to get something like this off the ground. I would, however, love to volunteer or intern at a start up or established craft/micro brewery. God knows I've tried and been ignored several times. Best of luck to you!

Cheers,
DutchCanuck

its funny when you go to a brewery and say "hey do you want me to work here for free" only to hear "no thank you, we are a struggling start up microbrewery but we also hate free labour"

its happened to me twice.

also, i no longer work for the only brewery that ever paid me for any work i did there. the beer industry is too funny to even talk about.

What kind of complete fools would refuse free labour from a young guy that just wants to learn?

[TJ]

What kind of complete fools would refuse free labour from a young guy that just wants to learn?

People who have to deal with the Ontario Ministry of Labour? (Just a guess.)

[JerCraigs]

What kind of complete fools would refuse free labour from a young guy that just wants to learn?

You'd be surprised. We have actually refused interns in the past because no one had the time to train them/get them up to speed enough to do anything meaningful.

Schredder, if you look at the Ontario market there are a handful of breweries that have gotten big. Brick, Steam Whistle, Mill Street, Amsterdam. Brick and Amsterdam took the multi-decade long haul route, Steam Whistle had big bucks (I assume) and long history of contacts and knowledge from Upper Canada experiences. Mill Street probably provides a closer model that’s still available to you - build up the business enough then draw in the necessary investments etc. to expand significantly.

Many of the other smaller brewers are operating on much smaller budgets, and (again, assuming) are often not paying themselves a whole lot accordingly. If you are not going to be doing the brewing yourself that means you need to be making at least enough money to pay two full time salaries… and even then those salaries may not look so great an a per hour basis (eg. You will be working your tail off to earn it)

Anyways, best of luck.

[Gedge]

The Brooklyn guys wrote a book about their experiences getting a brewery up and running. Certainly not a how to get in the business type book, but a good read.

[viggo]

The Brooklyn guys wrote a book about their experiences getting a brewery up and running. Certainly not a how to get in the business type book, but a good read.

Thats a great book! Some pretty good stories in there.