How profitable is a semi-successful craft brewery?

atomeyes · Post by **atomeyes** » Wed Apr 18, 2012 12:14 pm

Just wondering if anyone knows or can guess as to how profitable a smaller brewery can be.
I'd use Dieu du Ciel as an example of a Canadian small brewery that did well. Are the brewers/owners doing OK or doing really well?
Or guys like Trou du Diable or 3 Floyds in the US, who have exceeded capacity?

JerCraigs · Post by **JerCraigs** » Wed Apr 18, 2012 1:21 pm

There is no way to answer that question generally.

Brewery X has annual revenue of $500k and is largely debt free.
Brewery Y has annual revenue of $1M but has massive startup loans.

Which one is more profitable?

Rent/property costs, money costs (loans etc.), supply costs etc. vary wildly from brewery to brewery.

atomeyes · Post by **atomeyes** » Wed Apr 18, 2012 1:26 pm

JerCraigs wrote:There is no way to answer that question generally.

Brewery X has annual revenue of $500k and is largely debt free.
Brewery Y has annual revenue of $1M but has massive startup loans.

Which one is more profitable?

Rent/property costs, money costs (loans etc.), supply costs etc. vary wildly from brewery to brewery.

you've kind of addressed the question.
you can have $1 million in sales but your expenses outweigh your costs.
i'm talking about a brewery that, in 5 years, pays off most of their start-up costs. or, if you want to get technical, let's talk about EBITDA

TheSevenDuffs · Post by **TheSevenDuffs** » Wed Apr 18, 2012 1:42 pm

JerCraigs wrote:There is no way to answer that question generally.

Brewery X has annual revenue of $500k and is largely debt free.
Brewery Y has annual revenue of $1M but has massive startup loans.

Which one is more profitable?

Rent/property costs, money costs (loans etc.), supply costs etc. vary wildly from brewery to brewery.

Maybe this is the nerdy accountant in me talking, but neither of the two scenarios that you presented has the slightest mention of profit. Revenue does not equal profit nor is debt indicative of a lack of profit.

markaberrant · Post by **markaberrant** » Wed Apr 18, 2012 2:24 pm

Even if breweries were willing to offer up this info, the results would be all over the map.

TheSevenDuffs · Post by **TheSevenDuffs** » Wed Apr 18, 2012 2:27 pm

markaberrant wrote:Even if breweries were willing to offer up this info, the results would be all over the map.

Absolutely. It would be very interesting to have a look at the financial statements of some of the larger, smaller and mid-sized craft breweries across North America to see just hoe profitable and how varying they are.

markaberrant · Post by **markaberrant** » Wed Apr 18, 2012 2:34 pm

TheSevenDuffs wrote:Absolutely. It would be very interesting to have a look at the financial statements of some of the larger, smaller and mid-sized craft breweries across North America to see just hoe profitable and how varying they are.

Probably be about the same as any other business segment.

I'd like to see all my neighbours' and co-workers' personal finances too, I am sure it would also be very interesting.

Not trying to be a dick about it, but I mean c'mon. It aint gonna happen.

"If you mind your own business, then you won't be minding mine." Hank Williams.

TheSevenDuffs · Post by **TheSevenDuffs** » Wed Apr 18, 2012 2:41 pm

markaberrant wrote: Probably be about the same as any other business segment.

I'd like to see all my neighbours' and co-workers' personal finances too, I am sure it would also be very interesting.

Not trying to be a dick about it, but I mean c'mon. It aint gonna happen.

"If you mind your own business, then you won't be minding mine." Hank Williams.

I am not suggesting for a second that it will happen. Nor should it happen. Just that it would be interesting if it were to happen

atomeyes · Post by **atomeyes** » Wed Apr 18, 2012 2:53 pm

Ontario has the Sunshine List.
Manitoba publishes all physicians' total dollars billed to the government.
we know what CEOs make.
we know details about publicly-traded companies.

its not such a strange request.

in fact, i'd assume that any smart businessman would crunch numbers before investing hundreds of thousands of dollars into a brewery. so there has to be a basis on where their #s are coming from. you know, expenses, ingredient costs, sales projections, etc.

TheSevenDuffs · Post by **TheSevenDuffs** » Wed Apr 18, 2012 3:06 pm

atomeyes wrote:Ontario has the Sunshine List.

True, but that is for gonvernment employees. We are talking about private companies.

atomeyes wrote:we know what CEOs make..

That is not a true statement. We know what many executives for public companies make. Again, you are talking about private companies (breweries).

atomeyes wrote: its not such a strange request.

Actually it is. These are privately held companies. Lets take Ken at Black Oak for example. Why should we all have access to Ken's books to see how profitable Black Oak is? What right to we have to that personal information? It is Ken's company. He does not report to us as shareholders. If he did, then I am sure we would see his financial statements. Do we all have a right to look at your personal tax returns to see your finances?

JasonTremblay · Post by **JasonTremblay** » Wed Apr 18, 2012 3:19 pm

It's ~ $600k to open up a 10 hectolitre production brewery, depending on how extensive your renovations are. You need a floor that can support the brewhouse; fermenters; kegs; brights tank. You need drainage (you don't want to be the guy mopping up 800l of beer on a Monday morning). You need gas and electric that can handle everything you're running. And concrete has to be sealed so that the beer doesn't eat away at it.

Brewpubs cost the same as opening a restaurant ... with the added cost of having a brewery inside it. The ABA numbers suggest that a profitable brewpub-sized brewhouse is ~5 hectolitres.

It's ... complicated.

markaberrant · Post by **markaberrant** » Wed Apr 18, 2012 3:38 pm

Yep, for 2012 I would target $500k-1 million to open a 10bbl brewery and get it up and running. Again, so many variables to consider; used vs new equipment, cost of property/space, cost of renos, etc. In many markets, it is difficult to even find tradesmen to do the work needed (and then you are paying top dollar), and brewing equipment is also hard to come by these days due to all the new breweries coming online.

10bbl is pretty much considered the minimum size if you ever expect to make money. Makes me wonder what the market will look like in 5 years with all the nanos opening... and everywhere I go, all I hear about is other guys planning to open a brewery. Good on 'em, and I don't want to seem negative, but most of the people with these ideas/dreams have very little understanding of what it actually takes to run a successful brewery. All I know is that I don't know enough about it, which is plenty enough to scare me away. And I enjoy beer too much as a hobby to make it into my job.

atomeyes · Post by **atomeyes** » Wed Apr 18, 2012 3:46 pm

TheSevenDuffs wrote:
Do we all have a right to look at your personal tax returns to see your finances?

no, but if you asked me if i made a good living at my profession or what one could expect wage-wise doing my line of work, I'd disclose that information in a heartbeat.

i mean, google will give you similar (but possibly inaccurate) information. I'd rather get it from the horse's mouth.

what if I wanted to open up a brewery? you think that none of the current breweries didn't ask other microbreweries about their books? of course they did.
and if they didn't, they're stupid or they are poor business people who didn't think things through.

markaberrant · Post by **markaberrant** » Wed Apr 18, 2012 3:48 pm

atomeyes wrote:what if I wanted to open up a brewery? you think that none of the current breweries didn't ask other microbreweries about their books? of course they did.
and if they didn't, they're stupid or they are poor business people who didn't think things through.

There is a big difference between making that information public and sharing some wisdom in confidence with another operation that is serious about opening a brewery.

BrausBackinTown · Post by **BrausBackinTown** » Wed Apr 18, 2012 3:58 pm

I don't remember my source, but I heard the 1 to 2 million dollar range to buy/set up the brewery. Starting as a brew pub seems to make much more financial sense, since you can start making good money right away. There's also the contract brewing way to start up. You think Dimitri at Spearhead didn't talk to people to find out exactly how much he'd be making before getting started. But, as far as I know, he still hasn't quit his day job (which tells you something).