Progress

We need a name for the brewery business! We are distinct from Coastline but still affiliated with them, but to get our permits we need a new name for the entity which is Chad, Nick, Quentin and the brewery equipment. While they will mainly be brewing for Coastline, there is the possiblity that they will be brewing other beer as well - for restaurants, for parties, maybe even for their own line to distribute. So, they need a good name. Any suggestions would be appreciated.

I dug up my copy of Business Plan Pro but I am afraid that it is so old, it doesn't work anymore. I am still looking for a cheap if not free solution for writing this business plan, but if all else fails, I guess I can upgrade this old copy pretty easily.

Chad talked with Quentin today and they are looking at all sorts of equipment possibilities. Quentin talked with people at Sound Brewing Systems and they have quite a bit of used equipment right now. More importantly, they have a great section of notes for the start up brewery projects.

"A production brewery should in most cases choose a brewhouse size of at least fifteen barrels. Smaller systems will generally require too much labor per barrel to be more than marginally profitable, and will tend to run out of capacity before turning a decent profit, necessitating replacement of equipment within three years of opening. That said, a number of breweries have started with smaller systems and up sized within one to two years after opening (the “bootstrap method”), and many of these are still operating. The present climate would not seem too friendly to this style of start-up. A production brewery should ideally open its doors with a minimum of 1,500 barrels of annual capacity, and a minimum of two to three primary fermenters for an ale facility. As for lager beer, increase all size and cost requirements compared to ale breweries by a factor of 1.5-2.0. Lager is extremely capital intensive to make in a small production brewery and may only be profitable at volumes in excess of 10,000-20,000 barrels per year. "

"The usual minimum rational size for brewpub start-up systems is a seven barrel system. This will suffice for small to medium sized, retail only brewpubs (up to 125 seats). In certain instances, very small, limited operations may call for three to five barrel systems. Any brewpub that is larger than 125 seats or one that plans to wholesale any product to other outlets will likely need at least a ten barrel system. A 7 barrel brewery system will occupy 750-1000 square feet, and larger ones up to 1700. Total space for even a small operation should not be less than 2500 square feet, and 4000-5000 is much better. If the brewery will also produce beer for sale to other establishments, considerably more space will be needed to store, wash and fill kegs and/or bottles."

"Assembling and commissioning a brewery is an immensely complicated endeavor. It is inevitably dovetailed with a significant amount of construction work, and the nature of construction is--let's face it--delays. If the contractor says it will take sixty days, figure ninety and you may be safe, but 120 is safer. Permitting processes today often take months as well, and construction usually cant even begin until permits are issued. Construction delays are far and away the most common reason for late brewery openings, and late brewery openings are the most common reason breweries run out of capital."

Well, if that isn't enough to send you running scared from the brewery industry - their figures for start up costs are astronomical. Starting your own business is just about one of the scariest things you can do. But this is good advice to be considered.

Revenue:
Beer sold retail by the glass in a brewpub
$700-$1,000 per BBL
Beer sold retail to go in bottles
$300-$375 per BBL.
Beer sold wholesale in kegs to distributors:
$120-$150 per BBL.
Beer sold wholesale in bottles to distributors
$145-$190 per BBL
Beer sold wholesale in kegs to accounts
$160-$200 per BBL.
Beer sold wholesale in bottles to accounts
$190-$250 per BBL

Brewpubs may become profitable with as little as 250 BBLs of annual beer sales if it is all sold at retail. A brewpub should target beer sales of at least 40% of gross sales. Production breweries generally require 3,000-5,000 barrels of annual sales at wholesale to become profitable. They can often benefit from a modest on site pub, depending on the suitability of the location. A start-up production brewery may cost between $125 and $350 per barrel of annual capacity to build depending on quality of equipment, efficiency and other factors. Larger plants cost less.

Anybody scared yet?