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How much would it cost to start a microbrewery?

Discussion in 'Beer Talk' started by beerheredude, Oct 24, 2012.

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  1. I know I'm not the only BA'r out there thats dreamed of owning there own brewery.
    Lets here some insight please.
  2. gtermi

    gtermi Champion (750) Texas Apr 21, 2010

    I have always been told a MINIMUM of 400,000-500,000 and thats for a tiny brewery. I did a lot of research on starting one up and you really need to have around $1,000,000 for a nice setup.
  3. "If ya gotta ask, you probably can't afford it."
  4. raynmoon

    raynmoon Savant (480) California Aug 13, 2011

    It will cost your entire Pokémon Card collection. Assuming that you have a 1st edition Charizard in there.
    Dracarys, sullenbee, gtermi and 12 others like this.
  5. mjryan

    mjryan Savant (455) Minnesota Dec 22, 2007

    I'd imagine you could do it for far less than 1 million dollars. That being said, 1 million dollars wouldn't hurt.
  6. kzoobrew

    kzoobrew Champion (840) Michigan May 8, 2006

  7. yeah, I've crunched numbers, revised business plans and crunched numbers again. With all the governmental paperwork and fees and making sure you're big enough to make a profit, one million keeps coming up the magic number.
  8. rmcnealy

    rmcnealy Savant (330) Illinois Jan 13, 2006

    Do those figures take into account all of the marketing/PR efforts? You either need an amazing product that organically gains popularity or have a great gimmick to move mediocre product. To enter a market like Chicago, you better have something going for you to differentiate you from the shit tons of others.
  9. The smallest start up I have seen is $290,000
  10. MasterSki

    MasterSki Site Editor (980) Illinois Dec 25, 2006 Staff Member

    7venth Sun in Florida started with something tiny ($40k?). That being said, Joey Redner told me that 'to do it right' you need $1,000,000.

    You can certainly get by with far less than $1,000,000, but you'll experience significant stress and growing pains. Delays in label approval, ingredient sourcing, or government permits may render you insolvent, and you'll risk damaging your long-term reputation when you can't afford to scrap batches of beer that are infected/off/not up to par. Unless you have a really supportive local community of fellow brewers and volunteers donating equipment, expertise, and manpower you really need a decent amount of money on hand to pay the bills and employees when you inevitably have a problem that interrupts cash flow. There are also obvious inefficiencies and bottlenecks when working on smaller scales.

    Also - running a brewery and a brewpub are two completely different animals. The former is like running a factory, while the latter is like running a theme restaurant.
  11. cavedave

    cavedave Champion (930) New York Mar 12, 2009

    From what I have heard the million is to get started, if you are buying any good will it will be even higher. The one I would love to have is for sale for 3 million.

    That said, how do you get that much cash? Don't have to start there.

    A new business plan is nanobrew first, and that can be as small as 2 40 gallon brewkettles setup, can be done on the cheap for $6,000 and some smart labor. A really good local startup has done this to get there reputation made, name known, and some cash saved.
  12. mychalg9

    mychalg9 Advocate (685) Illinois Apr 8, 2010

    Interesting....
  13. mychalg9

    mychalg9 Advocate (685) Illinois Apr 8, 2010

    Very cool, thanks. I've been on that site occasionally but haven't seen that particular article.
  14. robinsmv

    robinsmv Initiate (0) Florida Jun 24, 2010

    I think I actually have one of those somewhere back at my parents house, does that mean I can be a professional brewer?
    jmccraney and franklinn like this.
  15. Put together a serious business plan and you'll know.
    albertq17 likes this.
  16. Without a doubt- that's what cured me (back in 1997). My wife, God bless her, encouraged me to spend the $600 or so on that 'How to Open a Brewery' seminar that the BA was offering at the time- " the money and time will be well worth it just to get your head out of fantasy-land" is how she put it. The seminar came with a number of realistic business plans (which I probably still have) that my friends and I looked over for a very short while before concluding that this life and its prospects wasn't for us. I also came out of it with a new-found respect for those who make the opposite call.
  17. BigGene

    BigGene Initiate (0) Florida Oct 30, 2010

    I have a friend that home brews, he makes some really good beer and he has made some drain pours. He is opening a brewery lat next year. He is starting with a 15bbl system and just his equipment is running $200k, He figures if when he builds it he puts a small apartment in back so he can live there he can open for about $750K that will include 6 months of operational capital. I told him I would be his first salesman, I will work for beer.
  18. Sounds a lot like Funky Buddha's set up, they are in the process of upgrading to a 30 barrel system from a 1.5.
  19. GRBrew

    GRBrew Savant (295) Michigan Jan 12, 2009

    You can start for a lot less than one million. It really depends on what you want. It you want a 15bbl system from the get go things are a lot different than if you start with a 3bbl or 7bbl system. I am working with guys right now that are doing it for less. I guess it all depends on if you hire a good lawyer like myself to help you out.
  20. I would be interested to know the salaries of those involved in brewing (owners, head brewers, etc.). I have a friend who opened a brewery in the 90s and was only recently able to have enough money to purchase a decent house. Even more recently, he sold his third to the other owners and got out. Brewing is a young man's game, and I'm sure there will always be enough cheap labor for the grunt work; but I wonder how many brewers/brewery owners will stay in it for the long haul given the (relatively) low pay.
  21. Hindsight

    Hindsight Aficionado (245) Ohio Oct 8, 2011

    afrokaze likes this.
  22. MasterSki

    MasterSki Site Editor (980) Illinois Dec 25, 2006 Staff Member

    Should probably mention that start-up costs will vary tremendously by state. Initial licensing fees can vary from a few hundred to a few thousand dollars, and limits on self-distribution can make opening a 'nano' impractical in certain places. This (along with culture) is one of the reasons there are so many more breweries in states like Colorado, Oregon, Washington, Wisconsin, & Michigan than there are in Texas, Florida, New Jersey, Ohio, and Georgia. And don't get me started on somewhere like Ontario...
  23. I personally prefer the brewpub model. If you can keep food costs down(from a waste perspective, not low quality) a good profit can be made. One big question at start up(non nano) will be whether or not you purchase the land/building. That can make costs skyrocket...but certainly gives you a lot more stability.
  24. MacNCheese

    MacNCheese Initiate (0) California Dec 10, 2011

    Size of the system, location/market/rent will play a HUGE factor as well as red-tape. Figure you'll be paying rent on a space for a minimum of 6 months before you even make a batch of beer and you won't be making any money/salary in the mean time.

    If you go less than 7BBL system are you going to be a brewpub? Then you have to open a resteraunt. El Cajon Brewing blew through $600k opening their brewpub w/ a 15BBL system, are barely making any beer and may fold.

    Gov't red tape will also slow you down as well as tennant improvements. To support fermenters/brew house you normally have to cut out the existing slab, put in drainage (plus permits) and repour a thick slab....it's endless.

    In San Diego if you want to open a brewery you're looking at a 15-20BBL brewhouse and opening costs ~$1M. So says the research from Societe Brewing and Modern Times Brewing (later is in process of signing a lease). If you have less, then you have to start with less and grow the business, but it means less or subpar hardware which just makes life difficult.

    And after all that, you need to make a stellar product, build your core base of customers and pray you can get tap handle accounts to stay alive. On TOP of all THAT: your first year to year and a half you most likely won't be able to source the hops you need to make the beers you want...so you've got to deal with that as well.
    TongoRad likes this.
  25. FosterJM

    FosterJM Champion (825) California Nov 16, 2009

    Your mom called. She said she threw that box out. So no.

    Cheers!
    Goldfishman and robinsmv like this.
  26. I would imagine Quebec is easier since this year, there have been numerous brewpubs/breweries opening up with more (!) on the way. I wish them all the best but i'm afraid the brew scene will get clogged.

    Sorry for the hijack :D
  27. mbuzzard

    mbuzzard Disciple (70) Virginia Aug 19, 2008

    Call me cynical... but I just don't know if this kind of plan is long term viable. I feel like you wouldn't be able to generate the kind of cash to grow when you need to, and if you have that cash in pocket why not start larger and grow into it?
  28. Depends on if you want to make money. I know of a fairly large brew club that pooled their money and opened a small brewery that does not bottle at all. They just sell enough at the brewery to keep the place open so the brew club can enjoy brewing on a larger scale and share with people who decide to come in. They stay alive and have average beer.
  29. You can wait until one of the hundreds of under capitalized breweries folds and try to pick up the used equipment at a discount.
  30. robinsmv

    robinsmv Initiate (0) Florida Jun 24, 2010

    Good, I didn't want to ruin a good hobby by going pro anyway
    franklinn likes this.
  31. Based on the quality and limited distribution of several new San Diego area breweries, I would suspect this is the case with them also.

  32. I agree totally. Nano breweries don't make money normally...but they do help to prove that you have a viable product/concept. That goes a long way towards attracting investors willing to assist in expansion.
  33. I was wondering something similar, with the nanos mentioned earlier expanding and getting larger systems, are they keeping their nano systems as a pilot system or are they selling them?
    Will there be an influx of small used systems as breweries expand?
    My understanding was that for many years, used systems were hard to find, so with expansion or closings, it is now easier to find used equipment?
  34. raynmoon

    raynmoon Savant (480) California Aug 13, 2011

    Absolutely, it does.
  35. I would like to point out that Michigan is a 3 tier state, no self distribution. Several nanos have done well, and expanded to larger systems- Paw Paw and Odd Sides come to mind. There are more nanos in the state that do fine.

    With >1000 breweries in the planning stages, used brewing systems are very hard to find.
  36. MasterSki

    MasterSki Site Editor (980) Illinois Dec 25, 2006 Staff Member

    I should probably have been clear that not all those states allow self-distribution. I was speaking more to the insanely low licensing fees for opening a Michigan brewery - it's $50 for a brewery and $100 for a brewpub.
  37. OK, see your point. The state has been encouraging the start ups in brewing, wineries (cider and mead fall into this license, which is why many breweries also have the SWM license), and distilleries through low licensing fees.
  38. mkorpal

    mkorpal Savant (265) Colorado Oct 28, 2007

    It's still extremely difficult to find used equipment. There are something close to 2000 breweries in planning right now, with only a handful closing, and a few more expanding.

    Anyway. As for how much, it depends on size, distribution, and food. Doing something like a 7BBL system with local distribution and no kitchen at your taphouse, you can probably get away with 6-700K. Obviously, adding a kitchen is going to almost double your costs. The one thing that helps right now is there is an abundance of empty realestate to move into.
    darknova306 likes this.
  39. darknova306

    darknova306 Initiate (0) New York Jan 13, 2005

    As with everything in the industry, the answer to this question is "it depends". What's your specific situation? Do you want to get a nano setup to build a brand while you hold a day job? Do you want to start a brewpub? A packaging brewery? What are the distribution laws you're working under? Do you have access to workable storefront in an area with lots of foot traffic that would allow you to have a small taproom that could float itself on a small brewing system just by selling on site?

    Read what Andrew says in that thread on Probrewer that's linked above. As someone who is involved in a start-up right now, I can tell you that my experience is in line with everything he says. It will always take more time and money and frustration than even your worst case planning indicates.

    I believe any type of brewery, yes that includes a nano without a day job on the side, can be profitable... depending on the specific situation. Keep in mind the most common numbers I've seen for profitability for a keg-only brewery put the necessary production at 3000 BBL/year, and for a brewery that bottles a significant amount it can be as low as 1000 BBL/year. For a nano, I think you really need to be able to sell most/all of your beer on site in bottles/growlers/pints, unless you're willing to hold a full day job and do the nano on the side.

    Basically, whatever situation you're in and the type of brewery you want to open, do the due diligence of creating a fully fleshed out business plan. That way you realize just how much money will go into everything, and will force you to see just how much money will be going out the door to keep you afloat for the several months after you start brewing before you actually see serious revenue flow. The comment above about under capitalized breweries is dead accurate. If you plan to start your own, make sure you can afford the cost of being properly capitalized, or your chances of long term success will be rough at best.
    tgchief likes this.
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