Bruery 2016 RS/HS Allocations

I would think there is an associated cost with the overhead of employees dedicated to managing the program, longer term storage of beers for members, and the added stress of trying to make a bunch of neck beards happy.

Many breweries keep programs in place, but at least a couple breweries have given up on it. De Garde and Crooked Stave for example.

 

Lost Abbey also gave up on theirs.

 

Obviously the benefit of interest free loans outweighs the cost of running the program or they wouldn't do it. Money don't get any cheaper than "free"

 

Plus, with the societies, they are pretty much guaranteeing that we will buy beer from mostly them instead of spending our beer money elsewhere.

 

With interest rates where they are and not really knowing what the overhead costs are I don't see it as obvious.

Being HS I can directly say that this isn't the case for at least some folks. I have been buying significantly less Bruery beers this year. It also seems that there are others posting here with the same sentiment. I would think this could be a potential problem when beers they hope to sell out of, last through second chance and then some. Those beers also being society beers, can't be released without members getting upset. So they are sort of stuck with them.

Either way has it's pros and cons, I am just playing devil's advocate and hope they do well growing the brands either way.

 

I guess I could rephrase it like this: Being part of HS/RS guarantees that the members will buy beer in general from The Bruery they would otherwise spend somewhere else.

I'm HS and I usually skip sours, unless people rave about how great it is. But, most of my cellar is Bruery beer since it's easy to get for me. I don't like chasing down beer, it's annoying and I'm too old for that crap.

 

Wait....what? Serious? Aren't the estimates for RS something like 2k-3k members? 2,500 ppl x $300 fee = 750,000 in interest free capital. And that doesn't even take into acct the Hoarders money? (possibly another 1,000 members @ $800ea, another 800k.....) I know you are by your own admission just "playing devils advocate" but I cant imagine an interest rate low enough (or an overhead high enough) where that kind of float doesn't make sense...

 

The last time anyone had something resembling solid numbers, it was ~450 HS members and ~2000 RS. I have no idea how different this year may be on those totals (I suspect they grew a bit), but the total is definitely well over $750k and probably approaching $1MM (if not over).

Regardless of interest rates, the cashflow situation for a brewery whose core business is barrel aged beer is not very awesome. Yes, they've been at it for a long time now, and yes, they've also expanded the non-BA side of their business, but their business model is significantly different even compared to a brewery like Modern Times. A few newer breweries have gone even more to that extreme (The Rare Barrel, for example), but the Bruery largely forged the path for an American brewery whose core business is aged product, rather than aged product being a cool sideshow/addition to a core lineup of high-turnover beers.

I think a lot of newer fans underestimate how the early years of the RS impacted the Bruery's trajectory and how intertwined BT is to that trajectory - in both good and bad ways in my opinion - but that's a really long discussion over what amounts to a tangent at this point.

 

Some very good points in this paragraph, specifically about the Bruery's unique model and how it's opened doors for others. The Rare Barrel bit's interesting since yeah, I doubt anyone could really get a read on how much money they do/don't make given low production, high emphasis on quality and (most importantly) low cost of business by not actually having to brew the beer or own any sort of brewing equipment. Purchasing wort probably isn't cheap, but still -- cheaper than the aforementioned brewing equipment. Only overhead is the wort and fermentation process.

 

I wasn't around in those days but kinda wish they had one now lol

 

I am somewhat serious, but I do not know enough about their overhead costs to really debate with any level of detail. All I am saying is the salary for 4-5 employees to run the program and rent for a climate controlled warehouse to store the finished beer in California can't be cheap. I would think storing those beers that don't sell and sit a long period of time before members pick up, is a huge cost vs unloading them on distributors. Also another key point would be the ability to use the interest on a loan as a tax write off if they just borrowed the same money.

Again, I don't have any numbers to crunch, but it would come down to overhead vs tax deductible interest. Even if they were close numbers wise, I could see the value in not having to deal with managing the program. In the end, no money is free.

 

To be fair, when winter comes, we do have break out our winter tee shirts

 

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Absolutely right.

None of us are being bamboozled. Otherwise the renewal rate would be zero.

Sure we crowd source/front load The Bruery, but it comes with an agreement that they will provide benefits. Benefits that are clearly valued.

In my case, being able to buy beer online, at my convenience, and having them hold it in temperature controlled conditions until I can get there, is a big benefit. As is a three week window to order new releases. Throw in a great tasting room next to where I pick up my beer and I'm in. And if I can't get there, I can ship it, even better.

The Bruery has tapped into a segment of the market that loves great beer and will pay more for the added convenience .

I may be buying a bit less this year, but I expect to be an RS member for many years to come.

Although I have admit if I moved out of state I would have to rethink this. The benefit of visiting the tasting room, getting member pours and growler fills, and going to the anniversary party are benefits value. The increased cost and loss of benefits would be an issue for me.

 

I hope that wasn't the sentiment I was conveying. I in no way feel bamboozled.

 

Just popped open Frucht Apricot. Anyone else notice it's a slightly milder version of Cuddlebug?

 

Can anyone point me towards any sort of official word to what is included with the HS package regarding the four melage bottles (2 each #13/#15). Have they been changed to the cuvees? I'm not sure what to buy this time around as I don't know what we are getting! @BruerJoel ?

 

Sorry, I also didn't mean to imply that you were suggesting that we were getting bamboozled.

I was just speaking generally about that fact that, for the most part, we all know what we are signing up for and the front loaded money gets paid back in benefits that we value.

Basically, just agreeing with your point that "no money is free"

Cheers

 

Anyone else care to chime in on Melange 15?

 

Melange #13 / #15 (the winners of the Hoarders blending tournament) have been renamed to 2016 Hoarders Cuvee (The Bruery), and 2016 Hoarders Cuvee (Bruery Terreux). Two bottles of each are included with your Hoarders membership.

Thanks,
Patrick
The Bruery

 

Speaking very generally here, only variable overhead costs are relevant when making a decision. 5 staff members whose sole duty is society fulfillment is a consideration. Fixed costs (like climate controlled storage for inventory, ecommerce interface, etc) are ignored since they exist with or without the society.

You'd also consider how much nicer the margin is when selling directly to your customers instead of to a distributor. Goes a long way to pay those friendly fulfillment center wizards.

The tax write off thing is an advantage for businesses without other options but pretty much obsolete in industries that have adopted crowd sourcing as an acceptable business model. (Bonus points for being able to crowd source yourself instead of paying a chunk to kickstarter, gofundme, etc etc...) If The Bruery needs tax shelters, there are many other ones at their disposal. (Source: I'm a public accountant with an industry focus on wineries and breweries.)

And none of that even starts to touch on @Xul's points about the benefits of a futures program for a specialty product like barrel aged beer. Production forecasting, budgets, etc... so much easier when you know that 5,000 Black Tuesdays have already sold (and have the cash in hand) instead of just paying in for a year and hoping for customers at the end of the road. The fact that society members will take care of out of state distribution for you? Nice cherry on top...

It's not the best solution for every brewery which explains why some have opted out. Its a liability, a form of debt... a lot of people don't like working after they have already been paid (since there is no carrot at the end of the stick), aren't interested in scaling, or lack the organizational skills and fiscal responsibility to properly utilize the funds. Don't mistake their shortcomings in execution as a failure of the system. For the more ambitious breweries out there (of which The Bruery is certainly one) there is really no question that the properly deployed "society" model is a boon.