Cost of a sole proprietor nano brewery distributorship?

Discussion in 'Beer Talk' started by dtgabel, Mar 14, 2013.

  1. dtgabel

    dtgabel Mar 13, 2013 Wisconsin

    I am a home brewer - purely for hobby. I have a friend who owns 2 pubs in a solid drinking/tourist town up in Northern Wisconsin, who wants me to brew beer for him to sell. He offered me ~1,000 square foot building/warehouse on his commercial lot where one of his bars is - for free.

    How much would it cost to start a sole proprietor nano brewery distributorship? I'll have a free commercial warehouse. $2,400 for a WI wholesaler permit every two years. What other significant costs will there be? I'm thinking of a 4 US beer barrel brew system.

    Any input would greatly be appreciated.

    - Thank you
     
  2. hopfenunmaltz

    hopfenunmaltz Jun 8, 2005 Michigan

    You might look at probrewer.com for information. You can register and ask the question there. There are other homebrew sites with going pro sub-boards, so look around the net.

    You need to talk to the state/local Alcohol Commision and the TTB. There may even be something on the TTB site about starting a small brewery.

    Edit - you will come up with a $ figure to start, double it. Your first hire should be an attorney, second the accountant.
     
  3. olympuszymurgus

    olympuszymurgus Nov 24, 2009 California
    Beer Trader

    250,000 plus enough money for a year worth of disposables.
     
  4. carteravebrew

    carteravebrew Jan 21, 2010 Colorado

    You will want to thoroughly make sure this space can be used for a brewery set up. This not only includes proper drainage, electrical, ventilation, etc. (all things that will be inspected) but also the location's proximity to schools, churches, etc. Some areas are strict on such specs in regards to producing alcohol.

    All licensing/permits at the local, county, and state level are dependent on where you area located, so there's not really a way to answer that. Agree with hopfenunmaltz, it is in your best interest to have a lawyer look into this.

    Here are a couple books I recommend checking out to gain a little more perspective:

    21 Questions About Opening a Brewery in the United States
    -there is an e-version of this that is much cheaper than the hard copy

    Brewery Operations Manual
    http://breweryoperationsmanual.com/
    by Tom Hennessy, owner of Colorado Boy Pub & Brewery

    Good luck!
     
  5. barfdiggs

    barfdiggs Mar 22, 2011 California

    Mike Hess Brewing in San Diego (A nano with a production brewery in the works) kept a blog about starting a nano. It would be a good reference to check out.
     
  6. sergeantstogie

    sergeantstogie Nov 16, 2010 Washington

    Question 22; Did I just pay 60 dollars for a 68 page pamphlet?
     
  7. billandsuz

    billandsuz Sep 1, 2004 New York

    Unfortunately, you are asking a question that requires an answer with a tremendous amount of planning and understanding to have any value. So you are not going to get anything remotely informative from a few paragraphs we can give you here. Building a brewery, even a small one, is like asking how much does it cost to build a factory?
    Well, it depends.

    You can begin by buying and reading http://www.amazon.com/Brewers-Guide-Opening-Nano-Brewery/dp/1470087960

    I can tell you this - if there is anything inside that book that is not already obvious to you, then you probably should rethink the concept. That is not intended to be knock on you personally or the book, just that brewing beer commercially has almost nothing to do with homebrewing. That said, open a nano brewery. Do it. Every third guy around here has thought of it, so why not do it?
    Cheers.
     
  8. sergeantstogie

    sergeantstogie Nov 16, 2010 Washington

    I think Jeff, Hopfenunmaltz , said it before, but with all the new breweries (nano, micro etc) opening; There needs to be more places to sell all that beer. Why not specialize in selling those lesser known beers instead of doing what everyone else is doing?
     
  9. leedorham

    leedorham Apr 27, 2006 Washington

    Is that supposed to be a serious answer?
     
  10. olympuszymurgus

    olympuszymurgus Nov 24, 2009 California
    Beer Trader

    Yep. Once he said 4bbl it went from big home brew nano stuff to real brewery equipment, real brewery infrastructure, real brewery money. If you need to make beer for two bars, a few tap lines per and that's it, and your willing to work round the clock then it's possible to get by with less but building a brewery is an expensive proposition.

    1bbl? 30,000, maybe less. You'll work 20hrs a week on your brewery and it will pay for itself but not the labor so be prepared to have a full time job.

    4bbl? Gotta brew full time, gotta pay for all that equipment, gotta pay labor.

    That is, unless your wife makes enough to support the family.
     
  11. leedorham

    leedorham Apr 27, 2006 Washington

    I guess I'm fine with people believing that.
     
  12. dtgabel

    dtgabel Mar 13, 2013 Wisconsin

    Thank you everyone for your input.

    With a free rental commercial warehouse & immediate demand for product, I thought it might be practical to take my passion of home brewing to the next level. Not to get rich, but to have fun and make a little supplemental income.

    I clearly don't have the capital, nor knowledge to start a nano distributorship. Oh well, who hasn't had a pipe dream that didn't pan out?

    But, I still believe my pale ale is unparalleled...

    Thanks again!
     
    Frankinstiener likes this.
  13. mattbk

    mattbk Dec 12, 2011 New York

    If your restaurant partner has capital - see if he will invest and hire you as the head brewer. A free space and a lot of demand are very good reasons to get into business - and if he fronts the capital, the risk is on him, not you. No need to blow off your dreams so quickly!
     
    Buller38 likes this.
  14. carteravebrew

    carteravebrew Jan 21, 2010 Colorado

    Agreed, nobody said don't do it. Just look into it a little more! You might be surprised, who knows until you check it out?

    There's a brewery near me that does 3 bbl batches and just brews double batches of 1.5 bbls at a time (sizes might not be exactly how I say, but something close to that). I believe he still works full time and just has the tap room open Fri-Sun. It's doable, especially if a major expense (rent) is taken care of.

    Look into crowd-funding, probrewer.com, craigslist, ebay, used dairy equipment...anything that can save you $$$ and your dream may become a reality.
     
    Buller38 likes this.
  15. billandsuz

    billandsuz Sep 1, 2004 New York

    as far as anyone can tell, you are no more or less prepared then the 100's if not 1000's of brewery start ups that have gone on to be quite successful. it's a stupid business for fools and the niave. and its getting more popular all the time. live the dream.
     
  16. epk

    epk Jun 10, 2008 New Jersey

    Agreed. And a thought occurred to me, does it even matter if your beer is always available at the pubs? It's not a brewpub, your beer wouldn't be the only thing on tap. Ideally, you would want to break even, sure. Of course your pub owning friend might not always want an empty tap wasting space.

    Though tt actually presents an interesting situation where you can sort of test what sells without as much risk (since you don't have to pay for as much, like rent - though what about water and power??).

    There is a production brewery in Cape May, NJ that boils in what looked to me to be a converted 50 gallon drum. I'm guessing they are doing a barrel at a time. They have a cooler with all their plastic fermenters in them.

    I mean, DFH started off on a 10 gallon system! Of course, he was brewing around the clock and I believe he borrowed quite a bit of money... but you do have the free space, that's a start.

    But what you need to do is some serious research and not just poll BA for answers. I for one have absolutely no idea what I'm talking about anyway.
     
  17. hopfenunmaltz

    hopfenunmaltz Jun 8, 2005 Michigan

    You need a solid Business Plan. Those take time.
     
  18. MLucky

    MLucky Jul 31, 2010 California

    Well, put it this way: most people start out with nothing more than a love of brewing. You've got that, plus free space, plus a customer. So in some ways you're ahead of the game.

    That said, the space issue isn't that much of a big deal: rent on a warehouse is going to be a relatively minor expense for most start-ups in comparison with equipment, ingredients, and utilities. And that's assuming that whatever space your buddy has would be useable, legally speaking, as a brewery. Another issue is how much your buddy would pay you for the beer. Usually, over the counter sales in the brew pub are what keep start-ups going, especially the really small guys. The difference in your profit margin on a pint sold in the pub vs what you can get selling a keg to a restaurant or bar is HUGE. You can make a couple dollars on each pint sold over the counter at your own pub, but often only $20 on a keg sold to a bar, and it's pretty tough to make enough money at that rate. So you'd want to figure out what he's thinking he would pay you per keg. If he'll give you a good enough split, you might have something there.

    I don't want to give the impression I think I know very much about this: I'm just another home brewer who's thought about going pro and who's chatted up a few guys who have. But let me add one other thing: I've heard a couple of guys sat that 500 barrels a year is pretty much the cut-off point, and that it's really difficult to make any money making any less beer than that. So you might start some back of the napkin calculations on that basis: ie, what you're buddy would pay per keg, how much it'd cost you to produce 500 barrels, how much labor and ingredients that'd take, and how much money you'd expect to be left with once you've paid utilities etc. Anyway, I'd say do the research, and see where it goes. Good luck!
     
  19. atomeyes

    atomeyes Jul 13, 2011 Ontario (Canada)
    Beer Trader

    he needs a solid Mission Statement! :)


    but seriously...
    the concept of opening a brewery/nano/micro is great. but you have to ask yourself what your end goal is?
    doing it as a hobby? the OP scared me already. that means "i'm not really interested in making money," which really means "my business plan (if there even is one) doesn't account for much profit, which means that I'll likely be losing money or be slowwwwly paying back the start-up debt to the point that interest/loan payments will be suffocating me."

    OP, ask yourself these two questions:
    1. what's in it for me
    2. what's in it for the bar owner

    your answer is obvious. you want to have fun. but why does the bar owner want to do this? increase his profitability? create a niche? create more foot traffic? just because (i.e. he digs good beer)?

    i've toyed with the idea of starting a nano. but i would only sell my beer in house. why? i went to a bar on Wednesday night. had a glass of local craft beer. $7. not a pint. not a tulip. a mini tulip. i'd guess that it was just over a 1/2 pint. for $7. and in Toronto, people are paying that.

    so if i can open a bar where i'm pouring 2/3 pints for $7 or $8 and it costs me (literally) pennies to produce, i am laughing. but if i'm brewing kegs to sell to someone and that keg is $250 for 100+ pours? what am I trying to do? $2.50/pint versus $7/pint profit? duh. the latter.

    the only way I'd do what you're doing is if your friend "hires" you and pays you an hrly wage that, surprise, correlates to the volume of draught he's selling. if it is costing him nothing to put you into his warehouse space and you're putting butts into his bar AND, i assume, getting him great local and internet press, then you need to be reimbursed accordingly.

    you can start a nanobrewery for $15000 and probably get decent volume. think that gives you around 3 kegs' worth per brew.
     
  20. bszern

    bszern Aug 18, 2011 Massachusetts

    Does the warehouse have floor drains? If not, you will have to rip up part of the floor and trench one out. That would be the first thing I would look at. Electrical is not a huge issue because it can be installed without major building modifications, but plumbing is a little pricier.
     
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