Horrible Time to Open/Expand Brewery?

It's a great time to start a brewery! To open and run a successful brewery is another story. This industry is just like any industry or aspect of life: the strong will survive and the weak will perish. Those that start ill-prepared and without the knowledge or experience to realistically execute their business plan will fall by the wayside.

First and foremost, a brewery is a business! Most unsuccessful breweries that close down, most likely, failed to operate their brewery as a business. Profit margins, marketing strategies, growth projections, budgeting, etc.. are just as, if not more, important than how good the product is. When I see breweries open with their creative foot and stack their year-round lineup with heavily fruited beers, cocoa nib vanilla beaned milk stouts, etc.. I find it hard to take them seriously. Can you imagine how much the costs of all the tertiary ingredients eats away at profit margins?!?! I'm not saying no experimental one offs, but to have any year round offerings in this fashion seems foolish to me. A brewery, just like any business, has to produce profits through favorable margins in order to expand and take advantage of economies of scale. This is especially true for start-ups with 7 bbl and under systems. Things like; formulating all year-round offerings to work off of X amount (say 10) of different malts and share the same base malt, yeast strain selection for harvesting/cropping for reuse, accounting for X amount of offerings to have dry hopping treatments which logistically lengthen grain to glass days, etc.. need to be planned out well in advance, and those are just a few examples from the brewing side of the business.

Capital is another deciding factor for young breweries. Sometimes breweries (and businesses at large) just don't have enough in the tank to hurdle the obstacles they need to overcome. Every business walks it's own path of challenges, discoveries, and trials and errors. The more financial cushion one has the better their chances at surviving all the barriers that stand in the way of success.

Lastly, before I shut up, a brewery has to be able to react and, even better, predict trends in demand of their market. If your a brewery in South Florida, you probably won't have a ton of dark, malty beers in your portfolio for the pure reason that it's always so damn hot down here and nobody wants to drink heavy, thick, sweet beers on a consistent basis when they are sweating their ass off. And if your in South Florida, for example, craft beer knowledge is growing very quickly but still has intricate styles like wild ales on it's horizon that is hard to come by on tap at any local breweries. I think recognizing the demands of the market, predicting what future demand will be and being the brewery that capitalizes on those trends is also another huge aspect of success in the brewing (and any) industry. Maybe these things are common sense, maybe they aren't, but I would find it hard to believe a brewery that operates in such fashion fall by the wayside. Business minded + beer passion + capital + adaptability = success in my opinion.

 

Just my observations and my opinion but i think its a great time to open a brewery.
All this bubble bursting talk, to me, fails to take into consideration the growing "community" of craft beer drinkers. Craft beer drinkers still make up a small part of the market. There is plenty of room for more people to get into drinking good beer. Craft beer is getting younger and younger as well. I was part of the "first generation" (i'm all of 22) of kids growing up with craft beer being readily available. Kids are turning 21 every day and have been influenced by what their parents have drank. the more craft drinkers that have kids, the more inclined the kids will be to drink better beer. I've seen this first hand as a bartender/manager at a craft beer bar. young people come in because the choices catch their interest. they stay and come back because of the flavor. The brewers association even stated they have a goal of 20% market share by 2020. There is still A TON of room for growth.
The "bubble" is what it always has been. If you make subpar beer, have bad margins or are in the industry to make a quick buck, you'll fail. But if have a passion, make a good product, get your name out there and take care of your locals before expanding too quickly, you'll be fine.
When it comes to hop shortages, that'll just force people to explore new avenues. Perhaps that means starting hop farms or malthouses (creating new jobs in the meantime) or brewing different styles (I could absolutely use more berliener weiss' around) or cultivating new hop varietals.
The future for beer and beer drinkers is very bright in my opinion. just my two cents, cheers!

 

Im not sure if I agree this is the case yet. Look at how many people drink craft beer. Now look at how many don't. There is still plenty of room for the industry to grow. If not now, what would be different about opening a brewery in the future? Seems like the sooner you get in and establish a foothold, the better.

 

build a better mouse trap and the world will beat a path to your door.


breweries that have built better mouse traps...
the alchemist
hill farmstead
nebco
beer'd
trillium
treehouse

I know these breweries will survive the bubble due to a quality product.
some will last due to location. only time will tell.

 

Is there going to be any concern about ingredient sourcing? I remember being told recently that there are breweries out there that get shut out of certain hop varietals due to insane demand for the likes of Citra. I can't remember which ones and what hops, but that's beside the point.. is this ever going to be a concern? I doubt Three Floyds will ever run out of a source of Citra hops, but with everyone and their grandmother making a citra hopped beer, will the demand continue to outpace supply?

 

there could be, but really brewers have to be a little creative. they also, for everyone's benefit, should do more to showcase different hops (many breweries do, actually).

on the one hand, you can be like "CITRA CITRA CITRA" and market the buzzword. but then look at mosaic, which got pushed to be "the next citra"--and it worked! do that more with different combos and you're golden.

p.s. simcoe + amarillo is the way.

 

When I look at the thread title, I always think a brewery named "Horrible Time" is opening or expanding. Just find it funny.

 

A good article and newly released report addressing the potential beer market 'saturation' in Oregon...

http://www.qualityinfo.org/olmisj/ArticleReader?itemid=00009054

http://www.oregonlive.com/politics/...here_too_much_oregon_beer.html#incart_m-rpt-2

 

There are five breweries opening up in my area (Louisville, KY) this year. I am excited about each and every one of them. Each new brewery is an oppertunity for me to have new craft beers, tap-only beers, and limited releases readily available to me. From a consumers perspective, this is very exciting as it allows me to have more hometown faves and keep from wearing out my usual spots.