BOP Business

[BusinessStudent]

I am currently investigating the BOP business for the States and have noticed a high failure rate. What are your thoughts as to the reasons? And, who are the major equipment mfgr's for this market?

[MikeRoy]

I work in the 2nd oldest BOP in the US, we opened in August of 1995. We've seen many failures,from companies we've trained to former customers trying to open up their own BOP. I've had the opportunity to visit a few BOP'S as well and while the reasons for them failing might all be different, the main contributing factors that I've seen have been: wrong location,underfunded,wrong approach to the business(marketing and customer base)....the two things that I've seen firsthand that I know for a fact played a part were lack of sanitation(bad image) and owners not understanding the amount of work that is needed. I can tell you first hand that it's not all standing around talking to customers and drinking beer.Just like the commerical brewing industry it's cleaning,cleaning,cleaning.I've been been to BOP'S that hadn't painted their floors since the opened,had days worth of dishes in their sink and when you touched anything in the place your hand stuck to it.You wouldn't eat there if it were a restaurant,so why would anyone want to brew beer there.To be honest, I think the commericial brewing industry is easier to work in then the BOP because for the most part you can specialize more.By all means I'm not saying anyoen can open a brewery and be successful,but usually you're not asked to do everything in the brewery.I often use the analogy of working in a restaurant to working in a BOP, because you are the host,the waiter,the busboy,the dishwasher,the cook,the bartender and the janitor. You have to be faceted in all aspects of the business, because of that I think it's not the business for everyone. How often do *most*(I'm generalizing just so that everyone is clear) brewers have to brew beer,answer the phone,greet a walk-in customer, and unload a delivery truck all at the same time? That can be typical for a busy BOP,it is atleast in our case. If it were me I'd open a beer bar before I'd open a brewery, because I don't feel there's a lack of quality beer out there,but a lack of places serving it and willing to educate people about it. As far as opening a BOP, i have no interest in it, I'd sooner lay all my money on the Detroit Tigers to win the World Series,becuase the odds of succeeding are probbaly higher.

[tarmadilo]

Mike said a mouthful!

As a brewer who's looked at BOP situations, and worked for one brewery that was originally going to be a BOP, I'd say that low profit margins and high overhead costs sure make it hard to succeed. Most folks who brew beer for themselves are ardent hobbyists, and those kind of folks are much more likely to brew at home! After all, it isn't hard to do.

Cheers, Tim

[MikeRoy]

Originally posted by tarmadilo
Mike said a mouthful!

As a brewer who's looked at BOP situations, and worked for one brewery that was originally going to be a BOP, I'd say that low profit margins and high overhead costs sure make it hard to succeed. Most folks who brew beer for themselves are ardent hobbyists, and those kind of folks are much more likely to brew at home! After all, it isn't hard to do.

Cheers, Tim

I agree with you Tim,but I also would liek to say, that it isn't easy to brew at home for the average person.Yes, it's easy for you,myself and most "homebrewers" to succeed at home,but for alot of people it has been complete failure.A good percentage of my customers are people who've attempted homebrewing, and now they brew with us because of their bad experiences. Most people don't realize the whole sanitation issue and that usally fouls their batches. That's where most people realize it's not worht their time(4-5 hours on a brewing day for most,monitoring fermentation,racking and bottling) and money that they've paid for their eqipment and ingredients.If a consumer buys a bad bottle of beer from a microbrewery, they would hopefully* be able to get a refund or exchange, as is with our BOP, we guarantee everything we make 100%, how many homebrew shop owners are going to do that? NONE. The real truth is that there is alot of people out there that would never try homebrewing,try it and fail,thus never realizing they they too can make great beer.I have nothing against homebrewing, I think it's a great hobby,but it's not easy and it's not for everyone. The BOP in my opinion is of a greater value to the "beer indutry" than the general homebrew shop, we're able to introduce and educate more people about the joys of brewing their own beer without the worries of watsing their money and ending up with an undrinkable product. Now I love homebrewing..in theory...but there's far too many shop owners outhere who simply take money and hand a boxed kit over the counter and never see that customer again.Homebrewing is dying, ask suppliers like LD Carlson and Crosby & Baker,they've moved alot of their business to home winemaking which is where the money is. I think what I'm trying to say here is, that despite the growth of the US craft beer industry, and byt hat I don't mean $$$ or barrells,but by the number of breweries producing great beer, suceeding in styles that we'rent even in this country 10 years ago,as a culture we're failing. Education is going to be key, there needs to be a revival in homebrewing and more importantly in the general perception of beer in this country which is weak in comparison to England,Belgium and Germany. I say we start by taking hold of each person one by one and shaking some beer sense into them,who's with me????

[Rob Creighton]

Ontario went through a massive growth curve on BOP's when there was a significant price/tax advantage to do so. When the tax break disappeared, the brew-on-premise industry either closed or changed to wine which is now producing almost as much product as is sold in our liquor distribution system. Reason: the quality of the cheap beer was marginal to bad and more labor intensive. The wine is too simple. Just pay for the batch, pitch the yeast and then come in to bottle a few weeks later and the quality is perceived as acceptable to good.

The latest variation confirms the argument as an Ontario brewery (Magnotta) is producing sterilized wort in a bag-in-box format and distributing it across the country in a wide range of styles. The response is good and the brewery is expanding production. The customer just pitches the yeast and all following steps still apply.

I believe it is a question of both quality and profit margin that is determining the viability of BOP's and I would much rather produce even a 7 bbl batch than a 1 bbl batch.