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Thread: 7 BBL production brewery

  1. #1
    Join Date
    Jan 2011
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    7 BBL production brewery

    I recognize that this is a volume business and manufacturers suggest starting a production brewery with at least a 15 barrel system. Nonetheless, I am planning to start a 7 barrel brewery without any investors or taking on any debt (i.e, all start up expenses are coming out of my own pockets) and am hesitant to invest the additional funds necessary to purchase and operate a 15 barrel system. In fact, when I initially started my business plan, I planned to operate a 3 barrel system, but when I ran the numbers, I had to brew at least 6 barrel batches to make a profit.

    Therefore, I have planned to operate a 7 barrel system myself, brewing twice a week to produce 700 barrels in year one. If the brand grows beyond 1500 barrels a year, I would ultimately purchase 14/15 barrel fermenters to complement the existing 7 barrel fermenters.

    Naturally, I could fill this post with pages and pages of costs, vision, projections, and over all business plan analysis. However, my question is more specific to those of you who have started out with 7 barrel production breweries. Did your model work? What was your experience? Would you do it again?

    I am hoping to get some real world feedback before I take the plunge and begin construction on a warehouse and installation of the 7 barrel brewery. Again, I understand that bigger systems allow for greater growth, more efficient operation, etc., but another mantra I seem to hear from many successful breweries is that they started extremely small and grew slowly. I have found opportunities and success in other industries when the majority of people in the industry all thought one way and I went another. The bottom line is that there are so many breweries opening up right now that they will not all succeed. As a consequence, I am trying to invest amounts that I can live with losing completely. So those of you who have taken similar paths, let me know your thoughts.

    Thanks,
    Michael
    Peticolas Brewing Company

  2. #2
    Join Date
    Sep 2007
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    McCall, Idaho
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    Put simply. Not having a brewery loan payment is going to help a lot. No brewery rent sure helps too. Of your personal funds available if you project that you will have enough excess cash to pay your personal monthly obligations for two years then you are looking real good.

    We are a pub model so I cannot speak directly to your brewery model from experience. If we didn't have a loan payment, rent and we had enough cash stashed for two years personally there would be far less pain for sure. But were slogging through it and it is the year of the Rabbit and I was born in 1975 woo hoo! (financial luck)


  3. #3
    Join Date
    Jun 2010
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    182
    Look at your business plan financial.
    Do the hones expense analyses and when you are done multiply it by 2.
    That is the amount of money you will need.

    By the way, buy yourself the 15 BBL fermenters. You can single brew or double brew into them.

    Good luck.

  4. #4
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    Sep 2010
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    Production yield

    I wonder if you will actually get 700 bbls, or if you will lose some product along the way during production.

    Can anyone comment on that?

  5. #5
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    Mar 2006
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    Ex-Germany / California
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    More important is your business model. Are you selling packaged product, which tends to be in price comparison on the shelves and the work involved getting it on the shelf, or $5 pints in the restaurant business?

  6. #6
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    Jan 2011
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    Henderson, NV
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    I would work backwards from how you plan to package.


    A production micro benefits from not having to build and open a restaurant and then the nightmare of staffing it.

    But beer packaging solutions come in two flavors -- expensive, slow and labor intensive, or very expensive, fast and "need a small army." The exception is keg fillers -- if you can find enough bars to place tap handles in, that could work well.

    The other question nobody has asked is, "Are you a good mechanic/plumber/electrician/carpenter/forklift operator/accountant/lawyer?"

    I'd say you'd need to be at least three of the above to think about starting a brewery and manning it yourself. And forklift operator doesn't count, because anyone can learn to drive a forklift.

    While brewers like to joke that we're not much more than glorified janitors, we're really inveterate problem solvers. Any given day finds me swapping out a pump head, or replacing a faulty solenoid, or stripping down a 400-pound heat exchanger, or programming a temperature control relay.

    Paying to have that stuff done by plumbers, electricians and handymen could crush a small start-up.

  7. #7
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    Jan 2011
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    I appreciate the feedback.
    SRB, I will have rent to pay, but the brew system, construction, installation, and raw materials will be paid in cash. I am debt adverse.
    Thirsty Monk, yes, everything is harder, takes longer, and more expensive in practice than theory. I absolutely plan to double brew into 15 barrel fermenters if and when it is demanded by the market.
    Stuart, that's a good point and one that also depends upon the styles being brewed for sure.
    Einhorn and Eric, I plan for strictly a production brewery; no restaurant. I am in Dallas, which is one of the few remaining US metropolitan areas without a single microbrewery. So, I have the opportunity to be first to this market. As for skills, I can say that I am a competent lawyer, which has been tremendously helpful, but am lacking "good" mechanical/plumber/electrician skills. I aim to better my mechanical skills, but also took this into account when purchasing the brew system (i.e., paying more up front for proper equipment ends up costing less than purchasing inferior equipment that doesn't perform and needs constant servicing). I do agree that having to pay for every single service can eat up those profits.

    Thanks again for the responses. I'd still appreciate hearing more from anyone who has taken a similar path. Also, I am considering going to the craft brewers conference next month, so if any of you have any interest in sharing your experiences with me in San Francisco, let me know.

  8. #8
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    Jan 2011
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    Henderson, NV
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    50
    Quote Originally Posted by Peti
    As for skills, I can say that I am a competent lawyer, which has been tremendously helpful, but am lacking "good" mechanical/plumber/electrician skills. I aim to better my mechanical skills, but also took this into account when purchasing the brew system (i.e., paying more up front for proper equipment ends up costing less than purchasing inferior equipment that doesn't perform and needs constant servicing). I do agree that having to pay for every single service can eat up those profits.
    Still haven't heard how you plan on packaging your beer. There are only a few options for a small micro. This is where to do your serious homework. Brewing isn't very hard when you get down to it. Cellaring is harder. Packaging is harder still.

    Frankly, it doesn't really matter what size the brewhouse is. You can load multiple batches into large fermenters or multiple fermenters. For a micro, it's all about packaging. I wouldn't invest a dime until that angle is worked out in detail. Have prices of a bottling machine, labeller, bottles, labels and caps. Or if you're going to can, the canning machine and the half-million can minimum order. Or if you're going to keg, a metric ton of kegs and a keg cleaner/filler.

    That is job #1. The rest can wait.

    As for mechanical skills -- you're going to need them regardless. Doesn't matter how new the equipment is. Pumps are going to break. Solenoids are going to fail. And they're going to do so at the worst possible time. I think it's mandatory for a brewer to be able to disassemble and troubleshoot every piece of equipment in the brewery.

    At the very least, you should be able to swap out a pump head, install and program an Omron/Ranco temperature controller, and swap out a solenoid on your glycol loop. These things aren't hard at all. I think it's harder to change the oil filter on a late-model car than any of the above. But they're things you're going to do often, or you're going to pay someone to do often.

    And if you have to pay someone, you have to wait. If you have to wait, you'll probably end up pouring multiple batches of ruined product down the drain.

  9. #9
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    Sep 2005
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    9
    Quote Originally Posted by stuart760
    I wonder if you will actually get 700 bbls, or if you will lose some product along the way during production.

    Can anyone comment on that?
    your losses are going to be substantial because hoses are only so small and transfers happen if nothing else. Also what comes off the kettle isn't what is in the kettle. On an 8 bbl batch, I usually lose 1/2 bbl end to end before packaging where you'll loose a bunch more depending on what and how you fill.

  10. #10
    Join Date
    Jan 2008
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    22
    Quote Originally Posted by Eric Brewer
    Still haven't heard how you plan on packaging your beer. There are only a few options for a small micro. This is where to do your serious homework.

    For a micro, it's all about packaging. I wouldn't invest a dime until that angle is worked out in detail.

    That is job #1. The rest can wait.
    I have to say that I've found this thread to be most interesting. The advice of Eric above is rather sound as others (present company included) seem to focus on other would be issues as being more important. Not that other tasks, roles, responsibilities plus the unexpected aren't ones to plan for as well. However if the product cannot go out the door to raise the revenue the actual brewing aspect is moot.

  11. #11
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    Oct 2010
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    Albuquerque, NM
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    Quote Originally Posted by Peti

    As for skills, I can say that I am a competent lawyer, which has been tremendously helpful, but am lacking "good" mechanical/plumber/electrician skills. I aim to better my mechanical skills, but also took this into account when purchasing the brew system (i.e., paying more up front for proper equipment ends up costing less than purchasing inferior equipment that doesn't perform and needs constant servicing). I do agree that having to pay for every single service can eat up those profits.
    If that's the case my advice would be to either hire someone on full time that has good mechanical skills or to get a new brewsystem and have it professionally installed. As I'm currently in the process of putting together a "new" used brewery I've had to rebuild all the pumps, half the motors, both heat exchangers, the steam boiler, and re-design the glycol system.

  12. #12
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    Jan 2004
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    St.Louis->Tacoma
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    I run a 7BBL brewery (by myself) w/ 4 FV's and 6 BBT's in a brewpub. I cannot keep up with sales, if i had 15BBL tanks it would be a blessing and easily double or tripple output with more FV space (the footprint of this doesn't really allow for that though). I have done 550-700 BBL's/Year in the 3 years here (1-3 brews a week) even with an occasional lager or two.

    I have to agree with a previous poster, get 15 BBL FV's or at least one to start off. I can do Double Brews in about 14-16 hours having my FV's clean and one of the filled with 200F water the day before. GET ON-DEMMAND HOT WATER, you will thank yourself every brewday- esp. if you start double-batching. ...oh, and make sure to allow for easy expansion (i.e. getting tanks in and out, or even replacing brewhouse down the road). Schlafly BottleWorks was smart on this front- giant removable section of the roof.

    Good Luck

    Oh, and i knock out ~10BBL's from kettle -> some loss in BK to trub -> Loss in FV due to Krausen in blowoff and on floor -> loss from filter, finings, yeast, etc and usually top off my "7BBL" BBT's with about 7.5-8 BBL's.
    Last edited by Jephro; 02-16-2011 at 03:39 PM.
    Jeff Byrne

    12 year pro craft brewer *NOW available for hire...
    Auburn, Wa - for now

  13. #13
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    Jan 2011
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    5
    I'll be packaging exclusively in kegs. I do plan to bottle at some point, but am focused on introducing the brand and product via keg in an effort to best protect the beer. Bottling is a science all on its own and I do not want to add it to the already lengthy 'to do' list involved with starting a packaging micro.

    I purchased a 4 year old Newlands system. It is a solid system. Five 7 bbl cylindroconicals (with 33% extra head space), seven 7 bbl brite tanks, 21 bbl hot and cold liquor tanks, along with 7 bbl kettle/whirlpool, mash tun, heat exchanger, boiler, chiller, pumps, etc.). I purchased it for a number of reasons (including the fact that it was only 30 miles from me, the price was right, it was the best used system I had seen in over a year of looking, I had knowledge of the brewer and beers being produced on the system, I have a relationship with reps of the manufacturer, the prior brewer is available for hire as a brewing consultant and installation consultant). The system is sitting in a storage warehouse just waiting to be installed. If I decide it's too small, I'll simply sell it myself as I've already had a couple of offers on it even though I haven't actually put it up for sale. However, I am leaning towards keeping it as the investment to upgrade to a 15 bbl system exceeds another $100,000. I do plan to install the brewery in a warehouse that has space for additional 15 barrel tanks if and when I can sell that amount of beer.

    Unfortunately, I am having issues with the City of Dallas regarding zoning, which is holding up warehouse construction and installation of the brewery. This is an entirely different topic, but explains why I have a complete system just sitting in a warehouse.

    Regardless of how much you know, there is still a lot to learn. I really appreciate you guys conveying your practical experiences and raising real world issues. Eric, I actually do plan to take apart every piece of equipment and put it back together. Agreed, a brewer should be able to do this in his brewery. Fortunately two of my closest friends are very mechanically inclined and have offered their help in this arena. I am confident that I can learn these skills.

    Thanks again, and if anyone else has additional advice, questions, or comments, please post away...

  14. #14
    Join Date
    Oct 2010
    Location
    Albuquerque, NM
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    57
    A couple things I'm going to add as someone that's currently in the process of putting a 7bbl system back together after having cleaned everything.
    1 when taking everything apart and putting it back together - check the threads here before you start, not once you can't figure out how it goes back together.
    1 Plan on everything taking at least twice as long as it should, something almost always goes wrong - and if its faster, you're happy, not pissed that its taken longer than it should
    3 while you're taking things apart replace any gasket that looks worn, otherwise you'll just have to take it back apart a little later.

    Feel free to pm me or email at manumussen@gmail.com if you've got any specific questions as to what I've been dealing with.

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