Brewpub name vs Product branding for local distrobution

[mmmatt]

Hello all!!! First time caller, long time listener. So much great information around here and I just want to say thanks in advance for any input I get on this subject and for the wealth of knowledge I have already soaked up.

Here is my tale. I am in the process of starting a Brewpub in Milwaukee. This will be a small-scale project which is more like a corner bar than a giant room with 20' fermenters on display. I intend on running a 2bbl Stout tanks Electric setup to supply what will initially be about 40-50 seats with room for future expansion in seasonal outdoor seating. My short term goal first and foremost is to be a successful tavern with a local following for my beer. I will be marketing my product as being fresh, unique and ever-changing, with a few consistant beers on tap at all times but primarily one-off brews. I think these are things that will separate me from other breweries and craft beer bars.

The WI laws for brewpubs are really great. I'm not sure how other states work, but in WI you can produce up to 10K barrels a year, you can self distribute, and you can form brewpub groups under the same licensing to coordinate the production, sales, or distribution of product produced at any location. This type of freedom will allow me to expand either at my single location, or through self distributing locally, by opening more locations, or by opening a central production facility to supply all my product needs. 5 year goal is to open another location in Madison and create a distribution network between Madison and Milwaukee working directly with bars looking for unique product.

So with all of this in mind, my plan is to first start the pub and gain local following for my products. I know quite a few bar owners in town and a couple that are big players that will certainly try my products, but before I get too hard into marketing, I would like to know what peoples thoughts are on naming of the brewpub to be the same or different than the marketing name for the Beer.

I have already chosen the name "District 14 Craft Brewing Company" and my logo is essentially D14 in a circle (here is the rough draft www.D14beer.com ). My question is if I use District 14 in/for the name of the pub, will other local restaurants and taverns see that as conflict and not buy my product because of feared competition? There are other breweries here who produce beers that are local staples in many bars (MKE, and Lakefront being the most common) and they have taprooms and compete on some level, but they are production craft brewers and their primary focus isn't the same as mine will be. MKE is actually an extension of a local large scale brewpub, but the MKE marketing came long after the brewpub.

I see my options as this:

1. Focus on my branding and keep the brewpub and the beer name the same despite some loss of local distribution sales. Truth of course, is that I will be hard pressed to service more than a couple of bars unless I'm not selling much from the brewpub. But most "beer bars" around here are going to 20+ tap handles and using 1/6 kegs which are pretty easy to self distribute. Bars in surrounding citys would likely not care about the competition, but self distributing to places across town is much more viable than an hour away. Driving an hour to place a $50 1/6 is not gong to get me rich.

2. Use a separate name for the pub. Doing this I don't get any pub advertising from my tap handles or my product names but likely it will be easier to set up local distribution clients. Those who come into my pub of course will be understand the connection. Also there are a lot of one word bar names around here and that is a popular way to market a bar or restaurant "Cuvee" is a champagne bar, "Stack'd" is a burger joint, "Tonic" is a cocktail bar and there are many more. I have a few of this sort of name in my mind but I won't put them out there yet.

3. Produce custom branded beers. I could rename any beer with the clients name. "Joes Restaurant Pale Ale" or whatever. This does nothing for my brand or my pub but may be attractive to some bar owners who like to keep things in house, or the appearance of such.

So I guess that is it! Any insight or experience in these things would be great.

Matt

[ChesterBrew]

You'll make the most money selling pints on-premises... and with a 2bbl setup and 40-50 tables, you'll be hard-pressed to keep up with consumption within your own premises, let alone self-distribute! Focus on your own identity and demand will work itself out if/when you scale upward and outward. Just my 2 cents...

[mmmatt]

You'll make the most money selling pints on-premises... and with a 2bbl setup and 40-50 tables, you'll be hard-pressed to keep up with consumption within your own premises, let alone self-distribute! Focus on your own identity and demand will work itself out if/when you scale upward and outward. Just my 2 cents...

Thanks for the input CB. 40-50 seats not tables, but your point is one that I am aware of. I know that before I will really able to make an financial impact with distribution I would need to produce a larger quantity. I have negotiated an outbuilding on site as part of my lease that could allow for storage, cellaring, or a larger brewhouse. But if I brew 5 days a week on a 2 bbl setup, I would be hard pressed to be able to sell that much beer from a little corner bar I think. I guess that would be some input I need from the fine folks here as well.

My break even point to cover expenses is about 100 beers a day. I can serve about 124 per 1/2 barrel figuring waste being = to headspace, so without much trouble or double batching I can produce the equivalent of 413 beers per day (6 days a week, closed Mondays). That would put my weekly profit in the $7k range. If I'm pulling $350K profit per year out of a 40-50 seat brewpub I'll be on the cover of forbes. I will only have simple food like pizzas and whatever can be made in a convection oven, but liqueur sales will be a pretty big part of the picture too. Wisconsin also allows growlers sales and that is huge right now, so that may take up a substantial portion of my inventory. People love to take growlers home and not just from breweries. Everyday bars are doing it as well. Milwaukee is OWI happy right now and people are starting at the bar and finishing at home with a growler so they don't have to risk an owi.

If there is anyone out there running this size of a pub, I would love to hear what kind of numbers you are pulling. maybe people don't share that stuff here though and if so that is OK.

[yap]

If you brew 5 days a week, how will you fit in the 5 days a week you will need for transferring/cleaning/packaging etc. Not trying to be a smart ass, but there is much more time involved in "everything else" than there is in a brewday. Unless you have staff to run most everything else, I don't think you will have time to brew 5 days a week. I run a 7 bbl (distribution only) and do everything myself. If I am able to brew 2 days a week its a miracle (and that is with working 7 days a week). Keeping up with fermentations, cleaning tanks, filtering, paperwork, answering the phone, paying bills, and everything else is usually a 5 day a week job in and of itself. I don't have the added headache of running a bar on top of all that. Your output will only hit those levels if you have at least 1 or maybe 2 people helping brew and cellar.

As others said, focus on in house sales first as you may be surprised by 1. how much demand there is and 2. how much beer you can actually output from your system.

some friends here in town opened a taproom with probably about the same number of seats. they are brewing on a 10 bbl system and were selling some to other bars. within a couple of months of opening they had to pull out of distribution because they were running out in the taproom. now they are adding more fermenters, all to keep up with in house demand on a 10 bbl brewhouse.

just another $.02 to add to the pile

[ChesterBrew]

Oops, yes, I meant seats, not tables, sorry.

But, here's where I'm going with this:

You need to factor in how many seats you have, how many hours you're open each day, and therefore how many times during the course of a day that table will have different parties that will each order beer. For example, if you're open for 10-14 hours a day, I don't think factoring at least 4-5 "turns" per day is at all unreasonable (of course, that will depend how seasonal or weekday/weekend rush your area can expect to be. So, that 40-50 seats is now translating to larger numbers per day, and each party may order multiple rounds of drinks while they're there.

I agree with Scott, brewing 5 times a week is a lot relative to all of the other chores that go into making beer (unless you have a lot of staff to cover every other aspect of the business, which of course means more overhead costs.)

[mmmatt]

If you brew 5 days a week, how will you fit in the 5 days a week you will need for transferring/cleaning/packaging etc. Not trying to be a smart ass, but there is much more time involved in "everything else" than there is in a brewday. Unless you have staff to run most everything else, I don't think you will have time to brew 5 days a week. I run a 7 bbl (distribution only) and do everything myself. If I am able to brew 2 days a week its a miracle (and that is with working 7 days a week). Keeping up with fermentations, cleaning tanks, filtering, paperwork, answering the phone, paying bills, and everything else is usually a 5 day a week job in and of itself. I don't have the added headache of running a bar on top of all that. Your output will only hit those levels if you have at least 1 or maybe 2 people helping brew and cellar.

As others said, focus on in house sales first as you may be surprised by 1. how much demand there is and 2. how much beer you can actually output from your system.

some friends here in town opened a taproom with probably about the same number of seats. they are brewing on a 10 bbl system and were selling some to other bars. within a couple of months of opening they had to pull out of distribution because they were running out in the taproom. now they are adding more fermenters, all to keep up with in house demand on a 10 bbl brewhouse.

just another $.02 to add to the pile

That is something for sure! Your friends must be rolling in it if they are maxing out a 10bbl system from a 50 seat taproom.

Yes, if I expect to reach that level of production I will need more staff. I intend to start flying solo from the brewing standpoint and hope to be behind the bar a couple nights a week. I am currently budgeted to pay myself, a full time office/bartender/foh manager, and a series of part timers who would technically be "guest bartenders" dipping into my list of personal friends who are career bartenders. If I'm selling that much beer I will certainly not spend as much time bartending, although I think people respond to the owner/brewer behind the bar. My intent is to start with 3 batches a week and see where that goes. I do have a full time person inline to run all the paperwork and manage foh. Lucky me she has 20 years bar management experience and is also a bar certified lawyer, but she doesn't like practicing law as much as she does bar management. I am figuring 60 hours a week at $15 hr in my costs so as I step away from some of the grunt work I can bring good people in. Honestly I am more worried about selling my 100 beers a day to break-even, than running out of beer but I suppose either could be the reality. Again, if I can pull the profit numbers associated with selling 10 bbls per week, I will have no problem adding staff and affording upgraded equipment or securing financing for either.

This is an interesting dilemma really... I don't want to drop coin on an oversized system that I am only going to run 1 day a week and I don't want to be double batching a puny system just to keep up with daily use. This is all part of why I am renting the outbuilding along with the primary space. If in 6 months I'm selling more than 10 bbls a week, I will have no problem getting funding to convert that space. If it happens in a year or two then I will likely open another location and expand production from there.

That all being said I would still like to know what people think about marketing with or without using the brewpub name as the same as the product name. Lets assume that I won't have production issues or that I am prepared for them when they arise.

Thanks again!!

[yap]

the other thing with brewing 5 times a week is fermentation space. if brewing 2 bbls into 2 bbl fermenters and assuming a two week turn you are looking at least at 10 fermenters and that is assuming you are brewing into the tank the same day you empty it. its a little better if you double batch into 4 bbl tanks, so now you are only brewing 2.5 days a week, but those days are longer and now you are buying bigger tanks etc. the need for more stainless can start to snowball pretty quickly.

think about this. if it takes you two weeks to make 2 bbl's of beer. you get it ready on a friday and you have a good busy weekend, that two weeks worth of work is gone in a day and a half easy...

[yap]

Yes, if I expect to reach that level of production I will need more staff. I intend to start flying solo from the brewing standpoint and hope to be behind the bar a couple nights a week. I am currently budgeted to pay myself, a full time office/bartender/foh manager, and a series of part timers who would technically be "guest bartenders" dipping into my list of personal friends who are career bartenders. If I'm selling that much beer I will certainly not spend as much time bartending, although I think people respond to the owner/brewer behind the bar. My intent is to start with 3 batches a week and see where that goes. I do have a full time person inline to run all the paperwork and manage foh. Lucky me she has 20 years bar management experience and is also a bar certified lawyer, but she doesn't like practicing law as much as she does bar management. I am figuring 60 hours a week at $15 hr in my costs so as I step away from some of the grunt work I can bring good people in. Honestly I am more worried about selling my 100 beers a day to break-even, than running out of beer but I suppose either could be the reality. Again, if I can pull the profit numbers associated with selling 10 bbls per week, I will have no problem adding staff and affording upgraded equipment or securing financing for either.

All I can say is good luck to you. I am afraid you will find there are not enough hours in the day for you to do all of that, but again good luck.

That all being said I would still like to know what people think about marketing with or without using the brewpub name as the same as the product name. Lets assume that I won't have production issues or that I am prepared for them when they arise.

Thanks again!!

Sorry. To answer the original question. You are trying to build a brand. To put someone else's name on your beer is (in my opinion) shooting yourself in the foot. When someone sees "Joe's beer" in "Joe's bar", people rarely ask who made it. You will not get the credit you are due. Yes in the short term it may sell a few kegs and if you are saddled with lots of extra capacity maybe it's something you do to keep the lights on. In the long run though I think it can be detrimental to the momentum of building your brand. If the neighboring bars don't want your beer because they don't want to "advertise for you" then those are probably not bars you want to be in anyway. In most circumstances having a "neighborhood beer" can help all those in the area grow business. If you are thinking long term then you shouldn't worry about what the other bars within 1/2 mile of you think.

[mmmatt]

All I can say is good luck to you. I am afraid you will find there are not enough hours in the day for you to do all of that, but again good luck.



Sorry. To answer the original question. You are trying to build a brand. To put someone else's name on your beer is (in my opinion) shooting yourself in the foot. When someone sees "Joe's beer" in "Joe's bar", people rarely ask who made it. You will not get the credit you are due. Yes in the short term it may sell a few kegs and if you are saddled with lots of extra capacity maybe it's something you do to keep the lights on. In the long run though I think it can be detrimental to the momentum of building your brand. If the neighboring bars don't want your beer because they don't want to "advertise for you" then those are probably not bars you want to be in anyway. In most circumstances having a "neighborhood beer" can help all those in the area grow business. If you are thinking long term then you shouldn't worry about what the other bars within 1/2 mile of you think.

This is all great advice and I appreciate it for sure. I do tend to bite of as much as I can chew and a bit more, but we will see what happens I guess. I am pretty good at putting failsafes into my planning so hopefully I can plan for what is to come one way or another. Comments like this will certainly make me scrutinize things even further.

I have a fair bit of basement space and have enough room for about 10 2 bbl ferms and a couple of 3 bbl's. I still use extracts in some recipes and I can likely run some at 3bbl from a 2 bbl rig. Not entirely sure how that is going to translate though. Double batching into 4's may not be a bad idea. I'm planning on plastic conicals so that will save me some upfront cost. I will be dropping lines from the kettle to the fermenters in the basement then pumping back up to a single brite on the main floor. Unfortunately not all my recipes are ready in two weeks so I am planning for 12 tanks thinking there will be stragglers. After that I have to start looking at converting the outbuilding or brewing some off site. I'm not yet sure if I can have somebody contract brew for me but that may be an option too if it looks tough to keep up. My original plan was to start with just 6 tanks but you guys have me convinced I should probably start with 12 right away and try to get a back stock going if nothing else.

Thanks for the comment on the naming concepts. I am leaning that way too. There are definitely some bars in the hood who would think it is cool to have a neighborhood brewery. That is part of why I chose District 14 for the name. Bay View is the 14th Aldermanic District of Milwaukee. This part of Milwaukee is known as Bay View and used to be it's own village. I originally thought Bay View Brewing co, but there used to be a Bay View Brewpub and it was a flash in the pan so I nixed it for fear of association. Pluse there is a Bay View Brewing Co from the early 1900's too that may be a conflict. In many ways Bay View is separate from Milwaukee and certainly has its own vibe. I think you are right about acceptance of a neighborhood brewery and I should focus on that. I still have to survive a town meeting on this for my liquor license and really should be focusing on becoming a productive part of the community and maybe start making contact with some of the neighboring bar owners.

[einhorn]

That would put my weekly profit in the $7k range. If I'm pulling $350K profit per year out of a 40-50 seat brewpub I'll be on the cover of forbes.

Can you elaborate a bit on how you will achieve this? What kind of costs are you calculating?

[mmmatt]

Can you elaborate a bit on how you will achieve this? What kind of costs are you calculating?

I'm figuring about 75% profit in the beer based just on materials and excise and then I am taking rent + labor + insurance + taxes + utilities and there were a couple other things like cleaning and misc paper goods and cleaning products.. All that I determined to be my costs and that is where I came up with the 100 beers a day figure to break even. Keep in mind this is a really small operation and my labor costs are low and there is no financing involved. Things like rent and insurance and those kind of costs wont change with increased volume and they are based on a small space. I'm doing this in 1800 sq ft plus a 24x24 out building and about 1000 sq ft of basement. So most of the price of a beer after 100 per day comes back to me... in theory! Certainly labor and possibly utilities would go up... register tape and bar napkins and cherry swords... but a lot of that $$$ I could keep.

Matt

[nateo]

Matt, I'd be happy to double-check those numbers for you. I'd be very interested in seeing your cash disbursement budgets. You know what they say about things that sound too good to be true. . .

[einhorn]

I haven't seen your numbers, but I think that you may be forgetting a few costs. With 30-40 seats you might be able to GROSS $350K, but it is highly unlikely you will have profits of that magnitude.

[mmmatt]

I understand that guys. That $350K was just an off the cuff calculation based on sales over my100 beer a day break even (which wasn't off the cuff). I think I just took 300 beers a day x $3.5 x 6 x 52 and rounded down. That wasn't meant to be any sort of Casey Jones "point at the fence" move or anything!!!! More a comment showing my flabbergasted disbelief that I could conceivably go through 10 bbls per week. I haven't done well thought calculations for that level of sales, but you guys here are making me think I sure should!! I am going to be going through everything again over the next couple of weeks. Nateo I will likely take you up on that offer. I'll PM when I am ready for that.

Thanks again guys for all the help on this stuff.

Anyone want to talk about marketing and rebranding? LOL

Matt

[nateo]

Well like I said, I'm happy to help. I don't know a whole lot about the nuts and bolts of making beer commercially day in, and day out. Other people here can speak to that better than I can. But I like accounting and finance, so I can help with the finer points of your business plan.

Just remember cash is king! Plenty of "profitable" businesses have failed because they ran out of cash, and also remember that big sales = big cash needs. Many companies grow themselves to death.