Starting a micro brewery (cost)
I am relatively new to this website and brewing in general. I just wanted to know what a small brewery would cost to get started. Not a brew pub or anything along those lines but just the smallest possible production brewery I guess. Sorry I dont know all the terms, still learning. Thanks alot for the help.
Start with as much money as possible. Figure conservatively at least one million dollars by the time you are through. Buying the smallest production brewery doesnt give you room for expansion, not a good business plan. What if your beer is really popular? How will you get more beer into the customer's hands? Don't forget that you need a sales force, marketing, and you need to buy supplies (glass, malt, kegs, etc.) to keep the place running. I think you actually need about two million dollars if you want some chance at success.
I don't want to sound rude, but here it is. You want to start a microbrewery but don't know anything about the business (don't know the terms)? The brewing biz is much more complicated than most people realize. Be careful and work in the industry for a few years or hire an experienced brewer and listen to him/her. Brewing beer is not a license to print money, be careful...
Do you really think that 1 million dollars is needed to start a sucessful brewery? Or even up to 2 million? With the right used equipment, location, business plan, and opperators I would think it could be started for much less. How big of a brewery are you suggesting 1 million will start? What about a small start-up leaving room for expansion? I don't think Corey was looking to open the next Sam Adams or Leinenkugels right off the bat. It takes time and dedication to accomplish goals. I agree that "as much money as possible" is a good place to start but you can't "buy" your way to a winning brewery if you don't have the drive to make it work.
Originally Posted by zbrew2k
Keep on brewing it and we'll keep on drinking it.
Just my 2 cents
If you do some research you'll find that you can probably start a small micro-brewery for 400,000-500,000, but the one thing you must understand is that micro-breweries have less then 10% chance of making it. You'll need dedication, great beer, and lots of luck to make it.
Is 10% based on facts showing that many failures? That seems pretty poor but I guess there are a lot of people who get into brewing and ownership for the romance value of making beer and selling it to people and don't have the drive to keep going when it gets tough. Does anyone have a cost breakdown of start up and as to why it still reaches 500,000? This is rather interesting.
Most Brewers, and Brewery Owners, haven't a real handle on the cost of their Brewery unless they are part accountant. I have built 2 Breweries, and please believe me when I say you are nickled, dimed, and 1,000 dollared all along the road to completion. A trip to Home Depot can cost $400. Heck, we must be on revolving credit with McMaster-Carr.
Since I and my colleagues did most of the work, we saved a bankload of cash on the construction labor.
Not to speak for zbrew2k, but he may have been joking (heck, I laughed! ). We at DK started both our Breweries for far less than the $1M - $2M........even far less than $500K. Certainly not to open up a tun of sour mash, but this forum is a great forum for solving technical problems and sharing information, but asking for itemized cost lists is more in the realm of Consultants......and even they can't get you a real cost estimate because they'll "cost plus" it all along. And Beauxman brings a straightforward wisdom to the table.........the road to success in the Brewing Industry is strewn with well intended souls who tried hard, but made a series of bad choices, or one really catastrophic one, that cost them their business.
Zbrew2k's comments hilite what the harsh reality of Brewery construction is, with the hidden costs lying below the waterline of the financial iceberg your about to hit. The big piece brewing equipment can be estimated out with some phone calls. Oh.......you wanted electricty to all that? What's that? You needed steam piping and gas lines run? Water? Sewer?
We've spent more facilitizing and outfitting our second Brewery than what the brewhouse and fermenters cost.
Though you can build a good Brewery on a shoestring budget, you had better be prepared to do all the engineering and most the work yourself.
Try buying some triclamp fittings without breaking your budget for the month. Nothing in this industry is cheap, just as previous posters have said. If you want to be a successful micro brewery (not pub). You need at least a 15 barrel system Not Cheap. At least 50-70K used. Now less if you were in the right spot/right time. A filler, 25K for a used Meheen. Wow only 100K to start up a brewery! COOL!!
Now, you dont have credit anywhere, no kegs, no cases/bottles/labels, and most importantly no quality control equipment. No boiler, no CO2 tank, and none of the infrastructure that you need for a proper brewery-good flooring, drainage, and equipment to keep the sewer board happy. Ok, there went more $$ than your equipment to start the brewery. 500K cha-ching! Oh wait, you need to buy hops and malt too... all of these things need $$ up front or you wont be brewing! Too many suppliers have been burned to put up with "checks in the mail"....
Ok...now how do you keep it running for the next year? Where is that cash coming from? If you think your wholesaler will greet you with a big fat check when you back your prized beer up to their loading dock, well, think it over again. You'll be lucky to see any cash for 40-60 days. What about the beer that sits in their warehouse and goes out of date? Will you buy it back or ignore it and sell it?
That is why I said $2 Million. Basically that's where the second million comes in, that is for operating capital to market your beer and keep the brewery in raw materials.
If you dont care about quality, and can live with making beer on crappy equipment, well you can start a brewery for under a million. The chances of it are being successful are very slim. If you can do it hoo ray for you, you deserve a medal!
I still say 2 million.
PS: I would love to hear a how you start it and run it for a year on less than 500K. Break it down for us!
Last edited by zbrew2k; 08-19-2005 at 06:31 AM.
Find a really good heating/cooling guy who knows about glycol systems. And find a really good welder who has done sanatary piping. Make friends. You will sink mad $$$$ into these two things alone.
Also find an experienced brewer who can consult and help with layout and logistics. A mistake avoided is money saved. We bought a used brewery for "fairly cheap" and easily doubled what we spent on the brewery installing, repairing and modifying it.
I thank you all for your responses and encourage more opinions on the subject. I can see where 1-2 million can be handy, wouldn't everyone love to have that kind of money for a start up. I can also see underlying costs adding up quickly, I am still a bit green in this game but not utterly naive. I know you just can't buy some equipment and grain and "BAM, BEER!!!" I work in a small brewery and see what goes into it from brewing, filtering and packaging to ordering, invoicing, scheduling, marketing, maintenance and beyond. It is a tough game but I love it.
Diamond, knowing constuction is key, saves a lot. I enjoyed the pictures of the concrete pouring.
Thanks again to you all.
Zbrew2k.......Buddy........where's my medal? As Bill Clinton said, "That all depends on what you mean by MicroBrewery."
Originally Posted by zbrew2k
Seriously, Z, we did it (twice). I would love to show it to you, and you can see it on our website. Dinner and beers on me.............
We do care about quality......A LOT...........but, yes.........the equipment is not A-B quality by light years. Our first 7 Bbl kettle cost $2,500 (new). I designed our first chiller. We used Grundies. We used an old Cherry Berrel bulk pasteurizer for a mash tun (I cut the skin plates off in my garage and fitted it with stainless skins). Our pump (Igor) and our heat echanger were definitely new...........but the Tri-clamp and fittings I bought used from a dairy supply company. Seriously. I know how to weld, own one, and use a welder frequently. I also do wiring, plumbing, glycol chiller circuit design/construction, graphic arts, and know a snick about refrigeration. You have to to save money in today's economy..
However, we have always referred to ourselves as a "NanoBrewery". We self distribute, have an Alehouse, and have a staff of 15 - 18 at any given time (at our first site). In Washington State, we carry a MicroBrewery license. We have also been around for 11 years or so..........the oldest operater outside of Seattle.
I have always subscribed to the idea of not having someone bring flowers to me.......I plant my own garden. We had a distributer once. Too much money out the door. We saved money there ($25 per keg; we felt we could deliver more than 10 kegs a day, and we have). Never look to someone else to make your business.......make it yourself.
Used equipment. Big savings there.
Rental property for start-up. Light Industrial parks do well at $.55 / sq-ft in our neck of the woods.
Have a full-time job with benefits and build your business after work.
HOWEVER..........it all depends on what a person means by MicroBrewery. No, we don't have 200 accounts from to our first 7 Bbl rig. No, we don't buy tap handles, we make them by hand on a weekend in bulk. No, we don't own our building. No, we don't have neon lights (but we do have coasters, tee shirts, and hats).
IF you are a hard worker.
IF you can, and have the aptitude, to do much of the technical work yourself.
IF you can handle retail as well as wholesale.
IF you have patience.
If you have a partner or 2 that can shovel the ditch as much as you do.
You can build a Brewery for far less than $500K.
Seriously. We've done it twice.
Anyway, just my $.02.
DK I can appreciate your hard work. If its worked out, great! You do deserve a medal. Being able to live in a state where you can self distribute is fantastic.
A majority of states do not allow that. And in one of those states you will have to deal with a distributor. Thats a huge problem.
7 Barrels is a bit small for a production brewery that wants to make any money and wants to expand later. Thats why I say 15 barrel. The economics aren't with a smaller system.
I agree that if you can do the work yourself you will save a bundle.
I know of people who have started micro's for 500k and are doing very well for themselves now. However (at least in my part of the country) you cant even buy land/building for less than 2.5 million plus another 250-500k for equipment, remodel, marketing, preopening salaries, preopening taxes and insurance, etc. And if you lease you might as well be throwing your money away. If you are going to pay $20 sq foot plus $5 CAM you might as well buy the building from the start and pay a mortgage that is only slightly more. The cash injection for the building loan is kinda stiff though. Get some investors who would be willing to loan you cash at "prime plus...." or whatever and purchase a suitable building
Zbrew2k..........yeah........I hadn't though of the fact that many of our colleagues here can't self distribute. That's a good point, but where a Brewery makes the most jing is either in having a retail side or large production volumes.
You don't need much from a distributer if you sell a lot of your own retail.
Jrdamas........our 7 Bbl Brewery has an Alehouse, is in a bus barn down on the waterfront. We pay about $1.50 per sq-ft at that site. Our 15 Bbl Brewery is in a an industrial park warehouse........4,300 sq-ft for less than $.60 per sq-ft. The indutrial space is definitely more suited for production, with exposed rafters, 27 ft roof peaks, and a 12 ft bay door.
Are there folks out there who can seriously afford $20 per sq-ft for brewing space? That's why our second site doesn't have an Alehouse. We wanted a big Brewery and didn't want to have to be located in an expensive location because we had a retail side.
However, both cases don't really address start-up costs.........both are recurring costs (aka, operating costs). If I were looking to build a Brewery, for say, $40K (what our first Brewery cost 11 years ago), I wouldn't look to be buying land or buildings. Also, I wouldn't be looking for a 50 Bbl system, either. I reckon we really grandfathered our way into the industry making baby steps the whole way.
Good discussion, guys.
Holy shit stuff is cheap in WA. I guess I am just used to paying more in the midwest. Keep in mind though that having 200,000 cars a day drive by your site really helps with sales so it helps to balance out the cost of the site. Thats crazy you opened a brewery for 40k. Pretty damn impressive. I dont see how that cold be done nowadays. There is just so much shit you need to start a business. For example, our preopening electric deposit was 13k (which is just sick). I consider that a startup cost b/c it had to be paid in order to start the business. And there is a list of so many things you need that are like that many people do not realize untill they are half way through the project. I just think its safer and easier to get some investors and properly fund the project from the beging to ensure opening. Come on we have all seen used equipment for sale from breweries that never opened because they ran out of capital. My advice detail out your preopening capital requirments and then double that figure. Whatever that equates to is on idea of the available funds you may wish to have ready (you prob. wont need it but just have it available to you just in case.)