What is the low end brew plant size?

[tjc27]

So with all this talk of nanos and what can and cant be done what are people finding to be the low end of a system size where you can turn a profit? Or should it be minimum bbls per year rather than brew plant size.

I am in the planning stages and I am going back and forth here between nano vs contract brew with my own fermenters and oak barrels.

I understand how to calculate fermenter output and so forth but I am curious what the bbls per year number might be where you can fund a expansion without having to take on significant investor money. I think we can all agree it isn't what it was a couple years ago, but what is the real number now?

[nateo]

So with all this talk of nanos and what can and cant be done what are people finding to be the low end of a system size where you can turn a profit? Or should it be minimum bbls per year rather than brew plant size.

It really depends on your unique situation. Rent and to an extent labor are really variable across the country. Feasibility of having a tap room is highly variable, and somewhat correlated with rent cost.

Your answer also really depends on how you define "turn a profit." If you're happy not paying yourself anything or recouping your investment, then "turning a profit" is much easier. However, if you want to earn a wage, then having a bigger system where you can hit your bbl/year numbers brewing less frequently will give you more free time to handle the business/marketing aspect of your company.

[Thirsty_Monk]

^^ all true. Brewery is a business and business runs on $$ not on BBL. It all depends how you sell your beer, what are your margins and expenses.

Good luck.

[Brandjes]

^^ what do you anticipate for expansion and what do you expect for profit. Work the numbers back from there. Every situation is unique.
I'm coming up on my 1 year. I added fermenters and kegs, paid myself for brew labor and still made a small profit. My hourly wage is less than the minimum wage but I'm doing what I love. 2bbl system and about 120bbl last year

[nateo]

I understand how to calculate fermenter output and so forth but I am curious what the bbls per year number might be where you can fund a expansion without having to take on significant investor money.

This is actually a fairly difficult question to answer. There are a couple ways to go about it. One way would be looking at what is called the sustainable growth rate. I think this might be helpful: http://educ.jmu.edu//~drakepp/FIN362/resources/sgr.pdf

It requires calculating a few financial ratios, so you'd need a good grasp on what they are and how to get them.

The other way would be to calculate the future value of the expansion (what it would cost to expand X years from now including a factor to compensate for expected increases in price due to inflation/whatever). So let's say the expansion will cost $1m in 10 years, and inflation is 2% per year, you'd need to save roughly $1.2m over the next decade to fund the expansion.

So obviously the feasibility of what you're trying to do depends a lot on what kind of expansion you're looking to do and when you want to do it. The long and short of it is it's incredibly difficult to grow substantially without significantly changing your capital structure. This means you need to take on lots of debt or lots of investor's money to fund the kind of growth you probably want.

Then there's also the issue of all the other costs that go into expansion beyond equipment and buildout. For instance, most people don't think about how much working capital they'll need to sustain Xbbl/year. You need to buy all the grain to fill the silo, hops to fill the freezer/etc. to sustain the higher output level before you sell your first drop. That can be a pretty significant investment if you're jumping from say a 2bbl to a 15bbl brewhouse.

[Brewtopian]

In all these threads about opening nano's with plans to expand in the future I feel like there's one thing that keeps getting missed. What does expansion mean to you? Where do you want to be in 5 years? I know that's cliche but without a long term goal expansion is just a word. Do you want to go from 2bbl system to a 7bbl system in 3 years? Do you hope to see your beer on retail shelves locally, regionally, nationally? Do you just want to make enough money to just keep you busy?

We get into this business for lots of reasons but at the end of the day its still a business. What kind of business do you want to be running?

[tjc27]

Well thanks for sharing. I didn't want to get into too much detail in my goals so we can keep it generic. I was hoping for the I did XX bbls and now I'm at XX bbls - this is how i did it. Or I did XX and it was barely paying the bills and now I'm stuck. But anyway here it is....

For me its a decent sized (small really) brewery with tap room. Two locations like that (one production location (outfitted warehouse with tap room and one high foot traffic location with a bar selling at retail). I don't ever want to be the $9.99 six pack brewery, i just enjoy the experimental and 750 ML type of brewing.

I think that would put me in the $800 to $1,200 per barrel range sales wise mostly selling at retail. Selling 1,000 to 2,000 bbls a yr mostly from the tap room(s) and a number of accounts at specialized locations.

I would think this can be achieved with a modest 7 to 10 bbl system and double sized fermenters. I don't need to get rich just be happy what I'm doing and make a decent living.

[nateo]

I don't ever want to be the $9.99 six pack brewery, i just enjoy the experimental and 750 ML type of brewing.

I think that would put me in the $800 to $1,200 per barrel range sales wise mostly selling at retail. Selling 1,000 to 2,000 bbls a yr mostly from the tap room(s) and a number of accounts at specialized locations.

I don't need to get rich just be happy what I'm doing and make a decent living.

I think that market is pretty saturated. In my experience "experimental beers" are pretty bad so you might be able to carve a niche there with a lot of work.

The big weird beers won't sell super quickly so I'd try to keep overhead and labor as low as possible. I would get a big enough system you can brew once or twice a week, because you'll probably have to spend a lot of time in the field pushing your product and fighting for shelf space.

Projects like this are much closer to a vanity winery than a conventional brewery, so I'd probably look into that for ideas about how to do the business end.

I would also look into how Crooked Stave does it.

[Thirsty_Monk]

What is the low end brew plant size?

Actually that is a good plan to my opinion. Your calculation of sales pre BBL is about right depends on your price per pint(unit).

Food or no food? How many seats per location?

There is a rule of thumb that brewpub can sell 5-7BBL/year per seat. This depends on market you might or might not reach these sales.

Now you can calculate potential of your sales and BBLs. Then you can determine size of the system you need.

Now subtract expenses and see if you can pay yourself.

Good luck.

[tjc27]

Thanks for the input to all, when I said experimental i didn't mean choc chip peanut brittle stouts but more sour beers through different methods (traditional, all brett, sour worting, etc.), local ingredients from fruit farmers, barrel fermenting, and so on.

Nateo I'm curious as to why you think the market is saturated? Or maybe now that I clarify your opinion may change?

[nateo]

Nateo I'm curious as to why you think the market is saturated? Or maybe now that I clarify your opinion may change?

It's probably regional, but here in Denver the shelves are full of beers like you describe. They're mostly really expensive and not very good. Sour beers are a niche in a niche. They're currently in vogue in some places but who knows how long that'll last.

[sok454]

I want to meet this Nateo guy. I bet he has a wealth of knowledge that would be great to hear. Just not over an overpriced sour! If you are even in IL let me know!

We looked at a nano style... didn't make sense for what we wanted to accomplish. Figure we should just look for more capital etc and got 7-15bbl from the get go. especially since we'd both keep our jobs for now and being able to brew only a few times a month initially would work better for us.