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  • Distribution for the VERY small brewer

    I'm working on starting an extremely small brewery, and running into a problem that I'm hoping some folks have ideas about.

    Similar to a few "hobby" breweries in the US and especially Europe, my venture will by no means provide me (nor require of me) full time employment. The beers will be aged specialty offerings in big bottles, and production will start at less than 15 bbl/year.

    The problem: by what mechanism can I actually sell the beer? The state I'll be brewing in (Vermont) allows self-distribution but it's not a big market, and further, the $1000 wholesaler's license would be a large fraction of projected revenue. I thought of self-exporting the beer to nearby states with larger markets (New York, Pennsylvania) but not only are the wholesaler license fees higher, you also may need office "premises" in some states.

    Seems like my only real options may be to attempt to build the brand in Vermont, or attempt to find a national distributor who for whatever reason feels like messing with the beer despite the very small volume involved.

    Any ideas? What am I missing? Thanks a lot for any suggestions.

  • #2
    $1000 is tip of iceberg

    If the $1000 fee for licensing scares you, then let it be. You will run into many other costs which do not generate profit off the bat.

    It simply costs money to set up and run a business. At 15 bbl/year it should remain a hobby.

    My advice - get some industry experience, either on the brewing side or on the sales side, depending on your personal strengths.

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    • #3
      Your plan sounds great! However I sincerely suggest you would be infinitely more profitable if you ignored licensing and gave the beer away.

      In general, smaller bottling breweries would best look to wine distributors instead of the increasingly-mega beer distributors who will only care about volume and have way too many brands to deal with already. Picobreweries and even merely small breweries are an absolute waste of their time. If they even agree to take you on, you will end up with zero sales.

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      • #4
        My suggestion would be to talk to the store owners of the stores you feel will be willing to take on and sell your product. They will likely be able to tell you what distributors they work with and feel will treat you well. Specialty stores would be where I would start as most of those guys are very approachable and love to talk shop(especially if it leads to them carrying a new good product).
        BJ Knoke
        Hub City Brewing Company
        "The Largest Microbrewery In Stanley, Iowa"

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        • #5
          Thanks for your responses and suggestions.

          Einhorn, you said that $1000 is just the tip of the iceberg, and Moonlight hinted at the same. Would you (or anyone) mind elaborating a bit on what other legal/compliance costs I might not be expecting?

          Or, for the sake of (over)simplifying the situation, suppose a homebrewer decided to pay $250 for a VT manufacturers license, $1000 for a VT wholesalers license so he can self-distribute, and of course the state and federal taxes on each barrel of production. He's heard the federal fee to produce is $1000, but looking at the TTB website it almost seems to be suspended/zero at the moment. He has some inkling that registering a brand will cost something. What other costs is this vain fool missing?

          Comment


          • #6
            Just a few costs to expect

            Here are just a few things - maybe Moonlight can add his 2 cents.

            logo design
            label design
            proofs for packaging
            6-pack and or case design (optional)
            website (?)
            office equipment/PC/software
            stationary/business cards
            telecommunication
            liability insurance
            other permits (local, state)
            labels (minimums generally apply)
            cooperage (a few smaller kegs are ALWAYS good)
            jockey box/dispensing & cleaning equipment
            tap handles
            POS material (coasters, table tents, signage, posters, banners, etc.)
            advertising above and beyond local press reports
            sponsored beer for events, tastings and samples for potential customers
            etc.

            These are just a few things that I spontaneously came up with, and probably an absolute minimum for a production brewery.

            As you can see, and also mentioned in the thread that is running parallel to your quetion here, there is an economy of scale with beer. If you do decide not to implement some of the above mentioned things because you think that you might not need them due to your output, you will quickly find out that your competition DOES have and use these tools.

            I wish you luck in your endeavour!

            Comment


            • #7
              Vermont...

              Well, in the state of Vermont you also need:

              Wastewater Permits - atleast $200 (Unless you have a spare building on your property and are going to use your existing septic...which, you will STILL, techinically, need a permit for!)
              Zoning - check with town
              Act 250 - minimum $150 (any construction for a commercial purpose or any change to existing structure for a commercial purpose requires ACT 250 Jurisdiction)
              Water testing (Potably Water Supply): coliform, uranium, arsenic, nitrates, nitrites, etc - atleast $150
              Registration of Corporation/LLC for the brewery: $100
              Registration of the LLC for self distribution company: $100
              Tradename Registration: $50
              Also, you technically need a separate storage space for your product as you will be self distributing in VT and must, also, have two different companies with two different facilities (which can be the same building but two different rooms).
              Plus, your startup operating costs:
              Bottles, Caps, Chems, Malts, Yeast, Hops, etc.
              Do you have a hop contract? Will you be able to get the varieties that you desire?

              That's all that I can think of off of the top of my head. I'm sure that I"m missing a few things...
              Shaun e.

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              • #8
                Listen to Shaun he knows what he's talking about when it comes to permits

                At 15 bbls a year you're talking about selling like 7 (22oz) bottles of beer a day. The biggest issue I see with this plan is what if....and by that I mean WHAT IF.....people like your beer?????

                If you can't keep up with demand you will alienate your customer and more importantly lose sales. Keep your territory focused and small to start. Local restaurant, a better beer bar and a package store to start. Keep your delivery radius small, there's no sense in spending $25 dollars on gas to make $20 in profit. Be exclusive,unique and special to start,create an allure/buzz for your product. Don't spread yourself thin, give yourself room to grow in your selected accounts. Be small, be smart, but think big. If you don't plan on being successful than just keep this thing a hobby.
                Cheers,
                Mike Roy
                Brewmaster
                Franklins Restaurant, Brewery & General Store
                5123 Baltimore Ave
                Hyattsville,MD 20781
                301-927-2740

                Franklinsbrewery.com
                @franklinsbrwry
                facebook.com/franklinsbrewery

                Comment


                • #9
                  Sonoma County,CA: $1200 and 10 months for commercial use permit
                  The requirement that it be done in a building up to commercial building code. (Not residential, your garage, nor barn)
                  The requirement that it be under commercial fire code, including fire sprinklers, fire truck access and turn around space or other mitigation.
                  Traffic mitigation fee, $200
                  Jeez, more I do not even want to remember.
                  All this included after I agreed to not be open to the public...it gets worse if I have off sale, or even on-sale.
                  If your personal vehicle insurance policy finds that you are using your personal vehicle for commercial uses, your personal policy is void.
                  You will need Fed and likely state bonds for your excise taxes, approx 250 each per year.
                  Yes, on the plus side, the BATF/TTB fees are currently suspended.
                  If I wanted to make one gallon for sale, these would still be in effect.

                  Basically it works like this: To sell beer, you need state and fed licenses. Both require your city or county to sign off saying that they are OK with having a brewery where you are. Bureaucrats breed more bureaucrats. The city or county has the right to require any hoops they wish upon you. They may be lax or may want to randomly exert their authority on you. My county wants to control growth. You may have an easier time, but they will likely be more nitpicky than the state or feds. The feds mostly just want to correctly collect your tax money. States want your tax money but also need to control the "evil" that you produce.

                  I don't know all your motivation, but if you are trying to make a name for yourself before trying to get funding or justify a more profitable venture, consider making beer as a hobby, and taking the beer frequently to establishments that you would want to have sell your future beer. Do NOT attempt to sell it, and do NOT let them sell it, just share it freely in exchange for feedback. You will have great goodwill and if your beer is good enough, the word will likely even find its way to potential investors.
                  Most importantly, you will set up your market, perhaps the most critical step to having positive cash flow (groceries) when you do decide to pay for those fire sprinklers.
                  Besides, you will get a chance to see what you think of the business and be able to more accurately build your brewery to what the market will/can afford to support.
                  Hope that helps.

                  Comment


                  • #10
                    Really Small Distribution

                    As a craft beer distributor myself I'd love to tell you that you should find a good distributor, but at such a small volume of production I cannot imagine that you would actually benefit by doing anything other than self distributing. At a rate of 15 barrels a year you're making less than a case of beer a week, so I don't see that distribution is going to get you into more than a few retail accounts to begin with, so you should be able to service that yourself.

                    I'll agree that the extra $1,000 fee that you'd pay to self distribute is really not the only extra expense that you'll encounter though. Bear in mind that when you self distribute you are taking on a lot of time commitment and expense in actually making beer deliveries in addition to your brewing duties.

                    On the plus side, you'll be able to sell your beer to retailers at a higher price than you'd be able to sell it to a distributor, because you will be bearing the burden of those additional expenses involved in transportation and delivery yourself. So you can make some, or perhaps all, of the extra expense up over time.

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                    • #11
                      Thanks

                      Just want to thank everyone for all of the suggestions and opinions--I never imagined people would take the time to provide such responses. There's a lot there that I hadn't thought of, and that I'm looking forward to figuring out. Thanks again.

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                      • #12
                        The best advice I can offer you is pretty much the same advice I offered someone this morning on another thread. Do your research! Don't close the book on your project just because the numbers start going through the roof. Just hike up your pants and get to work on the research and find out EVERYTHING you can. You'll still miss some stuff, but you'll find that once you find an answer for one thing, you'll also find more questions about other things.

                        It took me nine months to research and write my business plan for Bavarian Barbarian. You might not need that much time, but at least spend ample time on research. Writing the business plan helps you to focus and helps you to not only answer questions, but find other questions that otherwise would never occur to you. If you find that you have to force yourself to sit down and work on this stuff, then you'll know you shouldn't do it. Besides, spending the time researching and writing the biz plan might give the economy time to recover a bit and make it easier for you to find financing if you need to.
                        Mike Hiller, Head Brewer
                        Strangeways Brewing
                        2277-A Dabney Road
                        Richmond, VA 23230
                        804-303-4336
                        www.strangewaysbrewing.com

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