HELP! Three questions for new brewery.

[ngarri01]

Hello, I’m putting the finishing touches on a business plan for a small brewery in New England, but there are a few questions that I have not been able to find consistent answers to, and I am hoping somebody on this forum can help me out!

1. Approximately, what will I be paying for business insurance annually if I have three employees to begin with? I understand that there are many factors to consider here, but I just need a ballpark figure for the time being.

2. I will be working strictly with distributors. As is such, what can I expect to receive per keg (1/2 barrel) and per case from the distributors (our beers will be 5-6% ABV, nothing crazy)? Again, I understand that there are numerous factors to consider, but I’m just looking for an average.

3. I’m looking at sales of 2,000 barrels for my first year. What can I expect my utility costs to be (electrical, gas, water)? A per barrel estimate for utility costs would be extremely helpful!

I hope somebody out there can help me out!

[einhorn]

One thing to consider

One thing to consider when doing sales estimates your 1st year: take what you realistically think and divide by 2. This has 2 reasons: building up accounts takes time, especially as a start-up when you have lots to prove and working with distributors who you (I assume) do not even know yet. Secondly, you are theoretically saying that you will sell 4,000 (!) barrels in Year 2, as you must take an average over the entire year, which in my experience is actually about 40% of your projection for Year 2.

[beermkr]

2. I will be working strictly with distributors. As is such, what can I expect to receive per keg (1/2 barrel) and per case from the distributors (our beers will be 5-6% ABV, nothing crazy)? Again, I understand that there are numerous factors to consider, but I’m just looking for an average.

What you "get" from the distributor should be what you ask for. Let me elaborate.

You have $x into the beer. This covers cost of materials and brewing overhead (i.e. gas, electricity, water, etc).

You have to cover company overhead with your profits (i.e. salary, rent, insurance, utilities etc)

You need to charge enough to cover these costs plus a little. The problem is you need to make sure you do not price yourself out of the market. We would all love to get $100 per 1/2 from the distributor but that would make the cost to the consumer in the $150 range. Bud is like $85. You figure out which the average restaurant is going to carry.

I am NOT saying that you have to price yourself in the Bud range but you do not want to be double that number by any means. Look at a 60-70% margin for kegs and 45-50% for bottles and do the math to figure out your price point to the retailer and consumer.

Mike

[Moonlight]

Many of your answers are in the archived threads.
In addition, when doing cash flow projections, remember that you will be lucky to be paid for your beer even at 30 days, especially in this squeezed economy. Each state may have different credit laws; check out yours, but don't assume you will get the money on time without visits by your bouncer friend Guido.

[tarmadilo]

I am NOT saying that you have to price yourself in the Bud range but you do not want to be double that number by any means. Look at a 60-70% margin for kegs and 45-50% for bottles and do the math to figure out your price point to the retailer and consumer.

Mike

Yep, what he said! Be sure to actually do the math, though, DO NOT set your prices only based on what your competitors are getting. That way lies bankruptcy, unless you're purely lucky enough that your costs happen to be low enough for that to work...

Tim