Beer Venture - Is This Practical?

[stealthbeer]

I'm new to the forum, but I've already found some great information here.

Here's the situation. I live in a market that doesn't have a good microbrew or local beer. I want to solve this problem and start my own beer. I have a branding/marketing angle that I know I can make work.

In the start-up I'm not looking to build a brewery or develop a beer. Is it practical to think I can hire a contract brewer to help me develop a recipe to send to a contract manufacturer/brewer to sell in this market? Has anyone ever tried to develop a new brand this way? Are there even brewers out there that would be willing to develop a recipe that I could use for this brand?

The goal would be to build the brand and then eventually have a local brewery. I realize the cash-flow from the contract manufacturing may not be sufficient to build a brewery. However, if the brand is strong enough, I can leverage that to bring in investors to build the brewery.

For the experts on the board - where would you go to find a brewer that would be interested in helping me develop this beer?

What contract manufacturers would you suggest in the Mid-Atlantic/Mid-West Markets?

Simply, do you think I could make the economics work on something like this? If I brand this thing properly I truly believe that I will be able to sell it well as a local beer in this market.

If anyone has experience in this and would be willing to talk me through this concept I would appreciate it.

THANK YOU in advance for your suggestions.

[Scott M]

I recommend you learn as much as you can about brewing beer. Buy some equipment and brew and extract beer or four for yourself or with friends. Read as much on brewing as you can digest, especially the business, chemistry and biology of brewing. Attend an advanced brewing class. Work in a brew pub or micro as a volunteer to learn the business and what is involved in making a quality beer. Having some knowledge of the process will make selecting a contract brewer much easier and you may find that you are able to create your own flagship brew!!

Most importantly, learn about your market. Is the area really ready for a craft brew? What is the expected customer base? Do the numbers support your enterprise? What are the expected retail or wholesale sales expectations based on the demand projection for your demographics? Are you introducing a craft brew into 'Bud Town' or are the bars and restaurants in your area selling out of specialty beers?

Good Luck, and Cheers!!

[South County]

It can be done. Intercourse Brewing Co. is a local offering here in PA that is supposed to be a marketing brain child that operates this way.

http://intercoursebrewingcompany.com/default.aspx

So along with what Scott M said just do your homework.

Good luck! Happy Brewing!

[ParadisePint]

*ALL RIGHTS RESERVED * INTERCOURSE IS A REGISTERED TRDEMARK OF INTERCOURSE BREWING COMPANY LLC.*

Oh Hell... I have to give this guy money when I get lucky now?

[South County]

*ALL RIGHTS RESERVED * INTERCOURSE IS A REGISTERED TRDEMARK OF INTERCOURSE BREWING COMPANY LLC.*

Oh Hell... I have to give this guy money when I get lucky now?

Did I miss something?

[Guest]

Did I miss something?

just that the Intercourse Brewing website seems to suggest that they own the trademark to "intercourse" (as in sexual intercourse!) whereas others might suggest that some divine intelligence & humourist was the original designer of that whole minefield

[pennbrew2]

I have a branding/marketing angle that I know I can make work.

In the start-up I'm not looking to build a brewery or develop a beer. Is it practical to think I can hire a contract brewer to help me develop a recipe to send to a contract manufacturer/brewer to sell in this market?

Sounds good in theory, but the track record for new, contract-brewed brands has been dismal. Sure, Sam Adams started that way, but after that there's a long record of failures. Every one of them thought they had a "branding/marketing angle" too.

Are there even brewers out there that would be willing to develop a recipe that I could use for this brand?

Yes, there's a number of brewers who will be happy to do it but you'll need a large bankroll. Smart breweries will make you pay for everything up front before brewing, packaging and shipping beer. Start-up costs for a new bottled brand aren't cheap.

If I brand this thing properly I truly believe that I will be able to sell it well as a local beer in this market.

Marketing a beer as local when it's brewed at a distant brewery can be tricky.

Sorry if I sound like a total nay-sayer but I've seen many contract brands come and go over the years. Other than Sam Adams, does anyone know of a successful contract-brewed brand?

---Guy

[frigatebay]

double post

see below

[frigatebay]

Brooklyn, brewery came much later

Magic Hat, initial expansion was done with contract brewing, present expansion is being down with contract brewing

Schmaltz Brewing

Terrapin Brewing - brewery came years after startup


those are just off the top of my head.

of course I can come up with many times that that have failed

hey I'm still in business after 4 years of contract brewing.

K

[stealthbeer]

Thanks for the feedback I appreciate the comments.

In terms of learning the brewing process, there are really no hands-on opportunities unless I go at it my own. There isn't a brewpub/micro for a few hundred miles.

This market is undoubtedly a bud market, but I would suggest that there are many markets that were once bud markets and were transformed by great beer. The revolution will happen here eventually - the question is do I want to lead the charge or wait around sipping on a limited selection of crafts?

The market is rural, but we attract a ton of tourists.

No question that marketing a beer as local when it's actually brewed elsewhere is a problem. I think I could still market it as an _______beer but be upfront with people that its brewed elsewhere until demand justifies a local facility.

Guy - no worries on the naysaying. Keep it coming. I need it.

K - what region do you work in?

Also, what if I offered a brewer a small piece of future sales or equity for a recipe? Has this been done? What's the probability of a brewer having interest in this?

Other obstacles - I live in a 3 tier distribution market with somewhat restrictive limits on alcohol content in beers.

Thanks again everyone.

[pennbrew2]

Also, what if I offered a brewer a small piece of future sales or equity for a recipe? Has this been done? What's the probability of a brewer having interest in this?

It depends on how much money you bring to the table. If you're able to finance all the startup costs, then probably yes.

If however, as I've often seen, you expect the brewery to finance the costs then probably no. Labels, sixpacks, mother cartons, crowns all require artwork setup (and possibly dies) as well as minimum initial runs; malt, hops, bottles, labor, utilites, overhead and taxes to brew/age/package; warehousing and shipping. Add it all up and it's a substantial investment. If I'm the brewer I'd be foolish to put my money on the line for your product.

I used to work for one of the largest contract brewers in the business. They had (probably still do) pallet after pallet after pallet of old, unsold contract product and packaging materials they had no use for. After helping to finance the first few of these ventures, the owner got smart and started requiring 100% payment before producing any new contract beer.

Just my perspective, there's 100s of potential contract breweries out there. I'm sure they all have a different take on this.

---Guy

[South County]

Some more food for thought. Admin just posted this about twitter.com and while the online presence isn't the focus point I am making, the idea of why people by micro is:

Instead it is more of an interpersonal service that builds brand ownership among consumers. It’s a way to build a small following around your brewery and get to know those who drink your beer. It’s also a way to let people who drink your beer get to know you. One of the great allures of craft breweries is that each brewery is owned and run by people with passion. What’s the difference between your beer and Blue Moon? You.

So with that being said the demographic in our area (farming town) relies heavily on the interpersonal "this is MY brewery in MY home town". Part of the allure as stated above is about destination and people. I have made many converts just on the fact that they enjoy good company and conversation and also struck some investors out of it as well. With contracting there really are no "people" to go see, to talk to, share stories with. Having local patronage is crucial IMO, otherwise your just another collection of bottles on the shelf. Also you may run into distributors who want to know that brand they are putting resources into will remain consistent. You establish a beer flavor and profile with contractor and then bring it in house eventually it could change for a number of reasons, your brewing style, possibly equipment. No to mention banks and investors want to see you get your hands dirty. Selling yourself, an idea, and a product all go hand in hand and people want to see that.

So anyways, not trying to be negative, just putting out there how it may be received.

PS giving up equity for a recipe is probably a really bad business decision.

[WitsEnd]

Pete's Wicked Ale comes to mind. A few years back and may not be applicable in today's market, but that's how they went about it. They had no intention of setting up a brewery.

Also, Liftbridge out of Stillwater, MN www.liftbridgebrewery.com is doing just that. The have some good info on their website and fully disclose who they are and what they do.