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View Full Version : Nano for R&D or go for 15 bbl?



Vernair
08-17-2012, 10:14 PM
So here i am, and i have some wealthier family and family friends that have approached me to open a brewery. At first, I was planning on a 15 bbl production brewery with a strong emphasis on the tasting room. We are in Southern California and there are no microbreweries in our metropolitan area. After our last meeting, the investors presented the idea of starting a nano brewery (i'm guessing 2 bbl) to do Research and Development - both with recipes and market.

I've been homebrewing for about 2 years, and while I'm confident in my approach to beer recipes and my salesmanship, I don't have any really practical brewing industry experience. I have a current, albeit inconsistent job that pays the bills, so this would be done after hours and weekends, and I'd be looking to get another more experienced brewer involved.

My question is: should I push for us to open production brewery and develop the beer recipes before we open and as we go OR should I spend a year or so R&D'ing recipes and the market we are going for, potentially losing out on an untapped market?

(This is my first post - so if there's something I'm missing, let me know.)

Thank you all.

ChesterBrew
08-18-2012, 05:46 AM
Vernair,

A 2bbl system may be be able to break even if you're planning for tap room only sales, whereas a 15bbl system would work for distribution. Very different business models... and they likely require two different levels of staffing.

Definitely get practical experience before getting in over your head -- homebrewing and brewing have some similarities, but are not at all the same. You may wish to volunteer at a local(ish) brewery, or take some classes and get practical experience as part of that. For example, there's a brewery in Colorado that hosts immersive classes to cover both the brewing and business sides of the industry:
http://www.coloradoboy.com/Immersion_Course.html

I am currently in the planning stages of a 3-7bbl brewery, am getting my foot in the door with local breweries and trying to volunteer when I can, and have taken the Siebel Institute "Start Your Own Brewery" course in Chicago and am taking their "Concise Brewing" course in Chicago this fall.

None of these things are cheap, but it is definitely cheaper than opening a brewery and then realizing you have a problem.

If time were no object, I'd say get the hands-on experience in a brewery. If money were no object, I'd say get the hands-on experience in a brewery and take classes. ;) Don't shortchange the field experience.

Good luck!

einhorn
08-18-2012, 11:27 AM
What's the advantage to brewing 60 gallon R&D unit vs. 10 gallons of homebrew? In the end, you are going to have to tweak the recipes depending on the results your 15 bbl system produces anyway.

I agree with Chester, if possible get your feet wet (pun intended) at a local place to see what brewing 15 bbl (or bigger) is all about.

callmetim
08-20-2012, 07:16 AM
hypothetical question: you are up and running with your 15 bbl system and things are going well, you've got a few accounts and they really like your beer. you're running around all over the place, you're busy - this brewing thing is pretty cool! so you're getting a batch of beer out of the brite tank, ready to keg up. you take a smaple and say" hey. This doesn't really taste quite right" Or maybe it is ok. I better get another opinion. who do I ask? You find someone and they say"its great!" you still have lingering doubts. What do you do?

In my mind this is why going nano is great. you learn how many things you don't know and you are put in situations on a small scale that allow you to make these decisions.

What kind of beers are you going to make? which are going to sell best in your market? What you think will do best may not be what takes off.

Its true that you will have a difficult time making a profit but in my mind a nano is not a sustainable business model in MOST cases. But it is a great way for one to learn. there are other ways to get there but I don't regret going nano. We aren't where we want to be yet but I have a much clearer picture of where we will be and where we want to go then 3 years ago.

Part of that is i am very skeptical of other people's opinions and prefer to learn through experience. I guess I am just a glutten for punishment.

Good luck!

Vernair
08-20-2012, 08:42 AM
Thanks for the replies everyone. I'm actually eyeing that Seibel class in November...

So, my next question, and this is for my business plan so it doesn't need to be in stone, but how long should I plan on being a nano minimum. Let's say I'd personally be doing it part time (keeping my day job) and I'd have another brewmaster partner type as well. What should I being doing with the beer? When should I get my license?

Vernair
08-20-2012, 02:44 PM
What's the advantage to brewing 60 gallon R&D unit vs. 10 gallons of homebrew? In the end, you are going to have to tweak the recipes depending on the results your 15 bbl system produces anyway.

The advantage would be I'd be able to produce enough beer to start getting it into the community to get a feel for what my market is into. I feel like a 10 gallon vs a 2 bbl system, the cost isn't going to be that dramatic, especially once you factor in bigger bulk rates for ingredients, etc. I want to get as close as possible to how a proper brewery will operate.

ChesterBrew
08-20-2012, 03:16 PM
First and foremost, you need to get a handle on how your local government will allow you to operate and where they'll allow you to do it. You can expect to pay 30-35k for a 2bbl system total setup when it's all over -- not pocket change. Please be sure you do so with a complete understanding of where you'll do it, what equipment you'll use, and how many people you can expect to visit you in-house versus your need to utilize a distribution network.

BTW, I went to the Siebel Institute web site today, and their October/November "concise" class is now sold out.

Vernair
08-20-2012, 04:03 PM
First and foremost, you need to get a handle on how your local government will allow you to operate and where they'll allow you to do it.

Would i still need to get clearance if I'm not selling the beer (at least at first)? Anybody know what my first stop should be in getting clearance from my local gov't?

ChesterBrew
08-20-2012, 05:16 PM
Oy!

Yes, you need a Federal license before doing much of anything.

Your first stop before anything else is the TTB (federal gov't.)... either hire a consultant or take an immersive class. You don't want to screw this up from a legal standpoint.

My advice: hire a brewery consultant.

No offense, but you're obviously not entirely aware of the regulations at play and should really become aware/informed before going much further. Save yourself a black mark, and do so. Good luck!

Vernair
08-20-2012, 05:31 PM
Oy!

Yes, you need a Federal license before doing much of anything.

Your first stop before anything else is the TTB (federal gov't.)... either hire a consultant or take an immersive class. You don't want to screw this up from a legal standpoint.

So at what point do I stop being a homebrewer and start needing a license? Is it just 200 gallons/yr and that's it? There's no in-between?

EBC Commander
08-20-2012, 07:28 PM
Where are you trying to locate in So Cal? Friends and I operate a 3bbl system in addition to holding full time jobs. So it is doable, just alot of work. I would recommend getting a partner who would want to brew/run the operation with you especially if you have a tasting room. On the topic of licensing and set up, save yourself the few thousand dollars on a consultant and search the heck out of probrewer or just keep posting your questions. I hope I speak for the rest of the people here when I say we were once in your shoes and are more than happy to finally return the favor. Also brewery blogs are a great source of info on everything you need to know to start up. As we too are located in so cal PM me if you'd like to check of our operation or come by for a brew day. Best of luck.

Matt Enegren
Enegren Brewing
menegren@enegrenbrewing.com
www.enegrenbrewing.com

ChesterBrew
08-21-2012, 05:22 AM
So at what point do I stop being a homebrewer and start needing a license? Is it just 200 gallons/yr and that's it? There's no in-between?

Yes, exactly. If you want to sell your product or produce more than 100 gallons per person per household, you need a license.

Matt is totally correct that you can find a lot of information online and save yourself the cost of consultant (so long as you have the time to grunt your way through a lot of stuff.) Here are two sites that I've found helpful in addition to probrewer.com:

21 Questions About Opening a Brewery in the United States ($20)
http://legalbrewing.com

The Hess Brewing Blog
http://hessbrewing.blogspot.com
http://hessbrewing.blogspot.com/2009_07_01_archive.html (start here and work your way forward to follow their business from the beginning)

Matt, your willingness to help him is really inspiring -- I can't wait to be able to give back to others for all the kindness I've been shown on this forum and from the various breweries/brewpubs in my area.

callmetim
08-21-2012, 07:05 AM
I put together my 4.5 bbl brewhouse for around $2200. I went to the dairy junkyard and got 2 vessels for less than $1000. Use march pumps and a heat exchanger from duda diesel.

As far as hiring a consultant, that's that supports my rationale on going nano! There are so many more things to operating a brewery than brewing. Things you'll only learn by running a brewery. You won't make money running a nano but you'll learn and that has a value to it doesn't it.

so spend thousands on a 15 bbl system, thousands on a consultant, thousands on siebel and you still won't have learned what you did if you worked your ass off for a coupel of years in your own nano.

Just my $.02

Natrat
08-21-2012, 04:52 PM
With all due respect to some of the previous posters...

Skip the nano.

It is, unless you plan to have special beers in a taproom down the line, a waste of effort.

I get all the reasons to start off small, but this is small, hard work, and money losing. Not only that, but slaving away at brewing on a nano for two years will NOT prepare you for brewing on a 15 bbl or 20 bbl system. It is simply different. There is very little difference scaling from a half bbl to 2 bbl. But scaling to 15 bbl is like trying to fly a Learjet after training on a twin engine Cessna.

Granted, you might lose some money on some batches gone wrong on the big system, but it will be less money and less time than building and brewing on a dinky little 2 bbl.

I can think of about a hundred more reasons to skip the nano, and only two or three to go with it. You will learn SO much about things during the construction of the brewery...and hiring the right consultant can save you scads of money down the line...because your consultant should be able to see workflow problems and process issues from 5 years away.

Natrat

johnnymax
08-23-2012, 04:07 PM
If you hunt and are a little creative you can build a big homebrew system.
I bought three, five bbl stainless tanks $750 each and three, nine bbl poly tanks $500 ea. I also bought a 9 bbl brite tank for $2200
I heat with a 300,000+ BTU propane burner.
We brew four bbls at a time and it takes two batches to get eight bbls in our fermenters.

We brewed 4 bbls yesterday and 4 more today and we are bottling with a home made 4 head bottler in 22 oz. bombers tomorrow.

Is it east? no,
Is it fun? sometimes,
Is it rewarding, HELL YEA!

I am waiting for a good friend to get here, so we can run over to the brewery and I can let him taste the beer in my brite tank. He is one on my official tasters and I am excited with the results after modifying the water profile to make it taste richer....

The bottom line is, If you just buy stuff turn key it is expensive, but it is turn key.
If you build it yourself and grow, you will appreciate that 60 bbl system when you finally get it.
Will you get rich as fast, probabily not, But there is MUCH MORE to life than Money.

Do it for the love of making craft beer :)

mmussen
10-07-2014, 03:56 PM
A word on dealing with the TTB - you need to have a license before you can SELL a drop of your beer, regardless of how much you're brewing. As a homebrewer you can make your 100 gal but you better not get caught selling any of it to anyone. If that happens you can bet the TTB won't be letting you get a license any time soon.

CharlosCarlies
10-08-2014, 06:20 AM
With all due respect to some of the previous posters...

Skip the nano.

Old post, but have to completely agree w/ Natrat...especially if funding isn't the major hold-up (which it sounds like it isn't/wasn't in this case). Killing yourself brewing 2 BBL batches is going to get really old, really fast. We were in a very similar situation: homebrewers w/ little/no "pro" experience and took the plunge w/ a 20 BBL system and honestly now wish we had gone bigger. The entire process of building the brewery can take several months or more which gave us plenty of time to research, plan, and visit/talk to as many breweries as possible. Most of the people in the industry are extremely helpful, and we try to pass on that same good will whenever possible.

A couple of things that helped tremendously (for me at least):

1) Read, read, read...especially on here. Can't tell you how many processes I didn't fully understand until digging through these forums. There are some incredibly knowledgeable (and helpful) people here.

2) Intern/volunteer at a brewery if they'll let you. I had to e-mail probably 30+ breweries and spend a month in a different city, but it was well, well worth it. I had done a ton of reading and had plenty of theoretical knowldge, but seeing/feeling/doing things yourself was a humbling, yet extremely educational experience.

3) Go w/ a reputable manufacturer and don't be afraid to ask them as many freaking questions as you can think of, no matter how stupid. We ended up going w/ DME and even yesterday I was on the phone w/ them trying to dial in our lautering process. You should see how many e-mails and phone calls we went back and forth with before pulling the trigger on our system and during the build-out.

4) A consultant is obviously another good option and one we almost went with, but in the end doing as much as possible ourselves will likely pay huge dividends in the future as we now have a much better understanding of how the process could/should work. I always joke that after going through the process of building a brewery, my second brewery build-out would be amazing.

Something else to consider, and I always hate thinking negatively...but if you do your research and purchase quality equipment, even if the brewery did fail you will have zero problem selling everything off for reasonably close to what you paid for it given the current market. We looked and looked and looked for used equipment but everything good always got snatched up immediately. Not exactly encouraging perhaps, but when calculating risk/reward it's good to consider an exit strategy.

dhdarden
10-17-2014, 11:22 AM
A 2 BBL brewhouse with four 4 BBL CFVs and one 4 BBL BRITE ( brewing ales) should be capable of producing 416 BBLs ( 52/2 * 16) a year.

416 BBLs = 832 1/2 BBLs.

At $5 pint, that's a gross revenue of $499,200.

Seems like a small Nano operation should be able to eek out a pretty decent profit at that revenue level.... That is, if the beer is very good and the neighborhood supports the Nano.

Please slap me around and tell me what I'm missing.


Thanks,

Dan



With all due respect to some of the previous posters...

Skip the nano.

It is, unless you plan to have special beers in a taproom down the line, a waste of effort.

I get all the reasons to start off small, but this is small, hard work, and money losing. Not only that, but slaving away at brewing on a nano for two years will NOT prepare you for brewing on a 15 bbl or 20 bbl system. It is simply different. There is very little difference scaling from a half bbl to 2 bbl. But scaling to 15 bbl is like trying to fly a Learjet after training on a twin engine Cessna.

Granted, you might lose some money on some batches gone wrong on the big system, but it will be less money and less time than building and brewing on a dinky little 2 bbl.

I can think of about a hundred more reasons to skip the nano, and only two or three to go with it. You will learn SO much about things during the construction of the brewery...and hiring the right consultant can save you scads of money down the line...because your consultant should be able to see workflow problems and process issues from 5 years away.

Natrat

uptown brothers
11-05-2014, 10:37 AM
A 2 BBL brewhouse with four 4 BBL CFVs and one 4 BBL BRITE ( brewing ales) should be capable of producing 416 BBLs ( 52/2 * 16) a year.

416 BBLs = 832 1/2 BBLs.

At $5 pint, that's a gross revenue of $499,200.

Seems like a small Nano operation should be able to eek out a pretty decent profit at that revenue level.... That is, if the beer is very good and the neighborhood supports the Nano.

Please slap me around and tell me what I'm missing.


Thanks,

Dan
i think you'll be lucky to get 14 bbl every two weeks out of that system--process losses, trub loss, yeast dumping, dry-hopping, etc. I also think you don't necessarily get a two week turnover, i.e. 26 turns a year, on everything you make. You might want to estimate closer to 20 turns, or be serving some green and under-conditioned beer.

Next, you won't get 240 pints out of every barrel. You might appropriately assume closer to 200.

Next, selling doesn't come automatically. You're going to have to spend some time, a LOT of time, drumming up interest. Time you don't have if you're making 4 double batches every two weeks, running your taproom etc. Your model anticipates selling just under 100,000 pints a year in your tap room. That's 2000 a week roughly. Assuming you're open weekdays from 4 to 10 and weekends from 12 to 10, and you don't take any days off to regroup, that's still 50 hours a week and 40 beers per hour constantly, no slacking off, every hour you're open. Obviously it doesn't go like that, Fridays are busier than Mondays, but I'm painting in broad strokes here. I definitely know some nanos who can sell 40 pints per hour from 2 PM through 6 PM on a sunny Saturday. Maybe even all of 'em in Denver (that I'm familiar with).

But I know very few that are doing it every hour they are open. And back to a previous assumption, I know very few that are open 50 hours a week, as well. Some take Monday and Tuesday off (not "off", they're working, just not open to the public for on-premise sales), many close at 8 or 9 instead of the 10PM I assumed, etc.

Another way of looking at it is that most customers will have average about 2 beers per stop-in. Yeah, some will have 3 or 4, but enough others will only have 1, that 2 is a good number to use. 2000 beers a week thus means about 1000 patron visits per week.

But, assuming you can sell everything you make, i.e. pay no attention to the cautionary notes of the preceding 3 paragraphs, there's still the first two paragraphs which I think are reality--the described system running full tilt is more likely to generate (at a maximum with no down time) 365 days per year/18 day per cycle * 14 bbl = 20*14 = 280 bbl per year *$1000/bbl = $280,000 per year. (IMO, obviously YMMV)

dhdarden
11-07-2014, 11:47 AM
Thanks for the reality check.

I assumed there would be process losses. I was just not sure how large they would run. I can totally accept that 2 BBLs might be lost out of 16 BBLs brewed.

Losing 20 pints though out of each and every 1/2 BBL Keg seems high to me. Is there really that much beer lost to over-foaming or is this loss really a reflection of beer given away to customers or drunk by employees (a form of pilferage) ?

Just seeking to understand.

Many thanks,


Dan


QUOTE=uptown brothers;126403]i think you'll be lucky to get 14 bbl every two weeks out of that system--process losses, trub loss, yeast dumping, dry-hopping, etc. I also think you don't necessarily get a two week turnover, i.e. 26 turns a year, on everything you make. You might want to estimate closer to 20 turns, or be serving some green and under-conditioned beer.

Next, you won't get 240 pints out of every barrel. You might appropriately assume closer to 200.

Next, selling doesn't come automatically. You're going to have to spend some time, a LOT of time, drumming up interest. Time you don't have if you're making 4 double batches every two weeks, running your taproom etc. Your model anticipates selling just under 100,000 pints a year in your tap room. That's 2000 a week roughly. Assuming you're open weekdays from 4 to 10 and weekends from 12 to 10, and you don't take any days off to regroup, that's still 50 hours a week and 40 beers per hour constantly, no slacking off, every hour you're open. Obviously it doesn't go like that, Fridays are busier than Mondays, but I'm painting in broad strokes here. I definitely know some nanos who can sell 40 pints per hour from 2 PM through 6 PM on a sunny Saturday. Maybe even all of 'em in Denver (that I'm familiar with).

But I know very few that are doing it every hour they are open. And back to a previous assumption, I know very few that are open 50 hours a week, as well. Some take Monday and Tuesday off (not "off", they're working, just not open to the public for on-premise sales), many close at 8 or 9 instead of the 10PM I assumed, etc.

Another way of looking at it is that most customers will have average about 2 beers per stop-in. Yeah, some will have 3 or 4, but enough others will only have 1, that 2 is a good number to use. 2000 beers a week thus means about 1000 patron visits per week.

But, assuming you can sell everything you make, i.e. pay no attention to the cautionary notes of the preceding 3 paragraphs, there's still the first two paragraphs which I think are reality--the described system running full tilt is more likely to generate (at a maximum with no down time) 365 days per year/18 day per cycle * 14 bbl = 20*14 = 280 bbl per year *$1000/bbl = $280,000 per year. (IMO, obviously YMMV)[/QUOTE]