Nanobrewery - The Lessons I've Learned

[beejay]

What kind of equipment are you looking at? That's roughly the throughput of a 4-head Meheen filling 22s, with two operators doing manual (un)boxing.

We do 4 bottles a minute on a home-made 4 head counter pressure filler. Cost us about $300 to make and takes three people to operate. One person rinses bottles, one fills and the third caps. We easily bottle off 14 bbls in an 8 hour day with setup and breakdown. This doesn't include cleaning the brite tanks.

[a10t2]

We do 4 bottles a minute on a home-made 4 head counter pressure filler. Cost us about $300 to make and takes three people to operate. One person rinses bottles, one fills and the third caps.

That's more or less the setup I was envisioning. You can do maybe 4-8 cases/hour with one operator, depending on labeling equipment.

[nateo]

Another thing to keep in mind, if you're running way below practical capacity (producing much less beer than you reasonably could), under FASB SFAS #151 standards, unused capacity should be a period cost. If you dump all of your overhead onto your products when you're running way below capacity, it'll screw up your COGS. Idle capacity should be a period cost, like selling or admin.

[CrookedRun]

Frankly, this thread confuses me. I am about two months away from opening my nano. I have a 1 BBL electric system that I built. My sales forecast calls for a peak of 2500 pints per month (About three barrels per week in sales). Even with a rent of $2500 a month, that gives me a nice gross and net. I think I can do better than that (best location in richest county in the United States). I totally understand that nanos are a means to an end. What I don't understand is that they supposedly don't make any money. They have to make money. I am paying myself $24k a year, and I still have a nice net profit. Also, why is it that so many nanobrewers seem to resist the prospect of taking on debt? Debt is how you build a business, the only reason I would be scared to take on debt is if I thought my plan wasn't completely sound, in which case I would work at it until it was or move on to something else.

[yap]

I think the crux of this conversation boils down to this:

There are many different ways to build and grow a viable brewing business. However, for every one way that "works" there are about 1000 others that don't.

I think this statement scales differently depending on the size of the operation but IN GENERAL there are fewer ways to make it work as a nano than there are as a bigger operation.

If you have a good location, reasonable rent and overhead and good traffic then you are probably on as good a path as any. If you were in an expensive warehouse trying to brew only for distribution then that is a totally different plan. Just like a 5,000 BBL a year production facility is a different plan than a 5,000 BBL a year brewpub...

[nateo]

My sales forecast calls for a peak of 2500 pints per month (About three barrels per week in sales). Even with a rent of $2500 a month, that gives me a nice gross and net. I think I can do better than that (best location in richest county in the United States). . . Debt is how you build a business, the only reason I would be scared to take on debt is if I thought my plan wasn't completely sound, in which case I would work at it until it was or move on to something else.

Two possibilities: either your plan isn't actually as sound as you think it is, or you've figured out a way to make beer more profitably than most other people. If you want another set of eyeballs to check your plan, I'd be happy to help. Since you're two months from opening, you'll find out soon enough if you were right.

[yap]

Two possibilities: either your plan isn't actually as sound as you think it is, or you've figured out a way to make beer more profitably than most other people. If you want another set of eyeballs to check your plan, I'd be happy to help. Since you're two months from opening, you'll find out soon enough if you were right.

I missed the part about the $2500 rent.....Yeah, that seems quite a bit tougher with that volume.... As you say only time will tell...

[chaser]

But what if your nano brewed premium high gravity beers packaged in 750ml bottles? Here in Texas a nano can self distribute and the brewer can sell their beers at $84 case. I think a nano could be profitable in such case

Just curious but since when can you self-distribute in TX (I know laws have changed recently but I'm curious how they legally define a 'nano-brewery' and decide that certain breweries are able to forgo the 3 tier system that everyone else in the state is required to use)?

Also just a quick point that you won't get 32 bbls a month off of that set-up brewing high gravity beers. They take longer than 2 weeks most the time and yield less than your average batch of let's say pale ale. You'll maybe get 3.5 bbls a batch if you're lucky (sorry I don't know the typical loss on that size system) and I'd plan on turning over FV's every 3 weeks.

[chaser]

Can we all just come to a conclusion that starting a nano-brewery is a great way to work real hard and not make much money (if at all). And the only way to really make ends meet is selling close to 100% of your beers on-site at 4-5 dollars a pint. I've seen that model work well here in Colorado (to my surprise honestly), but in those states where you can't have a tasting room...good luck.

[CrookedRun]

Two possibilities: either your plan isn't actually as sound as you think it is, or you've figured out a way to make beer more profitably than most other people. If you want another set of eyeballs to check your plan, I'd be happy to help. Since you're two months from opening, you'll find out soon enough if you were right.

Sure, what's your email? But check this out:

Can we all just come to a conclusion that starting a nano-brewery is a great way to work real hard and not make much money (if at all). And the only way to really make ends meet is selling close to 100% of your beers on-site at 4-5 dollars a pint. I've seen that model work well here in Colorado (to my surprise honestly), but in those states where you can't have a tasting room...good luck.

Oh, absolutely. Without a tasting room, no way. But in my area I can sell a pint for 5-7 bucks. In fact, that is the same price/cheaper than the two beer-focused restaurants next to me. In fact, they will sell a 12 ounce of some Belgians for $9. Half of my beers are Belgians.

[einhorn]

I can't imagine being profitable at 3 bbls/week. Sorry, not that I am against you, I just do not believe that this concept is that "easy".

Maybe someone with track record can detail some of their actual costs (brewing loss, chemicals, equipment, COGs, insurance, electricity, gas, water, employment costs, taxes, licenses, advertising, etc.). I think it can only help this thread and be a help to future endevours of this kind.

[CrookedRun]

I can't imagine being profitable at 3 bbls/week. Sorry, not that I am against you, I just do not believe that this concept is that "easy".

Maybe someone with track record can detail some of their actual costs (brewing loss, chemicals, equipment, COGs, insurance, electricity, gas, water, employment costs, taxes, licenses, advertising, etc.). I think it can only help this thread and be a help to future endevours of this kind.

Please, I would really love any information anyone would be willing to give me. I have all those costs you mentioned worked into my plan, based on the best estimates I could get from BSG catalogs, insurance agencies, other breweries, etc.

Here's a breakdown of some of my numbers.

It costs me 0.63 cents per pint to brew my most costly beer, my IPA. That is based on the total cost for a 35 gallon batch ($126.28) plus federal and state excise taxes ($14.50 per BBL) divided by 220 pints per barrel (10% loss). I will sell each pint for $6. My two average-strength beers sell for $5 a pint, my brown IPA for $6, and my quad sells for $7 for a 12 ounce. I have the average price of a pint at $5.50. It would actually probably be higher in reality.

Say I sell 2500 units in one month. That is a cost of $1500 in materials for the units, but $13,750 in sales. My monthly costs are rent ($2,500), salaries for my two employees($1,000), loan payment ($400), insurance ($600), utilities ($600), accounting/payroll ($200) and cleaning supplies/glass ($100). That adds up to $7,800 a month. There are additional costs (income tax, burden, employee-related costs) as well, but that still gives me plenty of money to pay myself. In fact, I only plan on paying myself $2,000 a month, so that gives me some net profit.

[ChesterBrew]

Out of curiosity, does the loan repayment you mention include all of your start-up equipment costs?

[CrookedRun]

Out of curiosity, does the loan repayment you mention include all of your start-up equipment costs?

Most of them. I paid for and built my system with my savings, and my ten-tap draught system as well. I also raised 11k on Kickstarter. Here's a link to the Kickstarter page: http://www.kickstarter.com/projects/...se-nanobrewery

[einhorn]

Also, just for conversation sake, 2500 pints means 83 pints every day of every week. How many seats do you have?