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Nanos turn a profit?

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  • Nanos turn a profit?

    Curiosity has overcome me and I must know. Is there anyone operating (or was) a nano commercial brewery that was able to turn a profit and create a true good living (excluding spouse income real job, trust fund, lotto winner) for the owner/brewer? I'm not being a smart ass or trying to stir up a hornet's nest. There seems to be a large movement towards nano but no real data to prove that it works long term. My assumption is that it is a low cost way to test the market, attract investment or just dip toes in the water and see if you want to swim with the other fish.

    Beaux Bowman
    Black Raven Brewing
    Redmond, WA

  • #2
    Here's a great thread that will give you some idea.
    Nate Cornett
    Yellow Springs Brewery
    Yellow Springs, OH


    • #3
      I'm a month from starting a lease and my last review of numbers shows that it is possible, but it relies heavily on if taproom sales are as expected.
      I'm not prepared, or even expecting, to quit my day job yet, but if I can sell enough in growlers and pints, there is a chance I could split ways and do this full time. It will be difficult to pay myself and recoup the initial $30k investment until I upgrade to a larger system, however.

      It also depends on what you define as "A good living" and how that compared to cost of living in your area.

      For reference, I'm leasing 2,400 sq ft for $1500 a month. From what I've seen, I think that's quite a deal.
      I can also self-distribute, sell growlers, and sell pints, and have been told that I could expect to sell half of my 10 bbl/month production right from the brewery. If that's true, I have a chance by increasing production to 20 bbl and hope the tap room sales increase to match.


      • #4
        I hope it works for you WitsEnd. I am looking for data from someone who has done it and not just on paper. The reality is many costs appear after the brewery starts (or in construction) that were not projected in the planning stages. In most cases, this dollar/percentage amount was the theoretical profit margin and now there is nothing left.

        On a side note, if someone figures out how to do it, they could write a book and make some extra income.



        • #5
          I'm tossing around the idea of offering up my business plan and finacials to those that are interested. I have a friend that is helping me with a kickstarter video and wants to put out a documentary on the startup of the brewery. Once filmed, I thought it would be worthwhile to do his own kickstarter to edit, compose, and produce the DVDs. a second tier could be the operatioanl books on my nano startup.

          Either the documentary would end in a crash and burn of the nano or building toward a full production brewery. Either way, it ought to be an interesting story.

          I'm just not 100% sure I want to offer up my last 3 years of research and the next year of proving that research out, for sale on a kickstarter campaign. There's a TON of work that has gone into it and anyone would have to verify the numbers and application would apply in their situation anyway. It seems like what I'm doing will work, I just need to prove it.

          So, if I get a flood on facebook because of this post, I may feel obligated to move forward with the side project.
          Otherwise, hit me up for info. Glad to share when I have the time. My lease starts June 1st. It's go time!

          Patrick Sundberg
          Jack Pine Brewery
          Baxter, MN
          Jack Pine Brewery has been serving craft beer to the Brainerd Lakes Area and beyond since 2013.


          • #6
            Originally posted by beauxman
            I hope it works for you WitsEnd. I am looking for data from someone who has done it and not just on paper. The reality is many costs appear after the brewery starts (or in construction) that were not projected in the planning stages. In most cases, this dollar/percentage amount was the theoretical profit margin and now there is nothing left.

            On a side note, if someone figures out how to do it, they could write a book and make some extra income.

            Personally I think a lot of it has to do with the laws in a given area. If you can self-distribute, sell pints of beer in a tasting room, etc. (i.e. avoid the three tier system) you can keep more of a profit in-house.

            The conventional wisdom is that anything less than a 7bbl system is doomed to fail, but I think that also is making the assumption that you're selling your beer wholesale for distribution to bars and liquor stores. Taking that approach means selling on a per-bottle basis roughly 1/3 of what you could sell it for yourself on premises, so yes, that requires a greater volume of production to be a profitable enterprise.
            Kevin Shertz
            Chester River Brewing Company
            Chestertown, MD


            • #7
              Being able to retail pints and growlers is key. If I ran a nano frankly I wouldn't distribute at all if possible. It helps if you can have guest taps as well. I've seen a few nano's seem to do well because they also hold tavern licenses and serve tons of good guest taps, wine, etc.. But for a local example Beaux I think the Dons at Naked City (here in Seattle for everyone else out there) did a great job by opening a bar first, thereby getting a rep for serving great beer while they waited the year for their little brewery (it's a 3bbl as I remember) to come together. Now they usually carry nine or so of their own beers, don't distribute, and have 15 guest beers on tap. Maybe more ambitious, closer to a brewpub technically (since they serve food), than your typical "homebrew gear in a shed" nano but that's what I'd do if I was going that route.

              Also, here in WA you're allowed up to 25% of your taps to be guest taps on the standard micro license. So if you had something similar in your state you'd need to make the decision of greater profitability selling just your own beer vs. greater variety and backup in case you suddenly run out.
              Russell Everett
              Co-Founder / Head Brewer
              Bainbridge Island Brewing
              Bainbridge Island, WA


              • #8
                Nanos in the black

                Around Florida, Nano's have been working quite well. Tasting room sales, whse keg distribution and specialty bottling. When I think Nano...the 3.5bbl is right out. For the same money you can spend on a 3.5bbl, you can get a 5bbl. Brewery equipment companies are falling over each other with affordable Chinese stainless. Almost 100% of new equipment I'm seeing in start-ups is decent quality, Chinese manufactured tanks, sold by American companies. With a can use 10bbl Fermenters, 4-10bbl Fermenters can produce 1040bbls of Ale annually...4brews per week...that's not too shabby. I've been a part of around 14breweries opening up now...the single most expensive item on the budget might be principal equipment, but the greatest expense is going to be ancillary costs surrounding the brewery (packaging materials/kegs/fillers), installation, contractor costs and tenant finish. $50K is not going to cover it, I like $250K much better. How much do you know, how hard can you work and who do you know that can help you get the work finished is three questions I like to ask. If you are doing all the work you can legally do, that will shave off thousands. If you are a Dr. and don't intend on scraping up floor tiles or knocking out a wall, you're going to have to pay more than the guy who has a brother that loves beer and is a self employed contractor.

                So if your passion and dream to bring your creation to the retail market seems out of reach, perhaps you could afford to have a beer contract brewed. Once you establish a revenue stream for 2+ years, banks start lining up to loan you money...because you are no longer a start up have proof of a business taking in revenue. You might also strike a deal with a brewery to operate under a rotating proprietorship license. You brew on their system over the weekend and bring in your own fermenters and brite tanks. To split the costs of a breweries lease and operating cost is incentive for a brewery that has marginal profits.

                Lastly, one thing that troubles in particular about new start-ups is the lack of recipe development. Previous knowledge of brewing is not enough...recipe development should have been in the forefront of the entire business model. Lot's of folks can brew good beer, your interpretation and spin on any given style of beer is what makes your product special. If you haven't developed a brand yet or lack the ability to configure a brand, hire someone that is qualified to brew and fine tune your flagship beer recipe to be where you want it to be. If you're broke now and love to brew...start brewing small pilot batches. It's never too late to plan for the future~


                • #9
                  After reading, re-reading and reading again to the point that my eyballs are ready to fall out of my head at 1:30 in the morning all of the posts that are relevent to my plan, I thought that this would be the time to chime in on what I have going on. Trust me I don't need to be directed to anymore threads. I hope it's OK to latch onto this thread. Maybe I'll start a new one.

                  I'm a loooong time homebrewer (go ahead and shake you heads and long time business owner but have no practical experience in commercial brewing. I'm certainly not a dump and stir brewer, my all grain system that I designed and built myself is semi automated with all elements hard piped from the HLT all the way through the chiller into the fermenters. My process includes O2 infusion, filtration for some styles, yeast propogation and barrel aging. OK so maybe I just have more to forget??

                  Anyway my plan.
                  I have the golden brand name handed to me on a silver platter. Can't divulge it yet as I'm working on trademarks but trust me. I have a location that is a little on the expensive side but is a hub of MAJOR tourist activity. The idea is to put a 3 bbl system with tasting room at this site which I consider to be the store front and "face" of the brand. I want to brew there, and I will, mostly specialties and developing new standard recipes but the idea is to develop and market a brand. I will be using contract brewing for the majority of the product and use the standard distribution chains to get it out there.

                  Sufficient budget (over 100k)
                  Business experience
                  Brand name
                  Brewery and tap room location that will showcase the brand to visiters from across the country. (the merch on this brand will be gold!)
                  Good relations with local microbreweries for contracting and packaging

                  I know nothing about commercial brewing.
                  Rent is a little on the high side ($1.5/sq ft.)

                  Don't know what else I can say. I just have the business plan complete but have not commited to a lease. Gonna get the sytem from Premier stainless. There's a brewery nearby that has a 15 bbl from premier and I can hang out with them on brew days.

                  That's my story. So awesome to have these forums to learn and try to figure out how NOT to do it.

                  Last edited by Steve R; 05-13-2012, 10:55 AM.


                  • #10
                    @Steve: I think your budget is too low for what you described (depending on what side of over 100k you are on). It's not the equipment that kills the budget, it is everything else. Don't forget working capital in your budget, you will not be breaking even any time soon most likely. I would also factor at least 25% extra for delays and unexpected costs. I would bet that even 25% is too little on your first attempt with no industry experience. Probably more like 40%.
                    Last edited by beauxman; 05-13-2012, 11:27 AM.


                    • #11
                      It'll be tight. I have a $30k target and I'm using my current homebrew setup with double-size plastic conicals. Adding even a small taproom with a half wall in an industrial space is tying up easily a third of the budget.

                      You have to be VERY mindful of all your costs if you're going to go small. Things can add up very quickly. I caught a break finding an architect to take on the project for free. That was my last expense that was sprung on me. It wasn't the brewery that did it, it was changing the use from warehouse to taproom that kicked in the need for an architect with the city.

                      I'm already $2k deep in permitting and zoning with the city, not to mention the eventual on and off sale licenses. Small things add up fast on a tight budget.

                      Research, research, research, and keep a running balance sheet of projected startup costs, including expenses before you are selling beer. It will get more accurate as you get closer to opening. You'll also see that negative balance creep up as you find more and more items that require payment.


                      • #12
                        Thanks, I appreciate the input! Beaux, I actually have 50% built in to what I call the F factor (F is for fudge? And witsend I have no intentions of starting small. I will be contracting and serving beer whether the brewsystem is up and running or not. It's all about the brand. Also the other factor in my favour is I own a profitable manufacturing company that takes at the very most 2 days of my week (usually part of one day) to make a living. I'm in the process of working a normal 40 hour schedule to build an inventory so by the time the brewery starts up I will have 1/2 a year of regular income without having to work at all.


                        • #13
                          From what I've seen the most important thing for a nano is fermentation space. If you skimp on fermenters you'll find yourself out of beer constantly and without beer you're out of business. If you're opening a nano buy lots of fermenters and lots of kegs.
                          Grind Modern Burger
                          PostModern Brewers
                          Boise, ID


                          • #14
                            Neighborhood brewery

                            I own a 3 bbl brewpub, and I market it as a neighborhood brewery. I operate mostly as a bar. I am keeping up on bills, but with Milwaukee winter in full swing, it has been pretty tough the past couple months. That is to be expected around here. I opened in September and rocked it real hard up until about thanksgiving when things slowed. My location is blessed with a ridicules amount of foot traffic, but very limited parking and that makes it tough right now. I am sized to be more of a corner bar feel than a typical brewpub. The space is very nice and people usually do a long "wooow" when they walk through the door for the first time. My capacity is 75 persons. I have a lot of bar experience, but not pro brewery experience.

                            Running a bar is something I knew a bit about going in, and lots of friends that are bar owners have helped me along the way. We do minimum food, but are surrounded by some of the best upscale casual food in the city. We have a diner un-rush around 6-9 pm, and that is something I expected knowing we would appeal to the before and after dinner crowd that the neighborhood already draws. We have a lot of people that casually drink a beer or two in an hour or two vs the typical Milwaukee bar where people have 8 or 10 drinks in a few hours. It is different than a typical bar. I have no issues with damage or drunks or anything like that, but I'm not selling pitchers or $2 tallboys or whatever. I have an upscale affluent clientele for the most part and I like that a lot even though the per person $$ is lower than a typical bar crowd.

                            I serve limited food that allows my bartenders to cook/serve from behind the bar without need for wait staff or cooks. Fresh prepped pizzas for the most part. You can make cold sandwiches and call yourself a restaurant if you want to!!! Don't be scared away from being a brewpub thinking you need to have a big menu. My pizzas are actually a big hit and we serve them until we close. I employ 1 full time, and 7 part time people in addition to myself. Mostly bartenders and that is cheap labor because they make most their money in tips. I put in about 50-60 hrs per week at the pub and usually work when I'm home as well. I am hyperfocused on the pub for obvious reasons so it isn't hard for me to keep at it. I try to spend an hour or two per day going around the pub and talking to the customers, and that is huge. People feel very speciald getting to know the owner/brewmaster.

                            I have no plans to distribute until I am ready for multiple locations. Even self distributing I'm not sure how people can make it with the cost of the tap handles and keeping track of the kegs, and then only being rotated occasionally on 1 of someones 50 tap lines! Are they cleaning those 50 lines? Are the distributors moving your product so it is fresh? Is the bar owner with 50 tap lines serving your beer 6 months old because they don't have the volume to sell 50 taps every few months? I never have any intention of distribution being my business focus because of all the competition out there, and the volume (and luck) required to make any real money. However I have intentions of multiple locations and the 2nd will have a much larger system than what the new pub requires. This will allow me to centralize production for the every day beers for the new and my current location and also as a means to approach new markets for a 3rd pub. Opening a brewpub in a town that is already seeing your beers at the bars around town is a pretty good way to break into a market. So I would distribute to a new market for a few months or a year to get my name out there then open one if my product is well received. I always look first at the $$$ when I look at distribution. My avg 3bbl batches are worth $3750 by the glass but only $720 by the keg. That is a really big difference when you are talking a nano scale capacity!! If the money is in the taproom for a nano, then why distribute?

                            Plastic fermentation tanks and lots of them. Minimize labor with your operation procedures and buildout design but spend it where you need it because you simply cant do it all yourself. At the end of the day, there isn't much more labor involved in making a 20 bbl batch than a 3 bbl batch. The advantage of a smaller system, in my case anyways, is I can keep fresh beer in rotation, and release a new beer every week. I have 10 taps, 4 stay the same and the other 6 rotate. I still have yet to have 10 of mine up, although I did have 8 taps and 2 firkins for NYE. I was really struggling to keep up with demand at first, but now that things slowed up I'm saving up for the next pallet of grain! It isn't easy!! Luckily I have about 30 kegs filled and 3 tanks ready to keg, so all is good. I'm going through about 6 kegs per week right now and that is about 2/3 of what I was doing in the fall. My biggest sellers are always the newest beer I release. I've only had 1 that stuck around for any period of time. I expect to be doing about 12 kegs per week once the weather breaks. If I sell more than that, I will be bringing in more tanks, another brite, and another brewer for the night shift.

                            So can you make money? As a distributing Nano, I would say no, unless you consider $30K for 80 hrs a week labor making money! I think the key is selling by the glass, and then if you have the right space and the right formula for that space you can, but ask me in 6 months and I will tell you if I am right. Most people seem to think I'm sitting on a gold mine, but time will tell.

                            D14 Brewery & Pub
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                            • #15
                              Keep your eye on the prize man!! Pray for spring!!!