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Opening a Nano with Future Expansion: Site Selection and Other Questions

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  • Opening a Nano with Future Expansion: Site Selection and Other Questions

    Background

    (Actual questions in bold below for those who don’t want to spend too much time reading background info.)

    I am looking to open up a 2-barrel nanobrewery within the next few years in a suburb outside of Chicago and, in the interim, am working to perform all the necessary diligence to that I’m ready (or as ready as I can be) when the time comes. I’ve read through all the nano posts that I can find here and elsewhere, and still have some preliminary questions.

    First, as background, I’d plan to start out around 2 barrels, likely with Blichmann equipment, and would be focused on saisons, lambic-style beers, and other wild/mixed fermentation beers. Given that, my focus from the start would be solely on retail bottles sales without any distribution. Assume for the sake of this post that there are no questions about quality and I would have plenty of capital from the start and would only be relying on sales to cover monthly expenses after sales began. Aside from the small brewhouse, given the nature of the beers being produced, fermentation would occur exclusively in oak barrels. Eventually, once production picked up a bit, I would begin with weekend hours, serving house beers as well as other commercial saisons, lambics, Flanders Reds/Browns, and the like.

    I have no direct experience at the professional level, though will be seeking at least volunteer opportunities prior to when I open up shop. My thought is that, at this stage, that wouldn’t be a hindrance given that I’d essentially be starting out with amped-up homebrew equipment on a very small scale, commercially speaking. Bottling at this volume would be doable with Blichmann Beer Guns, though of course a manual filler would be nice.

    I would like to open in a location that will allow for expansion in the future. The initial 2-barrel system would serve a few main functions for me. First, proof of concept and dedication. Before sinking a lot of money into this, I’d like to ensure that it’s something I like doing professionally and can dedicate myself toward. Second, and somewhat-relatedly, time constraints. Before proceeding full speed ahead (at which point I would personally begin to work part time at my current job and potentially hire another brewer), I don’t have time to brew multiple times per week, distribute, etc. However, I would like to be prepared for expansion.

    Questions

    Space. Since I would like to be able to initially locate a space that would allow for a 7-15 bbl system, I’d be going with a space that would have plenty of square footage for such a system. Based on the information available on Specific Mechanical’s website and other sources, I’d also ensure from the start that the building would have the requisite electric, water, and similar capabilities. While the plan from the start is very basic, I don’t want to put myself in a poor position for future expansion.

    For budgeting/planning purposes, are there certain things that would be used in a larger system that would be too difficult to install later and should come in from the start? Floor drains for the entire space, not just the small area that the nano system would take up? Large cold room (initial would be small given focus on bottle sales)? Something else I’m not thinking of? I’ve also thought about starting up further out away from Chicago in a more-rural area and building a space from scratch. Would this be significantly easier than a modifying an existing space in an urban area assuming water and the proper utilities were available?

    Outside Help. From the beginning, I of course expect that I would need a real estate agent and an attorney to get things started. Given my lack of professional experience, would an architect and/or brewery consultant be wise to have from the start? Or is that really only an issue when putting in a bigger system? Once the bigger system would be going into place, I would determine whether I’d have the time/ability to continue to brew on my own, or whether I’d need to bring in an experienced brewer with a shared vision.

    Thanks in advance.

    Cheers,

    Mike
    - Ambrosia Ales

  • #2
    Hey Mike.. So Im finishing process that you say you are beginning and here is my 2 cents.

    As far as expansion.. When we looked we not only looked at the square footage but the HIGHT OF THE CEILINGS!!
    You can't raise the roof for a 7/10/30 BBL fermentor. I have a friend who was limited form 1 to 5 and not to 7 or 10 because of the hight of his ceiling. Another thing I looked at was my building.. Mine is not a free standing and it is in a strip of a few industrial buildings. I know that if I am going to expand I could go left and right if those buildings moved or went out of business.

    I don't think you need an architect to start. You will walk into a place and know it is the spot for you. And use this website as your consultant to start.. There hasn't been one thing I needed answered or advice I needed that I couldn't get here.

    And as far as modifying space.. Pluming is very expensive. So the ease in which you can get to a sewer main is pretty important. Next would be gas. Make sure that you have a link to NG.

    Bottle sales will be good but try to fit a tasting room in there. Tap Room is KING!!

    Good Luck

    Comment


    • #3
      Originally posted by DUB Co View Post
      Hey Mike.. So Im finishing process that you say you are beginning and here is my 2 cents.

      As far as expansion.. When we looked we not only looked at the square footage but the HIGHT OF THE CEILINGS!!
      You can't raise the roof for a 7/10/30 BBL fermentor. I have a friend who was limited form 1 to 5 and not to 7 or 10 because of the hight of his ceiling. Another thing I looked at was my building.. Mine is not a free standing and it is in a strip of a few industrial buildings. I know that if I am going to expand I could go left and right if those buildings moved or went out of business.

      I don't think you need an architect to start. You will walk into a place and know it is the spot for you. And use this website as your consultant to start.. There hasn't been one thing I needed answered or advice I needed that I couldn't get here.

      And as far as modifying space.. Pluming is very expensive. So the ease in which you can get to a sewer main is pretty important. Next would be gas. Make sure that you have a link to NG.

      Bottle sales will be good but try to fit a tasting room in there. Tap Room is KING!!

      Good Luck
      Thanks for the reply. The height of the ceilings is definitely something I will keep in mind. The information on Specific Mechanical's website mentions 12-14' ceilings, so I would want at least that. I don't think this is something that would ever go beyond a 15 bbl system, so I'd ensure that the ceilings would be big enough to eventually fit some 30 bbl fermentors.

      Great to know that I wouldn't necessarily need to hire any consultants or architects from the start, but could plan to have that option available if need be. At the very least, I plan to ask local breweries for recommendations (since I'll likely also be asking for recommendations for someone to help me find a good space). Thanks for the pointer on the main sewer line. I'll definitely have NG as well.

      The plan is to have a tap room as soon as I'm able to have enough of my own beer to consistently have several on tap and others in bottles, supplementing with other commercial beers. I'm not concerned with a paycheck or profit during the initial stages, so the tap room isn't as big of a concern, but definitely something that I'm planning for.

      Best of luck with your project!

      Comment


      • #4
        Originally posted by ambrosiaales View Post
        Background

        For budgeting/planning purposes, are there certain things that would be used in a larger system that would be too difficult to install later and should come in from the start? Floor drains for the entire space, not just the small area that the nano system would take up? Large cold room (initial would be small given focus on bottle sales)? Something else I’m not thinking of? I’ve also thought about starting up further out away from Chicago in a more-rural area and building a space from scratch. Would this be significantly easier than a modifying an existing space in an urban area assuming water and the proper utilities were available?
        Some of the larger equipment (glycol chiller, cold room, brewhouse, the bar itself) may effectively 'box in' your space. We brought in our brewhouse before we installed the cold room, now it's trapped. We left an opening to get more fermenters in, but it's a tight fit. You don't want to move big things again if you don't have to. Similarly, it's a lot harder to redo the floors once everything is in place. Certainly put in a trench drain, ideally a coating of some kind. Replacing things later on is fine, but remember you'll incur additional plumbing and electrical costs.

        Don't open a brewery on septic. Just don't.

        Keep in mind that it's nice to plan for expansion, but either you pay rent on wasted space, or you sit waiting and hoping that the business next door will finally GTFO so you can take it over because you needed to expand, like, yesterday. Either way you should account for that.

        Originally posted by ambrosiaales View Post

        Outside Help. From the beginning, I of course expect that I would need a real estate agent and an attorney to get things started. Given my lack of professional experience, would an architect and/or brewery consultant be wise to have from the start? Or is that really only an issue when putting in a bigger system? Once the bigger system would be going into place, I would determine whether I’d have the time/ability to continue to brew on my own, or whether I’d need to bring in an experienced brewer with a shared vision.
        You'll want an attorney, and presumably a commercial real estate agent. I'd hire some consulting at least, or a skilled brewer.

        You will not have the time or ability to brew and run a 15bbl by your lonesome, even if you had prior experience at it. You'll find it hard to run both the business and the two barrel system. Hire someone who knows what they're doing and get them brewing while you pay bills, answer endless phone calls, go to meetings, make sales calls and run the hundred other errands every day that comes with being an Owner. Hire someone who knows what they're doing to help layout the place. There's a million little details that you don't think about in a layout. Where are the hoses: hot, cold, both, and why? What about power outlets? Is this piping going to be in the way? Process flow; how's the malt getting in and out as easily as possible? Will a pallet of bottles fit through that door? Where are both empty and full kegs, bottles, barrels, etc all going to live? Where's your pallet jack, stacker, or whatever living? Ergonomics; can you even reach that valve back there? You'll never make it perfect, but you can try to make it not hugely inconvenient and rearrange things as you go on.

        Two thoughts on barrel and wild beers. First, good deal, those beers are still kinda rare and special. Often for a good reason though. Run your cash flow analysis carefully, because beer sitting for three years in barrels isn't making you any money. And the power company won't take lambic futures in payment. (Sadly!) I like our sour program beers, they're sexy and fun to make. But they make up like 1% of our business.

        Second, bottling. I am a big fan of numbers and thought experiments, back of the napkin style. So here we go. On a 2 bbl, brewing once a week at most (as you stated) you're looking at say 100bbls a year (it'll be less, but we'll leave waste out for now). If you want to bottle all of it, you're looking at 3100 gallons of beer. Presumably you're bottling in 750s or 22s or something of that size, so we're looking at annually, about 18,000 22's. Charitably giving say an average of 3 minutes a bottle to unpack, label, sani, fill with a single beer gun, cap, rinse, repack, and store, you're looking at 900 hours of bottling over a year. Something on the order of 18 hours a week spent bottling, average. So you can see, probably not a good way to go all by your self. So I'd look at getting a four or six head wine filler and bottle condition things, for example.

        Further, retail only bottles. Ok, let's assume you're popular and people will go all the way out to buy your beer on site. Open say 5 days a week, say 30 hours total. That's 1560 hours a year spent open. Thus 18k bottles means that an average of 11.5 bottles, or basically, a case of bottles, have to be sold, every hour, of every day you're open.

        Just some things to think about. Sometimes it seems like the amount of logistics involved in a brewery is exponentially related to the brewhouse size. From "I can pick up and stack those cases." to "We use robots for that now." But things still have to get from A to B.
        Russell Everett
        Co-Founder / Head Brewer
        Bainbridge Island Brewing
        Bainbridge Island, WA

        Comment


        • #5
          Originally posted by Bainbridge View Post
          Some of the larger equipment (glycol chiller, cold room, brewhouse, the bar itself) may effectively 'box in' your space. We brought in our brewhouse before we installed the cold room, now it's trapped. We left an opening to get more fermenters in, but it's a tight fit. You don't want to move big things again if you don't have to. Similarly, it's a lot harder to redo the floors once everything is in place. Certainly put in a trench drain, ideally a coating of some kind. Replacing things later on is fine, but remember you'll incur additional plumbing and electrical costs.

          Don't open a brewery on septic. Just don't.

          Keep in mind that it's nice to plan for expansion, but either you pay rent on wasted space, or you sit waiting and hoping that the business next door will finally GTFO so you can take it over because you needed to expand, like, yesterday. Either way you should account for that.

          Thanks, definitely all very helpful. The floors were what really came to mind since re-doing those in the future would necessitate moving plenty of things. I'll have full trench drains and floor coatings as things that would be really beneficial from the start.


          Originally posted by Bainbridge View Post
          You'll want an attorney, and presumably a commercial real estate agent. I'd hire some consulting at least, or a skilled brewer.

          You will not have the time or ability to brew and run a 15bbl by your lonesome, even if you had prior experience at it. You'll find it hard to run both the business and the two barrel system. Hire someone who knows what they're doing and get them brewing while you pay bills, answer endless phone calls, go to meetings, make sales calls and run the hundred other errands every day that comes with being an Owner. Hire someone who knows what they're doing to help layout the place. There's a million little details that you don't think about in a layout. Where are the hoses: hot, cold, both, and why? What about power outlets? Is this piping going to be in the way? Process flow; how's the malt getting in and out as easily as possible? Will a pallet of bottles fit through that door? Where are both empty and full kegs, bottles, barrels, etc all going to live? Where's your pallet jack, stacker, or whatever living? Ergonomics; can you even reach that valve back there? You'll never make it perfect, but you can try to make it not hugely inconvenient and rearrange things as you go on.

          Two thoughts on barrel and wild beers. First, good deal, those beers are still kinda rare and special. Often for a good reason though. Run your cash flow analysis carefully, because beer sitting for three years in barrels isn't making you any money. And the power company won't take lambic futures in payment. (Sadly!) I like our sour program beers, they're sexy and fun to make. But they make up like 1% of our business.

          Second, bottling. I am a big fan of numbers and thought experiments, back of the napkin style. So here we go. On a 2 bbl, brewing once a week at most (as you stated) you're looking at say 100bbls a year (it'll be less, but we'll leave waste out for now). If you want to bottle all of it, you're looking at 3100 gallons of beer. Presumably you're bottling in 750s or 22s or something of that size, so we're looking at annually, about 18,000 22's. Charitably giving say an average of 3 minutes a bottle to unpack, label, sani, fill with a single beer gun, cap, rinse, repack, and store, you're looking at 900 hours of bottling over a year. Something on the order of 18 hours a week spent bottling, average. So you can see, probably not a good way to go all by your self. So I'd look at getting a four or six head wine filler and bottle condition things, for example.

          Further, retail only bottles. Ok, let's assume you're popular and people will go all the way out to buy your beer on site. Open say 5 days a week, say 30 hours total. That's 1560 hours a year spent open. Thus 18k bottles means that an average of 11.5 bottles, or basically, a case of bottles, have to be sold, every hour, of every day you're open.

          Just some things to think about. Sometimes it seems like the amount of logistics involved in a brewery is exponentially related to the brewhouse size. From "I can pick up and stack those cases." to "We use robots for that now." But things still have to get from A to B.
          For eventual expansion to 7-15 bbl, that would definitely involve plenty of help. From the start, that would mean hiring a friend who has spent his career working in the industry to do a lot of the business aspects of the brewery, especially since that level would mean distribution, and he has plenty of experience there. It would also be another brewer, at least on a part-time basis. Even with a 7 bbl brewery, I don't think the initial goal would be much beyond a few hundred barrels annually.

          For the initial 2 bbl, I think more realistic is 1-2 batches per month, topping out under 50 barrels in the first year. Bottling would be done in 750mL bottles. Weekends would probably alternate between brewing and bottling. From the start, accounting and financial aspects (no distribution at all) would be run by a family member who currently does that for a living part-time and would be heavily involved.

          On barrel and wild beers, I should have provided a bit more detail. Those would certainly be in the picture, but mainstay beers would be primary fermented in oak with saison yeast and Brett, following a 3-4 week fermentation schedule, so the timeline would be much shorter than for sour beers. I have been a bit worried about bottling times if friends/family aren't helping with additional Beer Guns or using a manual fill system, so would likely end up being at least some kegs from the beginning as well. Open hours would be limited to start, something along the lines of Friday nights and then Saturday and Sunday afternoons.

          I think this would be doable on the 2 bbl scale for the initial period with a part-time "real job" schedule, and then would think long and hard about how many people to hire during and after expansion. But I am most definitely interested in people's thoughts if I'm crazy thinking that I could brew and sell 25-50 barrels per year working weekends and some nights with frequent help from several friends and family. members.

          Comment


          • #6
            Originally posted by ambrosiaales View Post
            Thanks, definitely all very helpful. The floors were what really came to mind since re-doing those in the future would necessitate moving plenty of things. I'll have full trench drains and floor coatings as things that would be really beneficial from the start.




            For eventual expansion to 7-15 bbl, that would definitely involve plenty of help. From the start, that would mean hiring a friend who has spent his career working in the industry to do a lot of the business aspects of the brewery, especially since that level would mean distribution, and he has plenty of experience there. It would also be another brewer, at least on a part-time basis. Even with a 7 bbl brewery, I don't think the initial goal would be much beyond a few hundred barrels annually.

            For the initial 2 bbl, I think more realistic is 1-2 batches per month, topping out under 50 barrels in the first year. Bottling would be done in 750mL bottles. Weekends would probably alternate between brewing and bottling. From the start, accounting and financial aspects (no distribution at all) would be run by a family member who currently does that for a living part-time and would be heavily involved.

            On barrel and wild beers, I should have provided a bit more detail. Those would certainly be in the picture, but mainstay beers would be primary fermented in oak with saison yeast and Brett, following a 3-4 week fermentation schedule, so the timeline would be much shorter than for sour beers. I have been a bit worried about bottling times if friends/family aren't helping with additional Beer Guns or using a manual fill system, so would likely end up being at least some kegs from the beginning as well. Open hours would be limited to start, something along the lines of Friday nights and then Saturday and Sunday afternoons.

            I think this would be doable on the 2 bbl scale for the initial period with a part-time "real job" schedule, and then would think long and hard about how many people to hire during and after expansion. But I am most definitely interested in people's thoughts if I'm crazy thinking that I could brew and sell 25-50 barrels per year working weekends and some nights with frequent help from several friends and family. members.
            This looks like a job for Johnny Max's $275 4-head bottle filler.

            Comment


            • #7
              Sorry but I have to ask. Do you need to get paid in this venture? As someone who's spent years in the business on all sides (retail, restaurant/bar and now production) brewing 2 bbl batches twice a month and offering up bottles for sale is a risky venture. Brewing that 2 bbl twice a month takes the same amount of time as dong 15 bbl so you might as well invest in the bigger system up front and save yourself the frustration of having to do things on the small scale for little to no money constantly.

              You at least need a tasting room. People are extremely reluctant to shell out $20+ on a beer they don't have the opportunity to taste first.
              Owner
              Grind Modern Burger
              PostModern Brewers
              Boise, ID

              Comment


              • #8
                Originally posted by Brewtopian View Post
                Sorry but I have to ask. Do you need to get paid in this venture? As someone who's spent years in the business on all sides (retail, restaurant/bar and now production) brewing 2 bbl batches twice a month and offering up bottles for sale is a risky venture. Brewing that 2 bbl twice a month takes the same amount of time as dong 15 bbl so you might as well invest in the bigger system up front and save yourself the frustration of having to do things on the small scale for little to no money constantly.

                You at least need a tasting room. People are extremely reluctant to shell out $20+ on a beer they don't have the opportunity to taste first.
                There'd be on expectation or need for me to get paid or make a profit from the start. The fixed costs at start-up would be sunk and would only hope that the initial nano would meet operating costs, eventually turning small monthly/quarterly surpluses such that it would pay back the initial investment. However, that would just be a bonus, as the initial smaller venture would be proof of concept for myself. With the quality and relationships I have around the area, I don't think it's a terribly risky venture with retail sales selling around $12 per 750mL bottle. From there, once things were established, I would expand within the initial building, using the nano system for future pilot batches. I would also then hire an additional brewer for increased production and a friend with plenty of industry experience (same as you, retail/distribution/sales) to do a lot of the business work alongside me.

                A tasting room is definitely within the initial plans. Ideally it would be ready with limited hours from the start, but might be pushed back until there was enough beer in storage to have a steady supply given the production volume and type of beer being produced. "Open hours" would really depend on how successful initial bottle sales are.

                Based on the research I've done and numbers I've run, I don't think it's unreasonable to expect such a place to be able to break even or at least incur only small losses given that there would not be any employee costs and the place wouldn't be expected to turn a profit. It would be nice to fund some of expansion with profits from the nano, but that wouldn't be strictly necessary.

                Now, if this all sounds way off base given these assumptions, I would love to hear major issues to expect and how I might be way off kilter.

                Comment


                • #9
                  What it comes down to is what your expectations are. Depending on how much fermentation space you have running a 2bbl system is a lot of work if you hope to come close to breaking even. If the goal is to have bottles on retailer shelves at $12 then your price to them is between $5 and $8. A batch of beer sold to retailers is going to yield about $1000 gross at best. With barrel aging you have the problem and expense of barrels as well as the time between batches that increase cost.

                  I'm not trying to talk you out of this just want you to consider how hard you want to work for minimal return. If this is proof of concept with the hope of attracting investment to be able to expand you've got to be prepared for the possibility that the time it takes you to prove the concept will be greater than your willingness to work for free or at a loss.

                  I don't have kids and I'm a workaholic so I'm ok with working 80 hours a week but most people aren't.
                  Owner
                  Grind Modern Burger
                  PostModern Brewers
                  Boise, ID

                  Comment


                  • #10
                    Originally posted by Brewtopian View Post
                    What it comes down to is what your expectations are. Depending on how much fermentation space you have running a 2bbl system is a lot of work if you hope to come close to breaking even. If the goal is to have bottles on retailer shelves at $12 then your price to them is between $5 and $8. A batch of beer sold to retailers is going to yield about $1000 gross at best. With barrel aging you have the problem and expense of barrels as well as the time between batches that increase cost.

                    I'm not trying to talk you out of this just want you to consider how hard you want to work for minimal return. If this is proof of concept with the hope of attracting investment to be able to expand you've got to be prepared for the possibility that the time it takes you to prove the concept will be greater than your willingness to work for free or at a loss.

                    I don't have kids and I'm a workaholic so I'm ok with working 80 hours a week but most people aren't.
                    All bottles would be retail through the "ta room," so would take full price. With no taproom initially, I meant no regular hours. Would still sell from the brewery when things were ready and at least have samples on draft.

                    On the barrels, I would consider those an asset rather than a cost given how cheaply they would come xompared to stainless conicals, and the beers wouldn't be taking much longer. Would then likely blend in a stainless tank and get over to a manual filler and bottle condition.

                    I don't mind the work as it would mostly be weekends from the start with some after work. The brewer would be less than a mile from my house, so commuting would be very light.

                    The proof of concept would be solely for me, as I would likely be financing the expansion myself, so it would really be about whether I wanted to take it to the next level, getting bigger and hiring a few full-time employees. That's still an option from the start (I'm exploring and pricing both options), but would prefer the nano route from the start if possible.

                    Comment


                    • #11
                      Originally posted by ambrosiaales View Post
                      The fixed costs at start-up would be sunk and would only hope that the initial nano would meet operating costs, eventually turning small monthly/quarterly surpluses such that it would pay back the initial investment.
                      Depreciation is an operating expense, so I'm not sure what you're talking about here. Depreciation is a means of cost allocation. "Depreciation is the accounting process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset."

                      Originally posted by ambrosiaales View Post
                      On the barrels, I would consider those an asset rather than a cost given how cheaply they would come xompared to stainless conicals, and the beers wouldn't be taking much longer.
                      Three or four weeks is a really long time for a fermentation schedule. That's worse than the economics of lager production.

                      Originally posted by ambrosiaales View Post
                      The proof of concept would be solely for me, as I would likely be financing the expansion myself, so it would really be about whether I wanted to take it to the next level, getting bigger and hiring a few full-time employees.
                      I've heard a lot of people talk about opening a nano as a "proof of concept" but I'm not sure what you're trying to prove. Do you want to prove you can make a minuscule amount of beer without making a profit? The only nanos I've seen that have "made a profit" only did so by ignoring some portion of their costs.

                      If you're serious about operating a brewery, set yourself up for success, not failure. Size the brewhouse to where you can actually make a real profit, in the standard way that's calculated. Spreading yourself too thin and making too little beer is a recipe for disaster.

                      Comment


                      • #12
                        Been there. Done it.

                        We started Kereru Brewing Co under our house in a 450sf space which we converted to a commercial kitchen for the purposes of trialing our brand and determining if it would be worth the expense of growing the business to a more serious venture. We began as a 1/4bbl nano that quickly turned into a 1bbl nano operation. I hand bottled and kegged into sixtels (20L kegs in local parlance) and it was a lot of work. I had no temperature control to speak of.

                        Unless you have the financing in place to start thinking about renting a much larger shell which you can fit a few basic fittings in to brew while you look for funding and your market I would suggest that you commit as little capital as possible to plant that will likely need to be replaced later. Or at least don't buy it new as you will be potentially looking to on-sell your undersized gear for pennies on the dollar.

                        It was a pure marketing exercise to brew 1bbl batches. Every dime earned went back into the business and nothing was taken out. Not wages or anything. And the unit cost on our beer was very high. As a tiny and hard to get brand we had good demand and a handful of outlets were able to take everything we could make. It was great and offered good confidence on moving forward.

                        The costs of scaling up were huge. And even if you find the right space with high ceilings when you triple the load on your cooling plant and start upscaling pumps and pipe diameters you enter a realm where things do not scale linearly. Tanks and brew kit scale just fine with a nice reducing curve in terms of $/BBL. Infrastructure is the reverse. Instead of inverse cube curves you get exponential curves and a 4" glycol pump is 4x the cost of a 2" pump. Same on electrical. It is a religious experience to spend the money required to fit out a 2,625/BBL per annum brewery.

                        And then there are wages for staff. Insurance. Utilities. Taxes. Think really hard about this decision before you leap as it is a very significant commitment.

                        In light of Russell's (Bainbridge) comments: I filled 14,000 12oz bottles in 18 months with a beer-gun and my awesome wife stuck labels on them. It was a massive undertaking. We did not bottle condition and shelf-life suffered for this because of DO. Even on the 4-head wine filler we used as an interim filler it was heaps of work and DO was still an issue. Today we can package with <50PPB TPDO, but this has only been possible after spending many, many dollars.
                        Regards,
                        Chris Mills

                        Kereru Brewing Company
                        http://kererubrewing.co.nz

                        Comment


                        • #13
                          Originally posted by kererubrewing View Post
                          It was a pure marketing exercise to brew 1bbl batches. Every dime earned went back into the business and nothing was taken out. Not wages or anything. And the unit cost on our beer was very high. As a tiny and hard to get brand we had good demand and a handful of outlets were able to take everything we could make. It was great and offered good confidence on moving forward.
                          Why not contract brew if the nano was just for marketing reasons?

                          Crooked Stave here in Denver does a lot of weird/wild beers, and they started out contract brewing at Funkwerks and later at Prost. I think they got their own brewery maybe two years ago.
                          Last edited by nateo; 01-24-2015, 06:54 PM.

                          Comment


                          • #14
                            Originally posted by nateo View Post
                            Depreciation is an operating expense, so I'm not sure what you're talking about here. Depreciation is a means of cost allocation. "Depreciation is the accounting process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset."
                            Sunk cost. The equipment will be 100% paid for up front, and I'm okay considering that a loss from the start. I'm then happy if revenues come close to meeting the ongoing costs of rent/mortgage, ingredients, utilities, etc.


                            Originally posted by nateo View Post
                            Three or four weeks is a really long time for a fermentation schedule. That's worse than the economics of lager production.
                            That's why beers like this sell for $10+ per 750mL bottle instead of $9.99 for a six pack. Tanks aren't tied up and oak barrels are insanely cheap in comparison. The economics are much better than that of a lager that'll go into six packs.

                            Originally posted by nateo View Post
                            I've heard a lot of people talk about opening a nano as a "proof of concept" but I'm not sure what you're trying to prove. Do you want to prove you can make a minuscule amount of beer without making a profit? The only nanos I've seen that have "made a profit" only did so by ignoring some portion of their costs.

                            If you're serious about operating a brewery, set yourself up for success, not failure. Size the brewhouse to where you can actually make a real profit, in the standard way that's calculated. Spreading yourself too thin and making too little beer is a recipe for disaster.
                            It makes a lot of sense if someone wants to start out on a smaller budget and not sink tons of money (personal, loans, and/or investor money) into a larger brewery without first putting their feet in the water. I would much rather spend $50,000 on a small-scale nano operation and then call it quits than twenty times that on a larger system and have it not work out.

                            As I've stated several times above, I'm not interested in this making a profit or even paying for any labor. If you want to call that ignoring costs, fine. I call that doing more of something I'm already doing on a larger scale where I have more production options, increase variability in recipes, and the ability to share my beer with the public.

                            If the nano model was such a recipe for disaster, there wouldn't be so many success stories out there. Maybe it's not the long-term answer for most, but so long as you realize that going in, I don't see where there's an issue.

                            EDIT: It's also helpful that the equipment isn't then simply lost. Having a 2 bbl system would be quite useful after expansion for recipe development, trying out unique/expensive ingredients, etc.
                            Last edited by ambrosiaales; 01-24-2015, 06:58 PM.

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                            • #15
                              Originally posted by kererubrewing View Post
                              We started Kereru Brewing Co under our house in a 450sf space which we converted to a commercial kitchen for the purposes of trialing our brand and determining if it would be worth the expense of growing the business to a more serious venture. We began as a 1/4bbl nano that quickly turned into a 1bbl nano operation. I hand bottled and kegged into sixtels (20L kegs in local parlance) and it was a lot of work. I had no temperature control to speak of.

                              Unless you have the financing in place to start thinking about renting a much larger shell which you can fit a few basic fittings in to brew while you look for funding and your market I would suggest that you commit as little capital as possible to plant that will likely need to be replaced later. Or at least don't buy it new as you will be potentially looking to on-sell your undersized gear for pennies on the dollar.

                              It was a pure marketing exercise to brew 1bbl batches. Every dime earned went back into the business and nothing was taken out. Not wages or anything. And the unit cost on our beer was very high. As a tiny and hard to get brand we had good demand and a handful of outlets were able to take everything we could make. It was great and offered good confidence on moving forward.

                              The costs of scaling up were huge. And even if you find the right space with high ceilings when you triple the load on your cooling plant and start upscaling pumps and pipe diameters you enter a realm where things do not scale linearly. Tanks and brew kit scale just fine with a nice reducing curve in terms of $/BBL. Infrastructure is the reverse. Instead of inverse cube curves you get exponential curves and a 4" glycol pump is 4x the cost of a 2" pump. Same on electrical. It is a religious experience to spend the money required to fit out a 2,625/BBL per annum brewery.

                              And then there are wages for staff. Insurance. Utilities. Taxes. Think really hard about this decision before you leap as it is a very significant commitment.

                              In light of Russell's (Bainbridge) comments: I filled 14,000 12oz bottles in 18 months with a beer-gun and my awesome wife stuck labels on them. It was a massive undertaking. We did not bottle condition and shelf-life suffered for this because of DO. Even on the 4-head wine filler we used as an interim filler it was heaps of work and DO was still an issue. Today we can package with <50PPB TPDO, but this has only been possible after spending many, many dollars.
                              Thanks very much. This is very helpful. Best of luck in the future!

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