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Average Costs per BBL for a Startup

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  • Average Costs per BBL for a Startup

    Guys,

    I'm finalizing my start-up spreadsheet for a 10bbl system, and I have a couple of ballpark questions to ask if people don't mind. Based on a whole bunch of factors, including ingredients, wages, insurance, utilities, rent, taxes and loans, I've figured out my average monthly expenses, estimating high when need be. I'm fairly firm on my monthly cost, but I'm not sure how much my income will be.

    I'm assuming 2 brews a week to start at 10 bbl, with a standard 3% spillage loss. Since I'm in Virginia, I need to be selling to a distributor, so my question is about how much should I charge for a half keg? I was assuming 100-120, depending on the cost of the beer to produce, with specialty brews going much higher (and most likely only selling in sixtels). Is this a fairly safe assumption?

    My other costs I've calculated (per month, or per bbl) are ~

    Utilities - 294 / month
    Rent - 2100 / month (small industrial space)
    Ingredients - 52.3 / bbl OR 4200 / month
    Taxes - 16 / bbl
    Loans - 3000 / month
    Salary - None (gonna eat it the first year)

    I have more information if anyone feels my assumptions are goofy, so if anyone could help me out that would be great.

    Thanks!

  • #2
    This might help as I am going through the same thing you are.
    With your fixed cost at what you provided your total each month, if you brew 8 times @10BBL each would be roughly 10,874. (Rough estimate). Cause you will probably have some unexpeted costs arise.

    Edited for bad math:

    10874 Fixed costs

    Assuming 80x31=2480/15.5= 160 half barrell kegs
    10874/160= BE point $67.
    Last edited by Tallybrewer; 07-25-2012, 10:41 PM.

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    • #3
      Tally -

      Assuming I sell 80 bbl / month at 100 / half keg, I was expecting gross revenue of ~16,000 / month. I should actually make more than that, with tap room sales. How did you get your numbers?

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      • #4
        my apologize. I just realized when I did the math I added one to many zeros and read your post wrong. It's been a long day.
        Fixed
        Last edited by Tallybrewer; 07-25-2012, 10:47 PM.

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        • #5
          utilities

          your utilities look really low to me. are you considering the power requirements other than brewing, like lights, HVAC, refrigeration, etc. I would be hard pressed to imagine a utility bill below $1,000 per month.

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          • #6
            Originally posted by ForgeBW
            Since I'm in Virginia, I need to be selling to a distributor, so my question is about how much should I charge for a half keg? I was assuming 100-120, depending on the cost of the beer to produce, with specialty brews going much higher (and most likely only selling in sixtels). Is this a fairly safe assumption?
            See if you can get a price sheet from a local distributor to see what other craft beers are selling for. Then, realize that those prices could be up to 30% more than what the brewery sold it to the distributor for. At least then you have a sense of what the competitive market is, and can try to determine a price from there.
            Kevin Shertz
            Chester River Brewing Company
            Chestertown, MD

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            • #7
              Originally posted by ForgeBW
              I'm assuming 2 brews a week to start at 10 bbl, with a standard 3% spillage loss.
              I'm no expert on this stuff, but your 3% spillage loss seems low to me. Is this a rule-of-thumb I'm not aware of?
              Kevin Shertz
              Chester River Brewing Company
              Chestertown, MD

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              • #8
                Chester - I've put in a call, but I've not had the best experience with distributors in the past. The spillage was a number I got from another brewer, but it could be low. I would rather assume higher, if someone has a better number.

                Gungadin - That's a good point. I had forgotten about stuff not related to brewing (I have brew process and fermentation) - its a smallish area, I figure I should be fairly accurate at 2 times that number? It would be lights, heating and cooling including the walk in. Mostly electrical.

                Tally - That makes a whole lot more sense. So basically, I need to determine my accepted margins. I should choose them based on giving salary, not without, so that when we make the switch all the accounts aren't mad...

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                • #9
                  FWIW, over the border in TN I think an $80 keg price from a brewery to a distributor ends up being a $140 wholesale to an account, which is the average price for a below 6% ABV craft keg in this market. There is a 17% wholesale tax in that number as well as distributor markup.

                  Here the distributor cleans lines automatically, a service that I think is worth a bunch if you figure the math for doing it on your own.

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                  • #10
                    Originally posted by ChesterBrew
                    I'm no expert on this stuff, but your 3% spillage loss seems low to me. Is this a rule-of-thumb I'm not aware of?
                    I used 10% which is what I recall someone telling me to use.
                    Little Deep Brewing Company
                    Minot, North Dakota
                    www.littledeepbrewing.com

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                    • #11
                      gungadin - wow, that is a huge tax. Don't get me wrong, having them clean the lines is nice, but 17% after excise taxes? That eats away at profits quickly - being a small brewer must be tough.

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                      • #12
                        Question, are you saying $294 per bbl for utilities? Are you using nat gas? electric to heat water/wort? Tap room size if any? how big of a walk in and of course how many bbl per month are you brewing? Even with all of that it's tough to say with a high degree of certainty what your utility usage will be but I think off the top of my head that $294 per bbl seems really high to me. I run 2 large coolers, a kitchen, 2000sq foot tap room, 15 tons of HVAC, tv's, lights, etc. etc. tap room is open 7 days 11am-midnight and busy every day. plus all the brewing and a BOP and my total utility last month (Electric, gas, water, sewer, trash removal) worked out to about $50 a bbl. The electric was the bulk of the utility cost and I can tell you without a doubt that the tap room uses way more electric than the brewery.
                        Luch Scremin
                        Engine 15 Brewing Co.
                        luch at engine15 dot com

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                        • #13
                          I agree with gungadin about the utilities Our brewery is 10 bbls and utilities for that production level would be about $1000. Yep, here in TN the 17% gets your attention.

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                          • #14
                            Originally posted by Luch15
                            I run 2 large coolers, a kitchen, 2000sq foot tap room, 15 tons of HVAC, tv's, lights, etc. etc. tap room is open 7 days 11am-midnight and busy every day. plus all the brewing and a BOP and my total utility last month (Electric, gas, water, sewer, trash removal) worked out to about $50 a bbl.
                            You should be spreading your utility costs over all products you sell if you cannot tie specific costs into specific processes.

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                            • #15
                              Forge BW-
                              looking at your posts I think you are underestimating your losses. You mention brewing twice a week on a 10Bbl system producing 80 Bbls of wort a week. You then mention selling 80 bbls a month. I don't know what your system is like but if you brew 80 Bbls of wort you are doing great on a 10 Bbl to get 8Bbl of sellable beer due to losses in the WP, Yeast, lines blowoff, Filter(if you filter) Etc.. Also 3% loss in taproom seem ambitious.

                              Best of luck
                              Todd Crowell
                              Head Brewer
                              Kettlehouse Brewing
                              Missoula, MT

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