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Nano Brewery - Is This Opportunity Viable?

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  • Nano Brewery - Is This Opportunity Viable?

    Hey everyone,

    I wanted to share with you all in the project details and involve you in some feedback regarding a nano brewery we're almost finished building out. I've read many articles and forums against commercial nano brewing (it's clear the numbers just aren't there), but I've also talked with a number of breweries who fit in this category and they're happy with the organic growth they've accomplished. Our opportunity exists in a VERY small market, and we're leaning towards a 2BBL system for numerous reasons. Here are some of the details regarding the prospective town and our status in a few areas:

    - Population: Under 2,000 (city) / Under 50,000 (county)
    - Number of breweries in this scope: 0
    - Building Status: Turn Key (cosmetic construction only)
    - Monthly Building Lease: $800
    - Number of bars in this scope: 40
    - 1st Annual Production Forecast: 200-300 BBLs
    - Owner / Employee Structure: 2 Owners / 1 FT Employee
    - Total Equipment Cost: $35,000

    It's a lot I know, but our decision to test market viability with a considerably low investment and small system is where we're finding the best opportunity.

    Wanted to gather your thoughts and feedback regarding the viability of this general plan and approach.

    Thanks!

  • #2
    Originally posted by leroybrown View Post
    Hey everyone,

    I wanted to share with you all in the project details and involve you in some feedback regarding a nano brewery we're almost finished building out. I've read many articles and forums against commercial nano brewing (it's clear the numbers just aren't there), but I've also talked with a number of breweries who fit in this category and they're happy with the organic growth they've accomplished. Our opportunity exists in a VERY small market, and we're leaning towards a 2BBL system for numerous reasons. Here are some of the details regarding the prospective town and our status in a few areas:

    - Population: Under 2,000 (city) / Under 50,000 (county)
    - Number of breweries in this scope: 0
    - Building Status: Turn Key (cosmetic construction only)
    - Monthly Building Lease: $800
    - Number of bars in this scope: 40
    - 1st Annual Production Forecast: 200-300 BBLs
    - Owner / Employee Structure: 2 Owners / 1 FT Employee
    - Total Equipment Cost: $35,000

    It's a lot I know, but our decision to test market viability with a considerably low investment and small system is where we're finding the best opportunity.

    Wanted to gather your thoughts and feedback regarding the viability of this general plan and approach.

    Thanks!
    I would not recommend going smaller than a 5bbl system if you're getting into off-premises distribution. Will your zoning and state license allow you to have a tasting room?
    Kevin Shertz
    Chester River Brewing Company
    Chestertown, MD

    Comment


    • #3
      I also don't recommend going any smaller then a 5 bbl you need at least that to make the amount need to keep a good distribution of kegs and tap room draft on
      also the full time employee what job would they have. if a brewing position 2 bbl even a 5 bbl will barley pay for one person to work full time unless your getting high dollar for your brews
      iv been through it trust me
      hope this helps matt

      Comment


      • #4
        Originally posted by ChesterBrew View Post
        I would not recommend going smaller than a 5bbl system if you're getting into off-premises distribution. Will your zoning and state license allow you to have a tasting room?
        We will have a taproom where we hope to derive most of our sales. The initial plan is to open our taproom only, focusing on pints and glowers, then working organically to grow our self-distributed network of bars and restaurants. I also forgot to mention that we have a six month swell of seasonal population grown (anywhere from 8 - 10x) - we plan to maintain a very busy taproom during these months then focus on distribution in slower times.

        Comment


        • #5
          Originally posted by 3guysandabeerd View Post
          I also don't recommend going any smaller then a 5 bbl you need at least that to make the amount need to keep a good distribution of kegs and tap room draft on
          also the full time employee what job would they have. if a brewing position 2 bbl even a 5 bbl will barley pay for one person to work full time unless your getting high dollar for your brews
          iv been through it trust me
          hope this helps matt
          Our full-time employee (me) would be brewing and handling the operations and growth of the business. As for serving, the plan initially is to sell onsite only and slowly distribute our products to nearby bars and restaurants once we understand and build a strong brand. I know it's a lot of moving parts, but we just don't understand the market enough to justify a larger system. Maybe around year two, but definitely not now. Per my comment about as well, we do experience a 8-12x population swell for six months of the year. This will give us a steady flow of customers during that month, reducing our need for distribution.

          Comment


          • #6
            Do the bars you plan on distributing in experience the same stretch of slow months? If so, I wouldn't expect them to go through much beer either. On a nano system, the margins on distributed kegs are pretty terrible - they are essentially sold as a marketing cost to get people to come to the tap room.
            Troy Robinson
            Quirk Brewing
            Walla Walla

            Comment


            • #7
              The cost difference between 2 and 5 isn't that much more and if it is a cost deal breaker; sorry to say, then you don't have enough capitol to start a proper brewery.

              In a 2 barrel system you have to brew every 1.68 working days a year to meet 300bbl . That's too much brewing for a place where you will be too multi roled at that size. A 5 barrel your looking at brewing once a week allowing you to focus on quality and growing the business.

              Comment


              • #8
                Originally posted by leroybrown View Post
                Per my comment about as well, we do experience a 8-12x population swell for six months of the year. This will give us a steady flow of customers during that month, reducing our need for distribution.
                Just my opinion - if you're not able to provide accounts with a reliable stream of beer year-round, they'll drop you quickly, since they'll be experiencing that same 8-12x influx into their establishments.
                Kevin Shertz
                Chester River Brewing Company
                Chestertown, MD

                Comment


                • #9
                  We started just over 2 months ago with a 1.5 bbl brewhouse and oversized fermenters (3 bbl). We just about sold out the first weekend and we are only open Friday and Saturday still since we are afraid to run out of beer. So essentially we outgrew a 1.5 bbl system in two months.

                  The obvious direction is to buy more equipment, but with the little beer we can make we are limited cash wise so it will be a slow growth. We are paying the bills we re-invest everything and we are doing fine with a great following so far but it is an uphill battle. If you have a reserve of cash and can increase capacity at any given time then I can see where the proof of concept will work. If you hope to grow organically just be aware it will take time.

                  If you do go with the smaller system I would suggest you buy as many fermenters as possible. That way you can brew every two days or whatever you need to do to keep up.

                  Just my 2 cents, believe the "hype" that everyone says. Haha, it is still a ton of fun.

                  Comment


                  • #10
                    Originally posted by leroybrown View Post
                    Our full-time employee (me) would be brewing and handling the operations and growth of the business.
                    So that's 3 things. In my experience, you'll probably be able to do 2 of them well while the 3rd will suffer. Your production forecast for year one seems fine, and it'll be a lot of fun, but try doubling that in year 2 and all of a sudden you're brewing constantly. Since nanos live and die on tasting room traffic I can tell you from experience it's distribution and business growth which will suffer. I grew a 1.5bbl up to a 7 in a little over 3 years. Over those years I spent way too much time making beer and taking care of the tasting room when I should have been out selling beer and building the brand. Pretzels, glass ware, cleaning the taps, repairing the toilet, raking the gravel in the beer garden, painting and fixing the picnic tables, running to get propane for the fire pits, getting co2...ect. All the things a tasting room manager should have been doing while I made projections and built my local Rolodex. So yeah, you're making 3 jobs for yourself. Pick 2 and do them well or you'll end up half-assing it.

                    Building status is turnkey? Does this mean that there was a brewery there before? So cold room and trench drains are included?

                    Comment


                    • #11
                      I think your annual production numbers will probably fall closer to 200 bbls. I have a nano-brewery with a 2 bbl system. It is doing very well, and i do work my ass off. The key is taproom sales, and getting asses into seats. Don't bother with distribution with this volume- you will be making no money for a ton of work. if you have some questions pm me and i can share with you what i have learned via a phone call.
                      cheers,
                      Mike

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