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Thread: Start-up Questions - How big should we buy?

  1. #1
    Join Date
    Feb 2019
    Location
    Jindo, South Korea
    Posts
    2

    Start-up Questions - How big should we buy?

    Hi All,

    First post, but a long time reader. I canít say how many times Iíve found really useful information on this forum, and I just want to say thanks to anyone in advance that takes the time to respond to my post.

    Iíve found a couple of really useful topics that relate to my question, however I wanted to explain my situation and get some thoughts/advice from the pros. First off, Iím not a professional brewer, Iíve never officially worked at a brewery, and I have no industry related qualifications. Iím an avid homebrewer, and beer tragic. Iíve recently quit a high paying role, as my wife and I really want to own and build something of our own. Iím sure you get where this is goingÖ

    Initially we developed what we thought was a solid plan for opening a brewpub in the Philippines, but logistically things just didnít stack up. My wife mentioned this as a backhand comment to her mum, which unexpectantly presented us with another opportunity. My mother-in-law lives in a very small town in South Korea. To cut a long story short, the idea made its way to the local council, and theyíre very interested in making this happen. So much so, theyíre willing to cover potentially up to 60% of start-up costs! This may also include the cheap sale of land, or leasing of an existing facility. The full details are not clear as of yet, but itís very promising.

    So, the catchÖ

    The local population is around 30,000, spread over a decent land mass. Itís an older community of mainly farmers that have probably never tasted a craft beer before. They also donít have loads of money. The area does get a decent amount of Korean tourists through, and given the council is so eager to get us onboard, there is a good chance we could line up some foot traffic through tourism. That said, relying on taproom sales alone would almost certainly end badly for us.

    Craft beer is really starting to turn the corner in Korea, and the popularity is on the rise. Rather than the brewpub idea, weíre thinking a little bigger. Assuming our product is good, and we market it correctly, we would look to distribute our beers to more densely populated cities, and hope for a small amount of taproom sales to assist with cash flow. While we do have this offer of up to 60% of start-up fees, this is not blank check by any means. In our plan weíre very much trying to factor in for potential growth, however itís extremely daunting looking at some of the costs that are adding up.

    The question partÖ

    I was originally thinking a 10BBL brewhouse with 6 x 20BBL fermenters and a couple of brites, but after doing some reading, a 10BBL is still considered a nano to many! What size brewhouse should we be looking at? Would a 20BBL system be a decent starting point with 40BBL fermenters? What would you suggest and why? Is our overall plan flawed? Please be as brutal as needed. You guys really know what itís like in the trenches, and your advice is invaluable. To be clear, weíre not doing this to get rich, but I also donít want to work 70-80 hour weeks to barely break even.

    I look forward to your replies!

  2. #2
    Join Date
    Oct 2002
    Location
    Chesterfield, UK
    Posts
    1,921
    I suggest you do a proper business plan, realistically taking into account the location, the sales prospects to locals, to tourists, in what form you will sell it, where else you can sell it etc etc. Then having done that, consider what you want out of it in terms of income (including things like pension provision) and lifestyle and allow for this in the business plan. There are a number of examples of brewery / brewpub business plans around which seem to me between them cover a lot of ground - just need to consider what else is peculiar to your location / business environment that doesn't get a look in in these examples.

    For what it is worth, the most common start up in the UK seems to be about 1500 litres, but there are plenty smaller, presumably making the people involved an acceptable lifestyle.

    Do a google search for micro brewery business plans. A couple I found are

    MicroBrewr Podcast

    equipment suppliers e.g. JNVW

    http://specificmechanical.com/produc.../system-sizing
    http://www.probrewer.com/library/use...bs-and-micros/
    http://www.alliedbeveragetanks.com/f...equipsel.shtml
    http://www.alliedbeveragetanks.com/f...psyssize.shtml
    http://marksdmw.com/

    Flad, W. Brauwelt, 27:1111¬Ė1114, 1990, but note this is likely to be based on German style long maturation times

    https://imstartingacraftbrewery.com/ - which covers a whole load more than just a business plan, but the whole stressful shenanigans around a start-up in Vancouver.

    There is also - Brewery Planner: A Guide to Opening and Running Your Own Small Brewer-Second Edition

    I have managed to lose some of the web links to examples - but if you find one relating to The Schotz Brewery & Grill then this struck me as pretty comprehensive.

    And finally of course, there are courses available and plenty of consultants, though inevitably, you need to choose one right for your particular needs - we all have our specialisms.
    dick

  3. #3
    Join Date
    Feb 2019
    Location
    Jindo, South Korea
    Posts
    2
    Thanks Dick, I appreciate the response. I do have large portions of a business plan complete, however I'm unable to finalise until we hold formal conversations with the local council, and establish exactly what their contribution will be. I understand my question is fairly generic, but I wanted to get feedback on what capacity we should be looking at for a distribution heavy business model. I'm thinking we need to be at 20BBL or more, but as stated, this is a fairly big jump, and a big investment on our behalf. Any advice would be great.

  4. #4
    Join Date
    Jun 2017
    Location
    Kalamazoo, MI
    Posts
    3

    Post

    IMO a 10 BBL with 20 BBL FVs is a good starting point if you're worried about cost. I'm not familiar with how popular craft beer is in SK, but 20 BBL of product is a lot for a new brand.

    So assuming the product is good, you would still need to find a way to distribute your product to an area with the demographic who would likely buy it. 20 barrels of product (not counting loss) is still 6,400 12 oz servings. So lets say things do pick up, it would then be more cost effective to add more FVs into your cellar and brew more. 40 BBL FVs would be feasible to fill with 4 brews in one day and then in the future, if you need a larger brew house to keep up with production, the tanks are already there.

    As far as build out planning goes, do yourself a favor and don't skimp out on floors. The headaches and time you will save yourself by not spending hours squeegeeing or near-future floor repairs is priceless. When doing all your electrical and plumbing, make sure that everything is easily expandable. For instance, don't just end your glycol supply at your last vessel. Leave a valve at the supply/returns ends so you can easily add more pipe. Same goes with all of your water/CO2/air/steam supplies.

    Don't underestimate the amount of space you need for storage too. Packaging/bottles/finished product/keg cooler/Etc adds up quick. The last brewery I worked for planned this part poorly and they had to rent warehouse space in town to store everything and the constant trips/inventory management was a nightmare.

    Good luck! Feel free to ask me any questions.
    Dale
    Craft Automation
    269-389-0048
    CraftAutomation.com
    sales@craftautomation.com

  5. #5
    Join Date
    May 2016
    Location
    Ningbo,Zhejiang,China
    Posts
    12

    Investigation First

    Quote Originally Posted by sassafrasdh View Post
    Hi All,

    First post, but a long time reader. I canít say how many times Iíve found really useful information on this forum, and I just want to say thanks to anyone in advance that takes the time to respond to my post.

    Iíve found a couple of really useful topics that relate to my question, however I wanted to explain my situation and get some thoughts/advice from the pros. First off, Iím not a professional brewer, Iíve never officially worked at a brewery, and I have no industry related qualifications. Iím an avid homebrewer, and beer tragic. Iíve recently quit a high paying role, as my wife and I really want to own and build something of our own. Iím sure you get where this is goingÖ

    Initially we developed what we thought was a solid plan for opening a brewpub in the Philippines, but logistically things just didnít stack up. My wife mentioned this as a backhand comment to her mum, which unexpectantly presented us with another opportunity. My mother-in-law lives in a very small town in South Korea. To cut a long story short, the idea made its way to the local council, and theyíre very interested in making this happen. So much so, theyíre willing to cover potentially up to 60% of start-up costs! This may also include the cheap sale of land, or leasing of an existing facility. The full details are not clear as of yet, but itís very promising.

    So, the catchÖ

    The local population is around 30,000, spread over a decent land mass. Itís an older community of mainly farmers that have probably never tasted a craft beer before. They also donít have loads of money. The area does get a decent amount of Korean tourists through, and given the council is so eager to get us onboard, there is a good chance we could line up some foot traffic through tourism. That said, relying on taproom sales alone would almost certainly end badly for us.

    Craft beer is really starting to turn the corner in Korea, and the popularity is on the rise. Rather than the brewpub idea, weíre thinking a little bigger. Assuming our product is good, and we market it correctly, we would look to distribute our beers to more densely populated cities, and hope for a small amount of taproom sales to assist with cash flow. While we do have this offer of up to 60% of start-up fees, this is not blank check by any means. In our plan weíre very much trying to factor in for potential growth, however itís extremely daunting looking at some of the costs that are adding up.

    The question partÖ

    I was originally thinking a 10BBL brewhouse with 6 x 20BBL fermenters and a couple of brites, but after doing some reading, a 10BBL is still considered a nano to many! What size brewhouse should we be looking at? Would a 20BBL system be a decent starting point with 40BBL fermenters? What would you suggest and why? Is our overall plan flawed? Please be as brutal as needed. You guys really know what itís like in the trenches, and your advice is invaluable. To be clear, weíre not doing this to get rich, but I also donít want to work 70-80 hour weeks to barely break even.

    I look forward to your replies!
    I absolutely accept that you should make a market investigation first.

    As you said you didn't have experience for running brewery, should you start as a small capacity first? For microbrewery, the usual capacity of brewhouse is from 5bbl to 30bbl. 15bbl and 20bbl brewhouses are more flexible for future expansion with 3 or 4 vessel brewhouse.

    In Korea, brewpub and small capacity (5bbl and 10bbl) is more popular in my opinons.

    Hope you successful soon.

    Cheers,
    Ray Ran

    YoLong Industrial Co.,Ltd II Microbrewery Setup & Expansion
    Email:ray@yolongbrewtech.com
    Cell: 0086 156 5360 2112
    Skype:beer.machine
    Web: yolongbrewtech.com

  6. #6
    Join Date
    Nov 2011
    Posts
    26
    Quote Originally Posted by sassafrasdh View Post
    I was originally thinking a 10BBL brewhouse with 6 x 20BBL fermenters and a couple of brites, but after doing some reading, a 10BBL is still considered a nano to many! What size brewhouse should we be looking at? Would a 20BBL system be a decent starting point with 40BBL fermenters? What would you suggest and why? Is our overall plan flawed? Please be as brutal as needed. You guys really know what itís like in the trenches, and your advice is invaluable. To be clear, weíre not doing this to get rich, but I also donít want to work 70-80 hour weeks to barely break even.
    Greetings,

    annyeonghaseyo seonsaengnim! Having lived in Korea for a year long ago, and visited since. I love the fact the the craft beer movement is making its was into Korea! I would love to find a reason to get back there for an extended trip/beer and food tasting/brewery tour.

    IMHO I think that you are thinking too big. I also think that anything larger that a 5 BBL system is not longer what I consider a Nano Brewery. If you want to go bigger that's great but it would not longer really be classified as a nano. Bottom line is that it is a personal choice and boils down to what you can afford. Follow your BP and do your research and due dilligance. It will guide you on what is right for you and your business. Always allow for room to grow if and when you're successful. All the best and good luck

  7. #7
    Join Date
    May 2019
    Location
    Seattle
    Posts
    2
    I'm in a similar boat as you, but I'll be starting my brewery in N. Japan. Rural, mostly old people, farmers, so not a lot of disposable income. Of course I haven't been offered 60% startup costs -- that sounds great! Just one question, how's your Korean? Seems like you'd be awfully isolated if you and the wife didn't know any. Another question, do you know about the licensing and permitting process of opening a brewery/brewpub? In Japan it is quite onerous, but probably not much worse than it is in the US, just different, and of course the tax office doesn't do email at all or anything digital.

    Keep me posted on your progress!

    Best,

    --Jason

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