While this may be true to get a truer picture one has to compare the costs of bottles v. cooperage. Granted you need a fair number of kegs, I think I have heard 3 kegs for every 1 you are sending out (1 still out, 1 ready to be cleaned and 1 filled) but, at least with pubs/bars etc you can expect to get those back. With bottles even though they may only be .50$ each you never see that money again.
But you include the price of the bottle in the beer price - you don’t “really” do that with cooperage. You can make a lot more money by packaging in bottles than serving draft. You need both though to be relevant. And often times draft beer tastes better.
Hey make your bottles returnable.
This has been working quit nicely for me.
While talking bout permits. You need to have a bond and that is minimum cost or $100 for state and $100 for federal per year.
And yes this commercial brewing is cutting into my drinking habits.
Good point. With bottles you’re relying of a different sort of sales than draft. We have a love for draft beer and I’d say for most craft beer drinkers (not the super beer geeks) the draft list at a bar is the only list.
thanks everyone, I apprecaite all the information. My GF knows some folks at our county planning department and has started talking with them. I paid the $100 to my state for the microbreweries license, and that seems to get the ball rolling. At least I’ll find out where the barriers are.
And just FYI, I’m now looking to really make a profit per se. But, as I live in a fairly rural area, and one of just a few homebrewers, I get requests to purchase my beer, or even brewing a special beer for things like Real Estate office Christmas gifts and such. And if I were to choose to do that (hehehehe), I’d like to be legal.
rockin! keep us up to date. This is very much the scall of operation I imagine trying to do someday. Not a real money maker but a way to get my beer out there.
Cool! you go micsager. The hardest part is finding the equipment that you can afford. Trust me, but we will help you out!
There is a guy who sells repourposed equipment in MI I forget his first name but his last name is O’Brien, he sells brewery equipment, many that have been repuorposed.
I’m curious - those that are already pro, maybe you can answer - Why not form your “brewing company” and simply either lease capacity from a local/large/established brewery or have it contract brewed?
Would obviously depend on having that capacity close and all but skimming most of the threads here relating to cash needed, start up costs etc - would seem to me, and my lay approach, that I might want to search out someone with extra capacity or the ability to squeeze me in between their schedule and while I believe my cost per brew would be higher - is it higher than also having to purchase the equipment outright?
I believe Jamil Z. is doing something similar (not EXACTLY that but leasing excess space/capacity from EJ Phair Brewing) to get started with Heretic.
I’m sure I’ll be corrected on all points but if I was really set on being a commercial brewer - it’s something I’d look into more. Not having to buy all the equipment but allowing me to generate some cash flow (hopefully) before having to come up with the large cash reserves needed to buy EVERYTHING.
The problem is that starting out as an alternating proprietorship dilutes your profit margin, so the threshold volume you need to produce/sell in order to break even is larger. For contract brewing, the margin is even smaller. So yes, it does reduce your startup costs, but it may or may not be more profitable over a given timeframe and/or production volume. It’s impossible to know without considering many factors that are unique to each business.
That’s what I’m thinking tho. I guess it depends on your individual comfort level. Are you comfortable putting 6 figures or so on the line with equipment purchases, quitting your job, benefits etc to buy your own gear and giving it a swing or are you more comfortable with risking SOME of your money to either enter an AP or contract brew to see how it goes.
You return less to your pocket perhaps but some is better than none?
With a lot of things I’ve been involved with for every 15 people who say “Dude, I’d totally buy/payfor/attend/support XYZ” = plan on 1 actually doing it which means those sales that you’re counting on are vaporware more than anything.
Speaking to a local contract brewery recently, the guy out right told me there is no way to make money contract brewing. The actual brewer is the one who makes the profit. They ended up securing finances and are now in the process of building a brewery.
I’ll add, brewing is a craft and as a brewer I take pride in my own craftmanship. All contract brewers have is a recipe and the rest is all marketing. That’s not brewing. It becomes more about selling t-shirts than about brewing.
If you find a contractor who will let you dictate recipes, which is not a given.
I would also agree that contract brewing looks great on spreadsheet.
Reality is different.
I do not have experience with alternating proprietorship.
Not too many breweries want to do that in my area.
I know a guy that has a small brewery and when he gets behind, he contracts it to others. He has told me on several occasions that he wonders why he brews himself, because he makes about the same having someone else do it for him and he doesn’t work as hard. I think he just loves brewing and that’s why he doesn’t contract everything.
I’m in no way saying your friend is wrong, but that is totally contrary to what other people have told me.
I’m sure he has studied it in detail. He has a business degree and is one hell of a sharp guy and a good brewer as well. It’s the brewing part of him and that will never allow him to be completely hands off.
If I could, I would post a pricing what you can buy case for and what you can sell it for when contract brewing.
My pricing is wholesale to retail outfits.
If your friend contract brew and sell this beer on premise then it could work.
Good for him.
I don’t think he’s allowed to sell on premise. He is very good at negotiating, so I wouldn’t doubt that he getting a better than normal deal. This is one of those guys that truly could sell ice to Eskimos.
Having worked at a brewery that contract brewed to increase production, I’d have to agree. Our margin on the contract beer was perilously thin.
Unless maybe the contractor is brewing several times his volume, and he meant that on a per-batch basis the profit was the same.