No Experience. $7000 dollars. = Profit!
Typo on the amount? Will they hire someone that knows how to brew?
[quote]He plans to spend about $7,000 to purchase new equipment and remodel.
[/quote]
500 to 1000BBL brewery + 2 employees.
And this all for only $7000.
Even 10 times that amount is doing it on cheap and no labour cost in it.
You guys scoff, but it can be done. Assuming magic elves will be involved.
I’d love to get my hands on a system that will put out that much beer for only $7,000. Including remodel cost! Must be a typo. $70,000 is a much more believable figure.
That’s probably not a typo. All the cool kids are starting severely under-capitalized breweries.
I wonder if all these new “pro” brewers will siphon off business from properly run breweries, ruining not just their own business, but several others as well. Hopefully they’ll go under quickly enough that the good breweries who deserve the business can stay afloat.
If so we will all be brewing on used commercial gear before long
“Freedom is temporary unless you are also Brave!” - Patriot
Sounds like you’ve been talking to Larry Bell or Kim Jordan or Jim Koch about their worst fears regarding this “boom”.
Their success will be directly proportional to the number of great friends they have that are happy to drink their crappy beer once they actually start charging for it.
I don’t know if the crappy breweries will necessarily hurt the good breweries. Craft beer is here to stay. It may not grow as fast as it has been but it ain’t going away either. If someone experiences crappy beer at a local brewery I seriously doubt they will swear off beer all together. If anything they will gravitate towards the better breweries and the problem will work itself out. I do agree that a lot of new breweries are under capitalized. One just went under in my area. Although I am hesitant to call it a “brewery” since their beers were contract brewed 100 miles away. In the end it just didn’t pay the bills to make it worthwhile. Too bad, because even though it was brewed on contract, the beer was pretty good.
Had an old boss that used to start these conversations with:
“Well, if I had enough midgets and buckets…”
They don’t mention what his other businesses at the location are. I suppose he could already be running some kind of food production already and simply needs to augment existing equipment, put up a wall,buy some tables/glassware and build a bar.
Small business owners are usually serial venture capitalists so you really don’t know what they can pull off. I’ve worked for some real jewels in my younger days. They always saw opportunities but weren’t too good at the long game sometimes.
Paul
Paul
They all were around in the late 90s when many breweries went under.
I would think that the $ amount is a typo, might have to contact mlive and see what they say.
What I’m talking about is market share. In some markets, there might be easy growth and unmet demand. In others, any growth in your market share means a decrease in your competitor’s market share. The pie is getting bigger, but not fast enough to feed all the new mouths coming to the table.
Craft beer is growing at about 15% per year. In 2012, craft beer was 13,235,917 bbl. The previous year, it was 11,467,337 bbls, that’s 15.42% growth in one year.
So there were 1,768,580 new bbls of demand. In 2012, there were 2,347 breweries in operation, and 409 new breweries that opened, and 43 that closed. That’s a net of 366 new breweries, or 15.59% growth. Sounds good, right?
How much of that new demand was captured by established breweries? I know some (maybe most) of that was captured by New Belgium, Bouldevard, Sam Adams, etc. So how much was left for the start-ups? I’d be surprised if more than 25% of the growth was going to startups. I’d suspect it’s more in the 10% range. If I’m right, 10% of the new demand is 176858 bbl, or 483bbl per new brewery. There might be some room for small breweries in certain markets, but you also have to look at the massive investments NB and Oskar and others are making in building new factories. The companies with the most capital will be best positioned to grab the new demand.
There are a lot of local/regional factors that go into this, and I don’t have solid numbers for where the growth is going, exactly. 15% growth per year is not sustainable over a long period of time.
I agree that 7000 dollars does not sound right,but just because the owner has no brewing expierence does not mean he will fail. One employee could be an expierienced brewer. Keeping your overhead down and starting small will probably lead to his success.
Agreed, but for the time being though, it is 15% of a fairly small number (6.5% of total market) in comparison to the much larger market for beer in general. Still room for growth as most younger folks are going for craft beers and even some older folks are getting converted. Some of the larger markets may reach saturation before the smaller markets as I believe that is where we are seeing the largest growth currently. Or not. 
It’s not just beer that’s growing. Craft beer isn’t only competing with macro beer. Craft distilling is growing, “soda-booze” malt liquor products are growing as fast as craft beer too. There are only so many dollars people spend on booze, and most booze is bought by a really small proportion of drinkers. In my psychopathology class, when we were talking about alcoholism, the number was something like 80% of all booze sold is bought by 10% of the total number of drinkers. Almost everyone has a glass of port at Christmas, but hardly anyone drinks heavily.
So small shifts in taste amongst the booze-hounds can have huge impact on demand for specific segments of the alcohol market.
I think breweries better get used to getting a smaller and smaller piece of the market share. Part of the problem is that everyone thinks they are going to make money with a brewery…at least enough to support themselves. This is where I think we can learn from the wine industry. Many, in fact I would say most, wineries/vineyards are started by people who made their money somewhere else. I have looking at the plethora of new wineries in my general area and most, if not all, are started by people in their 40’s-60’s. Most are only open 3 days a week and have very limited distribution. I see this as the future of breweries…not a 15bbl brewery that is trying to get their beer in every store, bar, and restaurant in sight.
Interesting take.
I don’t think any brewery “deserves” business.
+1 Nice post.
I think if your brewery has horrible chlorophenol problems, or sells infected beer, you “deserve” to go out of business. You’re doing the entire craft industry a disservice by selling shitty beer, as well as siphoning off sales that would otherwise support a good brewery that knows what they’re doing.