How to open a brewery in 2,364 easy steps – Part 2

Sorry for the long period of radio silence. The holidays are such a crazy time. I hope everyone reading this enjoyed a wonderful holiday season with the ones they love. I don’t know about you, but no matter how great this time of year is, I’m always a little glad for it to be over. There is still the Music City Bowl (Geaux Tigers!) and New Year’s to go, but those should be good times. Then, back to the daily grind.

Another good thing about the holidays being over is that we can get back to work on making this brewery happen. Right now we are in a phase where we write checks to attorneys, while it feels like nothing is happening (I’ll talk more about the ‘write checks to lawyers’ phase of opening a brewery in a later post). Hopefully after January 1, we will get some wheels turning again.

So, what do you do when you have decided (really decided) to open a brewery? Well, try to talk yourself out of it, of course (this is not the last time in the process you should go through this exercise). The goal at this point is to think about what your particular business model will be (packaging brewery? nano? brewpub?), and do some research to see if you feel it would be viable for your particular situation. Assume at this point that you will be successful selling your beer.

Call ingredient suppliers and get some price quotes (malt, hops, and yeast). Some of them may act like that information is top secret, but keep digging. Research rent for commercial property in the area where you think you want to be located. Call insurance companies and get some ballpark quotes for brewery packages. Talk to chemical supply companies. Determine the tax per barrel you will have to pay on beer produced. What do you estimate your utilities will be (base for facility plus water/gas/electricity/sewer per barrel of beer brewed)? What will you CO2/O2 usage per barrel be and how much will that cost? Calculate the monthly salaries plus payroll taxes you will be paying, if applicable. Include estimates for some other miscellaneous expenses like security system, professional fees, equipment repair and maintenance, marketing, etc.

Figure out the mix of wholesale and retail sales for your business model. If you will be a brewpub that does not distribute, your sales will all be at retail. If you will be a packaging brewery with a taproom, your sales will be a mix of wholesale and retail. If you will be a packaging brewery with no taproom, your sales will be all wholesale. If you will be canning/bottling a portion of your product, that will complicate your calculation a little (remember to include the cost of small pack packaging in your expenses). You get the picture.

Figure out what you can sell a barrel of beer at wholesale and at retail in your area. Retail should be easy. Go to a brewpub or taproom and see what a glass of beer goes for. Wholesale may be a little harder to figure out, but that information is out there.

For your estimated beer production and wholesale/retail sales mix, add up your gross sales. Subtract your estimated expenses. Still want to open a brewery? Only you can answer that question. Remember that this is a best-case scenario. You are assuming you can sell the amount of beer you are projecting you will produce in your target area. Like I said, this is not the first time you should try to talk yourself out of opening a brewery.

We’re not talking about startup expenses at this point, just operating expenses. Just try to figure out if your business model looks viable, or what adjustment you have to make so that it looks viable.

Ok, so that is Part 2. As far as an update on Half Batch Brewing, this is a period of behind-the-scenes work that my attorneys will not let me talk about in this public of a forum. Rest assured, we are doing what we have to do to make this happen. We can’t wait to open up and start serving fresh hand-crafted beers in Hendersonville, Sumner County, and all over Middle Tennessee. One requirement for opening a brewery is passion for beer. That’s something we are not short on, and our goal is to be producing world-class beers right here in Hendersonville, Tennessee, sometime next year. Stay tuned.

– Nate