I keep running across references to nanobreweries, but up  until now I never gave them much thought. My mind kept going back to this old article on MSN last year, “Something’s Brewing Close to Home” in which they note (or quote actually):

The nanobrewer isn’t going to quit his day job. They are brewing because they love the process and want to share the results with the people in their neighborhoods…

That sounds crazy to me, so I wrote it off. But I keep seeing the concept pop up, so I started doing a little research, and I think I just didn’t get the correct characterization off of said MSN article (an MSN article being unclear? Shocking!). It just kinda ends after introducing the concept. From what it looks like, you homebrew, and then you drop the thousands upon thousands of dollars you need for the necessary permits and licenses to sell your product, and then for some bizarre reason you keep your day job.

See? It is crazy. Totally batshit insane.

But! There are other operating nanobreweries around. The Hess Brewing Odyssey, a nanobrewery in San Diego, recently compiled a list of operating nanobreweries in the U.S., some of which are making the step up to being small craft breweries, though in reality a small craft brewery is all a nanobrewery really is. Sorta.

Curve Street Brewing

There’s no good definition, but what seems to be settled upon is that you’re making an amount of beer, per batch, that is considerably less than one would expect from a production brewery: half-barrel or one-barrel systems are common and sometimes even less. If you think about it, in that respect, Dogfish Head can be said to have started as a nanobrewery.

There are only a handful in the country, but it’s been enough for the TTB to put together some guidelines. They are basically a reminder of what constitutes the amount of beer that you can legally make in your home every year and that if you sell it, you need a license.

Michael, the person behind the Hess Brewing Odyssey, has compiled an absolute wealth of good documentation about how to open a brewery, nano or not. He covers all of the forms and hoops you have to jump through quite well (in fact, I’ve already bookmarked it to use as a reference), but the associated cost is still there.

So, I ask: If you don’t have a sizable bankroll at your disposal (Hi, I’m looking for investors, interested? Let’s talk!), is starting a nanobrewery financially feasible as a startup option? In other words, if this isn’t going to be a hobby – you’re not going to keep your day job – is that type of investment worth making 1 – 2 kegs at a time? A 7bbl brewday isn’t going to be much different in time vs. a 1bbl brewday, but at the end of it all you have 14 kegs to sell instead of 2 in return for your 8 hours of janitorial work. Will a 7bbl brewery cost more? Certainly. At least the brew system. Any sort of packaging and packaging system will cost exactly the same, and you’re going to use it a lot more frequently. If you’re making a go at starting a business,and you start that small, I feel like you’re going to be spending all of your time making your product, rather than selling it, and the latter is really important if you want to make a profit.

On the other hand, I’m a proponent of slow growth in the craft beer industry. Every single book I read about startup businesses in craft beer, every single time I hear an industry veteran talk about their startup experience, the number one thing I hear (though mostly in subtext) is, “We grew too fast, and had a hard time keeping up with production demands, so we went into a ton of debt.” I mean, I hear about companies that are now successful quote things like 7 – 10 years to cash-flow positive. I’m not convinced it has to be like that. Maybe starting super small and selling deep into a market is a way to avoid that. The path to cash-flow-positive growth is to not grow until/unless you can afford it and bust your ass in the meantime. It’s a theory.

I just can’t get by the fact that you have to brew 5 days a week to sell a half-barrel keg to 10 accounts. That’s a lot of time – and it’s a lot of fermentation space! I have a hard time imagining it.

Maybe the purveyor of a fine nanobrewery will stop by here and set me straight. They’ll let me know that, actually, they put together their operation with $5,000 and a box of coat hangers and they only brew on weekends, but I’m going to guess that’s not the case. I’m going to guess that they all meet at least one of the following conditions:

– they are rich
– they are in an enormous amount of debt
– they are making a go and hoping against odds that this venture doesn’t make them bankrupt
– they are still employed at a full-time job elsewhere
– they have an anonymous benefactor
– they are homeless and sleep under their lauter tun
– they have a really-well-employed spouse or partner
– they employ magical elves to make beer while we sleep
– they are, in fact, wizards

What do you think? Starting that small is an undeniably cool (and even romantic) concept, but I wonder at how sustainable the businesses are. It’s great to see that some of the ones listed in the link above are making a step up in growth, but how many will successfully make that step, and how many will make that step at all? Are these merely extended hobbyists or is this a viable entrance strategy to the craft beer industry?

I’d love to hear from others.

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Categories: industry, startup
Posted By: erik
Last Edit: 06 Jan 2010 @ 09 02 AM

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 01 Jan 2010 @ 12:13 PM 

This post was originally going to be for this month’s Session, #35: “New Beer’s Resolutions, but I canned it. It’s a cute topic, but I can’t do it. I don’t believe in looking back at mistakes. To learn from your mistakes is paramount, to dwell on them is folly. They are done and I won’t revisit them, but rather stay positive with their lessons in mind and move forward to greater achievement.
The future!
At the same time, I feel like resolutions are bunk. The number one way to not get something done is to make it a New Year’s Resolution. If you want something to get done, you need to roll out of bed in the morning and do it. Screw tying it to the calendar. Just get up and go.

I also won’t attempt to make any predictions about what could happen in 2010. The problem with predictions is that they are based on the past; they’re based on our current knowledge set and our current environment. We cannot forsee individual random events or, even more importantly, what will be invented that will change the world in the next 12 months. It’s impossible and fruitless to speculate. You can only be ready for anything and enjoy the ever-living-crap out of it.

But! The dawn of a new year is an opportunity to look forward to all of the wonderful things to come that you DO know about. Here’s my personal list of things to come in 2010:

Homebrew and Competition

After withdrawing myself from homebrew competitions for a while, I plan to get my feet wet again to see what comes out of it. I’ve had some rather snarky judges in the past that have made me feel rather jaded about entering competitions, but in the spirit of “I’m going to start a business.” I’ve decided to say screw-all to the critics, throw my hat back into the ring, and wait for the Gold Medal to arrive in the mail. If the rest of my big bold headings work out as I expect them to, this will also be the last year I enter into homebrew competitions.

Here’s where my beer is going:

  • 2010 Winter Brew Bash, Carrboro NC: Start local, right? These guys are working hard to have what appears to be a really incredibly non-traditional homebrew competition. What I like about it is that it is built around a homebrew tasting, so that brewers and the public alike can come in and try all of the beers that are entered into competition. It’s a lovely PR event for homebrew and has the possibility of getting a lot of new people involved in the hobby. At the same time, I love sharing my beer with other people and it’s a good opportunity for that, as well. Finally, as far as I can tell, it’s not tied to category, and thank god for that, because I don’t fit inside categories well.
  • LoneRider Brewery‘s Brew It Forward: Another style-less competition, where the prize involves getting your beer made and sold. I’m not sure when this is coming up – spring sometime – but they’re so close to my house that it seems ridiculous to not send them some beer.
  • National Homebrew Competition: My opportunity to play to style and send something out, and maybe – just maybe – I’ll get a feedback sheet from a judge that doesn’t make me want to punch them in the throat.

2010 Craft Brewers Conference Panel Presentation: I’m a Social Media Guru Now!
One of the things that I am both looking forward to and slightly terrified of is the 2010 Craft Brewers Conference where I will be part of a panel presentation entitled Storytelling 2.0: Social Media as Conversation with some colleagues that I feel rather starstruck about. Fullsteam’s Sean Wilson (one of my co-panelists) posted a nice up front review of what we’re attempting to do. Here’s the selected excerpt from our draft pitch that sells it best:

It’s time to stop thinking of Twitter, Facebook, and blogging as simple extensions of your press releases. Storytelling 2.0 will help you discover your own unique voice, and connect, build, and bond with your fan base. It’s time to talk with — not at — your audience.

Craft brewing is story-driven. Each individual brewery has a unique story to best engage its customer base. Social media empowers your brewery to include enthusiasts in that story, giving them access to your narrative voice in an unparalleled way. Well-crafted updates, photo postings, and personalized responses engage your customers, giving them a chance to see inside your operations and meet the characters in the story first-hand.

By the by, I hope nobody ever calls me a social media guru. I don’t use it enough (I’m sure my wife would argue that I use it way too much) – on purpose – because I feel like it’s easy to spam and therefore achieve negative impact through annoyance, but I think that automatically takes me out of “guru” running.

As we work on the conference panel over the next few months, you’ll probably see a few columns here about social media and how it pertains to breweries. These columns will not be meant as part of the presentation or may not even be related, but it’s the best way I have to work through things. At the same time, I hope that my ramblings will be useful to the internet/brewing community at large.

Know Your Brewer Re-Launches

We haven’t said a whole lot about this yet, but I am working with Sean over at Fullsteam on a little project that I think will turn out for awesome. Know Your Brewer, a website that was originally focused on North Carolina Beer as part of Pop the Cap 2.0. The site provided the basic template and early content for the North Carolina Brewers Guild website NCBeer.org, which I’m also helping on, but that left a domain and a concept unoccupied. I’ve somehow managed to convince Sean to let me help retro-fit Know Your Brewer for a new life.

The re-launch is coming and it’s coming nationwide. I’m not yet sure of our official re-launch date, I can say that I think it will be pretty terrific. The site will focus on the men and women behind craft beer – the people that make it, the brewers – and look at their beer and their breweries through their eyes. We’re hoping to have writers and bloggers across the country interviewing brewers from across the country, with lots of added content – recipes, Q&A, etc, all in a regular weekly format.

I’ve already done interviews at a couple of breweries and I have a half-dozen more scheduled in the next few weeks. It’s been a ton of fun talking to brewers about their work, how they got into it, and what they enjoy the most about it. It’s been a ball and I can’t wait to share it.

What you see there isn’t the final design, but it’s on its way. Look for an official announcement here (and, of course, on Know Your Brewer) soon. In the meantime, we’re recruiting writers – are you interested? Let me know!

Announcing the Location of Mystery Brewing Company

Finally, in either the second or third quarter this year, I will be making the announcement on the geographical location of my own startup: Mystery Brewing Company.

At that point, the blog will likely go through a slight transition where you end up hearing a lot more commentary about startup issues. On of my major criticisms with startup brewery content I have found, read, and yes, even paid thousands of dollars for, is the lack of practical detail. I get a lot of “you need to fill out TTB forms and apply for licensing.” And while it’s true, it’s not necessarily as helpful as telling me what forms are around, what information they tend to expect, and what pitfalls I should look out for. Not to say I’ll be posting how to fill out your TTB label forms here, but I will, whenever possible, post practical information about the startup process specifically pertaining to startup breweries in the hopes that others coming after me will find something useful. I believe that the future of the industry lays in continuing spread of the individual small brewery, rather than the continual creation of more megabreweries, and I hope that I can help the industry in the right direction.

Back when I was in high school, as a miserable teenager, I remember somebody taking me aside and telling me: “Remember these days, because these are the best days of your life.” And then I remember thinking, “Oh god – kill me now.” They were wrong. Totally and completely and in all ways possible: wrong. They were not even remotely the best days of my life. Every year that I’ve been alive, things have just been better and better, more fun and more awesome, and I can’t imagine that changing now. I’m looking forward to 2010, for all of these reasons up here and the hundreds of reasons that I haven’t found out about, yet.

Happy New Year, everyone. It’ll be a great one.

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