Selling Beer In a New Niche

General brewing information, questions and discussion. Topics that do not seem to fit elsewhere.

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Selling Beer In a New Niche

Post by beernewbie » Mon Aug 11, 2003 5:53 am

I have in mind a niche market for a bottled beer with my label on the bottle. I would trademark the mark, and copyright the label. That is all straightforward. I drink beer but know next to nothing about making it and selling it. I need to be talked out of investing money to create such a new business from scratch. So, can anyone tell me, roughly, at what scale of beer production (e.g., bottles per month) it could be profitable to make and sell beer? A before-tax profit of $6000 per month would be a target number, say. I really do think there is a serious demand for beer in this niche market, and I have an idea of the size of the market both locally and worldwide, but your advice on cost - with numbers to scale - would be most respectfully appreciated.

Please reply to this thread and also directly to me at XTALV1@NETROPOLIS.NET.

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First of all

Post by fitz » Mon Aug 11, 2003 6:46 am

First of all, you would have to get all of the permits and licenses from the federal government to sell your beer. It is illegal to brew for sale without all of the necessary paperwork and fees.
Unless you have a bunch of money don't even consider it. If you have a special niche, you will probably be bought out by the mega brewers anyway.

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Post by jayhawk » Mon Aug 11, 2003 11:45 am

It sounds to me like you are heavy on marketing knowledge, but lack the inside out knowledge of the mechanics of mid scale beer production. If you really think you have a profitable niche market to sell to, why not seek a partnership with a brewer in your area? A good brew pub in your area may be a good place to start.

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Books are available

Post by StranegBrew » Mon Aug 11, 2003 12:15 pm

I have seen a few different books regarding the prospect of starting & running your own microbrewery. If you seriously are interested, then i would advise getting a few books and do a little bit of reading. I think though, that if you have no personal experience brewing, then you would definatly have to find a brewmaster and form a partnership first. You may fool someone into trying a beer with a fancy label once, but the bottom line is if you just don't have a good product, then all the advertising in the world won't make a difference.

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Do you really have a new idea?

Post by Brewer2001 » Tue Aug 12, 2003 12:15 am


I have been working as a production brewer for the past eight months. Here are some of my observations and recomendations. The two guys that I work (worked) for underestimated the costs of operation, overestimated there profit margin and were unrealistic about the product market acceptance. I will out line what is happening.

They "bought" an existing brewery, the rights to established recipies and trademarks, staffed with a brewer and contract "help" of the previous owner. How could they fail...right.
The brewery needed a lot of work and is all manual (GRUNT WORK). The kettle is 20 barrel (620 US Gallons) but can only, affectivly boil 14 or 15 barrels (direct gas fired). The hot liquor tank is undersized (direct gas fired). The heat exchanger is single loop cooled by filtered water cooled by a small tube and shell glycol chiller. Bottom line labor intense!

Production started to climb as did sales. During Q1 and Q2 they 'bootstrapped' due to the brand name recognition of the original brews. Lots of brewing followed, long days and no pay. One of the owners dumped a significant amount of money (that they did not have) into kegs, conical fermenters, a large bright tank and promotion items. Nothing to help the brewing process. Q3 declining sales due to product uniformity, retaliation in the trade and avalability. They cannot secure additional financing and have spent all of the working capital on this equipment. The brewery has a taproom that serves beer by the glass and sells growlers to go. This helps but they sell the beer too cheap to offset the production expense!

Rule of thumb:in a small brewery the cost averages about $60 (US) per barrel (if you are brewing ales and not doing anything too exotic). This is only a production average, not packaged. A bottling line could cost anywhere from $26K to $250K and you would need to use "standard" no return bottles and filter or pasturize the beer to acheve any long duration shelf-life.

Assume: $8.00 per 12Oz. sixpack you would need to produce 4500 bottles per month (just to get to the $6000 mark). Now add cost of production, licences, taxes (State and Federal), utillities (water/sewer), bottles and caps, brewhouse, tanks,grain,yeast, hops, cleaning supplies,CO2, pumps, hoses and wages. (this assumes that you can raise the money to build the brewery and run at a loss for at least 6 months to a year).

Just to meet the $6K/month you would need to produce well over 1800 barrels (55.8K gallons)!

Now you could do the Sam Adams thing and have your stuff contract brewed. Some states allow this some do not, or very prohibitive. You just need to find the right size brewery to meet your production numbers.

Good brewing,

Tom F.

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