Five Keys to Opening a Brewery

Eno Sarris, June 28, 2016

I've never run a brewery, but I've now watched three friends take a concept all the way to fruition, and have watched the marketplace develop, and have come up with a few ideas about the keys to opening a successful brewery.

If you'd like the Cliffs Notes version, it's this: pretend that all you are going to open up is a brewpub that will give you and your neighbors a place to park their asses and drink fresh beer. That sort of mindset will serve you well. 

There's a little more behind that simple statement, though.

Think small.  

As you can tell from the open, I don't think much of the 'built to sell' idea. For one thing, it feels devoid of heart -- even if everyone's intention is to make money doing business, craft beer has been built on a slightly nobler "make money doing good beer" philosophy that has beer at its heart. 

But that's just philosophy. There are concrete business reasons to start with a plan that focuses on a small brewpub presence at its core. For one, it's a little late to be getting into the built to sell game. Big Beer has already hit many of the major markets, buying footprints into Los Angeles, Seattle, New York, San Diego, and Chicago. By the time your brewery is humming along, they'll have a craft brewery in every market. 

And then there's the fact that the very numbers that say that craft beer is slowing down are missing, in large part, the very core of the craft beer industry. Bart Watson, Chief Economist at the Brewers Association, estimates that 30% of craft beer sales are directly from the tap, which doesn't show up in IRI data which relies on a barcode scan. And now there are more can and bottle sales happening directly at the brewery -- Tree House in Massachusetts has virtually no distribution and is bringing in serious cash from the lines of people waiting for cans. Not in the IRI data. 

And then there's this note from the National Beer Wholesaler Assocation Chief Economist Lester Jones. He showed that 93% of craft breweries are small, and that's fine

  1. The small brewer group (making less than 7,500 barrels) accounted for less than 2 percent of all domestic volumes yet accounted for 93 percent of all breweries. The smallest of this group has 566 breweries reporting less than one barrel of production each in 2015. These super small brewers can thank the contracting brewing industry for helping them sell almost 100,000 barrels – a figure well beyond their reported production capacity.

So, join that pack in the thickest part of craft beer and plan to stay a while. 

Think fresh. 

Hidden in that last one is a sub-fact that will endear you to your local fans while also ensuring solid business practices: Don't distribute for a very long time. 

National distribution is a very sexy thing. It also means joining the SKU battle, where there really is a slow down. Because there are just too many products, beer stores are having to make harder decisions, and even established breweries are trying to reinvent themselves. Here's a great tidbit about Fort Collins Brewery, and their response to the crowded beer shelf, from Jason Notte's piece: "Though some of the more drastic changes involved removing entire states from the brewery’s distribution radius, refocusing on Colorado and Fort Collins in particular helped boost demand from 9,000 barrels last year to a projected 12,000 barrels in 2016."

Skip the BS and concentrate on a small market. Call it a focus on freshness, like Henhouse always did, and even in a relatively crowded Petaluma/Santa Rosa market, you'll soon be opening up your taproom and celebrating, unless you started with the taproom. As Henhouse's Collin McDonnell once told a crowded room of would-be brewers: "Beer creates community because freshness is important." 

Let Big and Medium Beer get bigger while you service the people who want unique beers, as fresh as possible. 

Think HR. 

Bring in someone that knows something other than beer. My friends who know much more than I will ever know about beer ran into some unexpected obstacles as they opened up their taproom.

Well, unexpected to them. Zoning and lease law came up. Permits. But also engineering things like gas pipes losing pressure by the time it got to their spot along the line. Someone with experience opening a brewery before would be great. You may want to change the beer world, but if you shoot yourself in the foot the minute you sign your lease, you'll be in trouble. 

Think where.

Pick the location very carefully. That's a bit from the last tip -- the actual physical location is super important -- but it goes beyond that. Consider the socio-economic status of the region you're entering. Consider your ties to local culture and people. Consider the crowd -- how far is the closest brewpub, and how far are you from a residential area that might go to your spot because it's the closest one? 

To that end, we actually have the beginnings of a tool that might help. Follow the roadmaps we set up here, and you may open a brewery in Albany, Georgia, or Bakersfield, California. Just make sure that makes sense, and that you bring in someone with local ties. 

Think what.

Have a breakout beer ready to go. The beer is hugely important! You need to have that one sentence marketing campaign ready to go. "Oh that place? They do have an awesome caramel smoked milk stout, you gotta try it." 

I mean, it's obvious, sure. But every brewery begins with a beer or a few beers that define it. It takes a long time to blow past that, and even to this day, Lagunitas and Anchor Steam and Sierra Nevada are defined by the yeast and water and sweetness choices that are actually fairly common across their beer offerings. There's something about Otra Vez, Sierra Nevada's lemon gose, that's still very Sierra Nevada. 

Find that thing that your brewer does better than anyone else and begin there (and if they are a great brewer, give them a piece of the business so they stick around for a while). Ask your brewer to do a few iterations on that one beer that is his very best. Develop second and third acts, other beers that fit their style and create an identity for your brewery, but remember that there needs to be one in the lineup that makes everyone make that face that Samuel Jackson makes in Pulp Fiction.  

You know, that one.