How Much Does It Cost to Start a Brewery?

In September, I wrote a post for Beerpulse about how I’d raised $1.25 million to start the brewery. Last week, when I asked Modern Times’ Facebook fans for suggestions on my eventual Kickstarter video, a few people were like, “Whoa, whoa, WHOA there, Mr. Moneybags, what do you need a Kickstarter campaign for seeing as you already got all that sweet, sweet money? Eh, Lord Bountiful?”

It may sound ridiculous, but it never occurred to me that anyone would think $1.25 million was a huge sum given the task at hand. If you found it in a suitcase, yes, it would seem like a lot, probably because you’d start thinking about how much coke you could buy with it. If it were your annual salary, then yup, that’d be a lot too, even though you’d probably have an absurdly distorted sense of your own relative wealth and deny it like a jerk. But if that’s all the money you have to start a 30 bbl brewery, then no, that is not a lot of money.

Can you start a 30 bbl brewery for less? Absolutely. There are all kinds of ways you can compromise quality, sacrifice worker safety, put off crucial purchases, make yourself inefficient, and worsen the consumer experience that will save you money.

That statement may make it sound like I have unreasonably high standards, but trust me, I do not. Some perspective: there are many, many new breweries that have smaller brewing systems, smaller buildings, and smaller ambitions that have raised a lot more than $1.25 million. And spent it all. And needed more. The difference is that most people won’t tell you how much money they raised, so you don’t get to question their fundraising choices.

My general approach to start-up expenses is pragmatic. I don’t care if something is used or looks like shit or isn’t hyper-efficient from the get go. Initially, the brewery just has to function well enough to make beer that meets reasonable standards for quality while being a decent place to work and visit. The basics.

But what are “reasonable standards”? Some would argue that a brewery couldn’t meet “reasonable standards” of quality without a laundry list of items that others would consider decadent, sinful luxuries.

I, for instance, consider a 3-vessel brewing system an unholy luxury, but there are oodles of start-ups that feel a need to have 3 and 4 vessel systems. Some people consider a North American made brewing system an absolute necessity; I do not. Hell, some people see sloped floors as a luxury (and there are large, successful breweries with floors that are goddamn stinking pietri dishes of multi-colored molds and fungi who still make excellent beer, so clearly it can be done), but I do not consider sloped floors a luxury. And that will end up costing me over $50,000.

So each day, I have to decide what standard I can set with the budget I have. Rest assured, it is not an excessively high standard. A grain silo, more sloped floor space, a third 30 bbl fermenter, a spent grain removal system, a separate mash mixer, a well-equipped lab, a decently sized pilot brewing system, and a tasting room cold box are all items I’ve said “no” or “maybe” to recently because of budget concerns.

The absence of those things will impact the consumer experience in one way or another. I could afford all of them if I’d raised twice as much money. But I didn’t.

So when you see me launch the Modern Times Kickstarter campaign, it will be those kinds of things that generous donors will be asked to finance. Things that will make their experience of the beer and the brewery better. Because whatever those things are, I can’t afford them right now.

Comments

James

Wed, 01/16/2013 - 05:49

I agree with Thomas. This was a very well written and insightful article. I will say this though, there is a local brewery here in Jacksonville, FL called Bold City Brewery that started their opertions with a mere $250k. They sold close to 6,000 barrels last year, which was only their 4th in operation. While speaking to the owner he emphasized that there is a common misconception that it takes a million dollars to start a brewery. Granted they had to search high and low for used equipment, and had to put in a lot of extra hours an elbow grease to get some of the equipment functioning again, but they made with what they had. He said it's really all in how much time and effort you are willing to put into the busines, which really pertains to anything you do in life. Just thought I'd share. Best of luck to you in your endeavors.

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I've definitely considered starting up a micro brewery in my city. They have become quite popular and are growing at a steady rate. City is a bigger one so it's no surprise that the market has developed a larger interest. We have tried roasting our own coffee in the past without much luck in terms of making a solid profit but we also didn't have much start up revenue to work with. WE now have a large sum saved up so we were thinking of opening up a brewery & cafe together! Who doesn't like quality beer and good coffee!? Anyways, I'll for sure be reading more on here and learning as much as i can, good to see there are others here chiming in with their opinions as well, the more the better!
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Modern Times

Wed, 01/16/2013 - 05:53

That's exactly my point: you can start for much less, but it depends on what you view as a "necessity" (also on how big you want to go.) If you don't feel that sloped and coated floors, a steam jacketed kettle, etc. etc. are necessary, then you can start with less. But those decisions have a very real impact on both the consumer experience and the work experience in the brewery.

Alan

Tue, 12/11/2012 - 06:42

I love how transparent you are about the process. I think there are a lot of people out there (like myself) that love trying new beer from new breweries but don't know anything about brewing specifics.

When you break it down like this, it's clear you're serious and have a plan of attack.

I'd be more willing to donate to a kickstarter run by a project that already has a bunch of assets but explains what else they need to purchase and why in an open, honest, logical and reasonable way than a brewery begging for $10K trying to rush into production and distribution.

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Modern Times

Tue, 12/11/2012 - 06:48

Awesome, glad to hear it Alan. Rest assured I will detail exactly what Kickstarter funds will be used for. Honesty is, for me, at the root of authenticity, so every time I ask myself, "Should I really be putting this info out there?", the answer almost always ends up being "yes."

Thomas M.

Tue, 12/11/2012 - 04:30

Excellent article and very well written I must say. If prose is your weakness compared to your brewing skill, America, watch out we've got a winner. Best of luck in the endeavour and I hope you're able to exceed the funding goals on Kickstarter.

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Fri, 02/01/2013 - 11:55

1. Yes, it was exaggerated for effect, but nonetheless, the comments sounded suspicious of my motives, rather than purely curious. Either way, it's the internet and there's no tone of voice, so it's hard to tell.

2. If you disagree in principle with crowdfunding, then we just have to agree to disagree. I think Kickstarter is amazing and brilliant and totally appropriate because businesses are not just profit/loss machines, they are social organisms and it makes perfect sense to me why someone would want to participate in the creation of one. Practically speaking, there are countless benefits to making improvements when you're already doing construction rather than waiting until you've accumulated capital through sales.

3. They do share in the rewards by receiving--literally--rewards, which in this case will include t-shirts. Kickstarter allows fans to work towards a common goal on a deadline, which you can't do with a standard online shop.

4. Glad to hear you're a fan of the blog!

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Mike Strickland

Fri, 02/01/2013 - 11:07

I'm late to the commenting party here, but I suspect I may be the genesis of this posting. Though I don't recall referring to you as "Lord Bountiful," I did comment the following on Facebook: "I may have missed something, but I'm curious why a brewery that raised over $1M in startup funds needs a Kickstarter campaign?"

My comment (and the single other comment questioning your need for more funds) lacked the snarky tone of the example in your first paragraph above, but as a wordsmith myself, I give you a pass for artistic license to make your point (which, I agree with the others, was well expressed).

Just to clarify why I asked the question in the first place, I suppose I personally disagree on principle with the idea of a for-profit enterprise essentially asking for donations (you yourself use the word "donors"), especially when that business is already well funded. Yes, I understand the Kickstarter model -- it's more like patronage than charity -- but in spirit, it's meant to fund creative projects, not businesses (I'm not saying brewing is not creative, but it is a business nevertheless). If you have enough money to start now, but would like to have the extra bells 'n' whistles that more funds could buy, then maybe the better approach would be to open with what you've got, and if your product is all that (I look forward to trying it), then the funds to improve your customers' experience will come.

I also believe that anyone who shares the financial risk of starting a new business should participate in the reward of that business' success as well. If you want to raise money in the kinds of incremental amounts you'd get from fans, why not just sell merchandise of some kind? That seems more like a mutually beneficial exchange. I probably wouldn't contribute via Kickstarter, but I'd buy a T-shirt or two! :-)

In any case, you aren't holding a gun to anyone's head, and I applaud the transparency you've demonstrated so far in your business. Anyone who chooses to sponsor your campaign will certainly know what they're getting out of it. My opinion is mine alone; I just wanted to clarify my original comment, after I saw it might have inspired your posting (though I'm terribly late in chiming in). And while I haven't tried your beers yet, I count myself a fan of your blog!

Dave Bennett

Thu, 05/23/2013 - 12:31

I completely agree that $1.25million is not an obscene amount of money when you are starting a Brewery. I remember when I opened mine the shipping alone for three 30BBL tanks was a good chunk of change. Which is a whole different story. After spending an outrageous amount of money on shipping and other cost when you are new to this industry you start getting a little knowledge and finding out what everything cost and what companies to work with for transportation, installation and so on and so forth.

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"Not a fan of this guy… Grass roots businesses need to do more for less, not beg like a bit*h. Also who are you to not once but twice question someone’s motives for their comment? That other guy was giving you large benifit of the doubt and still you tried to slam him… Real cute. $50,000 for a sloped floor is ridiculous and only showed that you don’t knowJack about contractors."
Mark,
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However, I think you're off on your assumptions about the $50,000 sloped floor. Depending, on how exactly it is done, I see anywhere from $5-$12/sq ft for the slope in a brewery. Of course,variables include type of material, degree of slope, PSI, location, etc. I believe modern times was a 30 BBL brewhouse at ~3,000 BBL its first year within 12,500 sq ft, with several bright tanks and fermenters, maybe glycol and other big heavy tanks. Upon sloping the floor, they probably also installed trenches, and some effluent plumbing, a curb, perhaps other necessities as well. Brewers will reinforce that a sloped floor is not a luxury, it is nearly a requirement. With 3,000 BBL on the first year, and plans for expansion (24,000 this year), it makes far more sense to do that up front. No one wants to be in charge of squeegeeing the other water that comes with 24,000 BBL worth of production. Its also inefficient.

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