What Kind Of Brewery Should I Start?

I’m going to try to steer this blog back towards the direction it started in: as a transparent look at the life of Modern Times and a soapbox for my wacky ideas. I never intended to abandon that direction, but the rigors of running the brewery have made it impossible to keep up. Alas, I am now clawing my way back to sanity, one badly needed vacation at a time.

Recently, I’ve been thinking a lot about what direction Modern Times should grow in. Chris, my COO, and I have had a bunch of discussions about different business models, and while those discussions are still happening, it got me thinking about what advice I’d give to a start-up looking to differentiate itself in an increasingly crowded market.

So I figured I’d highlight 4 craft brewery business models that seem underutilized to me. These are approaches that I think offer a lot of opportunity to breweries that can execute them well, while also strengthening the craft beer movement by providing some badly needed focus and diversity.

1) The Cult Winery. More and more craft breweries are following the path blazed by cult wineries: tasting room plus subscription service, with little or no wholesale distribution. This approach makes a great deal of sense if you’re selling high-priced, high-quality, innovative bottled beers. You need to sell a metric shitload of wholesale beer to make any money, so if you’re planning on staying small, the Cult Winery business model offers a much quicker path to profitability, while also eliminating some of the cash flow issues that plague most breweries. The challenges, of course, are numerous: your brewery must have a lot of buzz, your beer must be very high quality & brewed in rare styles, and you must deliver on what you promise. Nonetheless, I think this will become an increasingly common approach, especially for brewers with established pedigrees striking out on their own, since the buzz will follow them and the capital requirements are comparatively low. This path was blazed within craft beer by The Bruery and has recently been getting attention for folks like The Rare Barrel.

2) The Gastrobrewpub. Most brewpubs like to play it fairly safe with the food, and very few have a reputation for gastronomic greatness. And seriously, if you open another brewpub that serves pizza, I’m going to punch you in the dick. But a few daring folks are starting to combine small-scale breweries with more adventurous, upscale restaurants, and I think this approach has a lot of room for growth. American’s desire for gourmet food has never been greater, and neither has the portion of income they spend on it. Obviously, starting a great restaurant requires serious restaurant skills and experience (or partners who have such skills), plus the brewing chops to make beer that’s suitable for such an environment, making it a lot harder to pull off than a standard brewpub and requiring a skilled team of experienced operators. But the results can be fairly spectacular, as evidenced perhaps most clearly by Right Proper Brewing in Washington DC.

3) The Style Specialist. Let me be blunt: there simply is not room for an infinite number of standard production breweries (like Modern Times), and even if there were, it would make for a boring beer scene. But some young breweries are choosing to focus on a narrower set of styles and having some pretty amazing success in the process. Breweries like Tired Hands, Prairie, Logsdon, and Almanac are becoming super popular while keeping their line-up within a fairly limited style range, often saisons and Brett-spiked beers. And it makes perfect sense: why try to do everything when you can do a few things really, really well while catering to a small but loyal audience? One of my favorite examples of this approach is Duck Rabbit, who have been very successfully brewing & selling nothing but dark beers in the South for 10 years; a counterintuitive approach if there ever was one, but you can’t argue with their success (and delicious beer).

4) The Single Beer Brewer. If you have one great recipe, why bother making anything else? This approach is, of course, the oldest model of all, but it’s clear it can work in the modern craft beer world, too. Breweries like Trumer, Mac & Jack’s, and The Alchemist have shown that you can have great success with just a single beer (or close to it). The key, of course, is for the beer to be outstandingly good, or to have it fill a specific niche. And there are even plenty of existing breweries that could successfully rejigger their approach in this direction, too, by expanding the availability of their all-star beer while ditching the filler brands. As the craft market becomes more competitive, being able to focus on the quality and distribution of a single, highly-lauded brand would be a huge, huge asset.

I realize the irony inherent in encouraging people to not a start a brewery like the one I started, but if the U.S. craft beer movement is going to mature and adapt to its increasingly mainstream position, it will require us to take a diversity of approaches.

Anyway, that’s all for now. I hope this provided food-for-thought to a few would-be brewery owners out there.

Cheers, Jacob

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