Contract VS DIY
I stopped by and talked with Adam from Linden St Brewery over the weekend and had an interesting discussion about starting up a brand new brewery from scratch. For those of you who aren’t aware, Adam just got licensed to produce beer in Oakland earlier this year after trying since 2005. He is now the first production brewery in Oakland since 1959.
Adam got the lease to the building back in 05 and finally had equipment put in around 2007. However it has taken him an additional 2 years to get the proper work done to be able to make and sell beer to the public. We began talking about the challenges 510 is going to face over the next few months/years and the idea of contract brewing was brought up. At first I thought, “No way, this is my brewery, I want to make the beer.” Adam had the same thought back in 2005 and it’s taken him 4 years and hundreds of thousands of dollars to be able to sell beer.
I know I am an optimist (my wife calls me unrealistic) and a bit naive, but I do know there is a lot of time and money that is going to have to go into starting a brewery up. Specifically money. I think it is safe to say that any bank I walk into right now will tell me to kick rocks if I want the kind of money needed to buy the things I need. But what if we took baby steps and started doing contract brewing through a local brewery to get our name out there. Let another guy worry about busted equipment. It seems like a logical move to get the ball rolling.
What is everyone’s opinion on a beer that is contract brewed vs the actual company making the beer?
Posted on November 23rd, 2009 by tsmith
7 Comments
I know nothing about this, so just my two cents, but I think it’s a good idea…a means to an end, you know? Granted, brewing is awesome fun and if you’re brewing it on your equipment and selling it, it feels like your own. But at what expense do you want to have that feeling of “owning it” from start to finish? If it saves money (especially in the thousands), I say look at who provides this service and at least meet with them and see what they have to offer. No point in trying to reinvent the wheel, at least until the brand is locally known and there’s some income.
Depends a bit on what your end goal is. If your end goal is making/selling beer – then, it makes sense. For good or bad, with the broader selection of craft beer now on the market I think getting a new product out has as lot to do with marketing/sales/image/distribution/etc. It’s nice to think that a solid recipe is enough, but I think that might be a bit naive. When I hit the craft beer aisles these days, it’s getting more like selecting wine where a good label can make the sale. In any case, the point is that it makes little difference where/how the beer is made so contract brewing wouldn’t be a problem.
On the other hand, if the end goal is a brewpub, then another angle that might be worth exploring is finding a chef that has similar ambition to set out on their own and create their own place. Then, team up to start the business. The restaurant could carry things until the licenses and other issues are worked out. But, the huge issues this path introduces are – 1) running a successful restaurant is very hard and 2) business partnerships with people you don’t know very well can sometimes be disastrous.
(Caveat – I’m by no means an expert in any of this, just an opinion as I see things.)
Patrick,
For now I don’t see us opening up a brewpub any time soon. It would be nice, but I would be lost trying to figure out how to run a restaurant and a brewery at the same time.
The marketing/branding is definitely something that we are going to start and put a lot of emphasis on. You bring up a valid point that the labels can sell a product. The perfect example is El Toro Brewing Company which is one of the more local breweries in our area. I have yet to pick up a 6 pack of their beer, probably because the packaging looks bland. Now the beer might be amazing, but the first thought in my head is associating the packaging with the beer.
On the flip side, bottling might not be happening in the first year or so of our existence. That might change as we progress towards opening. So tap handle design and marketing is going to also be a major hurdle we will need to overcome.
Travis, you might want to seriously consider a collaborator if you don’t think you have the resources, or could secure the necessary resouces alone. An experienced restaurant operator willing to take you on as providing the “house beers” at his brew pub might work out in the right circumstances. Of course, it all depends on how well you’ll both work together. Contract brewing might work out if you can find a brewery at low capacity willing to take it on for the price you’re willing to pay. Of course, any of these collaborations will probably result in some loss of control or compromise in your business plans, but also creates the possibility of working with someone with the business experience and resources to help you accomplish what you want to achieve. While marketing is important, do not underestimate the importance of finding a way to get your beer in front of paying customers. These are just a few thoughts and observations of someone involved in business a lot different from selling beer, but I think they remain valid in the brewing industry.
Derrick,
I have considered going into some local restaurants and bringing up the topic of converting the place to a brewpub for house brews. However that will still require a significant amount of capital that we don’t yet have. The brewpub I work out now may be able to squeeze out a 10bbl batch once a month, which definitely is not sustainable. There are a couple of other production breweries nearby, but from brief conversations it still seems like it would be running into a capacity limit at their facilities.
A Dogfish collaboration beer?? I didn’t know they had one until I read about it here. I would love to try that one, I’m a big fan of DFH. I recently picked up Depth Charge which is an Espresso Milk Stout and a collaboration between Terrapin and Left Hand – REALLY nice beer!!
The Brooklyn Brewery started of contracting their beers while they built the business. Seems like a solid way to go. I’ve been reading about it the owners’ book Beer School: Bottling Success at the Brooklyn Brewery.