Please take the time to read this if you are considering buying a system smaller than 7 barrels for a start-up.....
Links below provide additional information.
THE MINI-MICRO-, PICO- AND NANO- BREWING SYSTEMS PAGE
Please
take the time to read this if you are considering buying a system smaller than 7
barrels for a start-up.....
Links below provide additional information.
This page is designed to inform buyers interested in what
we'll call Mini-Micro brewing systems, which for our purposes are those under 7
barrels in batch size. Most of the one seen on the used market fall between 3
and 4 barrels in size. There are a few 1 to 2 barrel systems that show up
from time to time, and a very few 5 barrel ones exist as well...5 barrels is
actually the rarest of all sizes on the used market.
There are one or two applications we feel Mini-Micro plants are good for, and quite a few more that they are not good for.
In a nutshell, here is what our long experience in this industry has shown us:
1. In 24 years in this industry, we have
seen NO evidence that a start-up microbrewery (meaning primarily wholesale sales, NOT a brewpub) is a
viable business at less than 10 barrel size, and more realistically 15 barrel
MINIMUM size. A micro will
not become consistently profitable until it produces some thousands of barrels per
year...3,000 or so is a ballpark number. You can't get there with a
3 or 4 barrel
system. Do the math.
2. A start-up brewpub needs to be scaled to produce and sell 500+ barrels of beer in house
to be successful. We believe this requires a minimum 7 barrel system. While smaller
systems can sometimes produce this much, the labor cost on a 3 or 4 barrel system is often too high
to make a decent profit. The cost of beer production on a 3 barrel system will
approach the cost of buying wholesale microbrewed keg beer from a distributor. Given that, why go through
all the licensing and regulatory headaches to make the
same money? Open an alehouse instead.
3. Tiny systems like 2 barrel plants are for the most part good only as pilot plants or
hobbies (as in big home breweries). They are not commercially viable for even a
tiny brewpub.
4. A 3 or 4 barrel microbrewery (wholesale production) is doomed to either fail, or enslave
its operator with interminable hours and little compensation until he can upgrade his
equipment to a large enough system to become profitable on. In many instances the
venture self destructs and visits financial ruin upon the owner.
5. Mini-Micro systems are useful for a multi-unit brewpub operator
(brewpub chain) in some instances.
These include opportunities to open satellite locations which (A) do not need to make
all their own beer on premises but (B) do need a brewery to get the license due to state
laws. In those states where this scenario applies, brewpubs are permitted to
transfer beer from one location to another. The Mini-Micro brewery becomes more of
a decorative piece that sees occasional use, and, of course, qualifies the establishment for
a brewpub license. Some of these establishments may brew as little as once a year to
comply with the laws, others use them for experimental or exotic brews like Belgian
styles.
6. Incrementally, a Mini-Micro system is the most costly to buy of any size and even more costly to
operate. A 7 barrel system of comparable quality is not twice the cost of a 3 barrel
system but it has far more potential expansion capacity. Buying a
Mini-Micro system and
replacing it later is very costly.
7. We have seen many times that adding a brewery to an existing restaurant
or bar usually does not work. A brewpub needs to be created from scratch, not
added on to an existing establishment. It is axiomatic that adding a brewery
will not "fix" an establishment that is "busted" (i.e. not successful), nor will
it add meaningful value to one that IS successful.
MORE FACTS TO BE AWARE OF ABOUT SMALL SYSTEMS:
8. The amount of labor and time it takes to produce a small batch like 3 barrels
is no less than the amount required to make much larger batches. Cost of
production is therefore much higher on a per barrel basis in a small plant. Too
high, in most cases, to make brewing on this scale profitable, whether in a
brewpub or a wholesale microbrewery.
9. The cost of ingredients purchased in small quantities is significantly higher than in
larger quantities. Shipping costs on small orders accentuate this disparity even
more.
10. It is likely that the TRUE cost of brewing beer in less than 7 barrel size batches
will equal or exceed the wholesale price of craft brewed beer bought from a
distributor. If your cost of production is greater than wholesale, where is the
profit?
11. On a dollar per barrel of capacity basis, small systems are by far the most
expensive out there. Cost versus capacity drops precipitously as size increases.
12. Many microbreweries (meaning wholesale production breweries as opposed to
brewpubs) that start up with smaller than 10 barrel systems fail within 2
years. Those that don’t quickly run out of capacity and find they need to
replace their equipment and/or build a new facility–an expensive proposition.
13. Most brewpubs that start up with smaller than 7 barrel systems find they
either cannot meet their demand (and have to replace their equipment and upsize,
a very expensive and disruptive process) or that they cannot offer enough
variety or consistency to be successful, and then they simply close.
14. The only applications we believe these small systems are appropriate for
are:
(a) A regional brewpub chain that is opening a satellite store, AND has
the ability to supply beer from other brewing locations, and therefore only
needs the brewery in place to comply with licensing laws. In
that situation, where the brewery will be operated occasionally to make
specialties and one-off brews, small systems are appropriate.
(b) Rarely, as a pilot plant for an established regional brewery.
This rarely works because the brewing capabilities of these systems are usually
quite limited.
We can’t think of any other applications where they make sense, either
financially or logically.
We have a love-hate relationship with small systems. This is because:
15. They inherently generate more inquiries for us than all other sizes combined,
but most of the shoppers don’t have the funds to buy a system. They consume
a lot of our time and energy for a very modest income they produce. The buyers
who pursue small systems tend to be the least informed, the least business
savvy, and the most likely to have problems with every stage of their project.
16. We resell the same small systems, over and over again, due to failures and
the realization that they are too small to sustain a successful commercial
operation. In that way, they are a form of job security for us, although one we
would just as soon do without, for reasons already mentioned. We have sold
and re-sold certain 3 and 4 barrel systems a total of FOUR!! yes, FOUR!! TIMES!!
17. With a small system, you are damned if you succeed and damned if you fail.
If you sell all the beer you can make you will (absolutely guaranteed) run out
of capacity and have to start over.
We are willing to sell a buyer any size system that he wants, if we have it
available. But we see a lot of
start-up brewers buying systems that are hopelessly undersized for any kind of
commercial success. We'd much rather see our customers be successful than not.
Often, we end up selling the same systems multiple times because they were not
part of a viable business plan and the business fails.
A lot of Mini-Micro systems were sold to restaurant operators during the big industry
boom of the late 1990s. The fad mentality convinced many that they needed to
add a brewery to their restaurant to stay on the "novelty curve." Most
found that the brewery didn't add anything to the bottom line and in many cases subtracted
from it (especially when they lost seats to make space for the brewery). A lot
of them didn't understand brewing at all and treated the brewing end as a gimmick, with
predictably bad results. News Flash! A prep cook is not a brewer. Most of the
Mini-Micro systems originally sold to
restaurateurs have by now changed hands, some of them several times since they were new.
In our view, the manufacturers who sold these systems were simply practicing
opportunism and did the industry a disservice by building and selling them at all.
OK, so you’ve read all this and you still want to set up a 3bbl or 4bbl brewery.
We will be pleased to sell you equipment we have available. We have done our
duty and warned you of many of the pitfalls. We don't offer
technical support or warranties on used systems--you are on your own. And we sincerely wish you good luck in spite of the
minefield that awaits you. Please hang on to our contact info, we will be happy
to assist you when it’s time to expand with bigger equipment and time to sell
that little system that you can’t wait to replace.
Click the links below to continue...
OK--I'VE READ YOUR INFO AND I STILL WANT TO START SMALL. SHOW ME WHAT YOU HAVE!
I'VE READ ALL THIS BUT AM STILL NOT SURE. I WANT TO SEE MORE INFO.