Part one of three

The step-by-step approach to
planning, building and running a small brewery
is the only way to fly.

Written by: Mike Coulter, P.Eng. cemcorp LTD. - Copyright 1987

So you want to build and operate a brewpub or microbrewery, huh? This article is intended as a brief reference and summary of the steps to building a brewing operation from start to finish.

GETTING STARTED

You have been reading "The New Brewer" for a couple of years, maybe even right back to the premier issue in November, 1983. You have become an enthusiastic homebrewer producing an excellent beer in your basement. You have sampled a number of speciality and imported beers. You have seen a proliferation of microbrewers suddenly appear in the market place and you believe that now is the time to stop thinking and talking about it and to do something about it since you see a great potential in an exciting new industry that has all kinds of possibilities for growth, profit, and fun.

Your problem at the moment is that you still have a few unanswered questions on how to go about it. And a lot of answers about brewing and the brewing industry about which you are not sure what the question is.

You have already determined the following facts and have arrived at the following conclusions:

Out of the above known facts, you are left with the primary question - How do I go about building a microbrewery the right way to minimize risk and maximize the chance of success? From all your reading of the articles in The New Brewer and other national magazines aimed at the brewing industry such as Modern Brewery Age, Brewer's Digest, the Master Brewer's "Technical Quarterly" and other periodicals; from the many textbooks on brewing technology; from conferences, exhibitions, beer tasting competitions, you have acquired a wealth of information on the subject. In fact, you have too much information on some subjects, some of it even conflicting and contradictory, and not enough information, data, or hard facts on other topics.

What you have probably found is that you are still not quite sure how to boil down all this information to suit your particular circumstances so that you can devise a good, sound business plan. In saying this to yourself, you have just recognized the most important point to remember which is that, unlike homebrewing, building and operating a microbrewery or brewpub is a business, a commercial venture, that must be profitable to survive, not just a hobby. Just because an enthusiastic homebrewer can produce an excellent beer in his basement which his friends and acquaintances applaud and encourage him to branch out and commercialize, does not guarantee that he can successfully own, operate and sell his great brew commercially.

And even if you build the brewery right, you must remember that you have identified and have decided to enter the speciality and imported beer segment of the market which represents less than 5% of the total beer market. The major distinction between your beer and that of the top 10 is that yours will definitely be different.

TYPES OF BEER

A good beer is one that customers buy. The top 10 Brewers had 95% of the beer sales market in 1986 because they marketed products that people wanted to buy. By this definition then, they make good beer. A better beer is one that customers will pay a premium price for. By this definition then, you hope to produce and sell a "better" beer. The simple definition of a bad beer is one that customers don't buy. You have no guarantee that the products you finally produce and market will fall into the "better" or "bad" category. These are the only two choices that you have since there is no point in trying to duplicate an A-B or Miller or Stroh beer as they do an excellent job at producing and selling this type of beer.

The primary objective of any commercial venture is to make a profit. However, in order to make a profit, you must resolve a myriad of problems covering all facets of marketing, financing, engineering design, construction, administration and operation of a commercial enterprise. What you must know before you even begin building a microbrewery is how to start a business. If you have never been in business for yourself before, the first thing you will have to learn is how to create and develop a successful business, the fundamentals of which apply to any business not just a microbrewery. That is a subject all on its' own. For the sake of space in this article we are going to assume that you understand the basic principles in starting and successfully managing your own business.

FUNCTIONS OF A NEW CAPITAL PROJECT

If you are going to build a brewing operation from scratch, what you are considering is a capital project that can be broken down into nine basic functions. Each function must be managed properly, from conceptualization to start-up. Whatever the type, form, style of brewing operation that you are contemplating, whether it be called a boutique brewery, craft brewery, cottage brewery, brewpub, microbrewery, etc., there are many questions, not just a few, that you will need to obtain the answers for as they apply to your situation. You may already know the answers to some of the questions but others you will have to research. To assist you in organizing the answers that you have obtained to date and to identify some important questions which you may not have considered, the following is a list of nine function steps that you must systematically and professionally proceed to do. Important questions that you need to ask yourself and find the answers for are listed in point form for your reference as a checklist of topics, problems, etc. to be covered under each function. The only difference between the answers for the brewpub as compared to the mini-brewery will be the depth and detail of the answers, but the questions are common to all new brewery ventures. The answers may be quick to find, or may involve a lot of time and money to ensure getting the best answers. Before you start, you need to have "seed" money available to pay for various studies, deposits, legal fees, etc. which should figure you may never recover.

STEP-BY-STEP FUNCTIONS OF A BREWERY PROJECT

1. Conceptual Examination

2. Market Examination 3. Feasibility Examination 4. Project Justification 5. Financing 6. Project Planning 7. Construction/Implementation 8. Final Inspection/Testing 9. Operational Management

Commissioning and Startup

Operation Now You're in Business!

In the next couple of articles we will discuss some of the key questions in each function and offer some suggestions of possible answers.

Reprinted from The New Brewer, Vol. 4, No. 4

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