Why Scaling A Small Brewery Is Hard
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- Опубліковано 29 лип 2024
- Scaling my small brewery has been the hardest part of this business so far. Trying to cash flow growth has been difficult and in order to grow I need to be able to produce more beer. This video walks through my jumbled thoughts on why it is so difficult to scale a small brewery.
#craftbeer #pivo #craftbrewery #czechlager #distribution #templetexas #brewing #beer
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Tanglefootbrewing.com
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Tanglefoot Brewing is a small Czech lager focused brewery in Temple, TX.
In 2021 the brewery opened in the back of my family's BBQ restaurant that had been operating for 53 years. The restaurant has since closed and Tanglefoot has now taken over the entire space.
This UA-cam channel was started to document the process of opening, running and growing a small craft brewery.
There are only a few breweries in Massachusetts that have no distribution and 100% is sold at the brewery. Tree House is probably the most successful example. They are killin' it. They don't sell food either (only food trucks) but they do have musicians play regularly.
In terms of lager only breweries, Bierstadt Lagerhaus in Denver....but they sell limited food like pretzels, snitzel, wings, bratwurst. You may want to call them and get advice from them. I have listened to many podcasts from them and they sound like good people.
Cheers!
I had no clue Tree House didn't distribute. Cudos to them for having so much success with a purely on-site model!
Bierstadt was definitely an inspiration when starting this. They went big on capacity and space out of the gates which I've heard had its own challenges but I guess you just gotta pick one or the other and just roll with it!
Cheers 🍻
Superb look at the conundrum of scale. Appreciate the candor. Respect. And all the best! I am certain things will work out just fine.
I really appreciate the support! Feels like your own bubble running a small business. 🍻
This one feels real close to home. I have a brewery in planning and all of the things you’re talking about keep me going back and forth on how I want to approach the business plan for eventual funding. Thanks for the video
Feel free to drop me an email if you want to get on a call and talk through the thoughts. Would be happy to help in any way I can 🍻
Very interesting looking at the business side of owning a brewery. I've seen breweries invest in capacity without a plan for distribution and then fail so its good to see you have the foresight to plan ahead.
It's a bummer that even with a good plan for distribution, it's so capital intense that there is not much room for error, hence the indecisiveness in the video ha
🍻
Second tab room vs distribution! There you go.
Will you run it? Jk.
It's on the list of options for sure. Having a hub for bproduction with small satellite tap rooms sounds interesting. 🍻
Thank you for this video Andy
Thanks for watching! 🍻
Great video. It’s tough in many businesses right now. Great info for anyone looking to do a startup or expand.
Very true. I have to constantly remind myself that these are just business challenges, not specifically brewing related. Cheers 🍻
My friend, let me just throw this out. Utilize that new equipment and brew double batches 3 days a week for 600 bbls/yr. Gear up with larger brights to serve out of, larger fermenters, outside cold room and upsized chiller. Rack jacketed horizontal brights in your tasting room for long term lagers (with bags for easy cleaning). Market to serve more in house by adding more styles/offerings. Financing help per earlier comments.
Look up far you've come, and I believe you have what it takes to do you even more. You don't need to go to a distributor, as there are a good dozen restaurants that would love to serve your flagship beers! That is another 2 to 3 kegs a week each out the door. Just bring it to them. 😅
More tanks = more lager = 🤘
Love the video.. absolutely amazing content. To help answer your question is what is your goal in terms of specific dollar target. Do you want to grow to a multi million dollar brewery or are you happy making 200k gross revenue and knowing all your customers, the answer lies with you 🙏
Thank you! Those are great questions i ask myself every day. I will keep the channel in the loop when I figure out what I want to do when I grow up 🤤
Its all about organic growth brother! Never forget it!
Glade you made this video, it was great talking with you this last weekend! It’s always a numbers game unfortunately. More FV’s & More kegs =‘s more everything else too haha
I’ll definitely stop by when I back in TX! Oh Austin was great. Cheers
That's great to hear! Glad you had a good time. Thanks for stopping by 🍻
Try being in Maine where we already have a brewery per 10k people and the distribution laws are horrendous. I feel your pain as I just would want to open a brewery but try putting one in when no banks will loan money for it and there's a bunch of cities where you have to be a restaurant in order to be a brewery...
Damn, that's a pretty high brewery per capita. Maybe everyone drinks 2bbls of beer a month???
Thanks for the breakdown and thought process behind the investments and cash flow. A podcast I listened to a while ago talked about the changing landscape of breweries, and while it used to be build a warehouse taproom and drinkers will come, but now its the blend of taproom and distribution in the initial phase and then opening the brewpub second phase (around Chicagoland 30-40% have some connection to food service). Adds a whole extra facet beyond being a great brewer and brewery owner. I have opening a brewery on my 5-10 year plan, but I’m watching the market to see if it’s truly feasible.
Good luck on figuring out your next steps! The challenge of figuring out projections vs debt vs cash flow, it can be a tough puzzle to solve, especially when it’s your money on the line, so I wish you the best!
It's all a jumble of thoughts, that's for sure.
So you are trying to open a brewery? Not sure if I read that correctly.
If so, would you be up to chatting on Zoom and talking about your business plan? I think it would be super valuable to see that planning stages for other folks. If so, feel free to email me at Andy@tanglefootbrewing.com. Cheers! 🍻
new sub, wonderful well made and engaging content :) really love it. good luck with scaling up dude :)
Thank you! Glad you like the vid. I'll keep it up as best I can 🍻
Great video. I’m an assistant brewer in Tennessee. We have a 10bbl system, 1x20bbl FVs, 3x15bbl FVs, and 4x7bbl FVs. Slower taproom sales are pushing us toward more distribution right now. So much so that we just got an in house canning line to reduce the cost of canning which we previously outsourced to a mobile canning company.
Thank you! Ya, seems like similar obstacles no matter the size. Guess we just gotta keep on pivoting in this market. 🤷♂️
Assuming you have guild member access, there’s actually some good resources under the education tab. At the last conference in Houston, some seminars discussed opening/planning a brewery as well as scaling it up, and their PowerPoints/notes should be available now
A neat thing that my local brewery does is it sponsors our rugby team. We'll head over to the brewery once a week after practice and will have our post-game there as well (when we're at home).
They'll also have a guy set up a taco station inside the brewery on their busier days
I supply a local sandlot baseball team with a discounted keg for their games and they rep it pretty hard 🤘
Hey dude, I asked a question around this on your podcast with CH, good to hear you going into further detail about the issues, its definitely a tricky balancing act from the sounds of it, but I think the phrase 'Gotta spend money to make money' applies here.
It definitely does. I feel compelled to prove the model will work before investing in more equipment but, then it's a chicken or the egg situation. Glad you caught the live stream! 🍻
I don't know what you're considering as far as "scaling" is concerned, but it appears to me that you could considerably increase output just by adding fermenters or unitanks. I'm the brewer at a 3 bbl brewery, and we currently have seven fermentation vessels and one bright tank. I think we could manage at least two more fermenters, preferrably unitanks. Just today, I was able to transfer a beer from a fermenter into a unitank I had just emptied to use as a second bright tank. We kind of got into a lager logjam over the last couple months and now I'm in the process of breaking it loose. We only do very minimal canning/bottling but self-distribute sixtels to other businesses to sell our beer from their taps. I have no idea Texas' laws on self-distribution, in Indiana it's allowed.
Yep, the scaling wpuld he more tanks and a glycol chiller. 🍻
Sq ft is critical too.
Great insight! It's so hard to figure out what upgrades are worth it and how to justify them. I spent too much on a labeler for mine and it will take a year or more of production to get the cost of it down to about 20 cents a can (although I'm not counting my time spent, so if you had to pay someone $15-20/hour it would pay for itself in a mere 800 batches). Scalability vs affordability! Cheers!
That's always the balance! Why can't I just get $1,000,000/keg????
Andy if you ever have been to Russian River , they started a small pub but created one of the most wonted beers in the country but you could only get it their . Promote ,promote , promote , got to get the beers out there . I do think festivities help , people would love to sit eat good TXs Bbq and listen to music and drink some good beer . Plus it would good for local community .
It's on the bucket list! Haven't been in person but love their beers. 🍻
I feel this video extremely well. I will say that another option is (and I don't know Texas law at all being in Florida) that having a distribution company in tangent to or in serial to the brewery would alleviate a lot of the revenue sharing and contractual exclusivity issues that occur. If Texas does not allow mixed system ownership, then having someone else as the owner of the distributor with the brewery being the only client has potential.
In Texas you can't hold ownership in 2 companies spanning different tiers of alcohol(i.e. retail/brewpub and distribution). Self distribution is an option though, which is essentially the same thing you described. Cheers! 🍻
but why scale up if you dont sell all of your batches/month? l mean, until you ran out of beer and the customers keep coming ( even waiting 1 week for a new batch), it's waste of money and time. distribution may help, but also it puts you in the pool with the other breweries and you may find yourself lost in the crowd ( unless you have some gold medal beers won).
On paper that's true, but it's a little more nuanced. The beers I brew take 2 months to make, so running out is not just being out for 1 week and the main goal is to not run out of beer. So it's been a balancing act of pulling back on 6 pack sales and not sending kegs into distribution so the beer can flow in the taproom(highest margin).
Andy, how big is your chiller? That's the largest investment that is not necessarily required for a scale up. A set of 7bbl stacked Lager tanks (used of course) is a small lift that could get you to >250bbl. I saw a set on ProBrewer recently for $14k or so. If you don't need a bigger chiller, that is the most capacity you can add for the smallest investment. Horizontal tanks will brite beer faster, and are also great for fermentation.
That is the problem. Chipler is small and already undersized for the temps we see here in Texas. Wpuld need to scale that, then CLT, then finally get to tanks. All about that money 🍻🍻🍻
@tanglefootbrewing I have 1 1.5hp in my pilot brewhouse that does fine. Are you thinking about 3HP? That's the largest of the indoor units I believe. About $5k used :-(
@tanglefootbrewing once your glycol chiller is upgraded, I would recommend moving away from CLT, and just using glycol directly. For your knockout time (
This is great stuff...shout out to you and CH - appreciate you showing up on CH's webcast. Here's a question. Do you have room to setup a larger line AND keep your existing line? Here's why I ask - if you kept your current line for in house and added something that is kinda sorta PORTABLE, like the Brewha 5 or 7 bbl system, you can expand the big gear as you grow and use that to sell kegs in distribution. You wouldn't even need the Brewha chiller - the biggest headache on that system is you need 14 to 16 feet clearance to be able to extract the brewing basket and your building looks like it's 10 feet?
Glad you enjoyed the stream! Might just have to do another one in the future. I would just add larger tanks to double batch into from the brewhouse i cureently have. Not a big fan of the all in one design since it has some limitations, but definitely have considered the individual glycol units for each tank to get by. 🍻
@@tanglefootbrewing I would love to hear your explanations on those limitations - I greatly value experienced inputs on these things - it gives me more to consider if I venture into this biz. Cheers!
@@jcinsaniac will keep that in mind for the next live stream!
Have you heard of Four Priests Brewing? Another channel dedicated to a small brewery (I believe 3bbl too) in the UK and they’re looking to expand now too. Might be good to brainstorm with someone who’s in the same boat.
They dont have a taproom and mostly sell keg and cask to local pubs directly with some online bottle sales. it cuts out the middleman, not sure if thats as viable where you are.
Haven't hear of them. Ill check it out! Unfortunately, it's still illegal for breweries to sell be online. Would be nice though.
You’re in temple, relatively close to most major metro areas in TX, have you thought about offering your beer to concert/comedy venues? You start with a free offering (hear me out) people love the product, and want to know where they can get more tanglefoot. Or same thing in metro areas again like Austin, specifically going and offering your beer to the food truck scene and going grass roots? These might all be bad ideas, but I think you take the loan, scale up, and go full on marketing campaign to get your beer out there, hit every nook and cranny you can, be creative, the rest will fall into play. On a side note, I’m very much interested in checking out your brewery. Aaron from SA
If I could make more beer, I would definitely be able to do more grassroots stuff like events/sponsorships.
Hope you can make it by someday! Cheers 🍻
Is the additional funds for more/larger fermenters or for a larger brewhouse, (or both)? Is contracting some production an option.. not sure because of volume and/or location. But those are pretty grim revenue numbers.
Tanks, kegs and chiller. Can't contract brew under the brewpub license I hold in Texas unfortunately.
The brewery I work at has been having the same kinds of growing pains lately. Our distro was up massively last year and continues to grow, but the costs of scaling up to meet the increased demand mixed with the low margins on distro make navigation tricky and high risk. Feel free to reach out if you ever want to chat! I'm not an expert, but I have seen us grow and I'd be happy to share some of my experiences.
That's some great insight. What brewery do you work for? No worries if you can't say. 🍻
I m starting out small, 1b. TTB,state reg, waiting on county. Im going to distribute my beer, DSanke keg. Can you do that? Start small radius, grow from there. My permit is for main place of business, then off 1off site. You have great content. Thanks
Ya, that's pretty much the plan! Thanks for watching! Cheers 🍻
would more fermenters/lageringtanks not help?
Sure, you need to brew more often, but perhaps thats the plan anyway?
Im just a homebrwer tho, and i make 50l batches. Usually 2-4 times a month, depending on how often we have parties at home...
Buuut, i've been thinking of getting a 100+litre system, and not a 65l brewzilla. But its only 1 year old... Cant really justify it more or less for lazyness.
Yep, more tanks is key 👍
What do you think is the biggest bottleneck? My local brewery is 3.5 bbl, and they have to brew 6 days out the week to keep up with demand, however, their space cant support anything larger so theyre moving production offsite.
Have you thought about getting horizontal lager tanks?
Well to be honest the biggest bottleneck with my system is the Beers I choose to brew. These Czech lagers take about 2 months to make. If I brewed IPA with a 2 week turn time I could triple my production. Outside of that, it's just fermentation space and kegs.
Would love some horizontal tanks but they are much less common on this scale than cylindroconicals and therfore more expensive per bbl.
@@tanglefootbrewing makes sense! Not sure what the used market looks like down in Texas, but in Minnesota, there is quite a bit of used fermenters on the auction market. I was just talking with a brewery that sold their 5 bbl jacketed conicals for $1500 a piece on auction masters. Basically scrap cost
@TheShahart damn, that's cheap! Ya, there's a few auctions around here, but I always seem forget to stay on top of em.
just opened a brewery, very small one though.
my question is, can‘t you just brew more with the same system? If you bought more fermenting vessles (like 4000k max) you could already make more beer, right?
Need a bigger chiller and kegs to go with it. One tank would help, yes, but need a larger chiller which is the bulk of the spend. 🍻
A couple more brite tanks and fermenters would go a long way. Hopefully you can find a great deal
Agreed! Gotta have a new glycol chiller to get those. Then gotta get kegs to move that beer out of tanks. And the list goes on ha. 🍻
@@tanglefootbrewing what kind of chiller do you have at the moment (rather, when you recorded this)?
@@bayoijasan8550 it's a 3/4HP Pro Refrigeration Chill&flow unit.
I know you are figuring out solutions and maybe you have thought of this before but I have two thoughts that may or may not help. Do you have places that may "contract" brew for you? I know its not the optimum but it may help increase brand recognition and distribution. The other thing is the Section 179 Tax deduction for 2023. I know you need money to buy equipment but if you somehow get it then be sure to use the deduction as it applies to equipment purchases. You may already be aware of these things but I have been thinking about it since viewing your video. Im Polish..Na Zdrowie.
Unfortunately Brewpubs can not contract brew in Texas. That was actually a big factor I considered when trying to decide which license to pick. Ultumately opted for the simplicity of the brewpub model though. 🍻
@@tanglefootbrewing gotcha. Im in the state that invented beer (J/K) Wisconsin and that is a thing here. We had a local guy contract out for over a year before they actually opened the brick and mortar store. Keep at it and you will figure it out. You have the desire and intellect, sometimes you just go for it but I know its a big decision. My best to you. Have a great weekend!
@@eddiane I appreciate the support. You do the same! 🍻
Can you not keep your eye open for a cheap third/fourth fermenter?
I can't add any more tanks to the glycol system I have. Not enough cooling capacity, so I need to upgrade that too.
@@tanglefootbrewing I wouldn’t upgrade the brew kit. Keep that and more fermenters. Keep an eye open for any maxi chillers or even hack an ac unit if need be.
@AndrewLynch9 oh ya, definitely not upgrading the hot side. Looking for tanks and chiller specifically.
why not just open another bar like your current one, double your sales and maintain your margin?
The immediate need wpuld still be some more equipment to scale production. Definitely considering a satellite location in the future though 🍻
I cant give you any advice.
But in Europe i see many brewers go bankrupt or quit.
Even bars ,hotels. Loads of troubles created by Covid and most by the European commission and frightened EU leaders.
High rising energy prices, Water cost, Distribution kegs cost. New emission carbon laws. Chemical prices and new laws, Oil gas ban laws are coming up around 2026 ish.
The Ukraine Russia US proxy war also hasn't done nothing good for many, besides for the US weapon industry.
Things are gonna change fast economical. Even for the USA when the fuel gas prices and emission oil laws are coming.
Its gonna be a whole cluster f*ck up.
Better keep your game small and safe for now.
A bag of German Weyerman pilsner malt already cost 43 usd here . And it will rise because of the Ukraine war and emission laws.
Yep, these are always growing concerns. Thanks for the insight into your part of the world! I guess the bright side is at least we've got cold beer. Cheers 🍻
Take equity out of your business and start something not making beer to diversify your income which will then help with cash flow to buy what you need now you have 2 business generating cash
Since this is the internet let's immediately jump into Capitalism. There's a veneer that small business owners are Capitalists and there's also the romanticizing such as calling them entrepreneurs and so forth. I promise what I'm about to explain is entirely relevant to the "scaling issue" this brewer is having. See he's talking about the business technicality. And yeah, technicality is precisely the way we should be thinking about this but it's not business technicality it's social hierarchy. All the solutions he's discussing seem to all matter only in the course of revenue. Skipping completely past the fact that he himself was free to invest in himself to start his business in the first place. He somehow reads correctly "direct retail" is the obvious and most efficient choice for revenue but then completely never mentions the whole reason he's in business: the venue.
The reason he misses this is because he thinks of his business as a form of asset positioning rather than marketing or retail. At 6:10 that's reiterated. That's inverted isn't it? It's capitalist LARPing. A small business owner doesn't play the asset game. Walmart or McDonalds play that game. Where does most of Walmart or McDonalds revenue come from? You guess it: real estate. Work on buying your own store rather than renting it. Attracting more clients isn't marketing for your brewery it's marketing for your landlord. The larger you grow the larger your liability is. Customers can leave you, you can't leave your landlord. Buy your own place first. Use it as leverage to buy another site. Expand that way and count on the fact that all that stuff you're "not interested in" at 6:10 is exactly what you should be thinking about when you expand. Cheers.
Hi there. I'm the brewer. All valid points. Part of the journey of this business is purchasing the property from my grandmother(the landlord) down the road. Investing in the property is by far the most valuable asset in the whole endeavor, and what other former brewery owners I know have said was the only profitable aspect of the business when they finally closed down.
However, my point about not wanting to do the things required to grow the on-site traffic in the current state of the industry is more about my personal goals for the business. I am more interested in building a brand not contingent on have traffic to one specific location. Again, great points, I appreciate the perspective on business. Cheers 🍻