Beer cost per liter on a Brewery

[Bigbre04]

@Mastoras007,
You seem to be passionate about pursuing this and I cheer you on to follow your dreams!
My suggestion would be to create a business plan and then schedule time with a consultant to discuss things in detail.
Make sure this contains equipment, rental space, licensing information, insurance, build out costs, raw material costs, refrigeration, labor, etc.
From there you can truly assess the cost of doing business.
Also, whatever time you had planned to commit to this should be at least doubled. I'm not kidding.
Here's a good question. What is the draw? Is your beer better or cheaper or different than what's locally available?
Just brewing beer is the easy part.
Good luck,
Brian

To add to what Brian said.

You need to take the money that you think you need and double it. I have personally seen several breweries start up and fail in thier first year or even before they made a drop of beer because they did not have sufficient cash on hand for things that happen.

Also as was said above, you need to assess the demand for this project. I'm In a small beach town with a pretty heavy tourist crowd for 2/3rds of the year. We did the math and even during the slow winter months our locals and low overhead allow us to stay open. Plus a really good rep for food brings more locals.

 

[BarbarianBrewer]

Be honest with yourself...do you really feel like you are "saving" money?

I actually do. If I can drink beer I like for half the price, then hell yeah I am saving money. My beer isn't quite at the level of the pros but I do get close quite often. However saving money isn't the primary reason I brew my own but it helps justify the cost of the equipment I have...well most of the equipment.

 

[Bigbre04]

I actually do. If I can drink beer I like for half the price, then hell yeah I am saving money. My beer isn't quite at the level of the pros but I do get close quite often. However saving money isn't the primary reason I brew my own but it helps justify the cost of the equipment I have...well most of the equipment.

Man, Hobbies always morph into Expensive hobbies for me lol. Learning the craft and sharing it with friends is more valuable then the money value in the long run.

 

[Mashmellow]

I agree with The Brew Mentor. Not to get all "finance" on you, but I grew up in the Napa Wine Industry and spent my career in Commercial Banking with the last 10 years working working to help restructure wineries and breweries across the US. I have some definite thoughts and advise about what makes or breaks these types of businesses. What I believe you're asking is about input costs, which, as pointed out above, vary slightly by product but can be broken down pretty easily depending on gravity and your process. It's not different than any other producer. The margin obviously, to cover the fixed costs, SG&A expenses and debt coverage, is what makes it a business. If you were to go to any Agricultural Lending Bank and ask them, they should be able to give you some parameters and templates, and steer you in the right direction. I love talking about this kind of thing, but always risk the "oh no here comes Uncle Pete to talk about annuities again" reaction, so I'll leave it at that.

 

[Ward Chillington]

Be honest with yourself...do you really feel like you are "saving" money?

Saving or spending less? ..yeah I get ya but saving Money? Yes....Time ? Hell no! But I know what's in there, I made it myself and I have a good time doing it.

 

[Mastoras007]

@Mastoras007,
You seem to be passionate about pursuing this and I cheer you on to follow your dreams!
My suggestion would be to create a business plan and then schedule time with a consultant to discuss things in detail.
Make sure this contains equipment, rental space, licensing information, insurance, build out costs, raw material costs, refrigeration, labor, etc.
From there you can truly assess the cost of doing business.
Also, whatever time you had planned to commit to this should be at least doubled. I'm not kidding.
Here's a good question. What is the draw? Is your beer better or cheaper or different than what's locally available?
Just brewing beer is the easy part.
Good luck,
Brian

I was a businessman for 10 + years after COVID I stop my business, so in my mind everything i do always making throughs how can i make business with everything, its something i have.
Any way my answer is, cheaper for sure, quality let's say a base recipe, (which is way better than all beers selling liquid stores here) i leave in Greece in my city there is only one brewery, we are not familiar as country with this things its something new to us the local beer,
I'm running some numbers and i can see a good profit on the product, i know there are to many other factors of costs, I can be cheap, or cheaper any way from others
I'm not going to open brewery at least now in the coming future, I'm just making throughs

 

[Bigbre04]

Saving or spending less? ..yeah I get ya but saving Money? Yes....Time ? Hell no! But I know what's in there, I made it myself and I have a good time doing it.

Exactly! its really not about the money, its about the joy of the craft. I dont homebrew, I havent homebrewed since 2006-2007.

 

[Bigbre04]

I was a businessman for 10 + years after COVID I stop my business, so in my mind everything i do always making throughs how can i make business with everything, its something i have.
Any way my answer is, cheaper for sure, quality let's say a base recipe, (which is way better than all beers selling liquid stores here) i leave in Greece in my city there is only one brewery, we are not familiar as country with this things its something new to us the local beer,
I'm running some numbers and i can see a good profit on the product, i know there are to many other factors of costs, I can be cheap, or cheaper any way from others
I'm not going to open brewery at least now in the coming future, I'm just making throughs

In my opinion, you dont want to be cheaper then the big brewery in your area. You will never have the economies of scale to compete with them. What you are selling is a Higher-end hand crafted product. Don't try to compete with the big guys you wont win that fight.

Make a great product price it a little higher then theirs and market it as craft or small batch or whatever moniker translates.

I was thinking about this conversation after work yesturday. I do think that you can do this on a fairly tight budget as long as you can keep your costs very low and your profit margins high. We did the same here, BUT it would be ALOT easier in the first 2 years if you had a pool of cash to draw from when you need it.

When i was talking about breweries not making it in my area, they were going far bigger and made poor choices financially(against advice from others). High rent, high equipement costs, covid, poor management, and a variety of other factors killed them before they got off the ground.

What you are talking about is very doable, it just takes some experience and ALOT of effort.

Feel free to DM me and i will help you where i can.

 

[Mashmellow]

In my opinion, you dont want to be cheaper then the big brewery in your area. You will never have the economies of scale to compete with them. What you are selling is a Higher-end hand crafted product. Don't try to compete with the big guys you wont win that fight.

Make a great product price it a little higher then theirs and market it as craft or small batch or whatever moniker translates.

I was thinking about this conversation after work yesturday. I do think that you can do this on a fairly tight budget as long as you can keep your costs very low and your profit margins high. We did the same here, BUT it would be ALOT easier in the first 2 years if you had a pool of cash to draw from when you need it.

When i was talking about breweries not making it in my area, they were going far bigger and made poor choices financially(against advice from others). High rent, high equipement costs, covid, poor management, and a variety of other factors killed them before they got off the ground.

What you are talking about is very doable, it just takes some experience and ALOT of effort.

Feel free to DM me and i will help you where i can.

You give excellent advise. There are a number of thresholds to making it in this industry--and a number of types of businesses. Building a menu of quality products and serving it in a destination environment, as you do, will generally allow a brewer to juice the margins enough to make a go of it, if they stay within themselves. But getting out over your skis too quickly risks turning an avocation into a vocation and kills the momentum and fun that got them into it in the first place. I've seen a lot of excellent breweries go sideways when they tried to swim in the deep water, and the retail aspect is a different beast altogether. When they got back to their core and were able to bring the fun back that you speak of, it became a good business again.

 

[Bigbre04]

You give excellent advise. There are a number of thresholds to making it in this industry--and a number of types of businesses. Building a menu of quality products and serving it in a destination environment, as you do, will generally allow a brewer to juice the margins enough to make a go of it, if they stay within themselves. But getting out over your skis too quickly risks turning an avocation into a vocation and kills the momentum and fun that got them into it in the first place. I've seen a lot of excellent breweries go sideways when they tried to swim in the deep water, and the retail aspect is a different beast altogether. When they got back to their core and were able to bring the fun back that you speak of, it became a good business again.

I have brewed commercially since 2009, seen some shit lol. Built 2 breweries from the ground up. Just happy to help people and share my experience!

 

[Donoroto]

People will pay more for a better product. For any service industry, atmosphere is important: it needs to be a place people want to go. And that they can get to: train, car parking, bus, walk…

Have you considered making beer for a local restaurant? That kind of partnership can be valuable - they come for the beer and have some good food, or they come for the food and have some good beer.

 

[Bigbre04]

People will pay more for a better product. For any service industry, atmosphere is important: it needs to be a place people want to go. And that they can get to: train, car parking, bus, walk…

Have you considered making beer for a local restaurant? That kind of partnership can be valuable - they come for the beer and have some good food, or they come for the food and have some good beer.

we are a brewpub. Food is a big deal, but also very expensive and a serious headache.

location is important. if you just have a little tap room area you can do alot with very little money.

 

[Mastoras007]

People will pay more for a better product. For any service industry, atmosphere is important: it needs to be a place people want to go. And that they can get to: train, car parking, bus, walk…

Have you considered making beer for a local restaurant? That kind of partnership can be valuable - they come for the beer and have some good food, or they come for the food and have some good beer.

No no no all my thoughts is just to sell beer kegs to other businesses, not serving like a pub, this will cost crazy numbers to do, also here in Greece the law for licence a pub like this is crazy, BUT for just a brewery selling beer to other businesses bars restaurants etc the law is to different
So all the thinging plan is for a very small brewery selling just kegs.

 

[Bigbre04]

No no no all my thoughts is just to sell beer kegs to other businesses, not serving like a pub, this will cost crazy numbers to do, also here in Greece the law for licence a pub like this is crazy, BUT for just a brewery selling beer to other businesses bars restaurants etc the law is to different
So all the thinging plan is for a very small brewery selling just kegs.

I dont know that at 2bbl its worth the effort to distribute it. The money is really in selling pints to the public.

It might be worth the time and effort to get the liscense to sell to the consumer? i just dont know the rules where you are.

 

[Donoroto]

I dont know that at 2bbl its worth the effort to distribute it. The money is really in selling pints to the public.

It might be worth the time and effort to get the liscense to sell to the consumer? i just dont know the rules where you are.

One data point: a retail pouring license in New Jersey costs about $3 million…only if you can find someone to sell you one. The number of licenses allocated to any given town depends on its population. Unless the population grows dramatically, the number of licenses is fixed. Unlike many states, there are no parts of New Jersey that aren’t part of a town, often called unincorporated land.

That is just the license. There are other significant costs completely unrelated to building out the premises too.

Compare that to Georgia, where a full pouring license might be $1500 a year, and there are no limits to the number that a town can issue.

 

[Bigbre04]

One data point: a retail pouring license in New Jersey costs about $3 million…only if you can find someone to sell you one. The number of licenses allocated to any given town depends on its population. Unless the population grows dramatically, the number of licenses is fixed. Unlike many states, there are no parts of New Jersey that aren’t part of a town, often called unincorporated land.

That is just the license. There are other significant costs completely unrelated to building out the premises too.

Compare that to Georgia, where a full pouring license might be $1500 a year, and there are no limits to the number that a town can issue.

Jesus I had no idea it was that crazy in jersey.

And ya Georgia is pretty cheap.

 

[Mashmellow]

I have brewed commercially since 2009, seen some shit lol. Built 2 breweries from the ground up. Just happy to help people and share my experience!

Yeah. Saw your website. Impressed.

One data point: a retail pouring license in New Jersey costs about $3 million…only if you can find someone to sell you one. The number of licenses allocated to any given town depends on its population. Unless the population grows dramatically, the number of licenses is fixed. Unlike many states, there are no parts of New Jersey that aren’t part of a town, often called unincorporated land.

That is just the license. There are other significant costs completely unrelated to building out the premises too.

Compare that to Georgia, where a full pouring license might be $1500 a year, and there are no limits to the number that a town

One data point: a retail pouring license in New Jersey costs about $3 million…only if you can find someone to sell you one. The number of licenses allocated to any given town depends on its population. Unless the population grows dramatically, the number of licenses is fixed. Unlike many states, there are no parts of New Jersey that aren’t part of a town, often called unincorporated land.

That is just the license. There are other significant costs completely unrelated to building out the premises too.

Compare that to Georgia, where a full pouring license might be $1500 a year, and there are no limits to the number that a town can issue.

CA has a separate Beer and Wine license, which is relatively cheap. The full liquor license is crazy e expensive if you can find one. I haven't priced one in forever though.

 

[Mastoras007]

I dont know that at 2bbl its worth the effort to distribute it. The money is really in selling pints to the public.

It might be worth the time and effort to get the liscense to sell to the consumer? i just dont know the rules where you are.

to sell pints to the pubic need a very big budget, this is way diffrent that i'm thinging
About license there is no something crazy spesial to get license, need some paperwork for sure more than a restaurant but not something that can't hapen in few months
All my calgulations is to build a 500liters batch system

 

[Mastoras007]

One data point: a retail pouring license in New Jersey costs about $3 million…only if you can find someone to sell you one. The number of licenses allocated to any given town depends on its population. Unless the population grows dramatically, the number of licenses is fixed. Unlike many states, there are no parts of New Jersey that aren’t part of a town, often called unincorporated land.

That is just the license. There are other significant costs completely unrelated to building out the premises too.

Compare that to Georgia, where a full pouring license might be $1500 a year, and there are no limits to the number that a town can issue.

omg, here there is no need to pay for lisence, i mean you need to pay some people to do the neccesary things to do, for exampe enginner for papers, enviroment polution papers etc, no need to pay extra money, also no fixed number for brewerys, as i say this is new stuff here, I thing there are 75 brewerys spread all the country,5-10 years ago was 35-40, in my city just 1 with 150,000 citizens + visitors, is not a turistic place but is big City.
Last years starting to become something new and we can find local beer.
Ale beers is rare to find in the supermarket

 

[Bigbre04]

omg, here there is no need to pay for lisence, i mean you need to pay some people to do the neccesary things to do, for exampe enginner for papers, enviroment polution papers etc, no need to pay extra money, also no fixed number for brewerys, as i say this is new stuff here, I thing there are 75 brewerys spread all the country,5-10 years ago was 35-40, in my city just 1 with 150,000 citizens + visitors, is not a turistic place but is big City.
Last years starting to become something new and we can find local beer.
Ale beers is rare to find in the supermarket

So what would the ballpark be on being able to serve to the public as well as to restaurants. The reason i ask is because competing for draft space with the big boys is really tough. They have a lot of advantages and can literally buy you out of the draft system. Especially when there may be limited draft towers available.

You will make significantly more money per Liter by selling it directly to customers. Think of it as the smaller the package the higher the profit margins. So where i can sell a beer to my customers for $7-8 in my location, that is the same price that the restaurant next door sells it for, but for them to make any money off of it i have to sell it to them at a much lower price per volume.

In my state i can only sell to a distributor who then adds 30% to the price that they sell it to the bar for them to add their 30% to get to that $7-8 mark. So i can only sell the keg for about $3 per pour and that is assuming that my competition are not undercutting me at $2/pour(which with economy of scale they can and will do).

For a niche product, the closer to the consumer that you can get the better.

Another extremely important note is that it takes me about an 8 hour brew day to produce 2 bbls of beer...even using 1/6 bbl(5.17 gals) that is only 12 kegs worth of beer. It takes time to wash those kegs and pack them. Labor on a 5hl system is your biggest cost. This also does not include all of the other paperwork and labor aspects of brewing. If you were able to offset your lower margin beer with direct to consumer sales for even a small portion of the beer produced that could make the business far more profitable.

It is very doable at 5hl for one person, but just producing the beer and packaging it is a full time job. Everything else would need to be handled by another employee.