By: Tracey L. Kelley
Three beverages are the most consumed in the world: water, tea…and beer. Regional breweries, brewpubs, microbreweries, and contract brewing companies all experienced growth in 2018. In the United States, 219 breweries closed, but 1,049 opened last year. In Canada, there was a slight decline in domestic beer production last year—3.4%—and only a scant increase in sales—0.3%. Nevertheless, 178 breweries opened.
Producers and consumers alike want the diverse selection, high quality and community connection craft brewing provides. This makes entering the industry an enticing option. So to answer some brewery start-up questions, we’ve compiled a few experts to share their acumen. They include:
• Jeffrey Gunn, president and CEO of IDD Process & Packaging, based in Moorpark, California. IDD is a family-owned corporation that provides the consultation, design and manufacture of complete brewery and beverage plant systems.
• Lindsay Johnson, operations manager, and Shawn Johnson, head brewer, Birds Fly South Ale Project (BFS) and tasting room in Greenville, South Carolina. Named one of 2019’s Top 10 Breweries by the U.S. Open Beer Championship, BFS specializes in Farmhouse and Saisons, along with sours, funky IPAs, barrel-aged brews, and range of wild and traditional styles. BFS is also on the 2019 Thrillist “Most Underrated Brewery in Every State” list.
• Ben Parker, CEO, Scan American Corporation, located in Kansas City, Missouri; and Aubrey Dyer, business development manager, Flavourtech, represented by Scan American in North America. Flavourtech is a global technology manufacturer that specializes in aroma recovery, extraction and evaporation solutions for the food, beverage and pharmaceutical industries.
• Christian Riemerschmid von der Heide, president and CEO of the Siebel Institute of Technology (SIT) in Chicago, along with John Hannafan, vice president and director of education. SIT is a for-profit vocational school for brewing education and brewing services. Founded in 1868, it’s oldest brewing school in the United States and home of the World Brewing Academy program, offering campus and web-based courses jointly developed with Doemens Academy of Munich.
The three primary start-up takeaways they want you to remember:
1. Take time to learn. Whether it’s refining your processes or understanding how to scale up, knowledge is power.
2. Choose equipment wisely. Everyone makes different choices—research and compare to make the right decision for your business.
3. Be patient, young Jedi. Slow, budgeted growth and the right partnerships make more sense for long-term sustainability and adaption to trends.
These experts provided much more valued insight than print space allows, so we’ll highlight some of the top aspects.
Take Time to Learn
The Johnsons were a Coast Guard family for more than 20 years, all the while gradually expanding their brewing and business knowledge. “We invested sweat equity first,” Johnson said. “We started home brewing while in Alaska. As we lived in different locations with the Coast Guard, Shawn was able to volunteer at several breweries, learning different aspects of business.”
In 2016, Shawn officially retired from service, with a year or so of professional brewing experience as a contract brewer for Thomas Creek Brewery, also in Greenville. “This provided us an opportunity to test the idea and see how we wanted to proceed with a brewery buildout,” Johnson told Beverage Master Magazine. “This period of time made it simpler for us to find funding through investment, as we were an established brand and gained some national level recognition early on.” BFS has since received top medals in the Best of Craft Beer Awards, the Great American Beer Festival and the North American Beer Awards.
Contract or nomadic brewing often reduces start-up risks. Some craft producers try the industry on for size, like the Johnsons. Others do it to gain gradual packaging and distribution knowledge and capital—a wise idea, since a full-scale packaging operation averages more than $300,000.
Some brewers develop contract partnerships because their current facilities are out of capacity, but budget or geographical constraints prevent expansion. In rare circumstances, a contract partnership with a local brewery happens when someone only has interest in running a taproom.
“We anticipated being small and niche and allowing the education and evolution of our products to happen slowly and organically,” Johnson said. “However, we quickly grew past all our projections and expectation models, and continually have to be extremely agile as our product line expands and as trends in the industry change. Our production model hasn’t found a ceiling yet.”
Hannafan/von der Heide believe that every good brew begins with one key ingredient.
“’First, you add knowledge’ is one of our favorite tag lines. A producer should begin their journey with education, and not after they run into issues,” Hannafan/von der Heide said. “Hopefully they come to us sooner than later to avoid many of the common pitfalls experienced by others. The same process applies brewing theory and understanding the ‘why’ of brewing. It’s not enough to open this valve or turn that pump on—there’s far more to brewing than the equipment side.”
SIT creates viable paths for new producers through extensive courses on everything from the art and science of brewing to the nuts and bolts of business operations.
“We share our knowledge by having assisted in numerous start-ups and real experience, not just theory. We offer a consulting arm which assists with recipe formulation all the way through to test batches and evaluating the product,” Hannafan/von der Heide said. “We assist with brewery start-ups and build-outs, supplier evaluation, business case review and staff training. We like to think that the art and science of brewing beer makes lifelong learners out of all in the brewing sector.”
Hannafan/von der Heide said there are relatively short courses that can dramatically enhance your probability for success. These include the two-week “Siebel Concise” course, “Start Your Own Brewery” and “Executive Overview.”
SIT also provides another valuable service: yeast banking. “Selecting the right yeast strain can be a key differentiator for better flavor profile, product innovation and brewery capacity utilization. Yeast banking, strain profiling, yeast propagation, fermentation optimization—you can never know enough about yeast,” Hannafan/von der Heide said.
Choose Your Equipment Wisely
Evolution in trends, products and other aspects of the brewing industry greatly influence how to source equipment. Spend time to evaluate options based on your ultimate goals and budget—not necessarily what everyone else does.
“For too many years, craft brewers grew up with the idea that the two-tank combi-brewhouse doing three–to–four brews in 24 hours was the only way to brew beer,” Gunn said. “As the industry grew, the systems expanded to four or five vessels, but were still stuck in the four–to–seven brews in 24 hours process, with low efficiencies in malt extract, water, energy, labor, effluent and so on.”
IDD specializes in high-efficiency brewing systems, or HEBS. “HEBS mash filter brewhouses were an unknown entity to most and misunderstood by many that were aware of them. It continues to be an educational project, because it’s difficult for many to believe the efficiencies we publish and the misnomers perpetrated by conventional lauter tun brewhouse manufacturers,” Gunn said. “With HEBS capable of 95–to–98% extracts, up to 40% overall more efficiency and up to three times faster than a combi-brewhouse, there’s such a high ROI for a start-up or expanding craft brewer. Obviously, size has to be adjusted down from a conventional system because of the reduced turnaround time per brew. But 12–to–15 brews in 24 hours are the norm for HEBS.”
If you’re planning a low-alcohol or non-alcoholic line, your equipment choice is even more specific. For example, Flavortech uses spinning cone column (SCC) technology to enhance flavor, efficiencies and budget.
“The day-to-day operating expenses of the SCC are low, as it’s very energy efficient. The first two years of maintenance are also included, so these don’t need to be budgeted for until year three,” Dyer/Parker said. “The other main cost is dealing with the alcohol removed from the beer. Disposal can be expensive—however, it can be a valuable income stream if re-concentrated, or could potentially be used to fortify other products in the portfolio. It’s important to work through this part of the equation in advance to maximize the ROI of the system.”
Scan American/Flavortech allows producers to test all its equipment. “We can teach the customer how the system works and showcase the different outcomes. A beer trial can be run with as little as 60 gallons of product,” Dyer/Parker said. “After each trial, we’ll complete a product tasting to see how it responds to the process. Typically, these trials are proof of concept.”
Gunn noted an interesting trend that influences equipment choices. “Smaller, more efficient breweries and cans. HEBS, for example, have gone from 20–to–40 Hl brew capacity systems to 5 and 7.5 Hl brew capacity systems. This reflects on the matured craft brew market reverting back to brewpub/restaurant and taproom style operations: local market supply through their own establishment,” he said.
BFS took a completely different approach to equipment. “Budgeting a brewery start-up is difficult. We’re so capital heavy,” Johnson said. “Don’t rush into purchases. A lot of times you see a deal, but it’ll come back. Some producers are better off sourcing used equipment when applicable.”
Hannafan/von der Heide offered this important reminder. “If you don’t know about equipment or sizing or space planning, hire a seasoned, independent consultant. Don’t let your emotional side pick the equipment suppliers. There’s a lot of unsafe, poorly-designed equipment that will haunt your day-to-day operations and product consistency.”
Be Patient, Young Jedi
Our experts offered numerous tips for new producers—here are just a few.
“We always advise the producer to focus on employing a good industry experienced general contractor, experienced industry-related architect, an experienced industry equipment supplier and themselves doing their due diligence,” Gunn of IDD Process & Packaging told Beverage Master Magazine. “The four parties working together can achieve the best system, the right location and within budget.”
“Our initial vision was quite different, or I’d say 60-70% different,” said Johnson of Birds Fly South Ale Project. “We call ourselves an ale project because we’re constantly exploring new styles, techniques and flavors. Our process is unique in that we’re continually blending, and our beer has a chance to evolve through different fermentation processes.”
“We knew from the beginning we wouldn’t have a ‘set’ product line,” Johnson continued. “This can cause some educational issues when first entering into a distribution partnership. Our brands slowly became a steady product line, but patience was key in our relationships with distributors and retailers. So be patience in all aspects, from hiring and budgeting finances to decision making. We like to say, ‘The beer takes two weeks or more to make—let’s give ourselves an extra hour before we make a decision.’”
“My advice to someone coming to us with a new product idea would be for them to sit down with us and work through the processing details to make it a reality. The next step is to book some time in our pilot plant and produce some product,” Dyer/Parker with Scan American/Flavourtech said. “We have a great team of engineers with a real depth of knowledge and can assist with the practical realities of turning ideas in successful products.”
Dyer/Parker also pointed out two exciting trends. “One is the move towards much higher-quality beers. I was in Brazil last month, and the local beer we were served was so good that we cancelled our wine order and continued to drink beer with our meal!” Dyer/Parker said. “Parallel to this trend is the development of the zero-alcohol segment. This fits really well with the SCC, as we enable zero-alcohol products to meet exact quality requirements.”
The educators from the Sieble Institute of Technology offered two final thoughts. “Create a realistic business plan. Then, have others with industry knowledge challenge and build your plan,” Hannafan/von der Heide said. “The craft and brewing industry is an amazing place to be creative and excel in entrepreneurial activities. It is, however, a place for the long run, despite the hype—there are no quick sustainable wins. Product and process knowledge reigns.”