Setting up a small Brewing business

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afrolad

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Hi there,

So this post may seem ridiculous especially given my limited brewing experience but I've got the bug and i'm starting to think a few steps ahead. I intend on kitting myself out but doing it once and doing it right!

I have brewed several kits and felt like there should be more to the brewing experience and then paid for a day long brewing course at London Beer Labs and have since done a few all grain brews there with friends.

I've decided to invest in some proper kit and the first decision I have made is to buy a 50L Braumeister All-Grain starter set.

If i'm thinking about doing this seriously (and i'm talking 1-2 brews a week whilst I "work from home") in my other job) what else should I be investing in? I'm thinking a small local business to start and if successful then think about selling a kidney to buy a Microbrewery.

for example, is there a benefit to stainless steel conical fermenters over better quality plastic fermenting buckets?

And also, does anyone know the legalities of how your home brewery has to be set up in order to sell your beer? For example, I've heard your bathroom has to be a certain distance from where you brew?

Any guidance appreciated.
 
If you're on Twitter at all, get chatting to @BeerNouveau. He started brewing one firkin at a time out of his garage, but has recently purchased a new 6.5bbl brewery. Sure he'd be happy to lend some advice.

From reading about this previously, you'd need planning permission for change of use, to register with HMRC and get a food hygiene certificate.
 
I was the same, as soon as I started brewing I knew I wanted to have my own microbrewery. I'm not sure I still do though, I think if I had to make money off my batches I would see brewing as stressful and it wouldn't be fun anymore. All breweries go through rocky periods to start with where the brewers end up moving back in with their parents due to no money etc. But those who are persistent and patient do well. (As well as secure investment and have a fantastic business plan!)

Anyway, there is a lot of red tape from HMRC when it comes to commercially selling beer. Where you store beer needs to be a bonded warehouse, you need to register as a brewer, where you brew needs to be a registered brewery, you need to keep track of the volume you brew and oay tax per hectolitre per %abv.

Once you factor in these extra costs on top of malt, barley, yeast, equipment, electricity, water, your own salary, you're price per bottle is looking quite expensive and customers won't pay the extra £s when they can get something similar for cheaper. To reduce costs you'd have to move out to your own premises a d set up a microbrewery, but unless you have about £100,000 to hand, that requires loans or fundraising.

If you would like to brew commercially, I'd highly recommend finding a pub which is up for having an onsite brewery. For about £2500 or so you could set up a nano/microbrewery and brew on site, plus you have a captive audience from the start. If it does well and you want to expand it will be easier to get investors interested as you already have a success story on your hands. If it fails you've sunk £2500, it's something you can recover from much easier than £100k.

In the meantime, you could probably sell bottles to friends and family to recoup your materials, I think that's alright but not too sure. I can't find the link to HMRC on brewing but when I do I'll post it here, have a read of that.

I would also recommend you get a lot of all grain brewing experience before going commercial and learn about the finer intricacies of brewing. It will all be useful if you want to scale up your brews. Local water will change if you move premises a d this will change the flavour of your brew.

In terms of fermenters, conical shape means the fermentation will be faster (all things being equal) and due to the cone there will be less surface area of trub to beer, meaning less off flavours. Conicals usually have a trub drain as well separate to the tab for draining beer, making it easier to secondary and harvest the yeast. Plastic is permeable to air, so if a brew is left longer than 2 weeks in a platic tub off flavours can develop. Also they can scratch easily, scratches can harbour germs which can ruin beer.

Hope this is helpful!
 
I have to say I had similar thoughts too once I got into brewing! My wife is always dragging me round to these craft markets and fairs on the weekends, and one small consolation is that you often see micro-brewers selling excellent ales that they have made either at home or in a small micro-brewery that they have setup. And since I have finally managed to start making beer that is actually drinkable (and started bottling it) one of the best things about brewing for me is giving some samples to my mates, and actually getting positive feedback. So it seemed a fairly logical progression that I could start brewing a bit more often, labelling my beers and giving them witty names, and selling them for £2.00-£2.50 or so at craft markets or small beer festivals.

I just started thinking about very rough figures a while back though and decided that I'd never be able to turn out enough beer to make it viable, let alone actually sell enough. Lets say you do a brew every day. That in itself would require a lot of space and lots of fermenters etc - but if it was your job then obviously no reason why you couldn't do a brew a day. Standard batches would be 23 litres - though with bigger equipment obviously you could do more. If you had a 50 litre boiler you could probably turn out 40 litre batches if you had big enough fermenters. So let's say you're doing 40-litre batches for now. That would mean that each day you would be brewing 40-litres, and also bottling 80 bottles from another FV/secondary. Essentially your production is 80 bottles/day.

Now - lets assume you could actually sell that many bottles each day. And obviously you wouldn't be able to sell that many at craft markets and festivals and these don't happen every week, let alone every day. So you'd need another market such as local shop/pub - or setup a shop yourself? If you are selling to a shop or pub then obviously they're going to want to buy cheap and add they're markup. But that is probably the only way you'd shift 400 bottles a week.

Being very optimistic, let's say you could sell 400 bottles a week at £2 a pop. That is £800/week, or around £38k a year if you have a bit of time off etc. And then you've got to factor in all the ingredients you're buying in. Other production costs like the heat/electric/gas (costs a lot to boil 80 litres of water every day) plus bottles, labels, transportation. And you'd not be able to pay someone else a salary out of that money so this would be your full time job. So in all it does start to look (to me, anyway) like a fairly tough business to get off the ground. And none of this addresses the legal red-tape of actually producing and selling alcohol.

Of course, it is a very different picture if you do happen to have a mass market for your beer. If you ran a pub - and were able to - you could sell your beer on pump and possibly make some decent money that way. There is a pub near me that has a microbrewery attached to it, and they sell their own beer, as well as selling it at local beer festivals etc. I think they do okay.

I certainly don't have the stomach for borrowing the very large sum needed to get a premises and all the equipment to start brewing commercially, so for me it is sadly not a viable business. And there's the fact that I am pretty much a beginner (at least to all grain) anyway, so certainly a long way off being the head brewer of my own brewery!

Of course, on a smaller scale one could consider selling home-brewed ales at craft markets and fairs etc. But even then, if you brewed and produced 40 bottles lets say that has cost you £30 for the ingredients and bottles etc. If you sold them for £2.50 and shifted the lot you'd only clear £70 - so hardly seems worth the effort. Personally I'd rather just drink them myself!!

Sorry if this all sounds a bit negative! That wasn't really the intention. I just think its hard to get any business of the ground these days - which is sad. And it's great to see lots of new micro breweries producing really interesting new "craft beers' (even if that is a marketing trick calling it that!) and if you do give it a go I certainly wish you all the best with it!
 
If you intend to sell no matter whether it be "home brew" or not you do need various licences, without them you are opening yourself up to all manner of legal problems, tax evasion, public health and safety as well as the darker side of blackmail/protection should the wrong type of person get to know your dealings. With the fraud/criminal proceeds arm of the law now you could potentially stand to lose a lot more than you could ever hope to make from trying to run a below the radar brewing setup. Maybe see if family and friends are interested in your products and leave it at that or go fully legal.
 
This is all very useful food for thought and has added some colour to my initial thoughts.

In terms of equipment, in addition to the 50l braumeister starter kit, and stainless steel conical fermenters, what should be on my shopping list?
 
afrolad said:
This is all very useful food for thought and has added some colour to my initial thoughts.

In terms of equipment, in addition to the 50l braumeister starter kit, and stainless steel conical fermenters, what should be on my shopping list?
Click to expand...

I guess you just need to think about whether you'll be looking to bottle your beer, or sell in kegs somehow. Bottling seems more trendy these days, but time-consuming. You might want to look at getting a decent capper.

Also worth thinking about where you will be fermenting. Because temperature control is so important if you want to produce commercial beer, you'll either need a brew fridge, or a temperature-controller room. Much cheaper to make a beer fridge!! But obviously limits production as even with a large larder fridge you'd struggle to ferment more than 1 50l batch every couple of weeks.
 
1st thing I would check is what the council think about it, normally a brewery would need B2 planning permission which you would never get on a normal house in a residential area but they may decide you don't need it due to the small scale. If this seems to be OK just be ready to go through a mountain of paperwork and applications with HMRC, if your selling to the public (ie anyone whos not reselling it) you will need a premises license (may also be an issue for a residential property) and a personal license again check with the council and then register with HMRC to pay the duty. Thats the big stuff you also need to conform to health any safety in a similar way to if you wanted to sell any food produced in your kitchen, your water company may want to check whats going into the drain and charge you more.
If this doesn't put you off good luck.
BTW I am in the process of buying a 1BBL hobby size brewery with the goal to increase it to 4-6BBLs and make it commercially viable and in my offer valued the fact all this license stuff is done at £5000. If you are interested and anywhere near gatwick your welcome to have a look when/if the sale goes through hopefully in 2-4 weeks.
 
Some excellent advice here and it's not so straight forward. Loads of brilliant articles on the web about it. Most say you need 50000k and a premises big enough to start up. It also depends on what market you want to target. Don't forget camera rules on what is real ale.
 
Simon12 - i'd definitely be up for catching up so keep me informed. You're an hour drive away but happy to make the trip and take up your kind offer!
 
Biggest problem by far is selling the beer. There are stacks of micro breweries competing with each other to get into bars. As for making it on a home brew scale - even at 40l a day the economics are ridiculous unless you are doing it for the love of it. You might make £20 a day or possibly £30 if you were damned lucky. One set of figures up top there didn't even factor in the tax. Cider makers can produce a moderate amount for sale on a small scale without paying tax, but I'm not aware that goes for beer.

I just make it and give it to friends and family. Works for me and I get more visitors these days.... (Visions of a queue of alcoholics at the door.).
 
Tony1951 said:
Biggest problem by far is selling the beer. There are stacks of micro breweries competing with each other to get into bars. As for making it on a home brew scale - even at 40l a day the economics are ridiculous unless you are doing it for the love of it. You might make £20 a day or possibly £30 if you were damned lucky. One set of figures up top there didn't even factor in the tax. Cider makers can produce a moderate amount for sale on a small scale without paying tax, but I'm not aware that goes for beer.

I just make it and give it to friends and family. Works for me and I get more visitors these days.... (Visions of a queue of alcoholics at the door.).
Click to expand...

I think farmers can sell 500l 'over the gate'
 

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