In the first of a three-part piece, Annika Naschitzki of Tiamana guides would-be brewers through the pitfalls of the business.
So you want to start a brewery…
… well jolly good. Tally-ho to you and a pint of lager for the both of us. Now let me tell you about this brewery thing.
I’ve been approached by a number of new brewers looking for advice (or equipment). Some wanted to establish a brewery, some wanted to contract (that is a for another day). All of them have been home brewers for a good while. I’ve decided to share what I’ve been telling people. This is the sort of stuff that I wish someone would have told me when I started to work on my brewery plans.
To preface: There’s some very different approaches to starting a brewery. I can speak to the shoestring approach – starting small with your own money or maybe a small loan, wits and endless hours of work. Starting a brewery with a number of people, with investors or bigger bank loans (and also endless hours of work) will be a little different. From what I hear a lot of the cornerstones are the same though. With more money doesn’t come more ease, just different-sized issues.
There’s a lot to talk about. Let’s unpack.
Why, oh why?
So why does anyone want to start a brewery? The answer I hear is uniformly: because I love to brew! And uniformly my advice is: find a job as a brewer, do not start a brewery.
Brewer and a Brewery Owner are fundamentally different job descriptions. But people rarely say: I want to become a brewery owner. Brewery jobs for people without commercial experience or certificates are in very short supply. So starting your own brewery is the shortcut to making your craft dream come true – isn’t it? You’re your own boss and you get to make recipes, brew beer and talk to beer people all day long. Oh, and of course it’s a lot of cleaning *insert laughter*.
Also it’s kind of sexy, isn’t it? Imagine what it would be like to have my own brewery – free beer all the time. Amazing!
The people I’ve met are aware that the running of the business will be a part of the package too, but they seem to expect that it’ll be ‘some paperwork’ alongside the brewing. Yeah, right.
In my three years of building, and nearly two years of running, a commercial brewery I spent about 10-15 per cent of my time brewing. There’s sales, accounting, deliveries, pick-ups, managing supplies, keeping your records and returns, cash flow projections, re-investment, endless emails, marketing, media, festivals, social media, people who want to chat with you and maintaining your venue.
Say goodbye to your old life
The weight of a business on your own shoulders is like nothing I experienced before. Being your own boss makes everything that happens to your business very personal and direct. While it gives you that great feeling of control and achievement, it also means that what happens to your business happens to you. Money worries, sales, growth, equipment not quite on point, chatter about saturation of the markets… and I don’t even have staff.
Over time you learn to distance yourself better from the stress and demands of your brewery, but make no mistake – owning a business will change everything, and might NOT make you a better person.
No matter what venture you start, you’ll likely find that reality is not quite what you expected, and that’s OK to some extent – learning curve and all. What’s almost impossible to anticipate is the massive toll on nerves, sleep, hobbies and relationships. In my experience, the people who are willing themselves into running a company in order to get the chance to brew end up seriously resenting the business side and everything that comes with it. And that in itself limits, and risks, the viability of the business. Because sales need to be done, more bills come in, relentlessly. More on that later.
In all likelihood, owning a brewery will create a Mr Hyde alongside your Dr Jekyll.
The strain shows. We all know stories of tantrums, aggression, frustration venting on the brewery floor, especially when numerous people are involved. The behaviour of some people in the industry would get you fired in any other job. And I think that’s not because aggressive, mean people become brewers – I think it’s because brewers are becoming business owners, unprepared to handle the personal fall-out.
What do you do as a home brewer if a batch goes wrong? In most cases I bet you’d just get a few mates over and drink the beer anyway. Owning a brewery, are you going to release a faulty batch? Are you prepared to pour out a few thousand dollars and days of your work because there’s a small fault to it? And will you manage to go home with a song on your lips, shrug it off and have a nice meal and a solid night’s sleep? Good on ya, if you do.
But the opportunity is so great, isn’t it?
Craft beer is such a growing industry, positively blowing through the roof! According to the ANZ Craft Beer Insights craft beer sales have increased by 35 per cent from 2015 to 2016. You’d be a damn fool not to get on the craft beer wagon right now!
When this report came out, me and all the brewers I know looked at each other and went resoundingly: nope.
Most important to understand is: growth does not equal revenue! In fact, in order to grow and become a well known businesses like Garage Project you have to invest and re-invest immense sums in design, sales, equipment, brand and staff. Investors with very deep pockets is a prerequisite for this kind of business model – alongside amazing talent, experience, outstanding staff, drive, motivation and a very clear vision. Some breweries sure are growing, but they’re not swimming in money. The money goes back into the machine.
The ANZ report and the number of positive stories in the media are misleading people into believing there’s tons of money to be made in craft beer. Yes, we all have an interest in shining a positive light on our industry, and there’s certainly success that we all share. But simply put: the only ones making any money are the ones who invest tons of money – and they’re only expecting to make money over 20-50 years.
That’s of course unless you’re selling your brewery on like Panhead or Emerson’s did. So perhaps that can be your game plan…
Starting a brewery vs running a brewery
When you do throw yourself and your money into the breach, you will embark on a massive learning curve. Over time you do pile up achievements when you learn to handle quotes, account forms, dealing with tradesman, designing your plant and sourcing all the bits and bobs you need for your business (woah, where did all the money go…?). After months, you look at yourself and see how far you’ve come and how much stuff you handled – that must be worth something!
So, you just got really good at the starting bit – but running your brewery requires a whole different set of skills. You have worked your ass off, and now you’re somewhat poorly prepared for what comes next.
I see it like this. A starting brewer spends a massive amount of time on sourcing and scaling equipment and plant, finding a location, etc. If you have some sense you start thinking about your brand and sales also (coming up next). Once you’re up and running, you spend about 10 per cent of your time actually brewing, the rest of the time is sales, accounting, distribution, records and maintenance.
That is all unless you have a lot of money left up your sleeve to pay someone to sell for you, or if you magically landed a distribution deal – more on that next time.
By the way, this is an effect that’s not unique to the craft beer industry. There’s some people who are bloody excellent at navigating all the barriers and pitfalls of getting a business off the ground. But as soon as all the drama is over, they’re a complete fish out of water. Some then simply move on, leaving someone less fierce at the helm to steer the ship. But really, that’s when the real work just begins.