Anyone moved onto comercial brewing?

[Dronfieldbrewer]

Hi All,

I am sure this has been asked before but how hard would it be to move upto brew for a profit? I have a few outlets that are interested in taking my beers, I could easily up size the kit here. I know that I would need to register as a brewery with HMRC and get permission from the local authority but am I missing somthing?

My points are that I would brew from the converted garage at home, anybody see any problems? Anybody else moved up in this way? i do not want to take the full plunge and get premisis as yet as I want to move into full time brewing at my own pace and scaling down my other business interests as this gives me a living income to allow the time to brew.

 

[graysalchemy]

Hi Robarwell. I can see from your post that you obviously have a business back ground . I have thought of brewing for a living like most people on here but I have always come to the conclusion that the leval of investment for the return I would want would be far to great. There was an article on hardknot dave's (I haven't got the adress to hand ) blog about 6 months ago about profitability which was enough to put anyone with a modicum of business sense of the idea. Plenty of people have gone from home brew to micro, but that was perhaps in more favourable economic times, the whole of the leisure industry has been turned on its head and will take a long time to recover. There are obviously markets to exploit but whether there are enough opprtunities to earn a decent living and warrant the ultimate capital investment I don't know.

One piece of advice I was given by very successful business man was stick to the markets you have experience in and you won't go far wrong.

I have concluded that brewing would not give me the profitability that I enjoy with my current business.

I think their are a few pro brewers on here who may give their experiences.

Good luck

 

[jamesb]

Dave said today that "I'll never get rich with beer but beer has enriched my life greatly"

I'm a commercial brewer. I also have a full time job doing something else. I prefer it that way. There's too much competition these days to make a decent wage in brewing unless you're really, really good.

 

[BigYin]

One of the chaps in the Scottish Craft Brewers is moving into commercial brewing - one of the biggest obstacles he faces is the taxes levied on beer. It means that brewers producing under a certain amount of beer can scrape by ok, but will never make decent money from it, while the next few steps up are being strangled by the tax and are uneconomic to operate in, so you then have to leap up several steps to make it worthwhile expanding, and then of course you have increased overheads, and need to sell a whole load more beer....

It's not an easy path to follow!!

 

[graysalchemy]

As I said before and these two gentlemen have also sugested the investment needed to make a decent profit is vast and then you are stung with a tax that few other industries with small players endure. I was speaking to a micro owner who set up last year to the tune of 250k. I wouldn't invest anything like that in an over saturated dwindling market.

;ust look at how many new members we have on here a month all spending our money on homebrew and not in pubs.

 

[Aleman]

Beer Bloke moved into the commercial arena about 5 Years ago when he set up Wibblers Brewery in Mayland Essex. He was lucky enough to purchase a 2.5BBL kit from another brewer for 800 quid or so. . . .Then got a contract to brew for the Blanchford Arms (4 nines a week) which covered his running costs . . . Unfortunately the pub changed hands . . .but he got of his **** and got his beer into a lot of local pubs (good market for good real ale in Essex) . . . and upgraded to an 18BBL plant a couple of years later . . . . Since taken over the lease on a local pub as the brewery tap.

Lot of hard work for Phil, massive investment in plant and kegs . . . Right time, Right place though.

One thing you'll have to think about is environmental health . . . HMCE is pretty easy . . . change of use from the local Authority . . . . 5 times as many casks as your brewing capacity . . . and then double it . . . and somewhere to store them all . . . Ted Bunnings book covers it in detail

 

[tan]

i reckon now is the time to go into home brew shop business. doesnt need high street premise. nor booze taxes. and still requires the expertise you have.

 

[Dronfieldbrewer]

Dave said today that "I'll never get rich with beer but beer has enriched my life greatly"

I'm a commercial brewer. I also have a full time job doing something else. I prefer it that way. There's too much competition these days to make a decent wage in brewing unless you're really, really good.

This is exactly what I want to do, my long standing profession has been hit massively by the downturn, probably more than most (I am an Independent Mortgage Advisor). I work from home only leaving the house to see clients in their own homes and for meetings with lenders etc. I diversified into other allied markets a little while ago but this has only replaced a part of the income I once had.

I am not looking for a get rich quick scheme, I just enjoy brewing. I would like to be able to brew from home a couple of times/ week whilst I do the admin for my day job. There is no way I could ever drink all that beer for personal use and I have a local outlet that wants 3 casks/ week.

 

[Jon474]

I am about to take that leap of faith...

I get my 1500ft2 industrial unit on 1 June, and in July Mr Porter is installing me a 6bbl brewery. Like jamesb I won't give up my day-job, but I wanted to do a bit more with the knowledge learned from a hobby I really like. Making beer makes me smile each and every time I brew. Will I feel differently in six months time? I hope not. I am determined not to feel any differently. I will a bit wiser but hopefully still smiling.

My business model is very detailed - I am an accountant by profession and a group treasurer for a large building services company by employment - but it is also very modest plan. I have assumed a very low level of sales in the first year and then gradually increased that very low number to another very low number for the end of the second year. Forget all about making a profit...just make sure you have enough cash at all times. To be honest though, whether or not it works is not too important...I want to give it a go. More importantly, Mrs S wants me to give it a go and that support from your family is essential.

As Aleman says...if you get your fixed costs accurately measured and controlled then, even in this economic climate, around four nines a week will just about cover your running costs.

Again, as Aleman says, dealing with the Revenue is easy...they are actually very helpful when it comes to Customs and Excise stuff...and I am now VAT registered, PAYE registered, and most importantly, I have my Beer Producer's Registration Certificate and my nines have been ordered. Just setting up the duty deferment bond and negotiating with Yorkshire Water for trade effluent consents. Need to pick an energy supplier next week. It really is great fun. I am a bit scared at the same time though. :sick:

Take care
Jon

 

[artyb]

all the best with it jon, :thumb:
im sure a few of us here would be interested in buying a few pints from you.... :

 

[Jon474]

Cheers for the kind words. I'm still planning to make beer in my garage. My producer certificate is linked to the brewery premises address and not to me as an individual, so I think I can still make beer at home outside of the duty system? Obviously, I can't sell the beer that I make at home...not that I would want to.

I'm doing Kirkstall Beer Festival in September! They want a porter/stout style beer so I am going to have to get my act together.

Take care
Jon

 

[Wez]

Thats brill Jon :clap:

Sounds like you have gone into this with a reaistic approach and your eyes wide open which is always the best philosophy.

Good luck with the venture!

Wez

 

[graysalchemy]

Forget all about making a profit...just make sure you have enough cash at all times.

Probably the worst and best bit of advice given by an accountant ever. Firstly the main principle of any business is to make a profit of some sort, the whole purpose of being in business is to make money.. If you don't make a profit then you are running a very expensive hobby, which unless you have deep pockets will be doomed.

Now the second part of that statement is the best bit of advice. Cash is king without cash flow you are doomed.

None of you have mentioned probably the most important part of any business plan your market. Have you identified your market /potential customers. What is your usp why would someone buy your beer over another micro's beer, what is your competition.

I may be stating the obvious but business is 90% common sense and the rest good luck and a bit of business acumen.

You both seem well done the road to becoming full time brewers, so I wish you the best of luck.

Alistair

 

[46.philh]

I would of thought the best way would be to have a brewery tap such as townes brewery have in stavley, near chesterfield, I did hear a rumor he was thinking of retiring from the brewery side of things.

 

[Jon474]

Alistair

Of course, you are correct. Thanks for the clarification. Being in a commercial business is ultimately about making money. A return on your investment is always required. My points here, which I accept could have been expressed more clearly (my excuses are that it was early, I was in the middle of mashing in and I had a hangover), were that rather than obsessing about making a profit you should first of all ensure that you have a positive cash flow. Having a consistently positive operating cash flow must mean that, over a long enough period of time, you are making an operating profit. Not necessarily an accounting profit though, as non-cash items like depreciation and amortisation can turn your operating profit into an accounting loss. My experience from my paid day-time job is that people chase profit because they think they understand what profit means, but the same people don't follow the cash side of every transaction. There is no profit until the cash is in your bank.

I think you (and in this context I mean "me" here) should be realistic about the time scale over which you plan to reach break-even, and then sensible about what profits you can actually make after that point is reached. I am both realistic and sensible!

I don't expect to get rich from becoming a brewer - unless I get lucky - but I certainly intend to have fun doing it.

You are right...I haven't talked about my USP or my planned markets. I'm not going to. That's because they are my commercial "secrets"...if I told everybody how I intend to become the best brewer in the Universe and whose market share I am going to take away to do so...then somebody will stop me...or have me sectioned!

Take care
Jon

 

[mashman]

There's a good book called The Microbrewers Handbook from Amazon that lays it all out in plain english, I bought it out of curiosity but if you are thinking of going commercial I would give it a read, i'ts a small paperback but full of good advice.

Steve.

 

[Dronfieldbrewer]

I think it is time to read that book from Amazon

 

[Dronfieldbrewer]

I would of thought the best way would be to have a brewery tap such as townes brewery have in stavley, near chesterfield, I did hear a rumor he was thinking of retiring from the brewery side of things.

Somebody else mentioned that he was going to retire. I orgainised a beer festival in dronfield and had a couple of casks from him...by jesus if that is the standard that we need to get to, it will take a heck of a lot of practice. his beer was like an angel dancing on your tonsils.