New brewery. Thoughts and ideas.....

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Greenhorn

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Morning all.

I originally posted this thread on another forum which looks to be more "commercial" based. But looking at the general view and post figures, there doesn't seem to be anywhere near the volume of traffic we get here.

Anyway.....

I've been working in Central London for far too long, whilst living in the wilds of rural Bedfordshire, commuting over 2 hours every day.

I've been discussing the merits of brewing beer with the landlord of my local real ale pub for several years and we're finally sort of getting a vague plan together. I've started getting a few figures together in order to get a feel for the finances and so forth.

Having had a look at a few vendors and the costs associated with setting up a brewery, the main issue is clearly not "can I brew enough beer", but "can I sell enough beer". We were initially talking about a 5, 8 or 10bbl brewery, but that's a lot of beer you've got to shift to make it work. I'll obviously be sounding out all the potential customer pubs in the area, but it's quite daunting.

One thing I am encouraged by is the fact that until last year, our village did have it's own brewery. It was started in the late 90s and was very successful for about 10 years, with beer on sale in just about every non-Greene King pub for a good few miles around. They also had bottle sales in many local shops including a few local branches of Tesco, which is fairly impressive. Unfortunately the two old chaps retired and the new owners didn't, or couldn't maintain either the reliability or consistency. And it all went south. But it does show that there is a local market. We are in an area of few microbreweries, Oakham, Leighton Buzzard and a couple in Cambridge being the closest.

We did discuss the idea of having a small 2.5bbl in the pub itself, but initially I dismissed it as being too small.

But then I did a few sums and looked at it in a different way.

The landlord says we'd be able to sell at least 4 casks each of two beers (he always has between 13-21 pumps on, including the pretty much obligatory bland fizz). So that 8 casks a week would pretty much take care of the output of a 2.5bbl running just once a week. The other two could easily be placed out between the other local pubs or bottled.

The breakdown at £3.80 a pint (after costs) would allow £2 for the pub, 50p for me and 30p as a sweetener for the brewery who own the pub. That 50p would equate to £360 a week wage. Am I right in thinking that a single 2.5bbl brew a week could be processed working two days a week? The vast majority of the beer would be staying on site, so there's virtually no deliveries, and getting casks back wouldn't be an issue.

If I could do it in two days, that would mean I could still do may current job in London 3 days a week, maintain a certain level of guaranteed income and allay some of the risk of "going commercial".

If it became really popular and the demand increased sufficiently, it would be a relatively simple task to up production and cut work in London.

The elephant in the room of the pub-owning brewery, may not actually be all that bad. The landlord has gently sounded them out. Provided they got something out of it, and we had a solid business plan showing how having a nice shiny brewery in the pub would increase trade, they might let us do it.

So, the big question is, is any or some of this idea in any way realistic?
 
What sort of numbers financially are you looking at for a setup of that size? Also associated building works to bring the space into a state that it's fit for purpose to include possible planning requirements.
 
Duty with the 50% waver comes to just over 20p and VAT is another 60p.

As for initial set up cost, the brewery itself could be anything from 10-30 grand depending how shiny it is.

Haven't got to the stage of checking out conversion costs at the pub yet. But shouldn't be anything too structural.
 
Assuming a beer of 4% you would have to pay just over £300 duty on each 2.5bbl batch, but as a small brewery (<5,000 hectoliters per annu,) you would get a 50% discount. My guess is that it would be hard to turn a profit commensurate with set-up costs at 2.5bbl once a week, but it would make sense viewed as a pilot to test the market before moving up to an 8 or 10 bbl. Not having to quit your job but having the option to do so in order to ramp up production in the week without investing in bigger equipment, this sounds like a very reasonable strategy to cope with both downscaling and upscaling if your initial production doesn't tally with what you can sell. If you can afford the outlay, and if it seems viable after making a complete business plan, then I would say go for it. Its a shot at making a career from doing something you enjoy!
 
Now that's the kind of reply I like.

To be honest, set up costs are something I'll think about once I've carefully assessed the viability of running costs vs profit. If it won't keep a roof over my head, there's not a lot of point.
 
Sounds cool (although I've no idea of the financials), it sounds like you're not too far away from me where's the pub?

I can think of a fair few other breweries around Bedfordshire and beyond, but I wouldn't let that put you off as most of them are doing the same old.

Have you given any thoughts or done any market research on what styles and recipes you'll be starting out with?

I'd love to be doing something like this, but giving up the security of my job (although I don't enjoy it), fear of the unknown, having no idea how to go about it and not knowing if it'd be viable would hold me back. If you already have a certain amount of sales guaranteed with the pub and can do it while keeping your current job then that sounds less risky.

If you get it off the ground I'd love to come for a visit (will work for beer!)
 
Duty with the 50% waver comes to just over 20p and VAT is another 60p.

As for initial set up cost, the brewery itself could be anything from 10-30 grand depending how shiny it is.

Haven't got to the stage of checking out conversion costs at the pub yet. But shouldn't be anything too structural.

That's not too bad, will that be coming out of the pubs part?

A guy I know has just started renting a brewery, not sure if that could be an option worth exploring to reduce initial costs?
 
The tax is costed separately. It doesn't come out of anyone's slice, although it will get split between me paying the duty and the pub paying the VAT.

The pub is on the beds/cambs border although I'd rather keep it under my hat until we've made more of an official approach to the brewery.

There are a few small ones around me but you're right, they do seem to just cater for the bland 'pint of best' demographic. I'm thinking of something a little more interesting, without doing a Heston Blumenthal. There'll be no mango stout here.

Have I read the microbrewers handbook? That's like questioning the bears as to where they poo.
 
I have been looking to set up a 3 BB brewery mainly because I know someone who will rent me the kit in the New Year. I still have to find premises, insurance, alterations, electricity, water rates etc and you will need a detailed spreadsheet to input all of these plus cost of goods, chemicals etc. one of the biggest expenditures will be casks/kegs as you need 6 times more than your brewlength give that they will be out in the market and some will be lost.This is a considerable outlay up front.

For a 3 BB kit I reckon I could get about 11 -12 casks for sale so brewing twice a week gives 24 and three times gives 36, take your choice. you will not have to charge VAT until you hit the threshold.
The advantage for me is that after being made redundant I am not looking for a full time job so look on this as a paying hobby rather than a career move so any profit doing something you really want to do is a bonus for me. I reckon I can pay myself AT LEAST £10,000+a year brewing 2 days and it gives the opportunity to test the marketplace without a massive capital outlay.Who knows 10 BB may be next!
Good luck with your venture but do make sure you capture ALL of the expenses and outlay before making the decision.
 
The pub is on the beds/cambs border although I'd rather keep it under my hat until we've made more of an official approach to the brewery.

There are a few small ones around me but you're right, they do seem to just cater for the bland 'pint of best' demographic. I'm thinking of something a little more interesting, without doing a Heston Blumenthal. There'll be no mango stout here.
Sounds good, best of luck with it and do let us know when you're up and running and seriously if you do need an extra pair of hands I'd be glad to help out.

Have I read the microbrewers handbook? That's like questioning the bears as to where they poo.
Alright cheeky, I was only trying to help! :tongue:
 
I have been looking to set up a 3 BB brewery mainly because I know someone who will rent me the kit in the New Year. I still have to find premises, insurance, alterations, electricity, water rates etc and you will need a detailed spreadsheet to input all of these plus cost of goods, chemicals etc. one of the biggest expenditures will be casks/kegs as you need 6 times more than your brewlength give that they will be out in the market and some will be lost.This is a considerable outlay up front.


The number of spreadsheets I have is rapidly expanding....

Usually the shear number of casks you need is a massive outlay, but if 8 out of 10 weekly casks isn't even leaving the pub I'm brewing in, then that shouldn't be too much of an issue. If I've got a weekly turnaround of 8 in "my" pub and a couple going out to other locals, I reckon 30 should easily cover it.
 
Sounds good, best of luck with it and do let us know when you're up and running and seriously if you do need an extra pair of hands I'd be glad to help out.

Thanks, but I already have a couple of local friends who like a bit of homebrewing so you may have to form an orderly queue.

More than welcome to come visit though. More the merrier.
 
The number of spreadsheets I have is rapidly expanding....

Usually the shear number of casks you need is a massive outlay, but if 8 out of 10 weekly casks isn't even leaving the pub I'm brewing in, then that shouldn't be too much of an issue. If I've got a weekly turnaround of 8 in "my" pub and a couple going out to other locals, I reckon 30 should easily cover it.

That's great if you only supply one outlet, it's when you go out into the marketplace they start to wander. Again didn't mean to be patronising about the spreadsheets, I have a few myself that I keep updating and reviewing before I commit ( or not).
 
Bit confused about the £3.80 breakdown. What about all the other costs? Who pays what? What agreement will be in place with the brewery?
 
That £3.80 breaks down into:

£2.60 for the pub including VAT.
50p for me.
20p duty.
30p to the brewery.
20p other costs.

Other costs include utilities, grain, hops, cleaning and maintenance. These figures were obtained from Dave Porter at PBC.

As far as a specific agreement with the pub and/or brewery are concerned, that is something that would have to be thrashed out as and when.
 
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