Do you know what it takes to have a successful brewery?
This past week, June 14, 2016 at Silo in the Makers Quarter of Downtown San Diego, a group of brewers, future brewers and industry folks gathered to discuss the current state of the brewing industry and its’ future. Elaine Rodriquez, ILS’ very own Brewing Finance Expert was amongst the attendees.
The educational event spotlight was on the panel of 4 experienced, well-known brewers from San Diego. Panel consisted of: Doug Constantiner of Societe Brewing Co, Jim Crute of Lightening Brewery, Jacob McKean of Modern Times Beer and Curtis Hawes of Second Chance Beer Co.
The reason for the gathering was to converse on the industry standards of operations costs, start-up costs, wages and labor costs. Each of the 4 panelists were selected based on their varied perspectives. Elaine’s biggest take-way of the night was how capital intensive it is to start a brewery. There are a ton of unexpected costs involved and having enough capital to sustain for the first few years is imperative. Almost every new brewery that opens think they have enough money and more times than not they don’t!
Each panelists shared their brewery’s path and how they have succeeded thus far.
Doug Constantiner was a home brewer that became an investment banker in order to raise capital for his brewery alongside his co-business partner. His main business idea is to “work for what fits”. Everyone has a different model and no model is perfect or the right one – do what fits best. As a start-up, he finds business plans to be a great exercise to get your thoughts down on paper. Starting a brewery is highly capital intensive and the best advice he can give anyone about their business plan is whatever you think is in your income statements, take that number and throw it away. It will all be spent on inventory and accounts receivables.
Jim Crute was a scientist. Legit scientist and wanted to create his own brewery, which not has been open for 10 years. He only has 6 employees and doesn’t care to become a massive brewery and finds that he has the ability to create and mold employees for the brewery industry.
Jacob McKean is a former employee of Stone Brewing. He learned from his time at Stone and incorporated it into his brewery that a brewery not only needs to be a manufacture, but a distributor and and retail company too. Modern Times has grown significantly in just the past few years. He takes time to invest in his employees because he finds it more expensive to cycle through employees versus paying them well – From the panel Modern Times had the highest internal hourly wage for their employees. Jacob also felt that starting a brewery is highly capital intensive, mentioning, “Even if you have a floor, you have to purchase a new floor to meet regulations.” He also feels if you really want to be serious about beer, San Diego is the city to be in.
Curtis is from Rock Bottom so he has a great understanding for what is takes to run a Brewpub (restaurant and brewery). Curtis finds that the main reason why there are so many breweries here in California is that they have the ability to self-distribute and have contracts with distributors. Not all states have the ability to do that.
No matter where your brewery is located there are some great takeaways from the discussion. To be successful you need a plan and you need money. The best solution is to get funding from a non-traditional lender in the form of Working Capital. Working Capital, simplified is a loan, which provides a business with capital for any business need. Essentially cash!
ILS provides a Brewery Working Capital program specifically for breweries. The brewery can use the Working Capital Loan to acquire just about anything from inventory (ingredients), expansions, cans, bottles, and most importantly wages and payroll for their employees. Read more here –>