More on contract brewing

July 28, 2012

Earlier this year we posted about contract brewing, and recently we’ve received a lot of questions from folks looking to start their own business.  Several questions kept coming resurfacing, so we thought we’d post a few of them and our answers here.  Before reading any further, I want to reiterate that before starting Jubilee, I met with 22 different brewery owners to pick their brains and learned 22 different ways to start a beer company.  The answers below aren’t meant to squash anyone’s dreams…just give one person’s perspective so that you might avoid some pitfalls.  Hope this helps:

1. Do I need to have another job?

Unless you’re rich or looking to experience life under the poverty line, I would recommend planning on some type of additional income source.  Initially, you may need to devote all of your time to launching the business, so plan accordingly.  You will not make much, if any, money contract brewing for the first several months, but to develop your brand, you’ll need to be very active in the market (tastings, visiting accounts, etc).  Probably the ideal scenario would be to focus on your business for the first 3 months, and then get a part-time job or a job with flexibility so that you could earn some money while visiting accounts occasionally throughout the day and a lot in the evening.

Jubilee's Mark Dunkerley chats beer at the East Nashville Beerfest

2. I want to do high-end, special bottles, 22 oz, 750ml, etc, but I’m having trouble finding a brewery.  What’s your advice? 

I haven’t spoken with anyone yet who has set out to make run of the mill, predictable beers in relatively boring packaging.  That being said, there are some financial and logistical considerations to take into account.  First is cost.  In addition to higher costs for packaging, you’re also going to incur additional labor costs, as a lot of bottling lines either aren’t set up for non-traditional sizes, or there will be a fee for adjusting the equipment to accommodate your product.  Second, if you approach a brewer about doing these types of beers, they’re going to hear “a lot of work for little return”.  You might as well say, “I’m going to be a high maintenance pain in the ass.”   I know…that sounds harsh.  But brewery owners are overworked, over-committed and under-capitalized.  They’re not looking to add difficulty to their lives.

My suggestion would be to try and make things as easy for the brewery as possible.  Use their bottles, similar labels, 6 pack holders, mother cartons (cases).  Hold off on your dream of specialty packaging until after you’ve developed a good partnership with the brewery.

Whatever you do, don’t build a business around hand bottling your beers.  No matter how cool it sounds.  Just don’t do it.  Ever.

3) How do I find a brewery?

Like any other business, the craft beer world is all about relationships.  Network, network, network.  Volunteer to help bottle.  Do whatever you need to do to get in the door.

And when you do meet with the owner of a brewery or a distribution company to pick their brain, PLEASE do your homework ahead of time.  Have an idea in mind of how you want to structure your business and ask them for advice.  Have specific questions.  Bring something to write with.  No, seriously, bring something to write with. If you come prepared and the person you meet with knows you’re serious, they are much more likely to share with you than if you show up with an idea and you think it’d be cool to work in beer.  That’s like wanting to work in sports because you’re a fan.

4) Do I contact a distributor or a brewery first?   What about investors?

In an ideal world, which no brewery operates in, it would work this way:

a. Round up the initial round of funding from investors or savings.  Having funding in place will accelerate your conversations with breweries and distributors.  How much money you need will depend on what you want to do (draft, packaging, one style, two styles, etc).   If you budget $25K per style, you should be fine (but please do your homework).  It’s going to be family or friends if you go the investor route.  You don’t have to have the money in escrow, but you would have verbal commitments.

Mark Dunkerley leads Jubilee's Beer School at the Station Inn

b. Find a brewery interested.  Typically I would advise having a brewery on board before reaching out to a distributor.  You don’t need to have a contract in place, but you will definitely get more attention from a distributor if you can say, “I have been talking to Mayday Brewery* and they’re interested in brewing for me”.  Note: Mayday is not interested right now.

c.  Meet with distributors- If you have a brewery in place, I would first meet with the distributor they use.  That will be the easiest because you can piggyback on shipping (lowering both of your costs) and their sales reps already know the brewery’s story.  That said, definitely shop your company around to make sure you’re getting what you need out of a distributor.

I hope this info helps.  In the end, it’s your dream and your company.  If you have the will, determination and funding, you can start a beer company any way you damn well please.

If you have a more specific question, feel free to give me a shout.



{ 4 comments… read them below or add one }

Courtney March 13, 2013 at 8:06 am

Since another party is doing the brewing and distribution/wholesale, does a person need any licenses to get involved in a contract brewing and hire a contract brewer?

Mark March 19, 2013 at 8:18 pm

It depends on how you are going to be set up. We don’t have a brewer’s certificate, but we do have a federal wholesaler permit and local brewery permit. Definitely check with your local folks to make sure!

Ric Fleck January 5, 2014 at 4:51 pm

I am an investor in a small craft brewery. After one year it is doing extremely well and we were considering bottling. Since the brewery is expanding quickly most profits are going into increasing product. I personally was considering starting a bottling company next door to do their beer. After checking into equipment seems even the low output automated systems will do much more than needed. In your experience would other small craft beer brewers be interested in bringing their beer to be bottled?

Mark January 5, 2014 at 11:54 pm

Hi Ric…glad to hear your brewery is doing well. I would recommend looking into a mobile bottling/canning line if you’re interested in getting into the bottling business. I don’t think many breweries would be willing or financially able to ship their batches in kegs to be bottled. Hope this helps.

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