Tag Archives: Starting A Craft Brewery

First Focus Group Results …. coming soon!

On Tuesday of this week, we had a focus group with the purpose of getting feedback on naming our brewery.  It was the first time I’ve planned and implemented a focus group, so it was many things rolled into one, not the least of which was a great learning experience.

Like anything in life, preparation is the key.  It was something that I prepared myself for, and even knowing that there was a lot of work for something like this, I was blown away by how much work it actually took.  I did keep a total of the amount of time I spent organizing this focus group, and up until the minute things started, it was 48 hours of work.  Where the hell did 48 hours go you ask?  Let me tell you:  Organizing participants, preparing questions, meeting with the moderator, securing the space, getting the food and beverages, printing copies of questions and non-disclosures, etc, etc, etc.

The focus group itself went well in my mind.  There are always questions you would change, formatting alterations you would make, and slight differences you would make if you did it again.  For the second focus group that we are having this Sunday, I will likely only change one question.

A huge component of the focus group is your moderator.  Luckily I had the help of a real craft beer enthusiast and very personable, yet professional individual.  I can honestly say, that next to the preparation involved, the moderator can make or break the implementation.  Rebecca was so unbiased, and also so personable, and was able to take the outline I gave her, and worked with it in her own way.

The feedback was somewhat expected and completely unexpected all at the same time.  While I would love to go into the details, I will wait for our second focus group to complete before commenting on them.  What I can say, is that the results will help us pick the name that is right for our brewery.  What we do know is the name we pick will represent what we are doing, what words are meaningful and what name fits with the local market.

I will update everyone more after we have our second focus group on Sunday and get closer to having our list of names narrowed down to 2-4 finalists.

How Many Breweries are Enough in BC, Canada and North America

I often wonder how many breweries can a City, Province, Country and Continent support?  As an entrepreneur and soon to be brewery owner, the concern is always in your head that the market reached a saturation point with businesses.  Eventually, craft beer market share will stop coming from Molson, Labatt and other International giants.  It will indeed come from other like minded craft breweries, which means I can taketh and I can giveth.

In the United States, the Brewers Association indicates that there 2,538 breweries operating in the country as of June 2013.  It also states that there are an additional 1,600 in the planning stages.  If you take a 90% survival rate, that would make about 4,000 total breweries operating in the USA.  That is a lot of beer, and one would have to think, reaching the point of saturation.  In fact, you can read this article posted in the USA Today, which looks at this very question.

In Canada, best estimates put the number of breweries at about 300, and within 5 years, that number is expected to reach 400.  Where is the tipping point?  Well no one knows for sure, but not unlike our counterparts south of the 49th parallel, with every new brewery, we take another step towards saturation.

All of this plays in your mind when you open a brewery.  It fundamentally matters what you stand for, the type of beer you make, and how you put all these moving parts together to form your brand.  It would be my opinion that as the market gets more and more crowded, new breweries need to carve out a more focused niche.  It used to be that making a craft beer was enough of a differentiator, but with more breweries doing more unique beers, being uncommon becomes a good play.

It feels like this is the path that we are going down with our brewery.  It just seems to make the most sense to me, and when something makes sense, I usually jump in with both feet.  When I look at the breweries that have opened and experienced success, they all stand for something.

Parallel 49 – Always something different and unique, but merged with hitting the middle of the market

33 Acres – Clean, refined and connected to Vancouver

Red Racer – quality craft beer in a can that appeals to the middle of the market

Four Winds – New world innovation influenced by old world tradition

Do you think Vancouver could support a brewery that focused on beer from one area of the world?  What about a brewery that focused on Low Alcohol beers or Gluten Free Beers?  Or do you think a brewery that focused exclusively on Sour beers, or different types of Saison would do well?  What about doing what Steam Whistle does, and only make one beer?  What about a brewery that only sourced local ingredients?

These are some of the options that are coming into play with new breweries, and ones that we have kicked around.  At the end of the day, I am going to brew beers that I believe in, and hopefully others like them as well.  There really is no other way to go, and to be honest, doing otherwise would be somewhat disingenuous.  As for the number of breweries, this is not something I can worry about.  It would be counterproductive for me to focus on what others are doing, at the expense of conveying what we are doing.

Back to my Excel spreadsheet I go.  It seems that I am spending far too much time making the numbers work.  My topic for next time will be the tasting room and what are some of the decisions and qualities that are important in designing one.  For now, I will leave this parting thought.  I hope that we are a ways from saturation, for it will make the task before me that much more attainable.

Nothing to do but Everything to do

Some days I feel like there is nothing that needs to be done in particular.  Whether its marketing, the business plan, finances, cash flow, collecting money, etc., there never seems to be a timeline on getting some of these things done.  But when you take a moment and look from 50,000 feet at what you have to accomplish before you sell your first beer and HOLY CRAP, there is a lot to do.

All of this means that starting a business, and in particular this brewery, results in having a lot on your mind.  I’m not talking about when you are in the shower, or making dinner …. I mean in the middle of the night, or when you should be engrossed by something else like a CFL game, or the company of a great friend.  It is so easy to let thoughts of your business, and the work that is undone, creep into your mind and send you on the path of mental anguish.

Tonight is a great example of that.  I would like nothing better than to sit down and turn my mind off the task at hand, but there are a few things on my mind:  I have a Brand Guide that needs attention, emails to investors to follow-up on progress, work with an architect on the space we are trying to lease, a meeting on Monday with our Accountant to prepare for, documents that our Lawyer needs returned, emails that need to be answered, a business plan that needs to be updated before it is PDF’d, decisions on equipment that need to be made, more requests sent to suppliers and manufacturers for additional quotes, contractors that need to be interviewed for work required, and most importantly this blog which needs to be attended to (I will get a check on that after this).

All of this makes me realize that Entrepreneurs are both made and born.  You have to like the  chaos that comes from this process …. the constant juggling and prioritizing of tasks, working in the trenches, while at the same time, working like a VP, and the constant struggle between what you really want to do, and what the market wants you to do.  You also have to be able to turn it off, and it is something that requires constant reminders of this.

So with the end of this blog, I am going to make a to do list for tomorrow, and turn-off my mind.  I am reminded what one of my good friends and mentors tells me …. starting and running a business is a marathon in that requires a balance of running harder to stay ahead of things and laying back to regain some strength.  Tonight might be some time to regain some strength.

Raising Money …. Almost there

This part of starting a brewery involves no glamour, lots of rejection, and takes a thick skin. Most importantly, looking for investors takes patience.  Sometimes, the last thing I want to do is is take time away from the Brand Guide, Business Plan or other more ‘fun’ projects (OK I’ll say it, liquid research) to focus on this.  There seems to be a lot of people interested to know more, but to have ongoing discussions with them, means reducing the number of people who actually want to make an investment.

You see sharing your business plan, and your thoughts on everything from Marketing to Financials is like exposing your inner-most thoughts on business and branding.  Inevitably, we all have different viewpoints on these items, so there are things about my business plan that some people jive with, and other parts that turn people off our business.  Likely, if you are reading this blog you are a fan of craft beer; so explaining the market, how it’s growing and what the future holds is easy …. like selling candy to a kid.

However, about 75% of investors that read my plan don’t know a lot about craft beer.  For instance, they think Granville Island or Sierra Nevada is craft, have never heard of many of the smaller craft brewers, and don’t seek out establishments that cater to craft beer.  Some investors have even approached the business plan from a pure business standpoint.  They ask, “Why wouldn’t you brew more beer, sell it cheaper, market the crap out of it, and have higher sales?”  As you can imagine, this is not what I have in mind for my brewery! #FollowMyDreams

Most of all, you are asking mostly friends and family to invest their money in your dream.  This simple fact means that people start out skeptical in the first place.  We all know someone who is offering some multi-level marketing investment, or someone else who is selling diet pills or a weight loss plan.  Personally, I find this annoying, especially when its very in-your-face.  Also, people work hard for their money, and there is nothing worse that pissing your money away on a bad investment.  All of these things stick in my mind when I ask people to part with their hard earned money.

The net sum has been very positive.  I feel lucky to be based in Vancouver with this dream, as craft beer is bigger here than most any other place in Canada.  From a Canadian perspective, craft beer in BC is very sophisticated and has set the standard for many years now.  The Canadian Brewing Awards is littered with BC breweries winning gold medals over the past 5 years.  I just have to keep reminding myself that this opportunity is not for everyone.  I have also learned to take the feedback that people give me as not a personal attack, but ways to make our business and prospects for success better.  Ok, sometimes people are just jerks, but thankfully they are in the minority here.  Most people just can’t afford to drop $25,000 on something like this …. living in Vancouver is expensive.

As of today, we have raised over $1 million dollars towards starting this dream.  When I really step back and think about that number, it is a LOT of cash.  Depending on the space we lease, and the retrofit cost involved in making the space suitable for brewing, we will likely need another $200,000 to be fully financed.  I hope that we can find this money within the next few months, as the thought of being so close to connecting with all the investors we need is both motivating and exciting.

I am always open to comments, support and help from anyone and everyone in making my dream of a craft brewery become a reality.  If you happen to have any advice, thoughts on anything about the industry, or any other insights on anything to do with starting a business, please feel free to pass them along.

Thanks for reading this post ….

Making an Offer and Finding the Right Brewing Space

Well its official, we have made an offer on a space in East Vancouver.  This will be our 5th property that we have made an offer on, and I hope that its 5th time lucky.  My friends who know me well, and have been kept abreast of the past 3 or 4 years of this process, are the ones who encouraged me to start this blog, as there always seemed to be so many ups and so many downs throughout the process.  None more than finding a space to call home!

In my opinion, the biggest and most important decision a brewery can make is the space you lease.  Sure other decisions are important:  Like, the name of your brewery, the beers you make, the employees you hire, the way you disperse your cash, and the image you present to the marketplace.  But what I have learned is the space you are going to be married to, for better and for worse, is the most important decision you can make.

For starters, finding a good space for brewing is difficult as the list of requirements is long, making an ideal space unique.  You benefit from having high ceilings (18 feet is ideal), a good water supply, good floors for taking the load of full fermenters, about 400 amp/3 phase power, and solid overhead loading doors.  If the list were limited to just these items, the search would be difficult in itself.

But lets not forget some of the other key items in a warehouse that are important in starting a brewery.  In Vancouver, M2 Zoning is the only commercial zone where brewing is an outright use.  All the other zones (for instance I1 and I2) are conditional use, which means you need to apply for a Development permit from the City of Vancouver.  This costs about $5,000 and takes anywhere from 8 to 16 weeks.  I heard Brassneck took 16 weeks, and I have heard rumours that Bomber brewing got their DP in 8 weeks.  Most importantly, you can’t apply for a development permit until you have a signed lease on a space.  That means you have to take a giant leap of faith you will get a development permit.  Why you ask?  Well inEast Vancouver good quality commercial real estate is so hot, and you likely won’t deal with a landlord who will let you have getting a development permit as a subject of the offer.

The list doesn’t end there …. Another key component is the size.  Small breweries need at least 2,000 square feet, and the size can go all the way up from there, depending on how ambitious the brewery is for sales.  I think a space of about 6,000 square feet seems good for starters, but it comes down to how much beer do you think you will sell?  Will you follow the path of Storm Brewing, and have sales that are modest, and keep the operation small?  Or do you plan on having higher sales, like Parallel 49 Brewing, thus requiring more space for production?  Like everything, there is a direct correlation between the size of the space you lease, and the risk an owner takes.

With the new Tied-House rules in the City of Vancouver, another huge aspect is the Tasting Room and Retail Area within the brewery.  It is hard to explain to people how oppressive the bureaucracy is when starting a brewery, and the ability to have a tasting room on site is huge bonus. It not only allows for a tangible connection with consumers to gauge their opinion and interact with, but it also helps to add a few dollars in sales to the bottom line of a brewery.  As such, the location of your warehouse, along with the design, aesthetic and interactivity with the brewery is huge.

The last big point that comes to mind is scalability of the space.  It costs about $500,000 to retrofit a space for brewing.  In other words, this whack of cash goes to upgrading power, floors, water, pipping, cooler/cold room, installation of brewhouse, offices, tasting room, grain handling, etc, etc, etc.  You essentially never get this money back, as its an investment you make in the landlords building.  Hence, its important that you find a space that works now, but also for 5 and 10 years down the road, as you need to avoid having to move spaces because you have outgrown your current facility.  This is of course a good problem to have, but at the same time, its important to be mindful of this fact.

There are obviously other factors like the quality of the landlord, the neighbourhood you locate in, the look and feel of the space, and the lease rate you pay.  All of these items go into making a space for brewing difficult.  However, if patience and an ability to pounce on the right space when it comes available are kept at the front of everything, it is possible …. just ask 33 Acres and Brassneck who both did very well with their spaces.

I hope today is the first day in securing the right space for my brewery.