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01.08.2018 - Eee by gum

This brewery building lark is a bit intense isn’t it?

With 3 new breweries opening a week (and that was in 2015!) & 50% of start ups failing in the first 5 years, the odds of creating a successful business seem to be stacked well and truly against us. Yet here we are and it’s far too late to turn back now!

1 month after taking on a new lease, we have been making what seems both slow & speedy progress. So far, we (well not Mike & I, that would be a bit ridiculous, actually qualified people) have reworked all of the gas, electricity & water cables/pipework to the back of our building where the brewery will be built & our brand new steam boiler has been safely installed.

We weren’t going to do too much of a detailed blog post, knowing that the audience who care about this stuff is limited and we are not great wordsmiths, but we changed our mind after spending last Saturday evening with the awesome guys at LHG, for their turn at hosting the Little Summer Beer Bash, remembering how many times we must have read their incredibly detailed start up blog over the last few months.

 

We used their blog to form the initial outlines of our budget, and cross referenced their numbers and suggestions with other useful start up blogs like this one from Andy at Elusive brew.  So we thought that maybe somewhere out there, there may be a homebrewer looking to make the move to commercial who might find this interesting or potentially a detail orientated beer fan who fancies a read.

It also might help our friends & family understand what the hell we’ve been up to over the last few months!

So, settle in and discover what we’ve been doing to build a brewery.

The garage

We always knew this wasn’t a long term solution. Speak to anyone in the beer industry and they will tell you that you cannot make a living off a 1BBL kit & ours is even smaller than that. The economics simply don’t work & never will. Our plan was to utilise this kit to develop recipes & get our name out there before we made the leap to a bigger kit.

We had always planned to use our start up kit to test pilot batches for the future, so was a worthwhile investment for now. What was harder to justify were the installation costs. Of course the single plug point in our garage wasn’t quite up to the job of running three separate heating elements, a glycol chiller, a pump and two solenoids, as well as giving us enough power points for things like laptops without some significant upgrades. So we had to spend a whole bunch of money to get the electrics redone to allow us to have the brewery set up and allow us to effectively temperature control our fermentation temperatures, which is obviously key in allowing us to recreate recipes again. Then there was the red tape.

We had initially spoken to EHO about getting approval for the garage as a food business so we could legally start manufacturing beer to sell to the public. They had said we may need planning permission for change of use of the garage to industrial.

This came as a shock. We were doing nothing more than what we had been doing homebrewing wise, so why now did we need planning permission? That and trying to explain to a planning department that you want to get industrial use on your garage in a quiet cul-de-sac is never going to be easy. So we were a bit stumped really as at this point, especially as we’d keenly signed up for Craft Beer Rising and had no way of legally brewing beer for it. Bum.

We looked around at various alternatives like brewing at Ubrew in London, but that would have meant our decision to get the kit in the first place, and money spent on installation would have been a total waste. We had a great kit & we wanted to use it!

After lots of thinking and talking, we decided to apply to EHO anyway and see where we got to. This basically meant that we were registered as a food business and would get an inspection to see how safe our productions methods were to the public.

We coincided the EHO request with applying to HMRC to register as a brewery (licence to produce alcohol) & hold duty paid goods on site for wholesale (AWRS). This came with an inspection as well but now allows us to class our dear garage as a “bonded warehouse”.

Both inspections went surprisingly well really & we even got a 5* food hygiene rating from EHO thanks to lots of paper work and a fairly thorough HACCP plan. No mention of planning either. Whoo!

So, thankfully, all this allowed us to do Craft Beer Rising festival from our own kit.

A lot of people knock Craft Beer Rising because its really hard as a brewery to make money from it. Most of the “desirable” craft beer festivals are an invite only type of deal. This high cost set up & lack of focus on the passion of beer does go against the ethos of the craft beer world.

But whoever you are you can pour at CBR, meaning you do get a lot of faux craft breweries but also a lot of new start up breweries who you may not have discovered otherwise.

We were opposite Boxcar who are the perfect example of an awesome, new  small batch start up brewery. In fact, we were named alongside Boxcar by Alcohol by Volume’s Chris Martin as one of the new 2018 breweries to look out for! Whoop!

For us, it was extremely valuable. Having not gotten any beer out on the market before then, it allowed us to hugely expand our reach quickly. It set us up with trade contacts that we could have only dreamed of getting without attending. It was far more valuable as a trade show than a consumer show & we have absolutely no regrets in jumping through all the hoops to allow us to do so. But did we make a profit it from it? Hell no!

The frustrating thing was the timing. We’d hoped it would perfectly coincide with us getting the keys to our new unit and being able to jump on any trade contacts made. However 6 months later and we still haven’t been able to. Which brings us on to;

Stepping up capacity

We now in the process of installing at 15BBL (24Hl) kit in our 6800sq ft warehouse.

A big jump up from the garage, but the economics have made us make that decision.

This kit will initially be pretty small in this huge space but that was always the plan. We hope to have a dedicated space for a tap room with plans under way to design a comfortable and dedicated space to enjoy our beers, a really epic cold room, space for barrel aging & one day perhaps a canning line and more fermenters. It gives us plenty of space to grow without the need to move.

But it does mean, with our huge initial outlay on the kit & installation, we have a pretty horrific first year cash flow wise, with high sales expectations if we are going to make it through.

To put that into context, our budget breakdown for our first year of trading is split accordingly;

30% on capital items (Malrex British made brewery kit, boiler etc.)

23% on rent & business rates

12% on installation fees (including floor)

Our rent and business rates are disproportionately high for the business at the moment, but with our long term view we are confident that one day it will pay off.

So what’s the remaining 35% on. Well, all the other bits to allow us the working capital to survive. Gas, electrics & water bills, marketing costs – label & keg lens design, budget to hopefully hire someone else one day, business & contents insurance, licence fees etc. as well as the upfront costs for all ingredients/kegs etc..

Bearing in mind that we’ll have approximately 3 months where we are paying rent and business rates but aren’t able to produce any beer in a well valued capacity, we will need a healthy cash flow to support that.

Hence why the word cash flow has been repeated about 500 times a day for us.

So, what sort of work is it?;

Boring bits

Planning approval for B2 industrial use – DONE (luckily for us our unit was already B2, but lots of questions raised around having an on site tap room meant we have sought planning advice)

VAT application – DONE

Agreeing a lease – DONE

Brewery plan & landlord sign off – DONE

Trade effluent approval – DONE

Change brewery license through HMRC brewing – DONE

Re approval of new site through EHO – IN PROGRESS

License application for tap room – IN PROGRESS

Waste Management contract – DONE

Spent grain solution – IN PROGRESS

 

Physical works

Relocate 3 phase electrics, gas & water from front of building to back of building – DONE

Install steam boiler – DONE

Build sloped resin floor & bund wall – IN PROGRESS

Dig & install drainage channel – IN PROGRESS

Install brewery – August 2018

Install brewery control panel & electrics – August 2018

Install glycol chilling system – August 2018

Build cold storage room – TBC

Build tap room (once licensing approved!) – TBC

Starting all this building work in mid July when most people bugger off for a holiday of some sort was not the best plan and has put a small delay on what our initial timing plans were. Adding to more time & financial pressures. But we are just about okay, with lots of fingers crossed.

The one piece of advice we would give to any would be brewery owner is go out and speak to people. Ask if you can be shown round their brewery & if they have any advice. Immerse yourself in the beer industry if you aren’t in it already, go to beer events, visit every bottle shop in your local area, speak to your potential customers.

You’ll find most brewery owners or brewers will be founts of knowledge for things they would have done differently, which companies are good or which to avoid, or the individual stresses that made their brewery build hard. Don’t just speak to one though, visit as many as you can, different sizes, different focuses. We found that everyone had varying sticking points – floor build issues, weather issues, waste issues. There’s going to be one, so you might as well do your best to try and avoid it.  These people are typically friendly & invaluable help to your brewery building plan. Use them! (Including us!)  Unsurprisingly, the people who have gone through all of this are generally always happy to talk about their journey, and we have learnt a huge amount from these interactions.

So yes, building a brewery is quite intense & how much you decide to spend on it, depends on what kind of brewery you want to be.

For us, we never really got into this lark to drive Ferraris & make huge amounts  of money. If money was the goal, there were far more stable things that we could have invested our money in. For us, we’re doing this so we can spend our working days doing something that we are hugely passionate about. To be a part of an awesome supportive industry. To drink great beer with great people. And hopefully create a really cool company to work for, that Reading locals are really proud of.

Anyway, that’s where we are.

After celebrating our final brew in our garage, we realised that we may have been a bit premature, as we were invited to pour at Siren’s Sessions & Sours and HopFest 3 at the Fox & Hounds in Caversham, so we need some beer…  So our garage brews continue for now at least!

The good news is that does mean we’ll also be pouring at Craft Core Festival  in Oxford and the Friends from the West event at Mother Kelly’s in London in September, along with Verdant, LHG & other incredible breweries from the west of England…. (well west of London anyway haha!)

I mean we can’t really believe we’ve been invited to these just on the strength of our garage kit beers but we are incredibly grateful and it does help ease some of the ever building panic. I’m sure & hope, that one day it will all be worthwhile.

Thanks as ever for your continued support and interest in Double-Barrelled & our journey. Thanks for every tweet, every shoutout, every bit of love.

It really means the world.

Luci & Mike

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