Brewery Incubator: An Economy of Scale

brewery incubator

Not all brewers throughout the U.S., especially in this rapidly growing industry, have the ability, or need, to purchase 15 bbl. brewhouses or anything even close. For Kristen Lyons and Jason Gardner, the owner and headbrewer for Binghamton Brewing Co. in Johnson City, N.Y., this was very much a reality.

Binghamton Brewing operates on a 2 bbl. brewing system, which is just big enough for them to operate successfully, but not big enough to keep up with the demand of the brewery’s flagship brew.

“The idea is, we’re a very small brewery, and there are a lot of smaller breweries in New York between 1 and 3 barrels in size,” explained Lyons. “All of us buy all of our own equipment and brew on this very small scale. The idea behind the Brewery Incubator would be to design a centralized location, get a larger brewery, somewhere in the 15 bbl. range, that would serve as a hub for smaller breweries to come and get that economy of scale without every other brewery having to pay for the equipment.”

What didn’t make sense for Gardner and Lyons, was for all the smaller breweries popping up in New York to immediately purchase their own 15 bbl. system. The idea of a bunch of breweries within miles of each other building huge brewhouses, just didn’t make sense to them with their background as Industrial Systems Engineers.

“We really appreciate the economy of scale of a centralized location where everyone can brew,” explained Lyons. “I’m not going to use it seven days a week, but if you divide that out over multiple breweries there’s an ability there to get that economy of scale, that central location, and be able to produce product, without the brewery having to do all of the outlay for the capital expenditure.”

The Brewery Incubator would have its own staff, and ideally would allow these smaller breweries to reach levels of distribution and success that they may not have otherwise been capable due to the outrageous cost.

For example, Gardner said that he doesn’t know of any smaller brewery in the area that had a bottling or canning line, or an automated kegging line. The outright cost of each system can truly be a major factor for a lot of smaller breweries. However, with the Brewery Incubator brewers of all sizes would have the ability to begin canning or bottling and either increase taproom capacity, and potentially distribution throughout the rest of the state.

While the pricing on this project has yet to be determined, or how much it would cost a brewery to utilize the system, it has become a forward thinking model that has received support from local economic development. The support has started assisting in grant research and writing to help turn this dream of a Brewery Incubator into a reality.

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