Will You Cut Weight, Or Close Your Doors?

Recently I’ve started hearing far too many sad tales of breweries that started too big and didn’t evaluate the surrounding market. While to many this may seem like a minor situation, I see how it could eventually blossom into a major concern for the growing portions of the brewing industry.

As many of you already know, starting any business can be a terrifying feat. And, you’ve probably read several articles, or listened to seminars from expert accountants discussing weak growth strategies.

While it is important to pay attention to these experts, and in some regard they have a point in not planning for the next phases well enough, it’s also not in your best interest to simply throw yourself off the entrepreneurial cliff without the best possible means for a safe landing or means of taking flight.

While you may believe you make the greatest beer on the planet, have won several awards and have a sound business strategy, there is one segment of the market you may have under appreciated, your customer.

Say you live in a location where you’d be the third, fourth or fifth brewery opening in the past five years. You have a means to receive a strong financial backing so you jump fully in with a 15-20 barrel brewhouse. The tanks are beautiful and it’s a lot of fun to take the brewhouse for a spin. But what you end up discovering is even with the hype of craft and the local attraction of new breweries in your area you still must grow like every other business. Having a massive brewhouse with an immediate distribution strategy doesn’t mean you’ll gain regular customers or shelf space.

Goldwater-Taproom2

When you run yourself into a situation like this you’ll see brewhouses that eventually aren’t in production as much as they should be because they’re simply making more beer than the customer base can handle.

If your first business wasn’t the brewery it might seem obvious to you to observe caution when opening, but there seem to be more and more breweries opening and closing due to an over commitment.

In all businesses it’s important to take a look at additional operations around you. While you may have a few breweries that have opened and are already moving on to larger brewhouses, that doesn’t mean that you jump on and ride the same wave. Instead it’s important you reflect and find your own wave.

Does that mean you start as a nano and try to grow? Or do you start with a 10 bbl brewhouse? In the current brewing landscape it’s vital that you look at all opportunities around you. Crunch numbers for everything from a single barrel all the way through a 20 bbl. Look at the pros and cons and be realistic with your business strategy. It’s better to be pleasantly surprised by your success than to be blindsided by cost and end up closing doors before you really get off the floor.

While many of you are well past this new landscape, I believe it’s important to also reflect on where you started, where you are currently and what successes helped you achieve your dreams. Understand what you could have done differently to move faster. When you can objectively look at your business you’ll be able to see paths to a successful future.
For the ones that are struggling because you may have come into the market with hopes to make it big, it’s important that you look at strategies to help you adjust your business model. Is there a smaller brewery around you needing contract brewing, or can you possibly sell some equipment and downsize. While many brewers may not want to confront those strategies, it’s a lot better to cut weight to stay afloat than it is to close your doors.

Leave a Reply

Your email address will not be published. Required fields are marked *