Craft Brewers Conference – Nashville, TN
While in Nashville I had a friend approach me with a question about contract brewing.
They were talking to a high-falutin brewery consultant about their expansion when the consultant suggested they contract brew rather than build a new facility.
Lil’ background on this brewery:
- 15k bbl of production, and growing
- Million dollar taproom
- They sell every remaining drop through distribution, and the market would take more
- Wildly recognizable and popular brand
- The liquid is damn good
When he asked what I thought about this suggestion, contract brewing over expansion, my only reaction was.
“Sure doc, I always go to Home Depot to purchase bread.”
This is not a knock on contract brewing, as I have many customers who solely contract brew.
I also have a number of customers who have tried contract brewing as a bridge to the next frontier. Those have not gone so well.
Without further ado, I give you the Small Batch Standards real-falutin experience with contract brewing…
Contract Brewing Tips:
- Be prepared to drink from a firehose. Most contract arrangements have large minimum brews. Its critical to have the sales plan in place to take on all this inventory and sell it through.
- Be prepared to pull your hair out over the quality of the beer as compared to what you produce in house. The typical brewhouse of a contract brewery is far larger than what you are brewing on. This will affect the recipe and taste. Make sure you have a super technical brewer who can guide the contract facility through the brews.
- Be prepared to make little profit. I don’t need to tell you this, you already know it. When you add another mouth to feed in this already thin margin industry, it wipes your profit out.
I need to repeat myself on one point, this is not a knock on contract brewing. For an existing brewery, I see contract brewing as a option to brew core SKU’s when you don’t plan to expand. This will frew up the production site to concentrate on the small batch goodies.
Contract Brewing Recap
Another great reason to contract brew would be a proof of concept. If you have a recipe, brand, and marketing but no cash to open your own place, then contract brewing is the way to go.
It goes without saying, this friend should not contract brew. He has all the right things going for him to risk an off-batch of beer entering the market.
I told him to move forward with expansion plans and the market will wait. It always does for a premium product.