Microbrew startup

[KLPInvestments]

I'm trying to start a microbrewing company tentatively titled....SwampFox Brewing Company to be home based in southeastern, NC. I have some investment money in escrow and a few partners. We are far short of goals regarding capital needed to go forward. The biggest expense will be for brewing, fermenting, and kegging equipment, and perhaps a brewhouse or lease for a brewhouse. In light of this, we have the option of contracting the brewing out to existing brewers that have the capacity to take on our project on a contract basis. Contracting would save us a lot of capital expenses and free up those resources for sales/distribution.

I'd love to get some advice on gaining the additional capital we need, finding new partners, etc.

We want to produce premium crafted beers and distribute to targeted regional markets in NC, SC, and GA.

I have done all-grain home brewing and have a good working knowledge of the brewing process. I also have made connections with several brewing professionals whom may prospectively join our venture. Making good beer will be the least of our worries. Getting adequately capitalized is the primary hurdle. The plan is to exchange equity for start-up capital. I am spearheading the project as I am the founding partner.

I can answer any questions you may have.

Advice? Thank you in advance!

 

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[kurtyordy]

The most important thing you must figure out for the sake of your business and to attract money is your plan to bring in customers, and how you will execute that plan.

The product is secondary.

Also, from experience, use the contract bottler at first before you expend a lot on equipment. Besides saving capital, my insurance rates are better because we do not produce. The downside, it cuts into your profits abit, but once you find out if your brand is viable, then you could build your own.

Just curious- I remember a disney movie from when I was a kid called swampfox. Is this where you got your name?

 

[Yankees338]

One thing I would suggest is to focus on WHY an investor would want to join you on your venture. What makes an investment in your startup more valuable than an investment in RE or any other private businesses? You could probably use the fact that the market is bearish right now to convince them that private investment is where it's at, but they probably know that already if they're looking. However, if you're targeting a broader market of investors, that could be an attention-grabber.

Good luck and keep us posted.

 

[KLPInvestments]

Swampfox....Francis Marion from the Revolutionary war. Remember the movie...The Patriot with Mel Gibson. The Swampfox name has strong local ties here in NC/SC. I live on Swampfox Hwy, and a local school here is Francis Marion University(he was the Swampfox).

From Wikipedia....

Francis Marion (February 26, 1732–February 27, 1795) was a lieutenant colonel in the Continental Army and later brigadier general in the South Carolina Militia during the American Revolutionary War. He became known as the "Swamp Fox" for his ability to use decoys and ambushes to disrupt enemy communications, capture supplies, and free prisoners. His use of guerrilla tactics helped set in motion the decline of open battles in the conflict. Early records indicate that he was a sailor before the Revolutionary War.

Marion is considered one of the fathers of modern guerrilla warfare, and is credited in the lineage of the United States Army Rangers.

 

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[hakrjak]

As with any business I'd be leary about bringing on partners -- it rarely ends well, unless they are silent partners with cash. Those types are going to be focussed on 1 thing and 1 thing only -- ROI.

- Hakrjak

 

[zaiteku]

How does one get into brewing and starting your own "label".

Ive always been interested in that business but never knew anything about it.

From a business standpoint sounds like you would have to approach the contractor with something appealing to add to their existing portfolio. Appealing enough that they would not want it in their competitors portfolios of fine brew (if they have their own line). Seems like the contractor would have a lot of production and marketing muscle that you could put to work.

As far as finding partners, if you get investors they could end up driving your company once they get their money in there. Im not sure of your capital requirements, but it sounds more attractive for you to raise the money some other way than direct venture capital, do a limited run of the brew and see how it scores, then see if you can do some kind of revenue share with the contractor if its looking attractive to both parties. If its profiting handsomely, in the case of a liquidity event, you would keep more of the profits that way. Investors generally want to know when they will get their money back, and when they will make X amount over that initial investment, and can be slave drivers (in high tech anyways). But if your going in on a run with a contractor, that would seem easier to negotiate terms, especially if there are several in your area.

Also, how difficult is it to get your product on the shelves of stores to get seen and purchased? I know sometimes its hard for the little guy to carve out a space to display their products in retail stores and supermarkets. Many times the big guys have a lock on display space. Are you in cahoots with some good liquor vendors? Or maybe that is not necessary?

Im also not sure how legal works with brewing. How do you tie up a recipe and make sure it remains yours?

 

[HenkHolland]

About 5 years ago I was asked to invest in a microbrewery. The offer was tempting, but I noticed that the entrepreneur focussed too much on the production and very little on how to sell his beer. Getting your beer produced is peanuts compared to getting it sold.
Don't even start if you haven't figured out how you can create your own niche in the beer market. Getting the beer brewed is a minor detail. If you decide to start, contracting it out is the right way to go in the early stage. In that way you don't have to invest in production facilities and you save a lot of headache and time, which you can use for the crucial activities, i.e. marketing and sales.

 

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[camski]

having a good friend in the beer distribution business I can give a little feedback here. If you go with a distributor they can market your beer and distribute it to both retail and foodservice establishments. One thing that you would want to make sure you do is budget very heavy with marketing money. T-shirt giveaways, mirrors, posters, table tents, etc. are all a big part of the beer business. The brewers spend a massive amount of money on this.

 

[HenkHolland]

Camski I fully agree. In our part of the world your beer has to have at least one USP (special taste and/or appealing brand and/or etc.) and you will have to do a lot of hard work before you will find a distributor who will be willing to add your beer to his portfolio.

 

[KLPInvestments]

Camski I fully agree. In our part of the world your beer has to have at least one USP (special taste and/or appealing brand and/or etc.) and you will have to do a lot of hard work before you will find a distributor who will be willing to add your beer to his portfolio.

Our plan is to distribute our own beer...up to 4000 barrels here in NC.

That said, we would be open to adding distributors. It's much easier for a distributor to do the work for you after you have established some semblance of a brand or gain some recognition for quality.

I have read some books on brewer startups and many of them did their own distribution in the beginning....Sam Adams(Boston Beer Co.), Brooklyn Brewery, and Dogfish Head among others.

 

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[KLPInvestments]

having a good friend in the beer distribution business I can give a little feedback here. If you go with a distributor they can market your beer and distribute it to both retail and foodservice establishments. One thing that you would want to make sure you do is budget very heavy with marketing money. T-shirt giveaways, mirrors, posters, table tents, etc. are all a big part of the beer business. The brewers spend a massive amount of money on this.

Very good advice. I am open to guerilla marketing techniques and whatever else can be done to get the very most out of the marketing dollars. T-shirts are always a great idea. Of course I wont be doing any commercials during the Super Bowl(te he!)

 

[KLPInvestments]

About 5 years ago I was asked to invest in a microbrewery. The offer was tempting, but I noticed that the entrepreneur focussed too much on the production and very little on how to sell his beer. Getting your beer produced is peanuts compared to getting it sold.
Don't even start if you haven't figured out how you can create your own niche in the beer market. Getting the beer brewed is a minor detail. If you decide to start, contracting it out is the right way to go in the early stage. In that way you don't have to invest in production facilities and you save a lot of headache and time, which you can use for the crucial activities, i.e. marketing and sales.

Yea, most of the brew startups go out of business not because they don't make great beer, but because they don't have a clue how to sell it.

 

[KLPInvestments]

How does one get into brewing and starting your own "label".

Ive always been interested in that business but never knew anything about it.

From a business standpoint sounds like you would have to approach the contractor with something appealing to add to their existing portfolio. Appealing enough that they would not want it in their competitors portfolios of fine brew (if they have their own line). Seems like the contractor would have a lot of production and marketing muscle that you could put to work.

As far as finding partners, if you get investors they could end up driving your company once they get their money in there. Im not sure of your capital requirements, but it sounds more attractive for you to raise the money some other way than direct venture capital, do a limited run of the brew and see how it scores, then see if you can do some kind of revenue share with the contractor if its looking attractive to both parties. If its profiting handsomely, in the case of a liquidity event, you would keep more of the profits that way. Investors generally want to know when they will get their money back, and when they will make X amount over that initial investment, and can be slave drivers (in high tech anyways). But if your going in on a run with a contractor, that would seem easier to negotiate terms, especially if there are several in your area.

Also, how difficult is it to get your product on the shelves of stores to get seen and purchased? I know sometimes its hard for the little guy to carve out a space to display their products in retail stores and supermarkets. Many times the big guys have a lock on display space. Are you in cahoots with some good liquor vendors? Or maybe that is not necessary?

Im also not sure how legal works with brewing. How do you tie up a recipe and make sure it remains yours?

The contractor wouldn't do anything more for us than to simply brew our beer. We are basically borrowing their brewhouse in exchange for a fee. They may have the capacity to brew 5000 barrels, but are only brewing 4000. It would make sense for them to brew 1000 barrels for us. Now they are at full capacity and their brewhouse is more effecient. Our brewmastere would oversee the contracting...ensuring consistency and quality. In some instances we would even supply the raw materials(hops, barley, yeast) to the contractor. We would write the recipe and they would follow it. We would be fully responible for the sales and marketing of the beer. The contractor would not put our beer in their portfolio. Again, we are contracting for their equipment. There is a lot of excess capacity out there.

 

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[camski]

Am I understanding this correctly, you will be selling only keg beer? If so then please realize that tap space at bars/restaurants is considered very valuable space to brewers. And keep in mind that beer in a glass has no brand visibility. You might consider providing logo'd glassware or printed cups in order to familiarize the end users with your brand. Is the brewhouse also providing warehouse space? Not trying to discourage here i am just very familiar with foodservice distribution and want to point out some obstacles. In fact my friend has been thru what you are wanting to do with another upstart brewer, this guy http://www.warbirdbrewing.com/home/Home.htm

Good luck you seem really enthused and driven to make this happen. i wish you well.

 

[KLPInvestments]

By the way, if anyone on here knows someone who can help build a website for Swamp Fox Brewing Co, please give recs. I want to put up a 'coming soon' website. It will give us an identity, and also give potential partners/investors something to look at.

Also need a graphic designer to do a logo.

As an aside, the brewing company that really inspires me the most, and one I'd love to model my own company after is Sierra Nevada...

http://www.sierranevada.com/

I can be contacted at: klpinvestments@gmail.com

 

[camski]

By the way, if anyone on here knows someone who can help build a website for Swamp Fox Brewing Co, please give recs. I want to put up a 'coming soon' website. It will give us an identity, and also give potential partners/investors something to look at.

Also need a graphic designer to do a logo.

As an aside, the brewing company that really inspires me the most, and one I'd love to model my own company after is Sierra Nevada...

http://www.sierranevada.com/

I can be contacted at: klpinvestments@gmail.com

This part is easy and I am talking from experience here. Tom at Aptohosting, one of the sponsors here, is awesome. I swear he works 24/7. Great customer service. There are others her who recommend him as well.

 

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[Yankees338]

This part is easy and I am talking from experience here. Tom at Aptohosting, one of the sponsors here, is awesome. I swear he works 24/7. Great customer service. There are others her who recommend him as well.

+1

Don't even bother looking elsewhere. It seems that his prices are very reasonable, but regardless of the price, the customer service is second to none.

 

[KLPInvestments]

Thanks guys. I'll check 'em out and perhaps get in contact soon.

 

[camski]

I would suggest registering your domain name ASAP. When it comes to beer it is all about branding, and I would hate for someone reading this post to snatch up your name.

 

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[MJ DeMarco]

I wouldn't worry about capacity until you started selling the beer. Once you start getting orders/contracts, finding the financing will be easy since the beer is already sold. The contracts become your assets which investors will see as evidence of market viability and saleability.

However, when ya go out and try to finance a brewing operation and not 1 keg has been sold, you're going to have your work cut-out for you.

Many of these brew companies start at home. Close parallels can be drawn with out food-stuff companies: Ms Field's cookies, for example -- started in the home and grew to large-scale manufacturing facilities when demand dictated.

What I'm saying is let demand dictate your facility ... it is that demand that will get you your financing. Without it, most investors will view the venture as high risk.

 

[Sid23]

What I'm saying is let demand dictate your facility ... it is that demand that will get you your financing. Without it, most investors will view the venture as high risk.

LISTEN TO THIS ADVICE! Right on, MJ. rep speed ++

 

[carlhuber]

Just a thought from working with both a large brewery and a winery started up by an independently wealthy entrepreneur as clients; if you don't create a buzz and generate interest on the consumer end, no one's going to buy it. By which I mean it's great if you can somehow convince investors to back you but if you can't get that oh-so-important grassroots support on which the craft brew market thrives, you'll tank.

I can't get too specific about my experiences but suffice it to say that a brewery with an okay product and great buzz will sell better than a brewery with great product and no buzz.

Once you have some product and you're sure it's good, take it around to all of the burger joints in your district. Maybe give away a half-keg for free, along with some nicely printed tasting notes. Talk to the managers of those biker bars and burger joints and convince them to have a keg of your brew on tap, maybe as a Friday special in the summers...you know. You've got to get it out there at both ends (investors and drinkers).

 

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[KLPInvestments]

Just a thought from working with both a large brewery and a winery started up by an independently wealthy entrepreneur as clients; if you don't create a buzz and generate interest on the consumer end, no one's going to buy it. By which I mean it's great if you can somehow convince investors to back you but if you can't get that oh-so-important grassroots support on which the craft brew market thrives, you'll tank.

I can't get too specific about my experiences but suffice it to say that a brewery with an okay product and great buzz will sell better than a brewery with great product and no buzz.

Once you have some product and you're sure it's good, take it around to all of the burger joints in your district. Maybe give away a half-keg for free, along with some nicely printed tasting notes. Talk to the managers of those biker bars and burger joints and convince them to have a keg of your brew on tap, maybe as a Friday special in the summers...you know. You've got to get it out there at both ends (investors and drinkers).

This seems like some fairly good advice. Yes, I think that a certain portion of our maketing will include giving a lot of beer away. I think we are going to do all sorts of CRAZY 'low cost' marketing campaigns that draw attention to ourselves as we try to build a brand. For example...we may hold a blues or jazz festival in our home locale, and offer our beer on tap, and perhaps have a chili cook-off. We'll put up a big banner with our logo behind the stage.

Our group will sit down in a board room(Starbucks) and hammer these ideas out. We are definitley going to be original with some of these marketing campaigns. We are going to do some things that have never been done before. We'll try some crazy ideas that will offer huge bang for the buck. Guerilla marketing on steroids!!!! We'll try to use our creativity to make up for our lack of money.

Thanks!!

 

[KLPInvestments]

I wouldn't worry about capacity until you started selling the beer. Once you start getting orders/contracts, finding the financing will be easy since the beer is already sold. The contracts become your assets which investors will see as evidence of market viability and saleability.

However, when ya go out and try to finance a brewing operation and not 1 keg has been sold, you're going to have your work cut-out for you.

Many of these brew companies start at home. Close parallels can be drawn with out food-stuff companies: Ms Field's cookies, for example -- started in the home and grew to large-scale manufacturing facilities when demand dictated.

What I'm saying is let demand dictate your facility ... it is that demand that will get you your financing. Without it, most investors will view the venture as high risk.

My reference to capacity was meant to point out that there is sufficient capacity out there to get our beer brewed without having to use our funding(or debt) to build an expensive brewhouse. There's plenty of capacity out there and we could get the brewing done on a contract basis.....thus freeing up funds to focus on marketing, sales, distribution, etc. Once we are established and on solid financial footing, we could then build the brewhouse. The caveat, .....contracting adds another layer of cost, and thins the margins.

I am assuming we are going to need several rounds of financing. Round one to get us started and to breathe some life into this thing.:cheers: :smx6:

 

[KLPInvestments]

About 5 years ago I was asked to invest in a microbrewery. The offer was tempting, but I noticed that the entrepreneur focussed too much on the production and very little on how to sell his beer. Getting your beer produced is peanuts compared to getting it sold.
Don't even start if you haven't figured out how you can create your own niche in the beer market. Getting the beer brewed is a minor detail. If you decide to start, contracting it out is the right way to go in the early stage. In that way you don't have to invest in production facilities and you save a lot of headache and time, which you can use for the crucial activities, i.e. marketing and sales.

Bingo!!!!!!!

 

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[KLPInvestments]

Am I understanding this correctly, you will be selling only keg beer? If so then please realize that tap space at bars/restaurants is considered very valuable space to brewers. And keep in mind that beer in a glass has no brand visibility. You might consider providing logo'd glassware or printed cups in order to familiarize the end users with your brand. Is the brewhouse also providing warehouse space? Not trying to discourage here i am just very familiar with foodservice distribution and want to point out some obstacles. In fact my friend has been thru what you are wanting to do with another upstart brewer, this guy http://www.warbirdbrewing.com/home/Home.htm

Good luck you seem really enthused and driven to make this happen. i wish you well.

I want to focus on the kegs and bottles. Definitely, we want a tap in as many bars, pubs, restaurants as we can get. Yes, that space is highly competitive!!!! But we believe that we will have competitive advantages in our home locale. Most establishments should be open to having the locally brewed beer on tap. That is our first priority...to penetrate the local market. Build density....and then start expanding out of that circle. But we want to build density!!!

 

[Ausable]

Also keep in mind that there is going to be a hop shortage this year. So you might want to check your recipes and adjust your prices accordingly. I know that for myself, I've already started to see the effects at my local homebrew shop, with higher prices and less choices.

 

[fanocks2003]

I'm trying to start a microbrewing company tentatively titled....SwampFox Brewing Company to be home based in southeastern, NC. I have some investment money in escrow and a few partners. We are far short of goals regarding capital needed to go forward. The biggest expense will be for brewing, fermenting, and kegging equipment, and perhaps a brewhouse or lease for a brewhouse. In light of this, we have the option of contracting the brewing out to existing brewers that have the capacity to take on our project on a contract basis. Contracting would save us a lot of capital expenses and free up those resources for sales/distribution.

I'd love to get some advice on gaining the additional capital we need, finding new partners, etc.

We want to produce premium crafted beers and distribute to targeted regional markets in NC, SC, and GA.

I have done all-grain home brewing and have a good working knowledge of the brewing process. I also have made connections with several brewing professionals whom may prospectively join our venture. Making good beer will be the least of our worries. Getting adequately capitalized is the primary hurdle. The plan is to exchange equity for start-up capital. I am spearheading the project as I am the founding partner.

I can answer any questions you may have.

Advice? Thank you in advance!

The way I would have done this if I where in your shoes would be to have a small, small load of beer brewed and then I would have visited the local pubs or whatever market you had in mind and the have these people have a little taste of your beer. If they like it then ask them if they would like to sign a small contract with you about purchasing smaller loads of beer on an ongoing basis (say a certain amount of beer, every month for a full year). Why do this? If you have contracts ready and signed, investors will be more than impressed and it would be a much easier sell. Investors in early start-ups like to see that there is a market ready to pay for the products or service the entrepreneurs offer.

Many entrepreneurs, when they start out they calculate that they need a couple of millions and hopefully with those millions they will buy the market. A market they don't even know exists. Create a mini brewery in your home, start making a smaller load of beer and visit your local pubs or something and have them taste the beer. Have contracts with you (be prepared if the pub owners feel your beer is great stuff). Then sign those babies up :smxB: and present the great business for investors. You will surely get the money this way. I know, I do this all the time. My job as a start-up entrepreneur is about proving there is a ready market for the things I create. A market ready to pay the money I ask them to pay.

If you can show a proven business team at the same investor meeting (just lining them up there): You will get the money. A proven concept, a proven business team (the managers). It sells itself. Just present it. It's like selling ice cream on a very hot summer beach. It takes care of itself.

Building a business is a process. It happens step by step. Like learning to walk or learning to ride a bicycle. If you jump over important steps investors will just frown when you ask them for money (they can be very harsh).

 

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