I have lost tracks on the number of Business Plans drafts that I have created to date. Trying to factor every variable, cost and issue before you even start to run a brewery, let alone a business is challenging. There is a fine balance of going big enough for growth, and not going too small that the costs become prohibitive to make a living, at least in the Bay Area.
Couple of weeks ago, one of my favorite local breweries announced that they were shutting down. A week later, a new press release announces that a skeleton crew is trying to keep things going. They are a regional size brewery with multi-state distribution, and chances are, you will find one of their beers on tap at your local in the Bay Area. Needless to say, I began to second guess all of this. Then again, they did just spend a few million on a large expansion. We will find out their fate in the coming weeks.
Craft Beer continues to expand. The number of breweries in the US is still growing like mad. With 826 breweries opening in 2016 and only 97 closings, the numbers are still looking good. To put it into perspective, there are about 10,000 wineries and 5300 breweries in the US, and there are many more beer drinkers out there.
With the recent growth, there is a lot more competition out there. Bars don’t typically add a new handle when a new beer come out; they remove something else. Retailers only allocate so much shelf space for beer. The craft beer model is changing. In the craft beer boom of the 90’s, craft brewers were modeled after Brewpubs and Tied Houses, and the beer was brewed for the local market, and typically only available on-premise. The breweries that survived were expanding into larger operations including packaged beer. The recent resurgence in craft beer saw the rise of the microbrewery and the tasting room. The tasting room is becoming an important part for off-site sales. Enthusiasts want to meet the brewers, experience the brewery through the tasting room and have access to the freshest beer as possible. As mentioned before, handles and shelf space is limited and the competition will continue to rise, and will start to shift the market towards the Brewpub and Tied House models.
As of today, I feel that I have good handle on the financials, at least have created spreadsheets that can be quickly manipulated as the numbers become more concrete. My goal is finalize the first draft of the Business Plan in the next week – well supposed to be Business Plan’s are fluid documents and require constants updates, and to start getting feedback from some mentors and potential investors for the next set of revisions.