Starting a private label

[bostondave]

I am not much more than an overly enthusiastic homebrewer at the moment, looking down the road and dreaming of starting a small beer label. I am interested in the idea of contracting a brewery to produce beer which I distribute.

I am in Massachusetts and this is the market I'd be focused on. I was looking around for information on the legal/licensing aspect of things, and am under the (hopefully mistaken) impression that it is $5000 licensing fee just for a license to operate in the manner I intend. Does this sound wildly off-base? Is that a brewery or wholesale operation?

Aside from that specific detail, I am trying to get a general idea of all the start up costs associated with this business model. I realize I will need refrigerated storage (rented?) and delivery means (outsourced trucking?, etc.). I'd need the services of a lawyer and accountant, right? What kind of fees would they be looking for?

I have a few friends in the bar industry, so I think I would start there hoping to get a few cases offered at the bar. Any further tips on that aspect?

[frigatebay]

private label? to you mean the rebranding of an existing beer? Start investigating packaging costs. Its a lot more complicated than just selling a few cases to a bar or two. BTW bottled craft beer really doesn't do well in bars, draft moves a LOT more in my experience. research alot.

[bostondave]

What I meant was developing a recipe and producing a craft beer without building a huge facility.

[beauxman]

Boy, it sounds sooooo simple doesn't it...best of luck!

But really, you could make it work, but it is going to take alot of research and work which you have started to do....kudos.

[bostondave]

I am pretty sure this is close to the way Jim Koch started Sam Adams. Not that I want to build something on marketing alone (not knocking Sam, just saying, it's pretty heavy on marketing), or copy someone else's blue print. Or even build something that large.

Anyway, like you said, ALOT of research, and yeah, that's what I'm doing. I know it's not "sooooo simple". I am just trying to brainstorm ideas for getting just enough of an operation going that I can make more beer than five gallons in my kitchen. Even if it's a few cases sold a month that can support a case or two I get for free and the pride to see my buddies ordering up "Dave's Brew" at our local pub, shit... what's better than that my friend?! If that kind of "bootstrap" thing works, fine. If not, fine. But I'm going to do it anyway.

Don't worry about negative; the whole damn world is negative. If that hasn't made me pessamistic by now, nothing anyone here says will, that's for goddman sure. ;)

[frigatebay]

A few cases a month? First to bottle your beer you'll have to buy case boxes, labels, six packs, get all the artwork done, get label approval, find a brewery to make it, etc. your talking $20K at least to get started. What we mean by research is find out what it takes to contract brew. I wouldn't look at Sam Adams for ideas. Start a lot smaller. I assume you are in the the boston area? Try looking at Endurance Brewing (contract brewed brand) or talk to Mercury Brewing (a contract brewer) they seem to brew for a lot of different companies. Good luck

[bostondave]

"What we mean by research is find out what it takes to contract brew."

I know. I'm sorry, what am I missing? Isn't asking questions remotely related to research? If you also mean looking at Massachusetts General Law, Chapter 138, specifically section 19, dealing with state regulation of alcohol production, I think that's a good start.

I realize you can spend an awful lot of money. I do not have a concrete plan, so I am trying to look at a few ways to "get my foot in the door". Your logic seems to be "go research, don't ask questions." Which is kind of odd.

I don't mean to offend, but I didn't ask about packaging - yet. I guess you are just trying to let me know it's not some fun little hobby, rather hard work. Thanks, but I'm not looking for a whole plan to be handed to me; I am also not going to get bogged down with every aspect all at once. Nor do I expect to be selling beer tomorrow. Or even next year. I am trying to get a few issues in my head; mainly legal/licensing overhead. Sure, packaging might end up making me think twice, but if I need to spend $5000 to get a brewer's license, or a license to contract, then that's a pretty big road block.

Or is the fee for a brewer's license, or license to contract and distribute, alot less and I'm just not reading state laws/regulations correctly. You're telling me it's hard research after I've come in here saying it's hard research and can anyone clarify some of this legal stuff. Crazy.

[frigatebay]

Call the state liqour authority in MA. they'll have answers for you about lic. issuses. Call a brewery like Mercury who's contract brewed in the past. they'll explain the logistics of if. Call a contract brand like endurance, they explain how they got started. btw Just trying to help you. I was in your shoes 9 years ago and spent countless hours doing that same thing and still screwed up lots of things.

[bostondave]

Thanks; didn't mean to come off so defensive. I've gotten a number for a lawyer at the state who can answer some of these reg. questions. I'll check out those companies and see what they can tell me. The info you gave will actually help alot.

[rmartinez01]

Hi Dave,

I am in a similar situation as you. Though I am not developing a beer, I am actually developing a sangria. Slightly different though many of the steps will be similar. If you are interested in comparing notes please feel free to contact me. You can either shoot me an email via this forum or you can go to our website (www.senorsangria.com) and leave me a message via the contact form.

Thanks,

Rick Martinez

[David Quinn]

some people in the industry have been successful at this type of operation, but it really dissapoints people when I tell them to read the fine print on their bottle that tells them the beer they love from so and so a town is really brewed by a contract giant somewhere 500+ miles away. Personally I would like to see the American craft brew renaisance we find ourselves in today trend toward the German model with small micros in every town limited distribution for all, keep the beer fresh, etc...Let us all get away from the "concept" brewing and get back to crafting.
$0.02

[tarmadilo]

Generally speaking, contract breweries won't want to brew and bottle less than a certain amount at a time. Amounts like a thousand cases (which would be a ballpark figure for a brewery with a 50 bbl batch size). The profit margin on this beer is pretty low, too, as the brewery is going to charge you slightly less than wholesale, and you won't be able to tack much onto the price when you try to sell it to a distributor.

You might have more success selling the idea of adding a very small brewery to your local tavern (turning it into a brewpub), and making and selling your beer right there, on draft. Not a slam-dunk cinch by any means, but not impossible, either...

Cheers, Tim

[rlangley]

This might be a bit of a tangent, but maybe some of you may know th answer. There is a small time microbrewer in New Mexico that brews most of his stuff out of carboys and sells the beer, I'm guessing in corny kegs, to the local bars in his area. He probably also does a little bit of self bottling - although I am not certain. Unfortunately the beer is not very good at this time, but I am certain it will improve as his technique and recipes improve.

I was in this conversation with my buddy last night that I didn't think it was legal to run a business in a residential area. He brought up the point that many people run business out of their home - i.e. he is a part time real estate broker outstide of his engineering job that he runs through his home office.

Anyway, I was wondering how this would work in regards to the brewers license. Is it possible to get a license for residential property as long as you are not operating a "Brewpub" from your garage, or does it simply depend on local zoning laws. I could imagine that a number of homebrewers would enjoy being able to sell their beer on this highly limited scale just for the ability that Boston Dave was talking about - selling to pay for the batches without the ATF coming down on your arse.

Dave this may be something you may want to consider since it doesn't sound as though you are really trying to make a fortune out of your contract brewing concept.

[Holter]

I am a homebrewer who basically lurks around this forum and others reading up on stories from professional brewers. I dont have much money - and I am not willing to give up my day job just yet, but i often think about how great it would be to strike up a contract with a local bar to supply them with X amount of beer in kegs per month.

Ive never really done any research into this, other than frequenting these forums, so i have no idea how unrealistic this is. Does anyone have any idea if something like this were possible to do out of my own home? I never really thought of it as an actual possibility unless i found some industrial space that i could rent out and use specifically for brewing - until i found this thread and saw it mentioned above.

[tarmadilo]

Your brewery will have to pass zoning codes, fire and health inspections, and BATF approval. It HAS been done, in fact New Belgium (makers of Fat Tire) started in Jeff and Kim's basement.

But getting zoning permission can be tricky...

Cheers, Tim

[kaiabrew]

Dave,

A good place to start is look at what kind of volume you would like to achieve in your first year. How many brands you want to start with and then work backwards. You need to have a real grasp of what kind of sales you will need to be able to pay the bills and most contract brewers will want to know what kind of volume you will require. Brewers need to make certain that the contracts they pick up will not just be a one off, but a viable new brand.

I know from a few contractees that their beer requires enormous amounts of marketing dollars to get the brands recognized. Make sure you build in a lot of incentive dollars and advertising.

I think you mentioned that you have a few friends with bars/ restaurants that say they will pick up your products. I have friends who have restaurants that took 6 years for us to get a draft line. There needs to be push/pull of your beer and it takes time to develope. You will need to be out selling and tasting your beers with people 7 days a week and nuturing the relationships it takes to sell beer.

Packaging can usuallly be built into the cost of the case but you will have art and plate charges that eat up a lot of cash.

Then there is the sets at liquor stores. There is a long list of things. But understanding the costs of things and the distribution side of beer is absolutely imperative to understand. For those of us who are brewers, making and packaging the beer is easy, getting placements and developing the strong relationships with our customers is hard work and can be very disappointing.

I'd be happy to chat or email and let you know how it works in Maine. We started shipping beer into MA in February and we have a long way to go. Competing with all the great beers available in MA is tough. We typically rely on our great service and persistence. Good luck

[Holter]

Your brewery will have to pass zoning codes, fire and health inspections, and BATF approval. It HAS been done, in fact New Belgium (makers of Fat Tire) started in Jeff and Kim's basement.

But getting zoning permission can be tricky...

Cheers, Tim

Great thanks Tim.