Thursday, January 26, 2012

Headed for a Crash?

It's time for another non-construction-related post.  As I have mentioned briefly before there are a lot of new breweries in various stages of opening in Cincinnati these days.  While I firmly believe we are overdue to catch up with everyone else in the craft beer renaissance that is occurring all over the country, the pessimist in me sometimes wonders how many breweries we can actually sustain in this area.  As I said before, there is definitely room for more breweries in this town, but how many?  Two?  Five?  Ten?  Of course this is a hypothetical question and I'm not asking it to stir any great debate, but some comments I read recently made me start thinking about this issue a little more deeply.

A few days ago on the Ohio Beer Blog Rick Armon interviewed Fred Karm of Hoppin' Frog Brewery in Akron.  If you haven't read the Ohio Beer Blog, its a  great resource for keeping up with the comings and goings of Ohio's breweries.  Rick Armon writes for the Akron Beacon Journal and also wrote the Ohio Breweries book last year.  One of his recurring features is "Five Questions With..." where he asks an Ohio brewer a set of questions about their favorite beer etc.  The most recent installment featuring Fred Karm contained an interesting answer to the question "What advice would you give to someone who's interested in opening a brewery?"  Here is his response (entire interview here):

"These days it seems everybody wants to start a brewery.  It is understandable.  I’d say DON’T DO IT — IT’S TOO RISKY, and oh, yeah, not to mention it’s really hard work.  Sure, everybody wants to start a brewery these days, but I’ve seen this before.  Reminds me of the American craft beer boom-and-bust of the late 1990s.  These lessons of the recent past can teach us that the availability of craft beer grew way too fast compared to the customers.  It appears that is the case again, with American craft beer sales being so predictable — they have been increasing at steady rate of about 11 percent over the last eight years.  That rate of growth has been matched in the last decade with many existing breweries increasing their production.  But in the last year many new American breweries have started up, and along with the growth of existing breweries, production recently has grown faster than the market can bear. And a lot more are already registering for 2012.  That is too fast of a growth for the customer base.  Back in the late 1990s, many newer breweries that weren’t as ingrained into the fiber of the community found themselves unable to make enough sales to stay in business.  It is possible that this will happen again, as history does tend to repeat itself."

This response struck me as interesting.  Usually this question is answered with upbeat statements like "keep at it, be true to yourself, etc" Fred Karm's candid response "don't do it" gave me pause.  I've never met Mr. Karm, but I admire his brewery and his honest response to this question.  He seems to have the data to back up his statements too.  As someone who was also present during the first boom/bust I have to say that I agree we must be careful not to let history repeat itself.  There were over a half dozen brewpub-type establishments in and around Cincinnati in the late nineties.  A few years later Rock Bottom was the only one left.  It's been 10 years and we're just now approaching the same level of brewing establishments we had back then.  But how many more can we handle?

One place where I do disagree with Mr. Karm is in the interpretation of those growth numbers.  While the growth rate may not be keeping pace with the expansion in output nationwide, there are definitely areas where this imbalance is much greater than here in Cincinnati.  Maybe it's because we are always "late to the party" in this part of the country but I firmly believe local trends towards craft beer are on the upswing here at a pace that can definitely sustain a few more players in the market.  According to the Craft Brewers Association Ohio ranks 32nd in breweries per capita but ranks 7th in population.  By contrast Colorado is 22nd in population and 4th in breweries per capita.  I think that means there is still room for improvement!

So, what's the answer?  Beats me.  I don't think we'll ever know where the "brewery saturation point" is in this town until we hit it (if we hit it at all).  Until then (if it ever comes) it's going to be fun helping to build a wonderful community of small breweries here in Cincinnati.....

Monday, January 23, 2012

Moving Day!

Building construction is 98% of the way done.  The floor is sealed.  Nothing left to do but move in.  Man, I thought this day would never come.  And it almost didn't.  It's just my luck to pick the morning after an ice storm to rent a 24' box truck to move all of my big equipment from it's undisclosed storage location about 30 miles away from the brewery.

In retrospect, it probably would have been a good idea to postpone since there was only one treated lane on I-71 and it wasn't treated very well.  But plans had been made, the truck was already rented, and help had been arranged so there was no turning back. It's fun driving a big truck, but not so much on ice.  After quite a bit of finagling we managed to get the truck there in one piece.  It was colder than a "cold activated" Coors Light which made things all the more fun but we got it all done (except for a few small straglers that wouldn't fit in the truck. (Yes we filled a 24' truck and still didn't get it all in).

Have brewery, will travel.
So on one hand I'm ecstatic that everything is finally here.  On the other hand, now all I see is lots more work.  Since most all of my equipment is used it means that very little is ready to "plug and play".  Most everything needs some amount of work done to it.  Whether its as simple as just needing a good cleaning or as complicated as needing some welding, EVERYTHING needs something.  So as much time as I've spent constructing the space, I can't rest on those laurels as there is now just about as much work to do to get all the vessels ready to brew.  Luckily this work is a little more fun than hanging drywall....

It's starting to get crowded in here.

Sunday, January 15, 2012

The Great Flooring Debate

Yes, I am writing a post about the floor.  It gets no more mundane than this.  But in a lot of ways it typifies the myriad of seemingly small decisions that could have major implications down the road when starting a brewery.  A brewery floor gets a lot of abuse.  It needs to be able to withstand temperatures from near freezing all the way up to boiling as well as highly acidic and highly basic cleaning solutions.  There are a lot of different ways to protect a brewery floor from eventually disintegrating under these conditions.  None work forever, but of course the more expensive the covering, the longer it will last.  So do you go all out with a 10 -20 year solution and put down quarry tile and epoxy grout for about $20,000 or do you get some cheap garage floor epoxy from Home Depot that might last about a year?  Of course finances enter into this decision, but I don't really want to have to re-do the floor every year.  That's kind of the crux of the issue.  How do you balance the short term needs to keep capital expenditures down while still building out a workable space? 

How many outlets should be on this wall?  How far should they be spaced apart so that they are where they will be the most effective?  Which way should the door on the walk-in cooler face?  All seemingly minor decisions that can be a big deal later.  If the cooler door isn't facing the right direction then you might have to run longer transfer hoses (which are very expensive).  If there aren't enough outlets then you will have to get more electrical drops added.  All of these "little" things can lead to extra expense down the road that you may not be ready for.

I've drawn out the layout and re-worked it a few different times trying to get the best "workflow".  All the electrical and water requirements were figured from there.  Hopefully it'll all fit as designed and I won't realize I missed something major when I go to get everything installed (which should begin next weekend).

So what about the floor?  I went with a "midrange" solution.  It's an industrial sealer that is supposed to be the same stuff they use in food processing plants.  We'll see how long it lasts...

Scrub scrub scrub.  Gotta clean it before you can seal it!

Wednesday, January 4, 2012

"Dude...It's starting to look like a hospital in here."

Well not really, but someone actually said that to me the other day.  I guess in comparison to how it looked before the analogy isn't that far off.  As of today the walls are officially done.  Over 2500 square feet of pristine white semi-gloss as far as the eye can see.  For the first time the place is starting to look sanitary enough to make beer (except for all the dust all over the floor).

 I think by the time I'm done I'll be wishing it was a hospital.  The truth is I am beaten and broken.  I guess I just can't handle physical labor as well at 35 as I could at 25.  But the good news is my ceiling stapling/ditch digging/drywall hanging/concrete finishing days are over.  While there is still a lot of work to be done the scope of the remaining projects is a lot smaller and doesn't involve hanging off a scissor lift 20 feet in the air.  In fact, the scissor lift went back to the rental company today.  I'm fully content never laying eyes on one of those things again!

In other news, the kettle was delivered as promised last Tuesday.  It took some work to get it off the truck but it's resting comfortably in the brewery now.  I unexpectedly found a good deal on a couple of single head bottle filling machines so it looks like I may be able to do some limited release bottling sooner in the business plan than originally expected.  I wasn't planning to do any bottling until late 2012 or early 2013, but it looks like maybe by the summer it will be possible now on a limited basis. The trench drain concrete is done and in my opinion looks pretty good for a guy who has never poured and finished concrete before.  As I mentioned the walls are done so I can now call the plumbers and electricians back to finish up their work.  First priority will be to get the toilet and sink installed and operational.  It's getting way too cold to pee outside.  I still need to decide what to do about sealing/coating the floors in the next few days.  I'll update more in depth on that later.

So shiny.
Now that's a drain.
The big news is that I received my Federal Brewers Notice Permit yesterday.  This is the first and (usually) longest permit to get.  I had been reading that it was taking anywhere between 4-9 months so I was worried.  Luckily it ended up being slightly less than that (105 days).  If you are reading this and thinking/working towards opening a brewery take this one piece of advice above all else you may read in this or any other blog concerning the federal permit process.  MAKE SURE YOUR APPLICATION IS AS COMPLETE AND ACCURATE AS POSSIBLE BEFORE YOU SUBMIT.  It's a big long pile of paperwork, but double and triple check everything before you send it in.  If you have a question about ANYTHING call the TTB and get it answered.  My reviewing agent said that the biggest reason why some applications take up to 9 months was due to a lot of missing/incorrect information that took a lot of "back and forth" to get corrected.  Luckily mine only had a couple of very minor corrections that were needed and we were able to correct it over the phone during my interview.

So I'm glad that hurdle is done.  Now the pressure is back on me though.  The next step is to schedule the site inspection with the ODLC (Ohio Liquor Control) so that my state A1 permit can get finished.  However the place needs to be a little more set-up than it is now for that to happen.  Before the federal stuff was done I always felt like I still "had time" to get everything set-up as the time frame was "out of my hands".  Suddenly that's not the case and now the regulators are waiting on me as opposed to the other way around.  It's a good problem to have, but now I really need to kick things into high gear (if I have any higher gears left)!