Wednesday, June 27, 2007

Construction update

I am just about ready to submit our plans for permit to start construction on the brewery. I submitted the plans I put together to my contractor and he's getting bids from the electrician, plumber and concrete guy. Hopefully I'll see some numbers today and we can get the plans to the City and County Health. We'll be able to submit the plans to the City over the counter, which means I'll bring in the plans with the contractor to the Building Department, they will look them over, comment on what needs to be added, and hopefully we can add those to the plans on the spot and get them approved in the same visit. County Health will likely take the plans and spend several days looking over them.

Yesterday I moved most of the equipment to the other side of the warehouse in anticipation of the construction. My green forklift did an outstanding job. The only things I didn't move were the mash tun and boil kettle, as those are a little too large and tricky to move myself. They also need to have some work done to them, so they'll be kept in a different area from the rest of the equipment for now.

I can't wait until the concrete is torn up and things start happening!

Bought kegs

Two weeks ago I ranted about the high price of kegs, which I still stand by, but I did find some decently priced used kegs the other day and bought a bunch of them (168 of them to be exact). They are used 30L kegs (about 7.9 gallons) that were made by reputable keg manufacturers (Franke and Hackman) that were used for San Miguel beer in China. The valves were retrofitted for American Sankeys. I bought them for $65 each, a steal considering what others are going for right now. I like the size as well as many beer bars would prefer a smaller format for higher alcohol beers, which is what I'll be specializing in. They'll also be a bit easier on my back when I deliver them.

If anyone is interested in getting some of these, contact Frank Ma (626-318-2837), I think he has around 20 pallets left of them.

Here's a 'before and after' picture of what the kegs looked like, and what they will look like:

Thursday, June 21, 2007

Almost have TTB Approval

When you're starting out a brewery, there's a bunch of agencies you need to get licenses and approvals from. One of the major ones is the TTB, the Alcohol and Tobacco Tax and Trade Bureau (I guess ATTTB doesn't have the same ring to it). The TTB is part of the U.S. Department of the Treasury, and it's main purpose is to make sure alcohol and tobacco producers are paying their excise taxes. Background checks, environmental issues, zoning issues, terrorism issues, and the like also come into play with this approval-- they are essentially the Federal government approval process.

I got a call yesterday from a very nice TTB agent informing me that I was missing a few documents and she went over some other things with me. One thing was she told me my background check came up that I had a court record from 1997. I had no idea what this was and it frightened me. Is my memory that bad to where I don't remember being sued or charged ten years ago? Luckily, my wife Rachel remembered.

On a warm June day in 1997, I got out of school at noon on the last day of school before summer vacation. I was going to Mater Dei High School and just finished my sophomore year, and my buddies and I agreed to meet up at Del Taco on Redhill off of the 5. I was driving down Redhill after turning on it from Edinger and proceeded to enter the Del Taco parking lot. I parked, got out of my car, and 10 seconds later a motorcycle cop was in front of me. The cop accused me of trying to lose him-- he said he clocked me a mile away and he had to go through 3 red lines to catch up with me. I said I didn't know what he was talking about, and he told me I was going 45 in the 35 mile an hour zone. He decided to drop his accusation that I was fleeing from him, and gave me a speeding ticket. A few days later, I drove by the area where he clocked me, and it was a 45 mile an hour zone. I was pissed off-- I was 16 at the time, and I didn't need a speeding violation on my record. I decided to contest the ticket, and went to court with my Mom. About 200 other people that day were wanting to contest tickets as well, and the judge told us we'd be here all day. My Mom decided she wasn't going to waste her day with this, so she told me I'd be going to traffic school to remove the ticket from my record. Ten years later and this shows up on my background check, and the TTB wants an explanation for it since it doesn't show on their record what the matter was about.

Anyway, after I send over several documents to the TTB, they will be ready to approve my application. Pretty quick considering I sent in these documents two weeks ago.

The other approvals I'm having to get are from the California Alcohol Beverage Control (ABC), Orange County Health Agency, and the City of Placentia. I've also applied for licenses with the California Board of Equalization for my sellers permit and my excise tax permit. Yes, the state of California along with the Federal government have special taxes just for alcohol producers.

The City and County Health Agency are more concerned about my plans for tenant improvements such as putting in floor drains, extending gas lines, other plumbing, putting in a new electrical service, and so on. The Health Agency wants to make sure I'm putting in these improvements in a way that is satisfactory for a food processing plant. My plans are now being bid on by my contractor, and then we'll send them to the City and Health Department for approval. They are minor improvements, so both have said it would be an "over the counter" process, meaning there's no extended deliberations about the improvements, and can be approved immediately (or denied immediately) once we bring the plans in.

The ABC will hopefully approve my license 10-40 days, so I'm thinking everything is on track for late August / early September. As most brewery owners have told me (or told me while laughing at me), I won't be open by August, September, or even October. Plan for December. That's the way I have it on my budget, so at least I'm trying to be realistic. I do think late August / early September is do-able though. We'll see.

Bought a forklift

Last week I bid on a glycol unit on eBay. If you don't know what a glycol unit is, it is essentially a refrigeration unit that I'll be mounting on the roof of the warehouse which will recirculate glycol, an anti-freeze-like liquid (don't worry, it's food grade). This liquid runs through a portion of the fermenters and bright beer tanks to regulate fermentation temperature and to bring the beer to a low temperature after fermentation.

Anyway, it was fairly new equipment, had only been used for 3 years or so before it was decommissioned, so I thought it might work for me. I won it for $3,500, a pleasant number considering I was going to buy a new unit with less cooling power for around $15,000. Then came the shipping costs, which brought the overall price to around $5,000. I still don't understand why it costs so much-- a 2,500 lb. pallet of grain from across the country costs $350 or so to ship. I asked how I could reduce this price, and was told that if I didn't need a lift gate, I could save $200. So I bought a forklift.

It's from 1986, has around 5,000 hours on it, and It'll handle 5,500 lbs., or at least it could in 1986. It seems to run well, and it shouldn't need to run too often for my purposes. I'll have to post a picture of the beast soon. It's lime green, which means it must be given a name. I don't know why things that are painted ugly colors have to be named, but it can be one of the brewery's mascots. Please post some suggested names in the comments area. Rachel and I came up with guacamole and limey, so you can tell we need some help with this.

EDIT: Here's a picture of the beast:

Tuesday, June 12, 2007


Kegs are just about impossible to come by these days. When you can find them, they go for $150 a pop. I'll try to explain why this is, and what it means for me.

I've mentioned it before, and you can bet I'll keep mentioning it, stainless steel is at historically high prices. Check out for a summary of how prices have gone up in the last year. This is affecting the cost of most of my new equipment, especially fermenters and kegs.

At the same time we're hitting records for stainless, craft beer is more popular than ever. Last year craft beer grew 12%, and it looks like this year will be even stronger. There's very little used keg inventory, if any at all, as craft brewers are buying up any kegs they can get their hands on.

To make matters worse for keg supply, a major manufacturer, Spartanburg, sold its keg production business, and the new manufacturer doesn't seem to be cranking out any new product.

As stainless prices keep going up, the value of kegs to scrap yards has obviously gone up as well. Keg theft is at an all time high. A brewer can expect to lose 10-15% of their kegs in a year unless they take measures to prevent this.

One solution is higher keg deposits. Current deposit amounts in California are about $15 per keg, about 10% of the cost of a replacement keg. This is not high enough to thwart theft, but charging $50 or even $100 is impractical when other brewers continue charging a nominal amount. Deposit fees are generally set by the big guys, as retailers don't see why craft brewers can charge $50 keg deposits while Budweiser is charging only $15 for the same keg. As a large multinational corporation, Budweiser and other large brewers are better able to absorb the cost than the local craft brewer. Many retailers are just concerned with cost, and charging a higher keg deposit makes craft beer a less profitable prospect as it ties up their cash.

Another solution would be to sell kegs to only those retailers who you trust. I have many good relationships with beer bar owners and I trust them to take good care of my kegs. I would be reluctant to sell beer in a keg to a retailer who I do not trust. This will impact my growth, but losing $150 on a keg for a $120 sale doesn't make sense to me.

Keg leasing and logistic companies, such as Microstar, are a good alternative to buying kegs. However, they are feeling the crunch too. They can't keep up with craft brewers demand and can't afford to buy new cooperage. Microstar isn't taking any new customers until early 2008, and they are requiring breweries to sell them their current keg inventory.

On the bright side, Sly Fox's John Giannopoulos and Christian Messmacher have plans to produce stainless kegs in China by the end of summer. This will increase the supply of new kegs, but they will likely be sold at the same rate as US and European keg suppliers. There are also new plastic kegs and aluminum kegs that might be feasible alternatives, but most brewers would like to stick with the predictable stainless keg.

What does this mean for me? Well, I probably won't be able to find used kegs to buy. Used kegs are going for about $90-110 for a 1/2 barrel keg. This is a significant savings over new keg prices, which are currently going for $150. When I put my budget together, I anticipated spending $110 on new kegs. For 100 kegs, it'll cost about $4000 more now due to stainless prices. Don't even remind me that 2 years ago new kegs were going for $90 or less.

Ultimately, keg prices will affect the types of beers I'll release. I will bottle as much as possible, and brew beers that are best suited for bottle conditioning. This is probably a good thing as I'll be able to produce more interesting beers, but bottling is much more time and labor intensive. There are glass shortage issues I'll have to deal with, but I'll save my complaining on that matter for another day.

Wednesday, June 6, 2007

Moving Around Big Things

Rachel and I went to San Francisco for the weekend so I could judge the Sam Adams Longshot competition. While we were in the area, we had fun hanging out with Ali and Cooper, good old friends from college, and Matt and Lisa, my brother-in-law and his girlfriend. It was a great weekend that was followed by moving the majority of my brewing equipment from Ukiah / Windsor / Hollister to Orange County.

Starting out at the Mendocino Brewing Co., we had a crane picked up pieces of the platform used at their old brewery in Hopland, CA. We also picked up the grain mill that was used at the original brewery. Then on to Quality Stainless in Windsor, CA, just outside of Santa Rosa. The bulk of the equipment such as the mashtun, boil kettle and whirlpool were located here. After 7 hours of moving equipment around, Rachel and I visited Russian River Brewing Co. for a beer and lunch before our long drive home. I met with Vinnie and Travis, who showed me how they bottle their bottle conditioned beers. I'll be bottled in just about the same way as they do, which they described as being a pain in the ass. I don't doubt it. We got home at 12 AM.

Yesterday morning I arrived at the brewery to receive the equipment. My friends Lyn and Mike and my brother Casey graciously donated their time and skill to unloading the trucks and getting everything into the brewery. I am indebted to these guys for their help. Things went fairly smoothly and we were finished by 2:30.

Various photos of the weekend:

Matt, Lisa, Rachel and I at a Burmese restaurant in SF.

The tasting room at Stryker Winery in Alexander Valley.

Mendocino Brewing Co.'s old brewery location. My equipment used to live there.

The "oh shit" look waiting for the crane to arrive in Ukiah.

Looking at the rusty platform I'm supposed to put back together.

Loading the boil kettle.

The truck is ready to go.

Unloading the vessels at The Bruery.

Celebrating the end of a tough day.

ABC License

Last Thursday I had my appointment to meet with an ABC representative and file my application. The Alcohol Beverage Control (ABC) is a state-level agency that regulates who can sell alcohol in a certain state as well as enforcing laws dealing with sales to minors.

With the few breweries in Orange County, it was not surprising that they hadn't dealt with a Type 23 license, which is for Small Beer Manufacturers. A few months ago before I found a location, I went to the ABC and picked up an application. Each license type has various forms needed to fill out, so what I had to fill out for a brewery is different than what a liquor store owner would have to fill out. Having the organizational structure as a Limited Liability Company also adds a few forms as well.

Once I signed the lease, I made an appointment to file my application with the ABC. My appointment date was 1.5 weeks from when I called, which is better than average for turnaround. I showed up for the appointment, waited for 30 minutes or so, then went through all of the forms with the representative. I won't bore you with the details, but it took about 2 hours and I had to make some changes to forms on the spot. If you get a cranky ABC rep., they might tell you to make another appointment (two weeks down the line) because you checked the wrong box or you didn't draw your premises correctly. My ABC rep was very nice and waited for me while I made a few changes.

She gave me a Notice to Sell Alcoholic Beverages, which I posted on my door on 5/31/07. I can take it down after 31 days.

My license can't be issued until 31 days after I filed, but it usually takes 60-90 days to have the license issued. Here's my ABC license info:

Bad, bad blogger

Not only is my blog boring, but I don't even keep it up to date. I'm sorry about that. This should really be called a blaaaah-g.

A lot of things have been happening, which I'll post on hopefully today. I applied for my ABC license, my equipment has been moved from Northern CA to my new location, and I'm sure there's other things I can't think of right now.