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 http://www.meps.co.uk/Stainless%20Prices.htm 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.
Tuesday, June 12, 2007
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.
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: http://www.abc.ca.gov/datport/LQSData.asp?ID=2028234029
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: http://www.abc.ca.gov/datport/LQSData.asp?ID=2028234029
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.
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.
Thursday, May 24, 2007
The Rush
Since signing a lease, I'm now in a rush to get everything put together so I can get open before I have to start paying rent. Here's what I'm in the process of doing:
- Putting together plans for the contractor, as well as for city, health department, and fire department approval (apparently I can submit over the counter, which is a huge time saver)
- Getting a city business license (contingent on other approvals such as health, fire, water district, air district, sanitation district)
- ABC approval (I have an appointment next Thursday to submit the application, trying to get one sooner)
- TTB approval
- Ordering new equipment (brite beer tank, glycol cooler, keg washer, Gamajet cleaning system)
- Retrieving equipment already purchased (brewhouse, fermenters, platform, mill, spent grain dispense system)
- Scheduling the contractor to cut do the tenant improvement work
- Liability insurance
- Getting switched over to my wife's employers health insurance
I'm sure there's stuff I'm forgetting, but there's so much that needs to be done. If I don't do it now, it'll delay me later, so it's somewhat of a stressful time. I'm relieved to have a place, but now my focus is on getting open as soon as possible. It's starting to happen, and fast, so this is a good time for me.
The biggest surprise so far was when I called Edison to turn on the power yesterday. They told me I'd need the city to check the panel since the power had been turned off for at least 30 days. So I called the city, and they told me I could turn on the power once I'd received all of my approvals, meaning I had received an occupancy permit through them (after everything has been completed), my ABC license had been issued, and so on. I couldn't believe it. If I had called a few days before, there wouldn't have been any problem, but now all of the work I have to do in the space has to be done by generator. It'll add a bit of expense to the construction, which isn't that big of a deal, I just don't understand the reasoning behind some policies. I'm guessing this isn't the first one I'll be surprised by. Now, if I need a permit for that generator, I'll go apeshit.
- Putting together plans for the contractor, as well as for city, health department, and fire department approval (apparently I can submit over the counter, which is a huge time saver)
- Getting a city business license (contingent on other approvals such as health, fire, water district, air district, sanitation district)
- ABC approval (I have an appointment next Thursday to submit the application, trying to get one sooner)
- TTB approval
- Ordering new equipment (brite beer tank, glycol cooler, keg washer, Gamajet cleaning system)
- Retrieving equipment already purchased (brewhouse, fermenters, platform, mill, spent grain dispense system)
- Scheduling the contractor to cut do the tenant improvement work
- Liability insurance
- Getting switched over to my wife's employers health insurance
I'm sure there's stuff I'm forgetting, but there's so much that needs to be done. If I don't do it now, it'll delay me later, so it's somewhat of a stressful time. I'm relieved to have a place, but now my focus is on getting open as soon as possible. It's starting to happen, and fast, so this is a good time for me.
The biggest surprise so far was when I called Edison to turn on the power yesterday. They told me I'd need the city to check the panel since the power had been turned off for at least 30 days. So I called the city, and they told me I could turn on the power once I'd received all of my approvals, meaning I had received an occupancy permit through them (after everything has been completed), my ABC license had been issued, and so on. I couldn't believe it. If I had called a few days before, there wouldn't have been any problem, but now all of the work I have to do in the space has to be done by generator. It'll add a bit of expense to the construction, which isn't that big of a deal, I just don't understand the reasoning behind some policies. I'm guessing this isn't the first one I'll be surprised by. Now, if I need a permit for that generator, I'll go apeshit.
Tuesday, May 22, 2007
Space is leased!
Things are finally happening-- I leased 715 Dunn Way in Placentia today. It's a little over 5,000 s.f., most of which is warehouse space. You can see it from the freeway off the Orangethorpe exit. This afternoon I hired an architect, a contractor, filed the preliminary applications with the city for a business license and a certificate of occupancy, made an appointment with the Alcohol Beverage Control (ABC) to file my application, chose a liability insurance company, and did a few other things to get the ball rolling.
If everything goes perfectly, brewing will start in August and we'll start selling in September. Things usually don't go perfectly, so my budget reflects we'll start selling beer in December. I look forward to posting more often to write about what I'm doing. Hopefully it'll be of interest to those who are and/or will be my friends and customers, as well as those who are interested in starting a brewery and are just as clueless as I was/am.
Cheers!
If everything goes perfectly, brewing will start in August and we'll start selling in September. Things usually don't go perfectly, so my budget reflects we'll start selling beer in December. I look forward to posting more often to write about what I'm doing. Hopefully it'll be of interest to those who are and/or will be my friends and customers, as well as those who are interested in starting a brewery and are just as clueless as I was/am.
Cheers!
Monday, May 21, 2007
Monday Update on The Bruery (5/21)
There might be an end to my redundant, monotonous posts. Well, an end to redundant posts about leasing space, I can't promise I won't be monotonous. I am negotiating a lease and working out all of the kinks for a space in Placentia, near the 57 / Orangethorpe off-ramp. It's a good location not too far from my house, is a good size, and I'm crossing my fingers that it works out. I've been working on acquiring equipment as well, but I'll post about that some other time.
Monday, May 14, 2007
Monday Update on The Bruery (5/14)
Unfortunately I didn't sign a lease on anything last week, but there are a few places that I'm pursuing in Tustin, Placentia and Anaheim. After a terrible drive out to my Brother's engagement party to Corona on Saturday, I decided I'll spend a bit more on rent so I don't have to be in the Inland Empire, not that I have anything against the IE. The prices are a bit better in the IE, but I'm finding that people in Orange County are looking forward to having a local brewery making unique beers, and I know I'd rather stay put here. I'm a bit less discouraged this week-- things are starting to happen and I have options.
As far as equipment goes, I've committed to some used fermenters to keep costs down. Stainless steel pricing is outrageous right now, so I'll be waiting on ordering new fermenters until I absolutely need them.
If anyone in Orange County is interested attending a homebrew club meeting, BrewCommune is having a meeting at Back Street Brewery in Irvine tomorrow night at 7:00. Hope to see some of you there.
As far as equipment goes, I've committed to some used fermenters to keep costs down. Stainless steel pricing is outrageous right now, so I'll be waiting on ordering new fermenters until I absolutely need them.
If anyone in Orange County is interested attending a homebrew club meeting, BrewCommune is having a meeting at Back Street Brewery in Irvine tomorrow night at 7:00. Hope to see some of you there.
Monday, May 7, 2007
Monday Update on The Bruery (5/7)
I bet you're as tired as I am about me not being able to find a location. I plan to change that this week, as I'll be expanding my reach outside of Orange County to Corona, Chino, Chino Hills, Rancho Cucamonga, Ontario, Long Beach, among a few other areas. My first choice is to stay in Orange County, but I gotta do what I gotta do.
This weekend was the Southern California Homebrewers Festival. About 1500 people attended this mecca of beer festivals, drinking great beers from the 30-odd homebrew clubs serving their goods up. BrewCommune served around 15 beers and ran out of most of what was brought. We also won the first IPA competition with my India Pale Lager. I brought two kegs that were drained in a little over 2 hours. I thought I'd be specializing in Belgian-style beers, but I might have to add this beer to my lineup. Thanks to Lyn for the photos (more are on this BrewCommune thread). As usual, I didn't bring my camera!
This week I'll be focusing on finding a place, then I'll worry about ordering equipment and finalizing my recipes.
This weekend was the Southern California Homebrewers Festival. About 1500 people attended this mecca of beer festivals, drinking great beers from the 30-odd homebrew clubs serving their goods up. BrewCommune served around 15 beers and ran out of most of what was brought. We also won the first IPA competition with my India Pale Lager. I brought two kegs that were drained in a little over 2 hours. I thought I'd be specializing in Belgian-style beers, but I might have to add this beer to my lineup. Thanks to Lyn for the photos (more are on this BrewCommune thread). As usual, I didn't bring my camera!
This week I'll be focusing on finding a place, then I'll worry about ordering equipment and finalizing my recipes.
Tuesday, May 1, 2007
Bad News
My broker called yesterday to tell me the Landlord for the Huntington Beach location leased to someone else. It has taught me a lesson that if a landlord is going to string me out for a month, they are probably not going to choose my use. It's about time for a bit of good luck.
Subscribe to:
Posts (Atom)