“Don’t do it.”
That’s the first thing I was told by a brewery owner during a recent discussion. This is not the way I was expecting this meeting to start, but he had my attention. His first point was that the craft beer bubble has popped and it is too late to get in - the opportunity has passed. There is no denying that on the national level, there will eventually be a glut of breweries if growth continues at the current pace. The nationwide stats on new breweries are pretty insane - something on the order of 3 opening per day. Anybody with plans to open a brewery should be concerned that they are hitting the market at a time where competition is too great to get a foothold. Cutting to the chase, I obviously disagree with his suggestion, but this relates to the 800 pound gorilla in the room of every new business - FAILURE.
This brewery owner was very frank about his personal struggles and concerns about the industry going forward. He said that there is getting to be too much competition for tap handles (placement at bars) and shelf space (placement in retail stores). That makes getting your new brand into stores tough and maintaining that space even tougher (new brands sell relatively easy; getting established is a lot harder). I think he has a point, but the situation is more nuanced. You have to consider beer quality, beer style, local market, branding, etc. before deciding whether there is too much competition to succeed. This brewery is not located in the Los Angeles area and he was candid that the city he is located in has been a detriment due to its bedroom community nature and lack of civic pride. This has hurt his tap room sales and brand awareness in his greater metropolitan area.
Another warning he gave was that the “band of brothers” attitude among brewers that is portrayed in the media is a myth. In my experience talking with a couple dozen brewery owners, I have found this not to be the case. They have been helpful, generous and forthright almost across the board. This was reiterated among a group of new brewery owners at a discussion panel we attended a few weeks ago. However, as competition does increase, it isn’t hard to imagine hurt feelings (and worse) from those not sharing in the overall success of the industry.
As confident as I am in the concept we are working on, hearing from people who are struggling throws in a good dose of fear. We will be putting an uncomfortably large amount of our own money into the brewery, as well as cash from others, and the thought of not succeeding is preeettty terrifying. Insert cliche about risk and reward, followed by another about eating fear for breakfast ;)
Progress Update - Our trademark application has been submitted and we had an initial meeting with lawyers about additional corporate law and securities needs. Business plan work continues and the start-up costs are nearing completion. We will be searching in the couch pillows this weekend for about a half million bucks!