In Start Your Own Microbrewery, Distillery, or Cidery, the staff of Entrepreneur Media Inc. and writer Corie Brown with Zester Daily Contributors explain how you can get started in the craft alcoholic beverage industry, whether you want to start your own microbrewery, distillery or cidery. In this edited excerpt, the authors profile a California-based brewhouse to give wannabe entrepreneurs an inside look at a successful business.
June Lake Brewing, June Lake, California
Justin and Sarah Walsh, Owners – Opened July 2014
Snowboarding has grounded Justin Walsh since he was a kid. Many winters, he would chuck whatever he was doing and travel for three months in search of fresh tracks. The jagged Eastern Sierra peaks around June Lake, California, a sleepy resort town at the backdoor to Yosemite National Park and an hour down the road from the mighty Mammoth Mountain, became his favorite cruise.
When it was time to start a family, Walsh and his wife, Sarah, decided to leave San Diego and make June Lake their home. Avid homebrewers, they looked forward to building a tiny three-barrel brewhouse to make beer for themselves and their friends.
“The problem was work,” says Walsh. “There wasn’t any in June Lake.” Everyone in town had six jobs, and many of their friends weren’t making ends meet.
After a year of planning, the couple moved to June Lake two years ago, bringing their dream jobs with them in the form of a blueprint for a 15-barrel brewhouse that could produce 8,000 barrels of beer a year. It would be enough to serve restaurant and bar taps in neighboring Lee Vining, Mammoth Lakes, and a brewery tap room.
Living in a remote spot where the nearest Home Depot is 170 miles away and truckers won’t deliver malt or hops after the first winter snowfall wasn’t the hardest part. The difficultly was the building. The town of 600 souls had only one suitable structure: a warehouse without insulation, power, or plumbing.
An experienced contractor, Walsh organized friends to overhaul the space into a brewery with sloped cement floors for easy cleanup, a high clearance to accommodate four 30-barrel unitank fermenters, and enough structural steel to meet the seismic standards in the earthquake-prone region. Walsh, 34, worked 18-hour days for three months straight. By the time the brewery opened, he was punchy from sleep deprivation.
The couple opted to buy a new ready-to-run brewhouse from Premier Stainless Systems in Escondido, California, which created a production delay of eight months while the equipment was fabricated. Buying used equipment would have saved time.
Ironically, the used equipment may well have cost more. So many breweries are expanding that immediate availability trumps everything. If you find what you want on ProBrewer.com, the eBay of the craft brewing business, it can be delivered immediately. But that’s a big if. This equipment sells instantly. Even banged-up stuff costs at least 25 percent more than new.
June Lake Brewing, Walsh says, “is a brewery that a community built on beer,” noting that volunteers put in thousands of hours of work in exchange for after-the-job beers and a promise that any paying jobs would be reserved for volunteers who lived in June Lake.
After six months in operation, sales were exceeding expectations and the taproom was packed every day during the summer of 2014. They parked a food truck offering Hawaiian-style soul food next to the brewery. With Mammoth Brewing Company already established at the neighboring ski mountain, “we’ve been surprised how many people found us. They sought us out,” says Sarah Walsh, 30.
Beyond the taproom where they sell pints and growlers, the couple delivers kegs to June Lake and Mammoth Lakes in a Toyota pickup; at 8,000 feet, there’s no need for refrigeration. “We hand deliver every account,” says Justin. “If we go the extra mile with service, the bars will talk us up. The best marketing is to focus on your customers.” They send occasional email newsletters, tweet regularly, and maintain a Facebook page. Their logo is strictly DIY.
Model for a new craft brewery
June Lake Brewing is following the model most often cited for new craft breweries at the start of 2015. They’re keeping overhead low, and the founders are doing much of the work themselves. It’s a neighborhood-focused operation with a captive audience. This is a model you’d be wise to follow, especially if you feel your community is ripe for supporting the craft trend.
“To start a successful independent beer business today, open a community-based, nano-brewery. Supply kegs to bars, no bottling, and learn what your community wants to drink. The barriers are lower,” says University of California, Davis, Professor Michael Lewis, an original guru of the craft beer industry. “Otherwise, I don’t see how you can start now. Johnny-come-latelies will have to work much harder than previous generations of craft brewers.”
There are 500 brewers in California, more than the next four most brewery-heavy states combined. Yet the Walsh’s mountain adventure makes sense because it’s grounded in their deep understanding of beer making. They were homebrewers first. Later, Sarah worked at two San Diego-area breweries and Justin had a month-long internship at Alaskan Brewing Company.
Their approach is particularly low risk. They built a brewhouse with enough capacity to grow over the course of several years. And their building is spacious enough that, when they need to add brewing capacity, they can do it without a costly expansion. But they kept their monthly costs low enough that cash flow from beer sales could keep them afloat. By relying on food trucks, they avoided the cost and headache of a commercial kitchen.
Self-distributing, as the Walshes are doing, is another way to maintain higher margins. And it works well in their remote region with a limited number of on-premises clients. Most states allow small brewers to self-distribute, but distribution laws are different everywhere. And even where it’s allowed, there are nuances to the regulations that may make it difficult.