Craft brewing – how hard can it be? Going by the swelling ranks of artisanal ales on display at inner city drinking establishments, you'd have to say: not very. And what better way is there for an entrepreneurial beer lover to follow their bliss?
Danielle Allen, co-owner of Two Birds Brewing; Jaron Mitchell, co-owner of 4 Pines Brewing Company; and Adam Trippe-Smith, former co-founder of McLaren Vale Beer Company and now managing director of keg-rental business Kegstar, explain what's involved in owning a craft beer business.
First, the good news.
Barriers to entry are low
Don't have much money, or even any idea how to make beer? No problem. Says Trippe-Smith: "If you want to set up or buy a small brewery you're probably looking at $250,000. My business partner and I launched McLaren Vale Beer Company [now called Vale Ale] with $100,000."
If you're happy to be a gypsy or contract brewer – that is, hire another craft brewer's facilities or just give them your recipe and have them take care of everything – it's conceivable you can get your first batch of beer brewed, packaged and distributed for as little as $20,000. Says Allen: "We started Two Birds - Australia's first female-owned and operated brewer - doing gypsy brewing because we didn't then have the capital for our own brewery. That came later."
It's a growing industry with plenty of room for new entrants.Adam Trippe-Smith
Observes Mitchell: "This is an industry that accommodates a lot of business models. You can have a microbrewery that retails beer to those within the local area. You can be a wholesaler and sell to bottle shops and pubs across the country. You can set up brew pubs and have the revenue stream that comes with selling food alongside the beer. Or you can do a mix of some or all those things, as we now do at 4 Pines."
If you're recalling your own not-entirely-successful home brewing experiments at this juncture, relax. Trippe-Smith: "My partner and I had zero brewing experience when we started McLaren Vale. We hired that talent in, as many people do. Mitchell: "Neither I nor any of the major stakeholders in 4 Pines are master brewers. We've been lucky enough to have had great brewers, including master brewers, passionate about their craft come and join us for the journey."
The odds are in your favour
Within a couple years of launching in 2008, Trippe-Smith and his partner were selling one million litres of beer. (At that point they sold out for a tidy sum.) After starting out as part-time gypsy brewers in 2011, the two 'birds' – Danielle Allen and Jayne Lewis – now employ 10 full-time staff. They have built a brewery with tasting room in Spotswood, Victoria and are on track on to sell 700,000 litres of beer this year.
Mitchell, having started out with a relatively modest brew pub located behind Manly Wharf in 2008, now has 75 full-time and casual staff. Three years after launching 4 Pines he had to set up a large-volume brewery on a nearby light industrial estate to keep up with demand from across the country.
Says Trippe-Smith: "I've been around for a decade and haven't seen any spectacular failures. It's a growing industry with plenty of room for new entrants. Adds Mitchell: "With around 250-300 craft brewers the industry might seem crowded, but craft beers still account for less than five per cent of the beer sold in Australia. There's still lots of potential for newcomers to help expand that market share."
The ultimate lifestyle business
"There's lots of travel and lots of hanging around with people drinking beer," says Allen. "Plus, it's a fun industry that functions like a big family. Craft brewers love getting together, especially if it involves dressing up and going to an awards night."
Erstwhile corporate warriors Trippe-Smith and Mitchell concur. "After having been stuck in an office, it was liberating to be able to travel all over the place and connect with lots of different people," says Trippe-Smith.
"I had a 'real job' in the city after graduating uni and hated it from day one," Mitchell says. "This is something I'm more and more passionate about every day, 10 years in."
Now the downside, such that it is.
It's not just about the beer
"Producing beer that people want to drink is a necessary but not sufficient condition for making a go of things," says Trippe-Smith. "As with any industry, a quality product is just the beginning. After that you've got to be driven to succeed, get the branding and marketing right, establish strong relationships with customers and make sure you don't run into cash flow problems."
It will take over your life
"It's 24/7," declares Allen, conducting this interview while her five-week-old baby naps nearby. "When you start off, you're endlessly pounding the pavement, visiting pubs and bottleshops during the week and setting up stalls at events and festivals at the weekend. Until some money starts coming in, you're doing every single thing that needs to be done without drawing any salary."
You won't end up a hipster plutocrat
"Craft brewing isn't like a tech business. There's not the potential for quick, large profits," says Mitchell. "Some independent brewers do end up selling to one of the big players for tens of millions but they are the exception. This is a low margin business where it takes time to build relationships with customers and learn to do other things well, for that matter. If you do want to grow sustainably, you've got to keep ploughing the profits back into more staff, equipment and possibly premises."
Not that Mitchell wants to discourage others from following in his footsteps. "If you're after a quick buck and under the impression you can make one by copying the formula of an existing brewer then this isn't the industry for you," he says. "But if you're passionate, in it for the long haul and can bring something new to the table, there are still plenty of opportunities out there."