‘So how much money does a brewery make? Can we all retire from our Professional jobs? What are the profit margins like?’
We do want to make you all great beer to drink, but we don’t want to do it for free…. The business needs to be viable.
We have spent a lot of time lately drawing up detailed spreadsheets of the predicted operational profit and loss. This meant a lot of market research; e.g., sitting in craft beer bars counting how many beers people generally drink and how many people go through in an evening. It also meant looking into our likely expenses and also how big our system needs to be to cater for the predicted volume of beer that you will all drink.
We need to know all this to figure out how big our system should be, how much beer would hopefully be sold over the bar and how much would be sold wholesale.
Thankfully the craft beer industry is quite open when asked ‘so, how many kegs do you sell in a week wholesale and over the counter?’.
Being scientists, we all love spreadsheets. We had to work out the size of kegs (yes they differ between countries… https://en.wikipedia.org/wiki/Keg
), how many beers per keg and the predicted volume of beer we would sell. Then we had a few different scenarios (low sales, medium sales and high sales) to counter for the range of uncertainty in predicted sales. Once we knew a rough idea of predicted sales, we concluded that the system size we were eyeing off was about the right size (15-20bbl).
We knew that the selling price of 1 litre of beer over the bar was approximately $18-20, and if it were sold wholesale it would be approximately $6 per litre. Remember though this is the sale price of beer, it isn’t the profit. We also have to factor in the cost to make beer; ingredients, head brewer, liquor excise, water, power, rent, insurance, loan repayments etc. The biggest expense in there is actually the liquor excise (https://www.ato.gov.au/Business/Excise-and-excise-equivalent-goods/Alcohol-excise/Excise-rates-for-alcohol/
). That’s why craft beer is so expensive, the cost of the excise gets passed onto the consumer.
There are a lot of guestimates of certain aspects, but we are giving it our best guestimate to figure out if this whole brewery thing will actually be worthwhile. We need to be able to pay our own house mortgages, living expenses and look after kids.
The numbers look viable! So let’s dive in and start a brewery! Photo: Scott looks over at the blank wall within the brewery-to-be.