LONGMONT — In the city that houses brewery giants such as Oskar Blues Brewery and Left Hand Brewing Co., a panel of early-stage craft alcohol entrepreneurs gave advice on how to start in the craft-brewery industry.
The “So you want to start a brewery?” panel at Wibby Brewing featured five panelists — two from breweries, one from a distillery and two from a cidery — discussing funding, return on investment and the business plans needed to get started in Colorado’s competitive craft-brewing field.
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Despite that competition — the Brewers Association put the number of craft breweries in Colorado in 2016 at 334 — many find the field not yet over-saturated.
“South Longmont is pretty crowded and concentrated, but it’s also a receptive market,” said Billy McDivitt, chief operations officer of Open Door Brewing Co., which has been canning since 2015 but opened a taproom just over four months ago. “It looked on paper that there was a lot of competition. We had to look at what differentiated us. You have to make sure you are different than what is in the community where you want to be.”
That ability to stand out was key for Wibby Brewing, said its co-founder and director of business operations, Ted Risk. Wibby is the only brewery he knows of that exclusively makes lagers, nothing else. It was also a key move for St. Vrain Cidery, said founders Cindy and Dean Landi, who started the first cidery in Boulder County in what is a relatively new segment in the alcohol industry. And John Young, co-founder of the new Longtucky Spirits, started in beer brewing but opened a distillery in an effort to do something different.
Despite the abundance of craft breweries in the area, many of them work together.
“It’s really important to acknowledge that there could be 100 more breweries that open tomorrow and it would still be the most collaborative industry I’ve come across,” Risk said. “When we started, all of the breweries around us reached out. And if we bring attention to beer that is local, then we’re doing justice for everybody.”
One of the biggest challenges beer entrepreneurs face, the panelists said, is funding. Unlike most startups, breweries don’t get a seven-times return on investment, at least not for a long time. The return usually is much lower.
Usually, the people who will invest in a brewery or distillery do so because there is an allure to it, Risk said.
“People want to be part of something,” Young added, “and they’re willing to be patient.”
Whether seeking investors, bootstrapping the business or getting a bank loan, plan for the business to cost about three times more than what you originally expected, McDivitt said.
Risk said Wibby was originally supposed to cost $400,000, but when accounting for every possible expense and future growth, they realized they needed $1.2 million. The businesses ended up costing $1.58 million.
St. Vrain Cidery bootstrapped their business, said Dean Landi, and is expanded to the point where they’re already thinking about bigger space.
Despite the challenges of starting their businesses, a focus of the panelists is banding with the rest of the brewing and craft-alcohol community and promoting independent brewers and distillers.
“As a group, it’s about sticking together,” McDivitt said. “I call it coopetition.”