10 Keys to Nano Success

A nanobrewery is generally defined as a brewery with a brewhouse up to 5 barrels in size (1 barrel or beer barrel is equal to 31 gallons/117 L), and these smaller-scale businesses offer many opportunities to brew, market, and share your great beers with your local community. Although the craft beer market may feel bloated, nanos fit the hyper-local niche, require less capital and space to launch than other brewery business models, and, unlike packaging breweries, do not battle for tap handles and shelf space. Here are some tips to consider if the idea of opening a nanobrewery has crossed your mind.

1. Begin with a plan

All businesses require a plan, and nanobreweries are no different. A good plan will clearly define the vision, mission, objectives, strategies, and action plans of a new business. Although most business plans are written to raise money from potential investors, you should consider your own needs when penning the plan. Use it like a map to help the business stay on course, and reference it periodically.

Plans patterned from boilerplate templates are oftentimes boring and generally uninformative. One-page business plans are a popular alternative because they can be meaningful, concise, and are easier to write than longer versions. Format aside, two important sections of a nanobrewery plan are the Vision and Mission sections.

A clear and meaningful focus helps a business stay centered. If the vision is to brew exceptional German-style lagers to serve in a locale with a strong German heritage, you may want to rethink that kumquat cream ale recipe you have been tweaking. Don’t like the way this restriction feels? Change your plan. But make the major changes before opening. A business that constantly changes directions can confuse its consumers.

You also need to plan for profits. While most new businesses are launched to turn a profit, some nanobreweries are conceived as a way to subsidize a hobby and the profit goals are quite different. Whatever the objective, the business performance should be compared to the plan.

2. Focus on high-margin beer sales

Successful boutique businesses maintain market focus on high-margin sales and purposefully avoid distractions from the macro-market because the temptation to satisfy all consumers can kill the ideal niche business. This type of focus requires dedication and absolute confidence in the business plan, and it is a philosophy that is fitting with the nanobrewery. Small batch beers are expensive to brew, a nanobrewery has a limited number of sales opportunities, and each of those sales need to generate a healthy margin for the business. Don’t be wooed by higher volume, lower margin sales.

The easiest way to stay focused on high margin beer sales is to brew beers that can demand a higher price. Most beer consumers are simply unwilling to pay premium beer prices for ordinary beer. Does this mean that nanobreweries cannot serve a golden-colored, regular strength, Pilsner? Of course not, it just means that the Pilsner cannot be ordinary. Despite the obvious nature of this advice, it is surprisingly difficult to always follow after your business doors have been opened.

3. Run from the alluring ego boost that can come

Local bars and restaurants love special beers from small, local breweries, and it can be a huge ego boost when these businesses want to feature your beer on one of their taps. Seeing your tap in another venue feels great, but does it make good business sense? Not usually. When beer is sold through distribution channels, even with self-distribution, the sales margin is eroded because the consumer is typically unwilling to pay more for your beer simply because it is being sold in another venue. The successful nanobrewery should sell every possible drop of beer in their own brewery before ever considering beer distribution. Period. And even then, the sales revenue may not be worth pursuing.

4. Stay true to your business mission

Nanobreweries are way too small to be everything to every beer consumer. Know who you want to be in the market, let your patrons know your identity, and stick to it. All breweries are guaranteed to be asked to brew beers that are not a good fit with the brewery. Examples may include mango wheat brewed in a Michigan brewery dedicated to fruit beers using locally farmed crops, a cask-conditioned ale in a brewery specializing in funky Belgian styles, or a nitro-stout in a brewery that only produces bottle-conditioned and keg-conditioned ales. When this happens, you must be prepared to clearly, unequivocally, and calmly say “no thanks,” and remain true to your path. Your core customers will respect the business for staying true to its mission.

5. Create a brand identity that fits your brewery

The look and feel of your brand can be as important as the quality of your beer for the first-time visitor. Many small businesses downplay the importance of brand identity, and many small brewers take the position that great beer speaks for itself. The look and feel of a brand helps establish impressions about a brewery and its beers before the consumer tastes that first drop. And positive first impressions help to reinforce the quality of great products. Conversely, a weak brand identity can negatively influence an otherwise great beer. If this sounds like psychological mumbo-jumbo, consider your own consumer behavior and how you respond to various beers simply based on brand identity.

Since few nanobreweries start out selling beer in bottles or cans, the brand investment is typically limited to the company name, the look of the name if it is separate from the company logo, company logo, and a way to communicate what beers are being offered. Decorative chalkboards are a popular and effective method used to announce the beer selection in a taproom. Although these often look great, they require talent and skill to maintain. If the nano team does not include artistic talent, consider other vehicles for your beer list. A good designer can develop all of these materials and get the business off to a strong start with a rock-solid identity. Not in the budget? Consider bartering for future purchases in
your taproom.

6. Location, location, location

Anyone who has ever considered opening a retail business has heard this expression. The exciting thing about brewery taprooms is that there are no clear rules about what works. Since nanobreweries are small, the population surrounding the nanobrewery can also be relatively small. Residential neighborhoods with the right zoning have become a very popular place to establish a nano, and these businesses provide something that has disappeared from many residential districts over the years. Light industrial complexes are another popular location, and if located in an area with congested commutes at the end of the workday, the tap room may swell with employees from neighboring businesses who want to wait before embarking on the commute home. Think outside of the box when considering your location.

7. Develop a stylistic theme

Let’s face it, there are many tap rooms around the country that lack originality. Some have a total lack of décor and feel sterile when partially full, and others have a formulaic feel that gives the feeling of déjà vu. Without question, the most memorable taprooms have original stylistic themes. The nano brand is largely based on the taproom, so make it special and consider all of the sensory inputs that your guests receive. Color, artwork, music, glassware, cleanliness, information about the brewery team, and how you interact with your guests all fit into style and help define the taproom.

Close your eyes and think of a memorable bar. Sights, smells, sounds, and the glass of beer in front of you are likely parts of your recollection. And this place is cool! Make your nanobrewery a cool place that folks remember, and return to for more great memories.

8. Don’t forget about the food

But nanobreweries are all about the beer! Seriously, who really needs food? Like it or not, tap rooms need a food program because a good chunk of the beer drinking population wants something to eat with their beer. Matching the food program with the look and feel of the tap room is a great place to start. If the focus is on a wide array of beer styles that show off your brewing skills, consider working with local food producers to offer tasty bites that do not require cooking, and do not take the focus away from your brews.

Think locally made sausages, cheeses, breads, pickles, fruits, and mustards for an A+ ploughman’s platter/brotzeit board. Or team up with local food trucks if you have the space for a food truck during key business hours. If these simple food options don’t fit your vision, having your own kitchen may be the best route for your concept. But adding that kitchen just turned your business into a restaurant and immediately increased your staffing requirements and operational complexity.

Most brewers who own and operate a brewery-restaurant employ at least one brewer. If your dream is to sell the beer you brew in your own taproom, think long and hard about building a kitchen. And think even harder about adding tables to your taproom.

9. Put on your engineering hat

Designing the brewery is what brewers are really keen about doing. The best designs begin from the end and work backwards to the front. Some of the things you need to know to begin designing include: The number of beers served at any one time, preferred serving method, annual sales volume, beer varieties, process philosophy, raw material types, and your DIY skills.

The question about volume is critical because it drives brewhouse sizing. There are plenty of nanos that began with a brewhouse that was too small and quickly realized the need for a bigger kit. Sounds simple, but if the facility was not designed with expansion in mind, expanding may not be a viable option. And there are many examples of “nanos” with 7–10 BBL brewhouses matched with 1,000-square-foot taprooms that simply brew batches that are a misfit with their sales volume. Beer is best when fresh, so large batch sizes coupled with a large selection results in old beer.

Setting the number of taps is another challenge. The trend these days is to maximize selection, but this must be balanced with batch size and projected sales volume. Sometimes less is more in tap rooms with good turn-over because a limited selection helps ensure fresh beer, keeps your consumers excited about future beers, and makes for reasonable batch sizes. Want 20 beers on tap all year? Be prepared to brew 2-3 batches per week.

Sour-beer programs require a place for barrel storage, step or decoction mashing requires specialized equipment, whole hops require a hop back, and malt mills may require explosion-proof rooms. Defining what your brewery can and cannot do is a critical part of the design process. And your DIY skills may influence your equipment purchasing decisions. Equipment selection will probably represent your single largest investment, so you may want to consider working with a consultant to guide this process.

10.  Sketch out an organizational chart

Your nanobrewery dream may include shedding baggage from the corporate business world, but some things must not be ignored. An organization chart, even if you simply sketch one out on a bar napkin, is extremely important to even the smallest of businesses. An organizational chart matches job titles and names with the daily tasks associated with business operations, and helps shape the team. One of the more important responsibilities in a brewery is preparing and paying taxes. Keep in mind that a major part of U.S. brewery legislation was crafted to prevent folks like Al Capone from ever again running breweries!

Issue: May-June 2018