I hear this phrase far too often in the beer industry but it seems like it is always been a part of our industry and most likely will be as we move forward.

Even back in the early 80’s, when the boom to local beer started.  There’s a litany of stories of breweries opening up and then very quietly shutting down.  If you look south of the border, this phenomenon is not solely happening with the tiniest of breweries but can also happen with much larger, successful operations.

I think a lot of us get swayed with becoming incredibly successful in a short period of time.  There is an incredible draw to earn more money than we know what to do with.  However, the faster the rise to success, the more likely a decline will happen equally as fast.  Slow and steady wins the race, right?

I often hear about the pot gold that awaits at the end of the rainbow of beer.  It is true that this business can be very profitable but that takes time and a good deal of thought and strategic outlook. 

If you are opening a brewery or a brewpub and you have a ton of your own money to invest – perfect!  If you are relying on outside sources of funding to help support your start-up, you should be fully aware of the timelines you have to pay back those who are investing. 

The goal of any brewery in the first 5-10 years should be to invest as much of their sales profits back into the business to make it sustainable for the future. If you are burdened with paying back loans and investments, it will severely restrict your ability to stay profitable.

The Canadian beer industry is a tricky place and you should be aware of all methods of distribution before you start brewing.  The single most profitable distribution point for any brewery is the brewery itself, whether it be the taproom or the retail store. 

After that, you pay a steep price for retail distribution so that you can reach a broader audience.  Think really carefully whether distribution through retailers is the right thing for you.  Bigger is not necessarily better and can easily eat your profits up.

A careful consideration of volume is also crucially important.  Believing you are going to hit 15,000 hectoliters in the first year of operation is delusional unless you know something the rest of us don’t.

There are only 60 breweries in Canada that have production volume about 15K HL.  I know many brewers who are just hitting 15K HL after 10 years of operation.  It is more likely that you should target 1000-2000 hectoliters in year one.  This makes way more sense and puts less stress on the overall operation.

Just a thought to leave you with. 

Seth Godin, a U.S. Marketing guru states “People do not buy goods and services. They buy relations, stories and magic.” So, while your product is beer, it’s the emotional attachment to your physical brewery and the people in it that create magic.

Give consumers great stories and surround yourself with wonderful employees.  Finally, own the surrounding geography and you may just find that pot of gold.

Roger Mittag is the President of Thirst For Knowledge Inc. (Canada’s leading beer education company) and founder of Prud’homme Beer Certification® (www.tfkbeer.com )