I didn’t plan to make every post for #MoneyMakerMarch build upon an idea set out in William Least Heat Moon’s foundational article on the micro brewing movement, “A Glass of Handmade” from the Nov’ 1987 issue of The Atlantic, but today I thought of this passage:
The New Albion Brewing Company, of Sonoma, California, the first true American micro, went under because it began bottling before it was financially able to produce beer in quantity. In distribution Jonah must face the leviathan. An industrial brewer can make distribution very difficult for a small brewer (sometimes by illegal means). One solution: eliminate distribution altogether by running beer from the maturation tank to the customer’s glass, or, as The Venerable said, “Put the cat under the milk cow.”
What a fabulous image. Put the cat under the cow. And what was the boom of brewpubs in the late 1980s is now the boom in taprooms. So, it was with huge interest that I followed up on Stan’s tweet this morning leading to a post at the The Mad Fermentationist, the semi-official news outlet of Sapwood Cellars of Columbia, Md. on just exactly how they are making money running their brewing and taproom operations to maximize a reasonable return. And what honesty do they bring to the discussion:
Most of our IPAs and DIPAs work out to $100-150 per ½ bbl keg. Self-distributing these beers for $200-250 there would be no way to make enough to cover rent, pay ourselves, and fund expansion. However, being a retailer of our own beers means we get $800-900 for that same keg sold by the glass and growler. It makes sense for us to charge a reasonable price ($7-8 for a 14 oz pour in a 17 oz glass) and have consumers return rather than charge a dollar or two more and end up having to self-distribute kegs (with the added effort).
Read the whole thing. Then consider how this is an example of open book brewery operations, giving secrets away to the competition. And to the drinker. Now I know that $.80 of Whirlfloc and six cents of Zinc Sulfate Heptahydrate go into every 10 barrels of their Pillowfort ale. Didn’t before. There is really no reason for any brewery not to take this step in eager transparency. They even go so far as to say that while other breweries stick to percentage markups, they do not. Competitive advantage? It is now.
Any other open book brewers out there? Let me know so we can spotlight them as part of #MoneyMakerMarch. Meantime, go read the post. It’s fabulous.