There are options, believe it or not, for brewers who don't have the $1,000,000+ to sink into a production brewery or brewpub and don't think a nanobrewery will be profitable at such a small scale.

Contract Brewing is a situation where you provide a recipe to a brewer and they produce the beer on their system and you then purchase the kegs and/or bottles. The owner of the kegs would most likely possess a wholesale license which would allow them to sell to bars and restaurants.

With dozens of beers, multiple restaurants, a book, and many other active projects many consider Mikkeller to be the leading example of making your mark on the beer business through contact brewing.

There are several examples where this relationship has been shown to be beneficial to both parties and the industry. For example, when Lagunita's Brewing was increasing their production some of their tanks were damaged during transport... putting them behind schedule. Their friends at Anchor Brewing managed to help them pick up the slack. Another example is with 21st Amendment in San Francisco who own a pilot system for smaller production but, until recently when they opened their new San Leandro facility, got most of their product brewed and canned at Cold Spring Brewery in MN.

Despite these cases, contract brewing still has a negative connotation for many who remember the beer boom of the 90s. Any wanna-be business men with zero brewing knowledge could come up with a ridiculous beer idea to market and pay a struggling brewery to make it for them. With many of these "craft beers" flooding the market it began to leave a sour taste in the mouths of legitimate brewers and beer enthusiast.

Things are changing, however, and in my opinion if it is done under full transparency and honesty by people who really understand beer it can be a great option for a new company.

Another option is an Alternating Proprietor relationship where you essentially “own" the brewery under specific conditions and times. You are actually renting a brewery and using their system to produce your beer and all licenses with State and Federal authorities are under your name. One advantage to this is the right to actually call your company a "brewery" (unlike with contract brewing where you can't use the term).

This requires much more paper work and potential up-front cost but it tends to be more profitable to the brewer because they are not paying the mark-up you would find with a contract relationship.

One concern for both Contract brewers and Alternating Proprietor brewers is whether or not your host brewery has enough room in their facility or in their schedule to have you occupy one of their fermentation vessels. The solution to this, which has been used by some, is for the tenant brewer to purchase a fermentor and have it on site so they are guaranteed to always have room for their beer. When not in use it can be rented by the host brewery to increase their production.

If you have any doubts that quality beers can be made under one of these arrangements, check out the BeerAdvocate.com or RateBeer.com scores for some of these breweries: Mikkeller, Omnipollo, Stillwater Artisanal Ales, Grimm Artisanal Ales, To øl, Local Option, Almanac

Henok from Omnipollo at the recent RateBeer Best Festival where they received several awards

If you are interested in introducing beer to market without investing a fortune, it may be worth your time to look into these options.

Good Luck!

Skin in the game...

— ALTBRAU —