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New England Nanos – The Business of Staying Small

When a home brewer goes pro, a nano brewery is born. From construction to distribution, brewers have a hand in every aspect of building the business and more often than not, they’re doing most of it by themselves.

For brewers pouring heart, soul, and savings into a budding enterprise, beer quality is everything; locavores and enthusiasts are seeking out the newest and most innovate brews. The demand is big – yet most nanos intend to stay small.

Home Improvement

Brewers with property are at a financial advantage over those who don’t. Better still, brewers with unused buildings on their property who have basic carpentry skills will spend the least amount of money to get a nano brewery up and running.

“What’s more efficient than working in a building you already pay taxes on?” explained Steve Allman, owner and brewer of Canterbury Aleworks. “I have very little extra capital invested.”

The capital he does have invested may well be attributed to building materials – Allman’s craftsmanship can be seen throughout the barn-turned-brewery on his farm in Canterbury, New Hampshire. The one-barrel brew system sits atop a wood-fired rocket stove that was constructed from bricks and metal. The stone-walled tasting room is warmed by a fireplace, filled with celtic knickknacks and is anchored by a thick mahogany bar, which Allman carved himself.

But if Allman’s beer is what you’re looking for, you’ll only find it on eight taps in the tasting room, or in bottles at the Concord and Canterbury farmer’s markets; the brewery doesn’t have any accounts.

“We want to be a destination experience,” said Allman. He hopes the brewery will remain a family business and that in the future, his kids will return to the farm and run it when he’s no longer able to.

In Berkley, Mass., Glenn Barboza’s contracting background made converting a barn on his 3.5 acre farm into the Berkley Beer Company relatively easy – having electricians for neighbors didn’t hurt either.

“It was fairly inexpensive because I did 98 percent of the work myself,” said Barboza; he engineered a wood-fired boiler that supplies the brewery with hot water. A bottling line was designed and built by his son, Glenn Jr.

“If you have your own property and you have the ability to do the build out and mechanical aspects by yourself, do it,” said Barboza. “It’ll save you tens of thousands of dollars.”

Future expansion plans will keep the brewery on the farm.

“We have room to expand here, we could easily fit a 10-barrel system,” he said. “Do I want to start doing tours? Add a tasting room? If I did, we’d have to go off-site. It wouldn’t fit the business model here. Then it turns into renting a building, equipment, and you’d have to take out a half million dollar loan to do that. Expanding here and keeping it small is what we’re focused on.”

For Lee Margolin, building a brewery into an unused room of his house proved to be a good money-saving technique. The tiny 236 square-foot sunroom was converted into the Pennesseewassee Brewing Company two years ago, and it’s ready for an expansion.

“I have two options,” said Margolin. “I own an empty lot next door that’s undeveloped. I could either do a stand-alone building from scratch, or build an addition on to the house.”

The expansion will allow Margolin to upgrade from 1.5 bbls to 3.5 and add another recipe to the lineup: a brown ale brewed with local honey and elderberry.

“I’m very pleased with being locally oriented and self-sustaining,” he said. “It’s where I wanted to be.”

Hoping to move his brewery off the family farm is Bret Hamilton of Huntington, Vermont. The 4 bbl Stone Corral Brewery is outgrowing the toolshed it was built in last year.

“My wife has been gracious enough to let me use her tack barn as a tasting room, but we’ve completely run out of room,” said Hamilton. “We’re bursting at the seams.”

It’s a big step for brewers to move off property they already own and start paying rent elsewhere. But for Hamilton, setting up shop in a commercial building across town is worth the risk.

“It’s going to be a lot more accessible to folks,” he said. “And I’ll have a lot more room to make beer.”

Going Commercial

For the city-dwelling home brewer, going nano usually means moving into a commercial space. There are pros: Bigger space, blank slate, accessibility. But, there are also cons: More invested capital, lease terms, cranky landlords.

On Long Island, brewer Steve Pominski got lucky.

“Once we decided to find a place, we looked quite extensively. It took us a long time, but we found a place for a good price, decent lease, and it had all the utilities,” he said. Barrage Brewery opened at its Framingdale, NY location earlier this year.

“In the first two months we outgrew our one bbl system. We can’t keep up with demand,” said Pominksi. In June, a tasting room was constructed in what used to be his office.

“Each week we see a larger clientele, repeat customers,” he said. “Bars in New York and Brooklyn are already asking for beer, but we have to tell them that they’ll have to wait.”

Relic Brewing Company of Plainville, Connecticut opened in 2012. The industrial space Mark Sigman moved into became a bigger project than he anticipated.

“The building was hooked up to city water and sewer, but it wasn’t wired correctly. I had to pay for new transformers. And when I opened, there were so many codes and regulations. I had to re-plumb the tasting room,” said Sigman. “I spent way more money on space improvements than brewing equipment.”

Fortunately, four months after opening Sigman was able to quit his day job.

“Once I started marketing the company and going to festivals, hundreds and hundreds of people started showing up. I decided that this could really be a viable business,” he said.

Legal Issues

For a brewery to open, it needs approval from federal, state, and local governments. Surprisingly it’s local-level government that seems to be the trickiest to win over. Brewer Matt Richardson of Exeter, Rhode Island, discovered that opening a brewery in his hometown would require lawmakers to draft an entirely new permit.

“In Exeter, they didn’t allow breweries at all essentially,” said Richardson. “I worked with the town for over a year, and we wrote a new city ordinance together. They didn’t want a Narragansett-sized brewery, but they were really supportive of farms.”

Working with Richardson on the ordinance was Exeter town planner David Schweid. He and the town planning board recognized that farm breweries could promote agro-tourism in the small New England state.

“There’s a difference between growing hops and selling them to Budweiser or Coors, and growing hops and making your own beer,” said Schweid. “We want to promote local agriculture, and we’re giving those people a way to make some money.”

With local and Federal consent, Richardson’s Tilted Barn Brewery is waiting for state approval before the brewhouse and tasting room can open to the public.

The brewery will open with a 2 bbl brew system and 8 bbl fermentors, with a goal of reaching the 10 – 15 bbl range per batch following an expansion. According to Richardson, that would be the maximum output as a farm brewery at the local level.

“We very much want to be a local destination brewery,” said Richardson. “We’re a small state. We’re happy staying small.”

Crafting the Business

It’s obvious that brewers get into the business because they have a passion for brewing delicious beer (and we like drinking it). But once a brewery is established, it has to make money in order to remain a viable enterprise. It’s tough a balancing act for a nano to be small enough to satisfy the local market, but big enough to turn a profit. So, it begs the question, are there any nanos out there making money?

The short answer: Not really – yet.

“Everything we make from a profit standpoint goes back into the business,” said Chris Tkach, co-owner and brewer at Idle Hands Craft Ales, Boston’s pioneer nano brewery. “Financially the brewery’s been positive, but it’s not at a point where I’m paying myself though. We’d have to grow a bit in order for that to happen.”

After their first summer open as a brewery, Gneiss Brewing Company of Limerick, Maine’s co-owner Tim Bissell is optimistic.

“We’re not out of the red in terms of owning equipment, but we’re not in trouble financially,” said Bissell. “We definitely want to keep on the smaller side of things. We want to get the business at a point where we can make enough beer to make enough money to keep things moving.”

According to Relic Brewing’s Mark Sigman, nanos can thrive as small scale breweries so long as the beers it produces are unique and high quality – standard recipes aren’t going to cut it. With craft beer sales up nearly 20% from last year, its clear that consumers are willing to pay for top notch local brews.

And although it is a business, nano brewers maintain that it’s not just about dollars and cents.

“People who start nanos aren’t necessarily in it for the money,” said Stone Corral’s Bret Hamilton. “They’re in it for the craft.”

***This article was published in the Oct/Nov issue of Yankee Brew News***


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