Regional Brewery Feasibility Study

This page is a workspace to consider the feasibility of opening a "regional" brewery in Monmouth, IL to serve initially the Central Illinois region. Future plans to expand would include the 7 Midwest states (MI, IN, IL, MO, IA, NM, WI) but NOT "beer-rich" areas such as Chicago or St. Louis.

Areas of Operation

Area 1

Original operations will target "area 1":

Monmouth (9K population)

Galesburg (31K population, 16 miles from Monmouth)

Macomb (18K population, 33 miles from Monmouth)

Peoria (115K population, 67 miles from Monmouth)

Rock Island (38K population, 50 miles from Monmouth)

Moline (42K population, 50 miles from Monmouth)

Bloomington-Normal (78K/54K population, 110 miles from Monmouth)

Springfield (116K population, 120 miles from Monmouth)

Decatur (73K population, 150 miles from Monmouth)

Quincy (41K population, 100 miles from Monmouth)

Rockford (148K population, 165 miles from Monmouth)

Champaign-Urbana (86K/42K population, 160 miles from Monmouth)

Total Population Area 1 = 891K ~ 1M (including smaller communities)

According to http://www.infoplease.com/us/census/data/demographic.html 70% of the US population is over the age of 21.

• So 70% of 1M = ~700,000 adults in the above population.

According to Gallup poll, see link below, 41% of adults drink beer. For each drinker, they consume 4.1 beers (12 oz) per week.

http://www.gallup.com/poll/174074/beer-americans-adult-beverage-choice-year.aspx

• So 41% of 700,000 = ~287,000 beer drinker
• 287,000 each consume 4.1 beers per week = ~1.2M beers per week
• If each beer is 12 oz then 1.2M beers is equal to ~110,000 gal (128 oz) per week or ~5.7M gal per year.
• In brewery terms, 5.7M gal is equal to 185K bbls (31 gal) per year.

So, a US population of 1M will consume ~ 185K bbls of beer per year.

Brewing Operations

Brewing operations will be located in Monmouth IL adjacent to interstate 34. Brewing system will be based on 4-vessel system with fermentation capacity to balance production of 40% ale and 60% lagers.

Scenario 1:

15 bbl brewing system, brewing 1 per day, 5 day a week.

total production = ~3.90K bbls per year...or ~2.11% of beer market.

Scenario 2:

15 bbl brewing system, brewing 2 per day, 5 day a week.

total production = ~7.80K bbls per year...or ~4.22% of beer market.

Scenario 3:

30 bbl brewing system, brewing 1 per day, 5 day a week.

total production = ~7.80K bbls per year...or ~4.22% of beer market.

Scenario 4:

30 bbl brewing system, brewing 2 per day, 5 day a week.

total production = ~15.60K bbls per year...or ~8.43% of beer market.

Scenario 5:

50 bbl brewing system, brewing 1 per day, 5 day a week.

total production = ~13.00K bbls per year...or ~7.03% of beer market.

Scenario 6:

50 bbl brewing system, brewing 2 per day, 5 day a week.

total production = ~26.00K bbls per year...or ~14.05% of beer market.

Summary

• Production breweries need to maximize the use of capital investment, so a minimum of 2 brews per day is expected with a max being 4 brews a day during high volume times.
• Scenario 1, 3, and 5 are not desirable due to only 1 brew per day.
• It is very unlikely that scenario 6 (ie. capture 14% of all beer consumption) is feasible.
• Scenario 2 seems most feasible (4% of beer consumption), but thoughts of future expansion (mainly as a contract brewer) would lean towards investing in a 30 bbl brewhouse with future expansion of the fermentation capacity.

Conclusion: install 30 bbl brewhouse with fermentation capacity to produce only ~8K bbl/year (4-5% of beer market). Consider brewhouse with dual heating (15/30 bbl) operation.

Labor Force

Brewing Operations

Scenario 3: 30 bbl brewhouse, 1 brew per day; 8K bbl/yr production

• Head brewer
• Assistant brewers (2)
• Fermentation hall/yeast manager (1)
• QC lab manager/technician (1)
• Facilities Manager (1)
• Assistant facilities manager (1)
• Packaging

• Bottling line manager
• Bottling line operators (4-6)

Note: Assistant brewers and fermentation hall manager are trained on all brewhouse/fermentation operations.

Note: QC lab manager and facilities personnel (2) will be trained on packaging operations. QC lab manager will also be trained on fermentation operations.

Administration/Sale/Marketing

• CEO
• CFO
• Assistant CEO
• Sales (4)
• Marketing (2)

Finances

Scenario 3: 30 bbl brewhouse, 1 brew per day; 8K bbl/yr production

Sales

• 8K bbl/year at ~$300/bbl ($5.45/6-pk) = $2.4M in sales

Material cost

8K bbls @ ~$50/bbl = $400K/yr

Labor cost

• CEO = $100K/yr
• Assistant CEO = $60K
• CFO = $100K/yr

• Head Brewer = $60K/yr
• Assist. Brewer = $38K/yr (x2) = $76K/yr
• QC manager - $38K/yr
• Facilities manager = $50K/yr
• Assist Facilities manager = $38K/yr
• Packaging Manager = $38K/yr
• Packaging personel = $28/yr (x4) = $112K

• Sales = $38K/yr (x2) = $76K
• Marketing = $60K/yr (x2) = $120K
• Legal = $100K/yr

Total Labor Cost/yr = $968K/yr

Overhead

• Property Tax = $6K
• Electricity/Gas = $20K
• Water = $5K

Strategies

Brew 2-3 "flagship" ales / brew 4-6 "flagship" lagers / 2-3 "specialty" beer for general distribution

Contract brew for 3-5 smaller breweries

Can and bottle product

tap room on site

offer beers to ball parks (Quad Cites, Peoria, Burlington)

Guest brewers/resident brewer

Brew school/lab???