(A New Way of Thinking for me and The Handmade Beer Company)
I recently discovered that there are a band of souls existing surreptitiously within the brewing industry, who have foregone the kudos of owning a brewery and are content to brew, or get their beers brewed at someone else’s gaff. As more and more brewers set up their own micros there must an excess of production capacity crying out to be utilised. Could this be the future for Brewery startups on a budget?
My interest in this business model was initially ignited whilst watching the documentary ‘The Architect’ about Danish Brewer Mikkel Borg Bjergsø of Mikkeller brewing fame. This guy is a rockstar in the brewing world, however he doesn’t have a brewery and he doesn’t get involved with the production! How so? It seems he’s quite content to develop his beers on a homebrew sized pilot system and then send his recipe to a trusted brewery to brew the production batches. To me this sounds like an interesting idea. …and no Mash tuns to dig out – always a bonus.
The Hunt for UK Gypsy Brewers.
Following the Mikkeller documentary I was straight into Google and searching for ‘UK Gypsy Brewers’. Mmm, Nothing exciting to speak of, just a few references. However, digging a little deeper and posting on the UK craft beer network facebook page, I soon discovered that in the UK, the popular name for itinerant brewers is ‘Cuckoos’. Not such a romantic descriptor, but mentally I couldn’t help take the metaphor to it’s limit. I had visions of creeping into an unsuspecting brewers nest and leaving a rogue recipe egg for the host brewer to nurture until it was ready for the big wide world of Craft Beer.
Low overheads, reduced environmental footprint, experimentation and collaborations.
Back in the real world, there seems to be a good argument for this business model. My research has found that there are a few established UK breweries that started as Cuckoos and at least one that plans to continue with this model for the foreseeable future.
From an environmental and also economic angle, I can see that it would be better to run 1 brewery at full capacity than 2 at half capacity. Taking away the necessity for large upfront capital for a production facility is going to have a positive impact on your cash flow and allow you to get going with minimum investment. Your ‘contract fee’ also helps the host brewery with their costs, so a win-win situation really.
Finally it’s a great opportunity to work with other brewers, experiment with recipes, exchange ideas and encourage each other when the going gets tough.
The only downside I can see is equipment availability, there may be busy times when the host brewer has no spare fermenter for you. Of course you could buy your own fermenter(s) if there’s room to house them, it’s still a cheaper option. Another option is to find a second host brewer and share the load.
However, there are a few things to keep in mind when planning the finer details of this business model.
But first let me just say: This information is the result of informal conversations with other cuckoo breweries. Please if you decide to go down this route, speak first to the relevant authorities and check that they’re happy with your plans. Trust me you don’t want to start on the wrong foot with HMRC.
You will have to decide whether or not you want to register as a Brewery. Yes, there’s a certain amount of esteem in being a registered brewery, but it’s not the only way. You could become a wholesaler (on paper that is) and still design recipes and brew your test batches. You won’t be able to sell your test batches, but that’s just a good excuse for extensive taste testing. Someone has to keep production records and file a duty return every month and unfortunately, if you are a registered brewery, you are responsible for all the paperwork and payments. If you are a wholesaler, the responsibility is with the brewery brewing your beer.
Next, you have to decide the details of your contract. Here are a couple of options I have been made aware of.
Getting your beer Brewed Under License
For this one you just contract another brewery to brew your beer, pay the brewer and take away your packaged beer. BE WARNED, If beer is ‘Brewed under licence’ for another brewery, it is no longer eligible for the 50% duty relief offered to small brewers. The contract brewer will have to pay the full duty amount so, it will cost you twice as much as any other small brewery which is not good for competition or profit margins.
Renting space in the host brewery
This is a contract with another brewery to rent space and equipment to brew your own beer. How involved you are with the brewing processes is a discussion between you and your host.
So, If you don’t want to be paying the full duty amount it seems the only choice is to rent space in a brewery that is eligible for the small brewery relief.
And so, here comes the announcement bit – I am forsaking the world of brewery ownership (although I was actually renting my previous brewery and equipment) and jumping into the world of Itinerant brewing with both feet. I have found a brewer that I respect and trust and I can’t wait to get started. – I’m going to concentrate on the recipe design and development as well as championing the virtues of the gypsy brewer. Oh yeah, I’m looking forward to some exciting collaborations too!