07 Aug Afterburner Brewing in Terre Haute – Tackling the Issues of Opening a Brewery in Today’s Environment
by Mark E. Lasbury for Indiana On Tap
This isn’t 2010. You can’t put out a brewery sign and expect people to come drink your beer. We’ve had eight closings already in 2019, so people that are contemplating a brewery in Indiana better have their ducks in a row. Many people contact me to talk about possibly opening a brewery, but few have a better shot at success than Afterburner Brewing, coming next year to Terre Haute.
Dustin Strole, John Null, and Greg Hrovat come to brewing beer for their own brewery a bit differently than most. They have been brewing the beers for Big Leaf in West Terre Haute for two years now, so they have a much better idea of what it takes to make and sell beer than people looking to open a brewery after home brewing or getting some academic training – even better than someone who worked as an assistant brewer or cellarman before branching out.
But that’s just where their assets begin. To open a brewery nowadays, an ownership or brewing group needs to have several things down pat before even imagining that they could pull this off. The big items are three: 1) do you know your local market, 2) do you have a very specific idea of what your model will be, and 3) do you have the capital to carry it off.
In terms of knowing a market – basically it boils down to whether you have a sufficient link to the community so that you know what they want, what they need, what they value, and where they’re going. More generally, you need to know how you fit in to that market, is it near saturated, does the community have the beer knowledge or the wherewithal to patronize a brewery? When assessing a location, are you in growing area or is it withering? More than a few breweries have been put in a bind by choosing a poor location or setting down roots in a community that wasn’t ready/willing to embrace them.
Many people consult market research firms before opening a brewery. Maybe it’s better to be immersed in the community you look to serve. image credit: Entrpreneur
As for a model – we’ve talked about this before. There are a bunch of ways to sell beer, and as long as you can market yourself correctly to the right group and make the right distribution and business decisions, just about any model can work – distribution only, ultra-local, regional, brewpub, destination. But you need to know what you are and stick to it. Rarely can a brewery change their basic DNA and survive. They can grow and evolve, but it’s hard to change horses in the middle of the race.
The last major factor, which perhaps should come first, is whether you have the money or can you get the money to open a brewery. It may be on your own, or you might recruit investors. Perhaps you can make beer on the cheap and sell it in distribution to build capital. There are models in which you first have a cheap building and then later to better digs that will pull people in (a la Daredevil in Shelbyville before Speedway). Other models call for brewing on someone else’s system to save overhead; of course you pay some of your profits in rent (the Central State or Herrmann Brewthers model). Maybe it’s best to just be born rich.
Of course, there are also other issues a potential brewery needs to address – do you have the work ethic, are you willing to market and sell, do you have the time, etc. Any of these issues can wreck a brewery plan. Take time for example – in order to have the capital to run a brewery and reinvest money instead of taking a salary, many brewers will keep a day job. But does this mean that they don’t have the time to invest in brewing, marketing, cleaning, doing the books? Just this year we’ve had multiple brewers get out of brewing because they didn’t realize how much time it took to run a brewery.
Notice that I haven’t even mentioned the beer yet – succeeding in brewing isn’t as much about great beer as it is about providing beer that your patrons will support over time. And to support it, they have to believe they know you and your story – knowing you is more important than knowing your beer. It may help to have great beer, but the more local your model happens to be, the more vital it is that you pay attention to what your patrons like about your beer, even if it isn’t what wins medals or makes your beers valuable on the resale market. Plenty of breweries with great beer have closed in recent years.
Afterburner’s logo. The three black diamonds make a delta wing fighter or bomber. The red diamond is the afterburner flame. image credit: Afterburner Brwing
Afterburner Brewing. With respect to all the subjects above, the guys from Afterburner have really thought this venture through, and their life experiences indicate that they have a much better than average chance of making this work. Dustin, John, and Greg are all career Air National Guard – these guys know how to work, how to be disciplined in a plan, and how to persevere. But even that doesn’t guarantee success if they don’t have answers to the issues enumerated above.
Market. The good news is that they do know what’s important and they have prepared for it. They do know their market area. They have picked a location that makes good financial success, but also makes good market sense. The building they are closing on (perhaps as early as next week) is just one block from Terre Haute Brewing Company and just over that from M. Moggers Restaurant & Pub. It’s an area with beer now and a strong brewing history – and there’s talk about declaring the area a historic brewing district. This means that the city is buying in to the craft beer market, which will help immensely.
Secondly, there is development on the way for the area they have selected for their brewery. A casino is in the works and will be voted on soon, and ground will be broken on a convention center in the next month. Each of these will draw crowds and therefore customers to their area of the city. Finally, all three Afterburner brewer/owners agree that Terre Haute is an underserved area in terms of craft beer. City size, the university crowd, and people brought in by business and tourism indicate that their seven-barrel brew house in planning is warranted.
Model. Afterburner has a brew house on order that will include a seven-barrel indirect heat kettle, four seven-barrel fermenters, and a brite tank. This will allow them to approach 1000 barrels per year. So what’s their model for selling that beer? Some breweries open their doors still wondering if they can keep themselves in beer or whether they will have beer get old in the kegs.
The Afterburner guys seem to have an idea. They will be a local brewery where the vast majority of their beer is sold over their bar, but they also realize that they will have some beer to send out to a few accounts – a very few accounts. Basically, they have bars that they themselves frequent and which they know will treat the beer well. These places will get some beer, but that doesn’t change the fact that they will apply an ultra-local model.
It takes a lot of green to make craft beer. Where does that money come from? image credit: The Potable Curmudgeon
However, all three brewers are fans of the taproom can release. They have done extensive research at breweries around the country (involving buying and drinking a good deal of beer), and they like the idea of having limited releases in cans that you can only get at the taproom and only in small amounts. They may be mixing elements from a couple of models, but the point is that they have a plan and the means to implement it.
Capital. Not everyone has the money to open a brewery, or access to the needed funds. They may look for investors to provide capital, or if you have worked for the Air National Guard for 30 years and saved a lot of your pay, they perhaps you can do it on your own. Beyond that, if you have a gig making beer for another brewery, and will continue to brew for Big Leaf even when Afterburner is up and running, then you have a chance to use your money for a new brewery instead of paying yourself.
It’s so important that John, Greg, and Dustin have no plans to draw income from Afterburner. They have made plans and put strategies into place that allows them to reinvest all funds into the new brewery. Part of this relies on the 30 years that each is putting in, and part is due to the opportunity the Daniel and Sarah Pigg provided them to make beer for Big Leaf and make money at it. The result? Other than one willing silent investor from whom they may or may not avail themselves, this venture is fully funded.
Beer. It was just over two years ago that Daniel and Sarah wanted to serve beer in their Sycamore Winery/event center. But the way the laws configured it, they needed to make beer on site to be able to sell it on site. They visited a local brew club and asked if anyone would like to come brew for them. Dustin, John, and Greg were already thinking about opening a brewery; here was a great opportunity to get a lot of experience, an internship of sorts.
First it was an unpaid internship, but later that came to an agreement with the Piggs and are now paid to keep Sycamore Winery in beer. That kind of experience – writing recipes, pricing ingredients, scheduling brews, maintaining the equipment, switching out a 1 bbl system for a 5 bbl system – has proven invaluable. They already know they can make good beer and can run a brewhouse. That’s waaaay ahead of many first time brewery owners.
The Chesterton Brewery isn’t even open yet, but they have connected to their community through veterans projects. Afterburner Brewing will follow this example. image credit: The Chesterton Brewery
The three brewers have investigated enough about beer making and beer selling that they understand that certain styles may be their favorites, but they have to make beer that will sell. That means having a cream ale or a blonde, and not overloading a board with any one style. It goes back to knowing your market – you have to make beer that will sell to your audience.
Other issues. Afterburner is primed to put in the time to do things right. John will retire soon and will devote full time to the brewery. Greg and Dustin will follow in a little over one and three years, respectively. Devotion and time are not issues for them. Perhaps most importantly, the strategy will be followed. Greg calls this “tactical planning” and it is a parallel to how they have been trained in the military. So perseverance and discipline won’t be a problem.
Finally, connecting to the community is a big issue for a brewery. The neighborhoods, both small and large, must embrace a business and know that they are all working together. Afterburner will be giving back to the community in terms of helping local veterans, bringing in community members to help with campaigns of assistance, etc. As is exemplified by the coming Chesterton Brewery (brewed by vets for vets), Afterburner doesn’t plan on giving back in order to build patronage, but because it is the right thing to do and they have experience with the people in need. The public recognizes integrity and rewards it.
Afterburner Brewing is looking at a 2020 opening, so follow along with Indiana On Tap as this group of active military and veteran persons confront the issues and obstacles in their way to make their six year goal a reality. While every brewery must address these issues sooner or later, the landscape is changing rapidly and is demanding that prospective breweries have a more concrete vision these days as compared to a decade ago. This isn’t your dad’s brewing environment, and people are going to need to be prepared to meet brewing where it stands now.
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