Scott Metzger, co-founder of Freetail Brewing Company, shares 4 tips on how to win customers
2 Minute Read
For the average person thinking about starting a brewery, the short answer is don’t do it.
Consider the numbers:
- There are 7.5k breweries in the United States, according to the Brewers Association, up from ~2k in 2011.
- Overall beer sales were down 1% last year (craft was up 4%, but that increase was lower than in recent years).
- Some 27% of brewers experienced sales declines in 2017.
But if you’re really interested in beer and willing to grind in a competitive market for a healthy business that is likely not scalable at a national or regional level, there is still a path forward for wannabe brewers. After seeing discussion about breweries in the Facebook group, we asked Trends member Scott Metzger to explain the market.
Metzger capitalized on the brewery craze at just the right time. In 2008, he co-founded Freetail Brewing Company in San Antonio, Texas. Freetail made about $1m its first year, selling beers only on site as a brewpub, and grew to make $3m in revenue in the ensuing years on a 30% profit margin.
When it started distributing beers in 2013––after Metzger lobbied for a change to state law––revenue grew to $5.5m with the same profit margin. Metzger left the company last year. He shared his views on how to build a successful brewery in 2019.
Go direct to consumer
The most successful new brewers open taprooms or brewpubs where they sell beers on site. The 50 fastest growing breweries in 2017 produced a median of 963 barrels per year, placing them in this category.
Metzger says distributing has few advantages because of the competition and the decline in profit margin. On site, one keg of beer––120 pints––can sell at $5 a pint for $600.
“Whereas selling that wholesale maybe you’re getting $99 to that wholesaler who marks it up and then sells it to a retailer who marks it up,” Metzger says. “It’s not just a little bit of revenue uplift. It’s exponential.”
Know that the beer comes second
The beer has to be good, but few people visit anywhere for just the beer. Metzger recommends brewers think of themselves as hospitality providers and offer something else––whether that’s quality food for a brewpub or an inviting atmosphere that helps the brewery differentiate itself in the local market.
Start slow and borrow capital
Metzger recommends staying open for limited hours at first and not seven days a week. And consider renting time at another brewer’s tank in the early goings instead of spending a considerable sum on your own equipment. Once frowned upon, that strategy is gaining acceptance because of the rising number of breweries.
The customers at most current breweries are like the current brewers: overwhelmingly white. But craft beer consumption has much more room to increase adoption among women and people of color.
“It’s not just the right thing to do,” Metzger says, “but a business imperative.”