The Sanity of Math and the numbers to survival

[Meadieval]

Distribution is another topic. Briefly though, I have no idea, since I am self distributing to retailers (allowed in my state for my specific license).

You may want to read "Brewing Up a Business" great book by dogfish head brewpub founder Sam Calagione great book for more general business questions and it does talk about the distributor relationships.

Sorry to ask again, I guess that was a poorly phrased question. But about moving all those bottles around. Did you have to purchase cases for them? I imagine that would be costly given the amount of bottles you have to get to the retailers.

I will definitley check out that book. Looks like a good read.

Thanks

 

[akueck]

These questions are actually all answered in his brewlog for his dry wine, it details his entire process and equipment, and how he starts with one recipe and then turns it into several.

Ah. Good point, I'll check that out now.

 

[Brad Dahlhofer]

In the end, I will be lucky to take home 13k worth of take-home pay and yes the efficiencies do go up as you make more, but even if I made and sold 1200 cases (goal of year 3) we would be taking home about 50k-70k depending on how fast we wanted to grow. A living that could finally employ me full-time.

Actually, you're probably not going to take home any. You have to make more batches, you know.

Also, plan on spending money on gas, shelf-talkers, website hosting, phone calls, business insurance, liquor liability insurance, and on, and on...

You'll do fine.

 

[AToE]

The one thing I'm getting out of all these numbers, is that if it's possible to secure the funding, it might be massively more efficient to start as big as you can. Scary as hell of course, and hard to get the funds, but if you could get up into quantities that allowed serious bulk discounts on packaging and ingredients and such, it might make the whole thing much more profitable. Of course, then you'd have employees...

Also, this definitely makes me realize that my dream of a bottle of mead that retails for under $15 would be very very difficult to make happen.

Thin margin, very thin.

 

[Brad Dahlhofer]

For those of you who do have done professional or large-scale melomels, is it that different when you're working on a really large scale? Or do you manage to industrialize it so you don't have to handle each berry personally?

Well, the 12 hours of stemming 1500 lbs of strawberries was quite a pain in the ass for only 100 cases of Yo Momma's Strawberry Pizzazz. So I'd say you're sort-of right about that.

I think what Medsen is saying is generally correct though. There are other ways of handling and processing fruit that would reduce the time it takes to make a batch. Those methods would require money I just don't have at the moment.

For traditionals, spiced, and some fruit meads, bigger batches take about the same amount of time.

 

[AToE]

Speaking of costs, an automated bottling is obviously out of the question, so I'm guessing both of your companies (Ian and Brad) are going the floor corker with a bunch of friends helping route? Or is there some inbetween option that's not insanely expensive?

 

[Brad Dahlhofer]

The one thing I'm getting out of all these numbers, is that if it's possible to secure the funding, it might be massively more efficient to start as big as you can. Scary as hell of course, and hard to get the funds, but if you could get up into quantities that allowed serious bulk discounts on packaging and ingredients and such, it might make the whole thing much more profitable. Of course, then you'd have employees...

Also, this definitely makes me realize that my dream of a bottle of mead that retails for under $15 would be very very difficult to make happen.

Thin margin, very thin.

Yes. I agree that it makes more sense to start with a larger producing meadery than small one. But the reality is that the mead market is largely uncharted territory and most of us were unwilling to put too much into it at the beginning. A lot of really great meaderies like Redstone and Rabbits Foot have got the ball rolling, but it still wasn't enough to convince me (or others) to invest tons of money from the start.

As for the under $15 bottle of mead....ours sells for $14.99 around much of Michigan. And right now we have a special promo for our Pineapple Coconut and Margarita meads that put it at around $9.99 for a 375ml. But that's only in Michigan.

 

[AToE]

That's good that you got it that low, I mean, it has to be whatever price it has to be, but the lower it is the more likely people are to try it out. It would be tougher to get that low of a price up here, I think most Canadian provinces have higher taxes on liquor than most states do (though keeping it under 16% cuts the taxes in half I believe, still high though).

 

[Brad Dahlhofer]

Speaking of costs, an automated bottling is obviously out of the question, so I'm guessing both of your companies (Ian and Brad) are going the floor corker with a bunch of friends helping route? Or is there some inbetween option that's not insanely expensive?

We're blessed with many friends that come out each week for bottling. A startup meadery would be smart to limit their spending at the beginning and rely on the help of others. However, that doesn't last forever, so eventually you'll have to upgrade equipment from the floor corker and Enolmatic fillers.

The next step up is a 4 or 6 spout gravity filler (about $4k), an pnumatic or electric corker (about $4-8k), semi-automatic labeler (about $4k), and capsuler (about $3k)

We're probably going to skip that last step and move into an automated bottling line within the next year. But it takes some serious output to justify that move.

 

[IanB]

We are moving a little away

Brad, thanks for chirping in. I think we are moving a little into equipment purchases, but that is still money and financing stuff. The key to not having to invest in such large (relatively) capital expenses, is to find a winery near/around you who is established and will let you rent their bottling line (I have not done this, but will be thinking about it on our next batch)

Then you just rent a forklift and a large truck, load your wine into the uhaul and transport it down to their space one week before bottling. Or pay someone else to move it freight (500-1000$).

If you are in California the best way to go, 100%, is mobile bottling line. WOW, I would have done that in a heart beat if I knew of one available on the east coast. They pay the capital expenses in equipment, bottle everything in 3 hours, and your home free.

If none of these options are available, you go Brad's route and invest in automated capital equipment.

I will say we are doing it by 'hand' with volunteers/victims right now, using a stainless 1 spout vacuum system like the Enolmatic, and we did 960 bottles (80 cases) with 1 micron in-line filtering in 16 hrs. I just picked up two more spouts (600$ plus 2 day air shipping) so that this Saturday we will hopefully get 1300 bottles done in 6 or 7 hours with a three spout system. We'll see though.

 

[icedmetal]

I will say we are doing it by 'hand' with volunteers/victims right now

If bottling at your meadery is anything like bottling at my place, the people helping never seem to stay sober. Making the victim comment seem strange.

...or do you actually not sample the goods while working away all those hours?

 

[Yraith]

I have to say Ian.. If I lived anywhere close to you, I would jump at the chance to help you bottle...

 

[Brad Dahlhofer]

Brad, thanks for chirping in. I think we are moving a little into equipment purchases, but that is still money and financing stuff. The key to not having to invest in such large (relatively) capital expenses, is to find a winery near/around you who is established and will let you rent their bottling line (I have not done this, but will be thinking about it on our next batch)

Then you just rent a forklift and a large truck, load your wine into the uhaul and transport it down to their space one week before bottling. Or pay someone else to move it freight (500-1000$).

If you are in California the best way to go, 100%, is mobile bottling line. WOW, I would have done that in a heart beat if I knew of one available on the east coast. They pay the capital expenses in equipment, bottle everything in 3 hours, and your home free.

If none of these options are available, you go Brad's route and invest in automated capital equipment.

I will say we are doing it by 'hand' with volunteers/victims right now, using a stainless 1 spout vacuum system like the Enolmatic, and we did 960 bottles (80 cases) with 1 micron in-line filtering in 16 hrs. I just picked up two more spouts (600$ plus 2 day air shipping) so that this Saturday we will hopefully get 1300 bottles done in 6 or 7 hours with a three spout system. We'll see though.

I can say that it would put a serious dent in my bottom line if I had to pay someone $1 - $3 per case + the cost of labor + the cost (and the risk of ruining my mead) of moving the mead every time I had to bottle. Consider that the reason many small wineries in CA use mobile bottling units is because they can only produce a vintage of wine once per year because their production is dependent on a harvest season. This makes less sense when considering bottling in a meadery because we can store honey, and make a batch of mead as many times per year as we have available capacity. I feel that there is enough inexpensive bottling equipment out there that you might want to reconsider your approach.

My setup consists of:

Bottle rinse/sanitizing equipment from morebeer.com. It consists of multiple racks that slip over jet nozzles that I use to recirculate sanitizer into the bottles. Overall cost was probably less than $300 (including the pump)

Filling is done with 2 Enolmatic fillers that are connected to a single bottling tank and run in parallel using a simple Y splitter on the hose. Cost is approximately $800.

Corking is done with a Portuguese floor corker. I go through about a corker every month (approx 400 cases), but they're pretty cheep if you have an account with LD Carlson (about 1/2 $ of retail). This said, I'm upgrading to a Rapid corker for about $750 from GW Kent. I only need 1 corker to keep up with the 2 Enolmatic fillers. Avoid the Italian corkers. They fail even faster than the Portuguese and are not worth the extra money. Not trying to start an equipment argument here. Just my experience using them commercially.

Capsuling is done with an electric heat capsuler. You'll need 2 because they're only rated to run continuously for about an hour. We set a kitchen timer and switch them every hour. Cost is approximately 1/2 of retail (Northerbrewer.com for retail price) if you have an LD Carlson account. I think I paid less than $300 for both. Though I've replaced 2 of them since we opened 2 years ago.

Labeling is done with a Race Jr. label machine that I bought used for $750. They sell new for about $1000. Sounds like a lot of money, and it is. But it is well worth the price. Trust me. I've labeled by hand too, and this is WAY faster.

With this setup, a team of 5 TRAINED people can bottle about 104 cases (a full pallet) of bottles in less than 6 hours. This includes breaks every hour (while we switch capsulers), and lunch. The key is making sure that you eliminate any bottle necks in your process for a smooth work flow. The total investment for this setup was less than $4000, and it's given me more freedom than if I relied on shipping my finished mead to another bottling facility. So, to keep things on topic, the overall investment in bottling that can handle a 400 case / month meadery can be had for less than $4000. And I'd recommend it to anyone.

 

[IanB]

I agree

What he said ^.....

We are doing basically the same thing. Except the labeling is not working at the moment (stupid ebay!) and our Capsuler is one that uses steam and a red-bull can (pictures to come in the Patrons section if it works).


(I wouldn't be very independent though if I just 'agreed' with everything though, So, here is my one comment. When we bottle (in the next batch anyway) we'll be at 1000 cases so shipping & bottling in a fully automated bottling line, will be about 1-2$ a case. That is peanuts for the speed, security, and consistency of a fully automated line. I want to make wine and sell wine, not spend 7+ days every 3-5 months bottling, labeling, and capsuling it. A fully automated line would do 1000 cases start to end in one 6 hr session. Money and time well spent in my humble opinion. To each his own though, especially when coming from a company who has yet to sell the first bottle!)

 

[tuumi]

I'm loving this discussion. Everything a new guy in the business would want to know. I ran a bunch of numbers myself over the last few days and have been in such a mead frame of mind I had to grab a bottle tonight. So at the moment I'm sipping some B Nektar Vanilla Cinnamon. Cheers Brad!

I'd like to post my numbers here along with my low budget approach so you guys can check it out and provide insight into what I might be missing. But...I don't want to hijack so I might put it into my other thread.

Here something I would like to know for those who have been there or are going through it. When you started how confident were you that there would be a market for your product? Did you have confidence that your stuff would get shelf space? Were you confident that once you made it it would be sold? B Nektar has a huge local market and it sounds like you guys started pretty small and grew according to demand. Do you think your at a point where you've matched demand? Or are you still growing?
Ian: Do you have plan to get your first batch sold? Once you have a finished product will you have to pound the pavement to get it in stores?

 

[AToE]

Demand's a fun thing when it comes to luxury products, if you run out you can generate more.

 

[Brad Dahlhofer]

I ran a bunch of numbers myself over the last few days and have been in such a mead frame of mind I had to grab a bottle tonight. So at the moment I'm sipping some B Nektar Vanilla Cinnamon. Cheers Brad!

Thanks!

Here something I would like to know for those who have been there or are going through it. When you started how confident were you that there would be a market for your product? Did you have confidence that your stuff would get shelf space? Were you confident that once you made it it would be sold? B Nektar has a huge local market and it sounds like you guys started pretty small and grew according to demand. Do you think your at a point where you've matched demand? Or are you still growing?

When we started, I thought I'd be lucky to sell a few cases a month. This was just going to be a hobby business.

Our production capacity exceeds demand. Our focus is on growing the demand to match our production capabilities.

 

[IanB]

Not a finance question

But....If you read any business book 101, you will find that the mead 'industry' is creating it's own demand by pounding the pavement. It is EXTREMELY difficult (read expensive) to educate a market about a new product. That is why most (Even micro sized) wineries do not create mead, they don't have the time to educate the market.

However, I am not a baker, or an auto-mechanic, so mead making is what I do even if it means climbing the steepest slope on the hill.

As to whether we have customers, I'll be lucky to sell 10 cases a month in 10-15 stores (while we do tastings and other events at those same stores). We create our own niche and demand (sounds like Brad is still doing this too, to the benefit of ALL of us in the business and the hobby!)

 

[Dan McFeeley]

Educating the public has been a slow climb, hampered somewhat by the lack of availability in most places of a wide selection of really fine meads. One of our local supermarkets stocks a mead -- Camelot mead from Oliver winery. It's a general mead for a public not well acquainted with mead and it seems to sell. Two of our local liquor stores stock a slightly more varied selection, but not much more.

There were two major events in the success story of American wine -- wines sold according to the varietal grape, and working to produce a "food wine," something that would pair well with a meal. The folk who run the Mazer Cup competition have been phenomenal with food pairings. As part of the competition, they put out some of the most amazing and creative mead/food pairings you can imagine.

Just for everyday cooking, substituting mead for cider in cider recipes works well.

This web site is also an influence. We've had a few noteworthy visitors here, Phil Dunlap who pens the Ink Pen strip, a heavy metal band, and likely many others.

We're getting there!

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[Dan McFeeley]

Oh yeah, thanks for the tip on the Dogfish Head Brewery story -- I'm going to be reading that one.

Although not alcohol related, another good book on the trials and tribulations of building your own business is 'Ben & Jerry's: The Inside Scoop: How Two Real Guys Built a Business with a Social Conscience and a Sense of Humor.'

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