Pub Dreams

Prepare for red-tape nightmares, twice the money and prep time

By Julie Hutchinson, Denver Business Journal, Jan 6-12, 1995

So you think you'd like to quit the corporation and open a microbrewery of your very own? Then listen to the story of Boulder-based father-and-son Larry and Adam Avery. Though the two have achieved the kind of success that fuels the microbrewery fantasy of every would-be entrepreneur, they learned that such dreams take up a lot more time and money than anybody believes at the start.

The very first 22-oz hand-processed bottle of Avery brew the partners capped off- by hand, of course-tallied up a tab of about $70,000. That's right.

Today, a year out in their venture, the Averys already have expanded once, and they've inked a distribution arrangement with Denver-based giant Western Murray, making their product available in more than 300 stores and taverns across Colorado.

"We can't make enough to supply out side state right now, although we're considering it as we grow," says Larry Avery, a retired chemist who moved to Colorado last year. He thought he was going to open a running store in Boulder.

In typical entrepreneurial style, however, he found a new plan when the running store fell through. Son Adam, a 1988 Regis University graduate, convinced his father to join him in the venture to create a custom brew, and put together a business plan for his father and silent partner. Avery Brewing Co. since has taken on conventional bank financing.

At this point, the brewery is producing about 100 barrels a month; the partners plan to produce 2,000 barrels in 1995. (One barrel contains 15 cases, each containing 12 22oz "bomber" bottles; one barrel contains two kegs.) To put things in perspective: Selling 100 barrels a month means "you're talking sales of $35,000 a month," Larry Avery says. "It's just Adam and I and we have some part-time help that helps us bottle. It's really hand-made beer."

Still, no one's surprised with the success they've achieved, Avery says: "We wouldn't have gone into it if we didn't think it was going to be successful." They are surprised, Avery says, that their beer won a gold medal at the Great American Beer Fest-beerdom's Academy Awards.

Since they sold their first keg last February, even though the partners were prepared for red tape, they're astonished at just how much there is -and how much they're required to contend with as part of doing business. Among the requirements:

• A Bureau of Alcohol , Tobacco and Firearms federal brewing license (issued after a wait of about two months), which includes a background check and a detailed application requesting a variety of documentation, including where the money comes from.
• A $1,000 BATF bond.
• Precise record keeping including amounts of grain and other ingredients purchased and proof materials purchased equal amount of product produced in a given period.
• Twice monthly tax payments to the BATF of $7 a barrel, and proper documentation to indicate payments represent an accurate reflection of production.
• State certification including a brewery license, manufacturing license and wholesaler's beer license.
• A visit from an agent of the BATF when the brewery is up and ready to start running-but before it starts running. The agent inspects equipment and documentation and explains ongoing paperwork to be filled.

As Americans' thirst for beer continues to grow, the partners project they'll be producing 20,000 barrels in five years or so in a new, bigger facility.

By Julie Hutchinson
Business Journal Strategies Editor
Jan 6-12, 1995