re: Baton Rouge Market for a Craft Brewery

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Although contract brewing has a higher cost of goods due to the overhead and profit owed to the host brewer, the bulk of the business is a variable cost with very little overhead. Rather than having the usual revenue expenses associated with owning a business—rent, lease on forklift, loans on brewing machinery, payroll for a large staff—contract brewers use their capital for additional brand building and marketing activities to yield a higher return on investment. “One of the primary reasons we chose contract brewing was to get our product line into the marketplace and establish brand identity before we committed to building our own brewery,” said Altimari. “This not only reduced our upfront costs but allowed a much faster time to market.”

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“No matter what the sliding scale of commitment, unless a contract brewer has full control over the brewery and staff (co-ownership), a contract brew is only at or below the highest level of performance of the host brewery,” said Del Grande. “This includes challenges like shifting scheduling whims or sanitary mistakes of staff, but also benefits like high quality equipment I couldn’t normally afford.”

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