Adam Shay is owner of Adam Shay CPA, PLLC, a CPA firm that focuses on working with entrepreneurs by utilizing technology, a fixed price approach, and custom options to partner with their clients. In addition, he is an entrepreneur in residence with Seahawk Innovation.
Beer. That one word, actually two – free beer – made it easy for UNCW Center for Innovation and Entrepreneurship (CIE) executive director Jim Roberts to draw a packed room to “The Business of Beer at the Beach” on Monday August 11th. There were a lot of new faces in the CIE for this event and it was great to feel the energy.
Some of the attendees traveled from all over the state to take part in the evening. Panelist Derek Allen of Ward and Smith law firm in Asheville, investor in Fortnight Brewing Company and panelist David Gardner from Cary, and Dino Radosto of White Street Brewing Company in Wake Forest. Slates Snider from the Rocky Mount Brewmill made the trip as well. Their willingness to travel is indicative of both the draw of the beach and the sense of camaraderie and giving found in North Carolina’s craft beer industry. That camaraderie was a recurring theme of the evening.
One of the interesting and unexpected revelations that evening was that two panelists have technology backgrounds. Gardner and Radosto both had successful exit events and felt the calling to invest in or start a craft brewery. It was apparent that their business skills really translate over to the brewery industry – it must be treated like a business and not just an artistic endeavor. While there is room for artistry, it all comes down to whether the numbers work – forecasts must continually be revised. I also believe that the persistence they’ve developed as entrepreneurs in other industries translates to the brewery industry.
The evening highlighted the many challenges in opening a craft brewery – enough that, even though I love craft beer and entrepreneurship, I would not consider starting nor investing in one. Part of the appeal of something like the Rocky Mount Brewmill is that it could lessen some of those challenges. But many of the attendees feel passionate enough that they are going to continue to pursue their dreams regardless. Some local brewers or breweries in attendance included Wilmington Home Brew, Fox & Crow, Good Hops and Waterline.
So what are those challenges? The panelists laid out the key ones:
*Breweries are very capital intensive. You either have to have deep pockets or have investors that do. Take whatever number you think you need to finance a new craft brewery and add an extra zero to get to your true number. It takes a lot of $4 beers to pay off a $100,000 piece of equipment that can only be turned over 15 times a year.
*They are tough to get off the ground. The design and zoning phase can be time intensive, frustrating and expensive. Make sure that you are working with people experienced in the brewery industry – whether that is construction, legal, or accounting.
*Planning for growth is especially challenging. This ties back to the capital intensive nature as well as making sure that there is enough space for rapid scale up.
*The panel also discussed a common misunderstanding about distributors – if you think they would sell for you, you’re wrong. Even if you use distributors, you have to get out and shake hands to get your product in the door. In essence, you have two customers that you’re trying to keep happy – the end consumer and bars and restaurants.
The brewery industry is growing exponentially. Allen shared that six years ago there were fewer than five craft brewers in Asheville. Now, all the big boys have come to town and there are a lot more smaller players. With the current competition, having a good beer product is a baseline to enter the game. You can’t overcome a marginal product with slick marketing and other tricks.
One of the questions during the Q&A portion of the evening was, “What ancillary industries or services could entrepreneurs look at in order to take advantage of the growth and size of the NC beer industry?” Other than becoming a farmer (the hop futures market is apparently way out in to the future), not much came out of that question. However, an ancillary player and the beer sponsor of the evening, Port City Brew Bus, launched at the event and promoted its Indiegogo campaign.
The discussion of the evening really stressed that the craft beer industry is unique. To quote Dino Radosto, “Most brewers are great guys.” They enjoy helping each other out and trading war stories. There are not many other industries where you can say the same.
One of the things that Jim Roberts and I have talked about over the past year is the correlation between a strong local craft brewery scene and entrepreneurship. While I am not certain that the correlation is direct, it is certainly encouraging to see Wilmington growing in both areas.
There was buzz in the room about the September 4th UNCW CIE Coastal Connect Conference. That buzz and the conference itself are a great sign of things to come at the beach. By the time that event arrives, there could very well be at least two additional local breweries serving their beer to the public.