When one of the breweries outgrows the space, it would recoup its investment and make room for another aspiring brewer, who would be chosen by a member committee, Parker says. “When it comes time and they move out because they’ve grown too big, it gives them an easy way out,” he says. “No one gets rich, but no one loses their house.”
Old Path, New Kicks
Even breweries with more-traditional business models are realizing the greater role communities can play in their business.
Page Buchanan, a former homebrewer, launched House of Brews in August 2011 in Madison, WI. To fund the venture, he followed the well-trod, though risky, path of many aspiring brewers. He secured a Small Business Administration loan, took out a second mortgage on his house, sold bonds to family and friends and reached into his own pocket. Currently, the brewery is up and running with keg-only production, which he supplies to local bars. But a farmer friend in his local homebrewers club turned him on to the idea of selling CSB shares. “It seems so obvious that I can’t believe that more people hadn’t thought of this before,” he says. He plans to sell six- and 12-month shares to customers, which would provide the subscriber with the equivalent of two or four kegs, respectively. He hasn’t started selling them yet, but already has a waiting list.
Other CSB startups around the country include 7th Settlement in Dover, NH, and Big Beaver Brewing Co. in Loveland, CO. However, Buchanan points out that a brewing co-op might not be legal under some states.
About the same time the Black Star cooperative was getting set up in Austin, Ethan Cox and some homebrewing buddies in Buffalo, NY, were hatching their own plans to launch a cooperative brewery. However, they hit a wall when it came to licensing. “We got as far as the New York State Liquor Authority,” Cox says. “The problem is everyone”—in a co-op, that could mean 1,000 owners—”would have to have a thorough background check and fingerprinting, like owners of breweries do. Because alcohol is such a highly regulated industry, they laughed at us.”
Cox and his partners changed direction, and chose a more traditional route. While they gave up on the co-op model, they didn’t give up on the underlying spirit of the co-op when they founded Community Beer Works. “Even though we are your basic LLC, we definitely aim to emulate a lot of the practices your cooperative business would normally endorse,” says Cox, CBW’s president.
And though Cox and his partners couldn’t recruit member-owners, they could still source a portion of their startup funds from the community. They produced a video that introduced themselves and their plan to build a community-supported brewery in Buffalo and posted it on Kickstarter.com, a website that allows organizations and individuals to propose projects and seek donations from the public. In return, donors receive gifts, the poshness of which depends on the amount invested. For a $10 investment, CBW offered a CBW sticker, the right to sign your name on the wall of the customer service area, a tour of the brewery and free high-fives from the CBW owners. For $1,000, investors received an invite to an exclusive brewmaster’s dinner. CBW asked for $15,000 in total, only a fraction of the $160,000 Cox estimates the business launch will cost, but still a good chunk of startup funds. Exceeding expectations, CBW raised more than $17,000 in 20 days from 237 donors. “That really confirms to us that we’re not going to have any trouble selling this beer, if there’s that much interest and it was that easy to raise that money,” Cox says.