Thursday, January 28, 2010

Kegs: Stainless vs Plastic

I've been doing a lot of research regarding kegs. There are pretty much three directions we can go. Buy brand new kegs from a distributor via China, buy used kegs off of an other brewery, or buy new plastic kegs.

Pros: Durability, preconceptions that the beer tastes better from steel, highly conductive, cheap when used.

Cons: Heavy, high scrap value, home brewer's delight, expensive when new.

Pros: Light-weight, stackable, made in California, will not be stolen by devious home brewers, reasonably priced when new.

Cons: Misconceptions about taste, not as cool looking as steel, slower to cool down, cannot be turned into a brutus brew system.

What do you think? Plastic or Stainless?

Monday, January 11, 2010

TTB Brewery Approval!

We have officially been approved by the Tax and Trade Bureau (except for actually getting the piece of paper that says so - that's supposed to be here this week). After plenty of shenanigans involving the Board of Equalization, our Seller's Permit and a mistyped Social Security number, we were able to get the TTB paperwork out the door. One week later they cashed our $1,000 Collateral Bond. After that we did not hear a peep from them for a month and a half so I decided to call them. No one was in the office so I just left our IRS employer identification number and the date I sent in our paperwork. Two days later we received an email from the TTB informing us that we had to make a few minor changes to our paper, many of which they could make with our consent, but a couple that we would need to redo ourselves.

The biggest "goof" necessitated us updating the diagram of our brewery since I had labeled the "Brewing Premise" as "Wholesale Food Manufacturing" , something I had seen on other breweries' diagrams that I had found. We also had to show proof that we had registered our trade name with the county (via a newspaper ad) and we had a lease on our building ok with having a brewery there.

So my advice after sending in your TTB paperwork: Call them. I'd say call a few days after they cash your bond. I do not think it was a coincidence that they emailed me two days after I called them. I also imagine that had I waited one more month they would have not emailed me until after I called them.

After getting all of paperwork in order we were ready for the big interview. This was probably the easiest part of the entire process, it took about 35 minutes and went over a bunch of rules and regulations.

If you're interested, here are all the questions:
Verify that I am a brewery not a brewpub.
Prior business experience: related and otherwise.
When I intend on beginning operations.
Equipment: Own it, purchasing it, or taking over existing brewery.
Prior TTB Authorization, if any.
If I owned stock/ownership in any other TTB authorized operation before or now
Are there any other parties that will partake in the profits?
Have the owners ever been convicted of a felony?
Have the owners ever been convicted of a misdemeanor related to alcohol?
Have the owners lived outside the US in the past 10 years?
How much money has been spent on the business since/towards going pro (since changing from homebrewing - money spend as a homebrewer does not count as investment money)
Are there any loans involved to finance?
Any problem with filing tax returns and paying taxes as they are due?
Verification of the brewery's address.
Are there were any other facilities or locations that would store non-taxed beer?
If I was aware that the TTB could come into the space at any time during business hours.
Describe the space and its appropriateness to being a brewery (floor construction, ceiling height, etc...)
Describe the brewing equipment
Where I planned to keep taxed and untaxed beers. We decided (by them telling us) that once beer left the primary fermenter it was to be taxed, ie. once it left the Brewing Premises side of the space (see diagram above)
That we need to lock our fermenters (they are houses in temperature controlled GDMs and the doors need to be lockable)
Where did I pitch the yeast?
If I'd be charging a fee for tours, parking or tasting.
If I shared the space with any other business, e.g. docks, etc
If the building was over 50 years old or on the National Historic Register
If I planned to sell interstate
If I planned to engage into an alternating proprietorship (letting other brewers use the facility) or if I planned on engaging in alternate premises (using the space to make wine, e.g.)
If I was aware that my taxation rate was $7/bbl up to 60,000 bbls
Where would I be keeping the records and would I have a reliable recordkeeping system and would they be available for audit [ref:, section 27CFR, section 25, subsection U]
Brewer's Bond expires every 4 years.
If I met the local and state zoning requirements: Commercial or Residential
If I had contacted the local fire department to ensure compliance with their regulations
If I was aware that I had to register with the FDA [ref:,]
That I can pay taxes and file forms online at
That for labels I could go online [ref:], that the first time I would print the forms and send in, afterwards, all online and could track its progress online as well
I could sign up for automatic email updates from the TTB on the industry at
Lots of exciting information, I know, but it's pretty straight forward. So if you are ever planning on opening a brewery/brewpub I would recommend going in this order:
1. LLC or Articles of Incorporation
2. Business License
3. IRS Employer ID Number
4. Seller's Permit
5. Planning / Zoning Approval
6. Tax & Trade Bureau
7. Food and Drug Administration
8. Dept. of Alcoholic Beverage Control
9. Dept. of Environmental Health

Any other order and you'll be waiting for paperwork to get through the system like we have. Anyways, you live and you learn.

Thursday, January 7, 2010

Re: Starting Small - The Nanobrewery Concept.

Erik Lars Myers of Top Fermented wrote up an article about the concept of starting incredibly small brewery (between 10-75 gallons for most "nanobreweries") while maintaining a full-time job. A quote from his article:
"From what it looks like, you homebrew, and then you drop the thousands upon thousands of dollars you need for the necessary permits and licenses to sell your product, and then for some bizarre reason you keep your day job.
See? It is crazy. Totally batshit insane."
The answer in Hess Brewing Company's case is that there are two of us. While we do have the same name, Michael--which makes things a bit confusing--there are in fact two of us working on this nanobrewery concept.

First is Michael Hess, owner, brewmaster and vaunted leader - the guy who was first crazy enough to say "go for it". Mike is the one with the real "paying job", now running two businesses at once! who foots the bill around here. Mike has been busy handcrafting ales and lagers for 15 years now, much to the delight of his friends, and soon, if all goes as planned, all of you!

I, Michael Skubic, will
be the guy going around to bars and restaurants attempting to sell our handcrafted ales. For now, I work in the brewery full-time, drafting blueprints, Charlie work, getting all the TTB/ABC/DEH paperwork ready for signature, painting, carpentry... More importantly for our readers and followers, I'm the guy updating the blog/twitter/facebook. I am just "crazy" enough to go along for the ride. Crazy like a fox. Also, does guano make you go insane? I always wondered where that saying came from.
"What do you think? Starting that small is an undeniably cool (and even romantic) concept, but I wonder at how sustainable the businesses are. It’s great to see that some of the ones listed in the link above are making a step up in growth, but how many will successfully make that step, and how many will make that step at all? Are these merely extended hobbyists or is this a viable entrance strategy to the craft beer industry?"
From the nanobreweries (and former nanos) I have seen it can be an extended hobby or a viable entrance strategy. Breweries like Two Beers and Schooner Exact have started on 1 barrel systems and have grown into 7-10 barrel systems in a matter of months, while others like Healdsburg and Steffan's Aldergrove have stayed at 10 gallons to 31 gallon systems for a couple of years now.

How are we going to grow? That remains to be seen. For now we are just about through all of Tax and Trade Bureau licensing, we just have the interview tomorrow morning. After that we just need to show our TTB approval to the Alcoholic Beverage Control and we will be a legal brewery! All we have after that is the Dept. of Health. Wish us luck!