Opening Day

We opened up our doors on Wednesday and the turn out was mind blowing. We thought 15 or 30 people might show up. Boy, were we wrong. It was probably a lot closer to 120+ that came through our little 1.6BBL beer factory! You gotta love the San Diego beer scene. Thanks beer lovers!

First Day Crowd (photo courtesy SD Beer Blog)

We also had visits from some of our fellow brewers - Peter Hess Zien (yes, that's his real middle name - what a coincidence!), Bill Batten and several others of the AleSmith Brewing Co. crew, Lee Chase of BLAH & Automatic Brewing Co. and Tony Clarke of Airdale Brewing Co.

Packed House.

Jeff & Melani Gordon of TapHunter.com stopped by as well. If you live in SD and have an iPhone TapHunter is a must have app. For your Droid-ers, get the mobile web version. It is great for finding specific beers or new bars around town. Also Jeff Hammett who writes SanDiegoBeerBlog.com was there and also had some nice things to say.

Huzzah!

Peter Rowe of the SD Union Tribune came by on Saturday, and he promptly wrote a kind review today. Thanks Pete!

Satisfied Customers. (Photo courtesy Tim Stahl)

We appreciate the beer community coming out in force for our little opening. We hope to see you again in the future.

Cheers,

Mikes: Skubic and Hess. (Photo courtesy Tim Stahl)

The Build Out: Brewery Structure

Mike, Greg, Mike and Mike.

Well, we made it to San Jose, up to San Fran, out to Walnut Creek and back again all in one piece (well, the brew structure is in two pieces, but that was intentional.) The trip was a lot of fun and a lot of work. Friday we took off at about 6:30 am from San Diego towards San Jose/Redwood City; from there to San Francisco where if you go a few miles east you will hit Sierra Graphic's headquarters.

Born in '23

My favorite piece of equipment ever.

Mike's brother Greg owns Sierra Graphics Services, a printing machinery repair and sales business that has all the machining equipment we needed to build our brew structure. There was one piece of equipment I particularly liked: The 1923 Racine Shear-Cut - it's been around for 87 years and is still going strong. It has this crazy Dr. Seuss/Rube Goldberg mechanical sawing motion that I wish I could show you. You have to see it to believe it.

Cutting through 2x2" Stainless Steel.

Setting the Work.

Engage!

To get Racine to engage you have to throw your shoulder into the silver handle protruding to the right of the arm while simultaneously using your knee to push in the big T-shaped switch AND locking the black knob into the correct position AND locking the wench down. It's a complicated process but it is actually pretty fun.

Big Greg, Mike the Welder and BigJoe

We started building the structure on Friday night after dinner- we cut up the first stick of 304 stainless steel (we used 2x2 with .180 wall thickness) and got the welding station prepared (it involved a large precision machined metal plate, improvised electrical outlets and a BigJoe mechanical lift.)

Here Comes The Sun.

304 Stainless Steel melts at 2,552 degrees Fahrenheit. The weld arc is about the same strength brightness as the sun. Note the crazy masks.

A Very Skilled Mike.

Hot Suede and GemFire.

We had to customize our tippy dump mechanism design when we realized we had ordered about 2 feet less steel than we needed. Some quick thinking and a revised mechanism later we had this:

New Tippy-Dump.

Originally it was going to be a nice triangle because that provides more strength, but then we remembered that these welds can hold up to 70,000 pounds per inch, so I don't think our 1,000+/- lbs will be breaking them anytime soon.

Greg Setting Up the Mill.

Mike's Dad, Grinding the Bit.

304 s/s Stainless Spirals.

Clean Up.

We started most days at 8AM and didn't finish up until 10PM. Who knew building a brewery would be so labor intensive? 30 hours of work later we ended up with this:

Mike, Greg, Daft Punk, and Mike.

I cannot wait to get the kettles built so we can fire this guy up. What should we call it?

Home Again.

p.s. You can see more photos on our Facebook page.

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: ttb.gov, 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: www.fda.gov,]

That I can pay taxes and file forms online at pay.gov

That for labels I could go online [ref: http://www.ttbonline.gov/colasonline/], 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 www.ttb.gov

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.

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!

The Complete Guide to Opening a Nanobrewery.

Here is a little list of things you need to accomplish if you feel like you wanna open up a nanobrewery of your own. I guess it is relevant for a full scale brewery too. I actually made this list for JC of Trillium Brewing, who will probably be going down the smaller scale road like us.

 Brewery Licenses/Permits/Etc:

Local /County Government:

Planing Department: this is where you gotta go to make sure you can actually open up a brewery at your desired location. If not you'll have to appeal to the government and get Conditional Use Permit.

Department of Environmental Health: If you are going to have a tasting room you'll have to deal with your local DEH. Make sure you get someone that knows what they are talking about.

State Board of Equalization: You need to have a seller's permit which is a local/county run deal.

Business License: A license to actually do business in your city.

Building Permit: If you are doing any serious construction this will be needed. Sometimes even for smaller jobs too.

State Government: 

Department of Health: if you are opening up a wholesale food processing facility, which is the category a microbrewery falls into, they will need to approve you facility.

Alcoholic Beverage Control Board: This is the basic license application. We have a type-23 microbrewery license. We have all the same rights as a type-01 license holder except the fee is considerably less.

Paperwork you'll have to file: Personal Affidavit, Additional Affidavits, Personnel Questionnaire, Corporate Questionnaire (if you are an LLC/ Corp), Diagram of Brewing Facility, Zoning Paperwork, Consideration Point (i.e. schools, churches, etc.), Residence (i.e. if you are close to non-commercial buildings), Signature Sheet (for LLC/Corp), and Tied-House Restriction Paperwork. All in all about 22 pages of paperwork.

Excise Tax Division of BOE: An excise tax permit is required as well. They require a bond as collateral.

LLC or Corporate Articles of Incorporation: Done through a lawyer and usually a yearly fee associated with this as well ($800-1000 per year)

Federal Government:

IRS Employee ID Number: This is just to keep track of your business taxes. Easy to obtain, just a few pages of paperwork. I think it can be done through their website.

Alcohol & Tobacco Tax and Trade Bureau: They require a collateral bond for taxes and you need to pay taxes on every barrel of beer you produce and sell. Minimum of $1,000 bond is needed as collateral.

Paperwork you'll have to file: Brewer's Notice, Brewer's Bond, Personnel Questionnaire, Power of Attorney (for LLC/Corp.), Pay.Gov User Agreement, Environmental Information, Quarterly Excise Tax Payment Procedures Checklist, Supplimental Water Quality Information, Signing Authority (for LLC/Corp.), Legal Description of the Brewery, Description of Security, and a Diagram of the Facility.

 I hope this is insightful for anyone looking to get in the brewing game.

New Logo Direction.

The older look.

This is our newest look.

As you can see we've given the logo a little bit of swagger. Some new swoops and a very fancy "E."

Let us know what you think about the logo. Questions and comments are welcome. Thanks!

Cold Room Set-Up

We finally got around to putting the cold room together. We got a little side tracked after finding out that we are going to have to install two more sinks in our space. Do you think it is a coincidence that the acronym for the Department of Health is D'OH!? I find it highly suspicious. Highly.

Anyways, we have to install a floor sink, so we had about six plumbers come in last week to give us estimates on how much it is going to cost to install one and it looks like it's going to be in the $1,250 to $2,700 range. The deal with a floor sink is when serving any sort of food or beverage to citizens of San Diego we need to have an air gap between the plumbing and the sewer, that way we don't get sewage backing up back into our sinks. A little something called "Backflow Prevention."

The cold room was really easy to assemble, it was like a gigantic piece of IKEA furniture. Just needed a bit of elbow grease to lug the pieces around into the correct position and a little deductive reasoning to determine where the ceiling pieces and voilà! Instant* cold room.

Here are some semi-timelapsed photos from the build out:

*Instant being about 4 hours + a 14 hour round trip to Phoenix.

The Cold Room.

I used to enjoy twitter, now I am a believer. It was through twitter I came across a listing on Craigslist for a walk-in cold room for cheap. It had fourteen tap handles (probably more than we'll ever need, but extra space can't hurt) and two glass door merchandisers. Really a prefect fit for our size of operation. Thanks so much @abeeraday for the heads up! 

I called up Iron King on a Monday to begin negotiations and figure out some logistics. We would probably need to rent a 26' truck from Penske and get a car trailer for the ride back. Luckily our good friends came through and we were able to borrow a 12' trailer + a full size pick-up.
He decided to take off some extra cash since we were going to drive out there and pick it up ourselves. So we began our 14 hour journey at 5:00AM on Friday.

Here are some pictures from the journey:

5:00 AM 

Don Quixote would love this place.

Raw Power.

Who?

Bummer!

Rising Up from the Ashes.

7th St, 11 AM.

Almost Full.

By the hair of our chinny chin chins.

Long Distance.

Getting Dark.

Sunset.

I'll be sure to post picture from the build out and the completed cold room. Unfortunately it is going to take us a little long to get everything up since we just talked to the DEH on monday and it turns out we need to install a floor sink, a mop sink, and a hand washing sink. So that will put as at a total of 7 sinks in our small space. We will be sure to have clean hands and pint glasses though!