A few weeks ago, my friend Nick Nunns returned from the Craft Brewers Conference (which I’m going to next year, dammit!), and proceeded to rock my world. In a good way.
Nick told me about the idea of an Alternating Proprietorship, or an AltProp. It’s not a new idea. I’ve probably mentioned it in some post on here, or in the comments somewhere. I’ve almost always just brushed it aside. I think this was mostly due to not seeing the difference between contract brewing and an altprop. My biggest difficulty with the idea of a contract option was that I wouldn’t be brewing. I didn’t want to just give a recipe and instructors to another brewery and say “Here, make me beer.” And that idea just sort of stuck.
So when Nick got back and we talked about AltProps, that idea got rocked out of its place. Basically, and Alternating Proprietorship is an agreement with an existing brewery in which we go in and rent out excess capacity on their system. While we’re brewing, we technically own the equipment. It’s our own license and our own beer. It’s much more complicated than that, and the agreement can be a lot of different things, but that’s the basic idea.
Anda, one of the owners of Funkwerks in Fort Collins, and the author of LegalLibations.com and LegalBrewing.com, wrote an article about this idea in January: http://www.legallibations.com/2010/05/alternating-what.html. Check it out, it helps to clarify this whole thing.
The TTB defines an alternating proprietorship:
An “alternating proprietorship” is a term used to describe an arrangement in which two or more people take turns using the physical premises of a brewery.
Generally, the proprietor of an existing brewery, the “host brewery,” agrees to rent space and equipment to a new “tenant brewer.” Alternating brewery proprietorships allow existing breweries to use excess capacity and give new entrants to the beer business an opportunity to begin on a small scale, without investing in premises and equipment.
This idea could get us started much, much sooner, for much, much less money. If we work out an arrangement with a new brewery in town, where we buy a few tanks, rent out the time and space, and start making beer, we can be on tap this year. Depending on the arrangement, we could hopefully work something out where we buy 2 fermenting tanks, use the space for 6-12 months (or however short / long it takes), and then “leave” the tanks there, as payback. Or maybe we open at the same size, and take the tanks with us. Or maybe a brewery just doesn’t have the need for some of their tanks, and it’s a pure rental agreement.
I started talking to a few of the newer breweries in town about this. It’s a win-win situation for a brewery with excess capacity. Our presence lowers their liability, since we’re paying them for their time. And for us, it lets us start today, rather than tomorrow.
Part of the TTB’s rules on this scenario is that the business plan must include not only the altprop, but the exit into a full brewery. This is a temporary situation, where we can make sure the market likes our beer, make sure we know what the hell we’re doing, get a few accounts up and running, and have something solid (well, liquid) to show investors.
This is the current plan. We’re exploring our options and writing down the numbers. I’d love to know what you think of it!
Last night we joined the Brewer’s Association as a 0-500 bbl brewery. There are a 
As 
May 1, 2010.
While we haven’t run the numbers yet, our current guesstimate is in the $500k range. That’s a big number. It’s hard to swallow. And it’s going to be hard to get. I could ask 10 of my friends to take their paychecks every two weeks for a year and deposit them right into an account, taking nothing out, and it wouldn’t be $500k (gotta love entry level positions…).
Starting a Brewery 