Leasing brewery time to homebrewers and new brands

Why a brewery would lease time

A brewery has fixed costs whether the tanks are full or not: rent, staff, utilities and equipment. Idle fermenter days earn nothing. Leasing brewing time to a homebrewer ready to scale up, or a new brand without a plant, turns spare capacity into income. It can also bring in a future customer, because some tenants later buy your beer or contract with you.

It is a different business from your own. You are selling access to a plant and your expertise, not your beer. Decide first whether you want that and who you want in your brewery.

Two models and one to avoid

Most arrangements fall into one of two shapes.

• Hire of time. The tenant brews their own recipe with their own ingredients on your equipment, supervised by your brewer. You charge for the day, the tank time and the labour.
• Contract brewing. You brew to the brand's recipe, often with your staff doing the work. You charge per hectolitre. For this route see becoming a contract brewer to fill spare tank space.

The model to avoid is the informal one, where someone turns up with a recipe and a handshake. That is where quality problems and disputes start.

Work out what an hour of your plant costs

Start from your own numbers. Add your fixed monthly cost for the plant, including labour, utilities, cleaning chemicals and maintenance. Divide by the number of brew days you actually run. That is your cost of a brew day before any profit. Then add the extras a tenant uses: cold room space, packaging line time, extra cleaning and the time your brewer spends supervising.

An illustration with round numbers in a neutral unit: if your plant costs 3,000 units a month to run and you brew on 10 days, a brew day costs 300 units before margin. Add 40 units for supervision and 20 for extra cleaning and your floor price is 360. Your margin sits on top. These are not market prices. Work it out from your own accounts.

Rules you need to settle in writing

Before the first brew, put these in an agreement drawn up by a lawyer.

• Who owns the recipe, who owns the brand and who owns the yeast.
• Which days and tanks the tenant may use and what happens if a batch overruns.
• Who buys and stores the ingredients.
• What gets tested before release and who signs it off.
• Who is liable for a faulty batch or a recall.
• Insurance and who pays for damage to equipment.
• What happens to the beer if the tenant stops paying.

The agreement protects both sides. It is also the document you will want if a dispute arises.

Licences and excise come first

This is the part you cannot improvise. In India alcohol is a state subject, so excise rules, licence conditions and the treatment of someone brewing in a licensed brewery differ by state and change. In many places the licence belongs to the premises and its holder, which can limit what a tenant may do. Some states have specific rules for contract or shared production and others do not.

Speak to the state excise department or a licensing adviser before you offer this to anyone. Do not rely on verbal assurances. Never let an unlicensed person brew or sell on your licence without written confirmation that the arrangement is allowed.

Protect your own beer

A tenant's beer shares your fermenters, your cold room and your water. That creates risk.

Keep sour and wild fermentations out of shared kit. A tenant who brews a mixed fermentation sour in your clean-beer tanks can spread bacteria and wild yeast into everything that follows. Our checklist: no wild cultures, a written cleaning step between batches, a swab or a rinse test before the next brew and yeast kept in your own control. Water and drains matter too. Read planning water supply and storage for a new brewery and planning floor drains and slopes if your plant is still being laid out.

Start small and pilot it

Offer one tenant, one recipe and one tank for the first trial. Watch the cleaning time, the supervision hours and the product. Measure what it really cost you and what you earned. Then decide whether to open it up. Our guide to leasing equipment versus buying it covers a related question on the other side of the arrangement.

Common questions

Can a homebrewer legally brew on my equipment?

It depends on the state and on the terms of your licence. In India alcohol is a state subject and the rules vary and change. Check with the excise authority or a licensing adviser before agreeing.

How should I price brewery time?

Start with your own cost of a brew day, add supervision and extras, then add a margin. Compare the result with what the idle day earns now.

Who owns the recipe in a lease or contract arrangement?

Usually the brand owner, but write it down. The agreement should also say who owns the yeast strain and who may use any improvements made during the work.

What is the biggest risk of leasing brewery time?

Quality and contamination. A sour or an unclean batch can spoil your own beer. Set cleaning rules and keep wild cultures out of shared tanks.