Follow The LAAW: The Gypsy II – Diluting an Industry

John and I were recently told that what we are doing, gypsy brewing, ninja brewing, whatever you want to call it, is “diluting the industry.” The idea that two guys from home brewing beginnings could brew out of another person’s brewery and flood the market with our 341/6 BBL (5 gallon) kegs is diluting the industry? Really?

The fact is, everyone gets into their chosen industry differently. Be it rigorous education, moving up the corporate ladder, being in the right place at the right time, knowing someone, getting an inheritance, having access to wealthy investors, these are all viable options – none of them being better than the other. John and I have chosen to–and it was a subject that required much deliberation–build our brand and experience via gypsy brewing while raising money. Our aim is to build our brand while simultaneously scaling up our recipes, gaining commercial brewing experience, and working hand in hand with our partner brewery. Transparency is something we are very passionate about, which is why we have our partner brewery, Ohana Brewing Co, at all of our events. We are proud and happy for their success and we look forward to not only working with them, but collaborating with and empowering them as much as we can.  Their focus is on quality and small batches which goes hand in hand with ours.

Skin in the game?

Well, we aren’t sitting on mountains of money, but what we do have are our cars, the titles of which have been graciously handed over to the bank as collateral so that we could buy our 200 kegs. We also have our day jobs.  John and I save up every month and make an equity contribution into the LAAW account like you would a savings account. This allows us to pay for pilot batches, equipment, meetings, etc.  It’s slow, but steady, and also smart.

We’ve been working on our brewery concept for nearly 4 years now, and we have a plan.  This plan tells us what our brewery may look like in 2, 3, 4, 5+ years, but the reality is that we can only speculate.  Looking at breweries like Orange County’s The Bruery, you’ll see that even in a expertly executed business plan, your business may take on a mind of its own.  This was a bad shift, but they recently closed the provisions store so that they could refocus.  The people, your clients, and demand are the focus.

Kickstarter Thank YouKickstarter

Oh ya, and there was that Kickstarter thing. First of all, John and I would love to have the opportunity to thank each and every backer in person.  I look forward to meeting all of you that I haven’t met, and hugging all of you that I have.

393 backers banded together to bring in over $38,000, which enables to buy commercial equipment that will be housed at Ohana. Thank you again to everyone who backed and/or supported us along the way. Buying this equipment allows us to have more equity in our company and also lessens the burden on Ohana. Our keg washer will be used by both breweries at will. John and I are interested in giving back and collaborating.

So why not wait for investment and just open a brewery?

Well that’s the plan, but why turn away commercial experience, recipe upscalling, and the chance to work closely with our brewery, bars, and drinkers/clients? We’ll hit the ground running when we start and have solid relationships to back us up.  We are moving forward with private equity investment to acquire funds that will lead us to our own manufacturing facility, hopefully in West LA.  The amount we are raising, $750K, seems like a lot of money, but in terms of starting a business like this where manufacturing, equipment, leasing, and buildout costs are a premium – it’ll go fast.  The money we raised via kickstarter is already well on its way to be spent on our fermentor(s) and keg washer.

Diluting and Industry

How can a small brewer like us, focused on small 7BBL batches (eventually 15BBL when we have our facility) dilute the industry?  The answer is that we can’t and we won’t.  John and I are very focused on the artisan-boutique approach to brewing.  We want to grow organically and are not, currently, focused on saturating the market with our beer.  15BBLs goes fast.  Look at an LA based brewery like Eagle Rock Brewery, who keeps up with demand in a constrained space.  They do a good job making a quality product and have been rewarded.  They will most likely expand and that’s great news.

Starting large has many caveats, and the risk of diluting the marketplace by producing too much beer is greater than the threat from too many small brewers.  As a beer drinker, I would rather have hundreds of tiny breweries making unique small craft product than a large regional one dictating what we drink.  I’m always blown away when I see a brewery take the start large approach over organic growth.  Isn’t craft beer all about size reduction, refocusing and shifting away from quantity?  That being said, starting too small can cause a financial and time burden.  Take our current approach to gypsy brewing.  We work during the day and find time to do the brewing, marketing, etc. by taking off work or doing it after hours.  We aren’t making enough to financially sustain ourselves, but we are making enough to break even.  There are several nano-breweries existing/starting in the area, and every time I read about their success it excites me beyond belief because I can only imagine how hard it is to sustain.  Still, I love the idea of small batch, so although we aren’t taking the nano route, it’s something we respect.  Diversity is a good thing.

Brouwerij WestThe Gypsy

Let’s look again at a brewery we’ve all heard of, Brouwerij West.  Brian and the team over at Brouwerij West have been tirelessly brewing and building their brand.  They’ve been to several breweries trying to make it work and have found a happy spot now where they are able to make product, distribute, build their brand, and plan ahead.  He’s planning on opening a tasting room at some point in the near future as well, and I’m sure a brewery is also on the horizon.  What is wrong with his approach? It’s unique, it’s tasty, it’s Brouwerij West.  The labels, love them or hate, (I love them) stick out on the shelf and offer an artistically loud approach to the standard beer label.  Brian is building his brand through the way of the gypsy and is finding success.  It’s true he doesn’t have a facility, but at the same time, his head is in the right place when crafting his product.  Isn’t that something we as beer drinkers want to support?

How are we different than a mom and pop business baking goods out of a neighborhood partner bakery?  So I ask you, how are we, Los Angeles Ale Works, diluting the industry?  The answer is we’re not.  The answer is we can’t.  The answer is we wont. We’re on OUR path to a brewery and everyone’s path is different.

*For more on Gypsy brewing check out the related article Follow the LAAW: The Gypsy

*Title Photo by Geoff Kowalchuck.

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  1. Personally I care more about the passion and the product than some wacky notions of supposed legitimacy–keep on crushing it guys!

  2. I think there is a strong argument to be made that the “start large” approach dilutes the industry far more than your approach. When a brewery comes out with guns blazing and millions in financing they saturate the market with their beer and are completely focused on bottom lines (not much different than the big boys). They have to be because of the huge capital that they must repay. Small craft breweries may not be the most financially successful, but they are the most interesting and IMO, desperately needed.

  3. Al:

    I think the dilution idea has a bit of truth. Stores and restaurants only have so much shelf/tap space. If you get a tap well guess what…..someone else loses one. Now for the consumer that is a great thing…more choices is always better IMO….but for the brewery owner they are going to have to hustle that much harder to replace that lost income.

    • Kip:

      Al, that’s definitely a fair point. There is always a bit of gray area in these discussions. However, in the age of rotating taps, I don’t think it’s as big of an issue for smaller brewers. I don’t think it’s unfair to ask local brewers to stay in contact with their target markets. I make a point to visit all of my keg accounts as often as humanly possible so I can talk to end-customers as well as talk to the people that are buying my product to make sure they are happy. I think the real issue comes for brewers making larger quantities. They depend on those constant taps to keep the money flowing.

  4. Al:

    Your right that is the “advantage” that small brewers have…..the ability to keep in touch with their customers. That is definitely a possibility with a 7bbl system but it gets increasingly hard with even just a 15bbl system. That is why I wouldn’t consider a brewery without a tap room. Not only do you get lots of direct contact with your customers, you are the ones making the money selling 5 dollars pints vs. the bar/restaurant.
    I poured my homebrew at a commercial beer festival a few years ago right next to New Belgium. People dig interacting with the brewer vs. someone hired to talk about beer and pull the taps. That is where the small breweries, like yourself, excel. You can create an experience for the beer drinker that they won’t normally get from larger craft breweries.

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