EPISODE S.2, E.23

[DUDE, LET’S START A BREWERY!]

[00:00:00] TT: Hello and welcome to another episode of the BrewDeck Podcast. I am your host, Toby Tucker, with three wonderful individuals joining today. I got Grant Lawrence, our South Central territory manager who’s based in Houston. Grant, how are you, buddy?  

[00:00:13] GL: I’m doing all right, man. I’m stoked, really, to hear from a real seasoned veteran in the industry about how to go about starting a brewery and his philosophy on it.  

[00:00:22] TT: John Egan, who’s a SoCal dude that’s been on our podcast several times and has a hand in producing these things as well. John Egan, our territory manager, is based in San Diego. He covers SoCal, Arizona, and Hawaii. John?  

[00:00:37] JE: All’s good. What’s up, everybody? Thanks for having me again.  

[00:00:40] TT: Then our guest, we quickly found out that he is holding up a giant roll of tin foil on his roof trying to get good service here. His new name is robot Aaron Justus. Aaron Justus, how are you, buddy?  

[00:00:54] AJ: I hope that I sound okay right now.  

[00:00:56] TT: You sound stellar. It took 25 minutes for us to get to this point, but we’re happy to have you on, buddy.  

[00:01:01] AJ: Twenty-seven minutes to be exact.  

[00:01:07] TT: As I was saying before we got booted off the sweet call here earlier, you have a hard time understanding me, and you were mentioning that you like the Texas accent, right?  

[00:01:21] AJ: Heck, yeah. I’m from Kansas City, so I’m used to it.  

[00:01:25] TT: I got a little background on that, and we got cut out, but we got a guy at our schools who works for us who knows Aaron well, and had mentioned that you listen to the podcast quite a bit, just had a hard time understanding what I’m saying, which is all good. But anyway, I was like, you know what? You need to get Aaron on and talk some stuff about brewing here because I’m looking at your rap sheet; it’s very long and qualified.  

I ran into you a couple of times, and I got to sit in on one of your classes. You’re teaching there at UCSD, brewing certificate program. I’ll leave the introduction and background up to you because I think a lot of the listeners probably already know about you. But tell us about yourself, what you do, and what you’re doing now?  

[00:02:08] AJ: Obviously, I didn’t start in brewing. The path is long and arduous. I’ll try to keep it as short as possible. I was a TV meteorologist for 13 years, homebrewer during that time, and guess what? A career in television doesn’t last forever. As much as I thought I’d stay in it, I needed to find something new to do with my life.  

So I quit it, moved to San Diego, went to brewing school, American Brewers Guild, and got a job at Ballast Point washing kegs for minimum wage. Back then, minimum wage was $8 an hour. Working two other jobs, I worked my way through the ranks at Ballast Point. I finished up there as the brewmaster, but my last month there was this past September.  

I’m starting my new venture, East Hills Brewing Company, in downtown San Diego in the East Village neighborhood. I’m pretty excited about that. It’s been crazy. It’s been a crazy path. My life’s been chaotic at times.  

[00:03:04] TT: It’s a good segue to the episode at hand. It’s great having you on, but good timing as well. As you mentioned, you’re in the process of opening your own brewery. In this episode, we wanted to have you on and walk through some of the challenges and the advice that you have for the listeners because you’re right in the thick of things, and then also spent obviously quite a bit of time in larger operations. We’re interested to see what your experience was there and what you’ve taken from those into what you’re going to do there in East Village. So thanks for joining us, Aaron. I appreciate it.  

[00:03:36] AJ: It’s my pleasure. I’m a fan of the podcast. How long is this? Is this a five-hour podcast? Because I can get a little long-winded.  

[00:03:45] TT: We’ve got plenty of time, don’t worry about it. Let’s start with this. What are some of the biggest challenges that you’ve seen planning your new brewery? That’s a very vague question, but what are some of the biggest challenges?  

[00:03:59] AJ: It is vague, but there are many. Everyone’s going to encounter something that’s unique to wherever they live. But for me, we started this venture. I guess I should even rewind just a little bit. My business partner is Brandon Green. He was the former director of brewing at Ballast Point as well and a friend of mine.  

We always dreamed about opening up our own brewery. We’d go on these hikes on our days off and strategize exactly what we want to do if we were to open our own brewery. He’s my business partner. We started hardcore into business planning three years ago. We were supposed to open last year. Obviously, that did not happen.  

Luckily, it kind of was serendipitous that, before we signed our lease and a bunch of contracts to get the ball rolling, we were able to just come to a screeching halt. During that time, our bank dumped us. Our lender, who was going to give us an SBA loan, dumped us. So I was on the phone every day talking to bankers, trying to convince them that it was a good idea to open a brewery during the pandemic.  

As you can imagine, that was a little difficult. I would say that one of the biggest challenges was just finding funding. It was incredibly difficult, and it’s already difficult without a pandemic. There’s that. There are hidden costs that you have to worry about as you start going into this. You have to pay people to get those permits.  

It pays for structural engineering, environmental engineering, and all that. It just starts adding up. One of the other biggest challenges that I’ve run into so far is the fact that you have to manage multiple projects. If you don’t follow up with people, they will not follow up with you. So you almost have to schedule weekly meetings with everyone that you’re working with to get everything through. Like I say, I get a little long-winded. I would say those are the three biggest challenges we’ve encountered so far, the funding, those hidden costs, and just following up with people.  

[00:06:12] TT: It makes a lot of sense. What’s interesting is you think that people may or may not follow up, like lenders or city officials, that you get permitting and stuff. When you have a checkbook out, and you want to write a check to get something accomplished, you would think that they would get back to you.  

[00:06:27] AJ: There is an incredible backlog. Our architect works with projects all around the country. So it’s not just the City of San Diego, but there was a time when people weren’t able to work from home. That caused an almost four- or five-month backlog of work that they’re still trying to get out of. It’s taken us almost a year to get our building permits.  

It’s been rough. Luckily, my wife has a job. Brandon’s wife has a job. They’re really nice people. Otherwise, I’d be washing kegs again at another brewery while I’m trying to open another one.  

[00:07:12] TT: How was that taking the leap? Being at Ballast Point, you got a great job that pays well; you get a paycheck. There’s probably a pretty good feeling about knowing that you have a job to go to. What was it like just making the decision? All right, well, this is going to be my last day doing this, and I’m going for gold. It’s probably pretty scary at the same time, right? Exciting and scary?  

[00:07:38] AJ: That’s a great question. Both Brandon and I had great jobs. I could go out, attend conferences, go to hop selection, and judge at JBF. Life was great. There was even a point when we sat down and said, do we still want to do this? But we did. It’s a passion project. We really believe in what we’re doing.  

I’ll be honest. Once you start doing this permitting process, your names are available to the public. We wanted to have a sit-down conversation with our bosses at the time at Ballast Point and just be full disclosure. This is what we’re doing. It’s nothing against you. This is something that we’ve wanted to do for the past several years. They were completely understanding and allowed us to stay on payroll for several months afterward.  

[00:08:28] TT: That’s great.  

[00:08:29] AJ: Yeah, we’re very lucky about that.  

[00:08:32] TT: That’s awesome.  

[00:08:34] JE: I got a question, Aaron. San Diego’s a big little city, but there are so many different areas. What made you guys choose to open it down in the East Village?  

[00:08:44] AJ: Also, a great question. Brandon and I wanted to be a taproom brewery. Now that Covid—knock on wood twice or three times—is starting to lessen, and there are easier ways to drink outdoors, so on and so forth, we still want to stick with that taproom brewery model where obviously we want to focus on pint sales and take-home cans. Maybe do a little bit of keg distribution to some select accounts.  

Being a taproom brewery, there’s a checklist. Number one is high foot traffic. We are right across the street from the baseball stadium. We’re within two blocks of the convention center and almost near the harbor. Lots of foot traffic so that we can sell those pints.  

It’s also important, though, that there needs to be high population density versus brewery density. East Village is still underserved. It’s the East Village of downtown. It’s a burgeoning neighborhood. Lots of development, and there’s going to continue to be development. If you look at the City of San Diego, more apartments, more commercial real estate are being developed. In the next ten years, you’re not going to recognize the neighborhood.  

We’re on a quiet street, and we have a great landlord. You want to have a landlord that’s willing to maybe put a little skin in the game as well and give you a building allowance because that can certainly help. It’s less debt for us. It lessens the risk.  

[00:10:13] JE: Right, very cool. So you guys are mainly filling taproom style, no plans for distribution other than a few kegs here and there to some of the select bars and restaurants?  

[00:10:25] AJ: We’re just working with Ballast Point. Just seeing how challenging distribution is, I just don’t have the stomach for it.  

[00:10:35] JE: I don’t blame you. One of the hardest things about working in a production brewery was dealing with distributors. Yeah, definitely.  

[00:10:45] AJ: It’s tough, and I can truly appreciate our sales force because I would go out with them and talk to distributors. I did that a lot. It is such a hard job to just pound the pavement, get out there, and get in front of people. I don’t know; hopefully, this is a new chapter. Everyone has a plan when they go into something. That plan can change. I don’t want to say it’s going to be definitely this, but the business plan is to just hopefully be a destination.  

[00:11:22] JE: Awesome. Very cool.  

[00:11:23] TT: I think that the taproom-only has been one of those areas of our industry that’s really grown drastically over the past 5–10 years. You find a lot of successful smaller breweries these days. You can get their beer at their facility and leave with a six-pack there. It’s really a great way of doing business.   

Number one, you’re cutting out a lot of middlemen there. You really can pocket a little bit more money on your product. But two, you’re right. It’s a destination. People really come to like East Village beer. They’re going to go there, and it’s a good place to hang out. They can go and get the product there, so I don’t blame you. I think it’s a great way to go about opening your brewery, so good to hear.  

[00:12:04] AJ: I appreciate that. The thing is, when you talk about the overall pie that’s available for craft beer and compared to big beer, it’s small, but when you look at just even the state of California, it’s hundreds of millions, if not billions of dollars. The taproom brewery model is going to fragment that a lot, but I don’t need that big of a slice of that pie to be a happy person. It’s just all about execution. I’m excited to see more and more neighborhood breweries open up around San Diego, and I frequent all of them.  

[00:12:45] GL: Maybe this is a little obvious, but one thing that I noticed with this model for brewing is that you control everything. It never goes to anybody else. No one else handles your beer. The ability to have just excellent QA, QC, and nothing slide, it’s all in your hands. Whereas when you start distributing or sending it out, in a way, you’re trusting your accounts to clean lines and do things like that. This is at least speaking like Austin, Texas breweries, for instance. By controlling all of it, some of them have just amazing quality, right?  

[00:13:18] AJ: That’s an excellent point. When you think about the advantages of a taproom, obviously, margins are up there when you’re selling for pints. But the other one, certainly, is that control of quality. Brandon and I are going to be there in the taproom. If something doesn’t taste good, it’s going down the drain. That’s our quality program.  

With that said, though, we’ve talked about this. We’re still going to buy a DMA. This makes my heart palpitate thinking about it, but we’re probably going to, right out the gate, buy a DO Meter. I just said that because they’re so freaking expensive.  

[00:13:53] GL: Yeah, impressive. Cost of a car.  

[00:13:57] AJ: It’s like the cost of the car. Some of the good models, because there are a lot of bad models, but there are some good models out there that are starting to get down into the mid to lower teens. Hopefully, we’re going to get our hands on one of those. Then there are other advantages, just being able to tell the story, being closer to the customers, and being able to just tell them to direct our vision for the brewery and for each beer.  

[00:14:23] TT: I guess this opens up a line of questions that I was hoping to ask anyway. When you moved from such a giant production facility with 60 barrel fermenters, many, many of them, and several silos, how do you decide on what kind of equipment that you’re going to need? Let me back up here. Do you have an idea of what you’re bringing in? Are you going to do a 5-, 10-, 20-barrel system? When working on such large-scale equipment, how do you look at and what do you look for when you’re looking at buying equipment for your new brewery?  

[00:14:55] AJ: When we opened up our Miramar facility for Ballast Point, it was focused on extreme growth. It was installed as many tanks as quickly as possible, and then we’ll sort it out once we actually can meet demand. By the end of it, in Miramar, we’re installing 1500 barrel tanks just to keep up demand for Sculpin. This one is just so different, but I’ll tell you exactly how we calculated this.  

First off, you have to try to figure out how much you need to sell just to break even. I’ll be honest; I bought that Brewers Association book, the small brewery finance book, which is really helpful just creating a rough template of monthly expenses. Then you can say, okay, how much beer are we going to sell in each format? Then you can backtrack that to see how much work you need to make to break even.   

When I say breakeven, you should be able to pay yourself. You can’t just write into the budget that, oh, I don’t need to make money for the first couple of years. A part of the budget is actually paying ourselves at least a little bit of money just so that it is an actual business.   

Once you know how much work you need to make to break even, Brandon and I tripled that number. We said we wanted to triple that, and that’s how we came up with the fermentation capacity that we needed to make to achieve our goals of either maxing out that facility or opening a satellite tasting room.  

We tripled our breakeven number, and then we said, okay, we need about 70 barrels of fermentation capacity. We said, okay, well, we need about a 10-barrel brewhouse and seven 10-barrel fermenters, and we can do what we want.   

Mind you; we also have to come up with a breakdown of what types of beers we want to brew. Let’s just say 50% IPA, 20% lager, and then 30% other beers that are ales, that are on dry hops, stouts, ambers, so on and so forth. Those all have varying throughputs. You throw that into the matrix and say, okay, if we’re going to do 50% IPAs, 20% lagers, so on and so forth, this is how much we can brew in a year. That’s what we came up with.   

Obviously, we’re going to throw in a couple of puncheons and some barrels. We’ll still be able to increase capacity doing barrel fermentations and barrel aging as well. Max capacity, we’re probably going to be out about 1500 barrels out of that location.  

[00:17:32] GL: Did you go with a simple two-vessel mash lauter or something else?  

[00:17:38] AJ: Two-vessel. Yup, just two-vessel. It has steam jackets. We’re not going to get it initially, but you can get these small steam generators because I’m a firm believer in step mashing. We’ll do the good old under light with hot lake water to do our step mashes, but eventually, we’ll get steam in there and be able to do step mashing because that certainly helps make terrific beers, Hefeweizen. You have to do those Cyrillic acid rests. I really think that step mashing helps lagers and has retention.  

[00:18:11] GL: For sure. So any kind of automation or just like PID controllers on a brew deck?  

[00:18:16] AJ: Pretty much that. We kept it simple. The one thing that was super important to us was being able to monitor and control fermentation temperatures from home. We can do that remotely, even there through the phone, and just change temperatures remotely because I’ve wanted to have that forever. Once we actually instituted something like that at Miramar, at our main production facility at Ballast Point, you can never go back. That is just heaven on earth.  

[00:18:43] GL: Helps you sleep better at night?  

[00:18:44] AJ: Yeah. You can just check the temps and then just go to bed.  

[00:18:49] GL: That kind of technology is crazy. Ten years ago, I felt like it was very leading edge, and only the most massive breweries had it. I think what some smaller brewers don’t realize is like, check it out, it’s affordable now, that kind of monitoring software and automation.  

[00:19:04] JE: That was always my dream to have that.  

[00:19:08] TT: We were talking about barbecue earlier. Think about what that’s transformed into. You can set it and forget it. You can control everything via your phone on the triggers and stuff.  

[00:19:17] AJ: I have a friend in Kansas City that uses a barbecue thermometer. He puts it into his coupler, into a fermenter, and he monitors his fermentation temperatures with barbecue technology. It’s a cheap way to do it. It works.  

[00:19:35] TT: So lazy these days.  

[00:19:40] AJ: There’s some truth to that. The other thing that we had to think about was when you think about the layout of a brewery; you can’t waste space. Either an area has to be making beer or needs to be making you money. You have to be really careful how you lay everything out so that there’s no wasted space.  

What always becomes a problem with the brewery, especially when you’re expanding, is storage, specifically dry storage. I worked at the Scripps Ranch facility for Ballast Point, which was the old main production facility. It was 22,000 square feet. At peak production, we did 125,000 barrels out of that place with a three-vessel brewhouse. But a lot of people say, how did you do that?  

The answer was always, all of our dry storage was off-site, and all of the cold storage even was at another location. You can get creative with storage, and space, and layouts so that if you’re paying a premium for rent and when you’re in a densely populated area like downtown San Diego, guess what? Rent is not cheap. You want every square foot to count. You guys will stop by the brewery; we’re packing it in for sure.  

[00:21:00] TT: That makes a lot of sense. You talked about growth, et cetera. You guys planning on just sticking to bag malt, or are you looking at putting maybe a tote handling station in or setting some room aside for that? What’s the plan there?  

[00:21:13] AJ: That’s a great question. We’re going to make a bag of malt. I wish we could get it siloed. The thing is, downtown, getting a silo, and permitting, the thought of it, even just thinking about it, makes my head want to explode. But I think we could maybe pull it off because the main thing that we’re concerned about with this brewery, not only do we want to make delicious beer, but sustainability is super important.  

If we can get away from or minimize at least a little bit of bag of malt, we’ll go that route, or we will just find ways to recycle those bags. We’re going to do that. We are going to install a chain and disc conveyor system to control dust. The mill and the hopper will be on top of the grist case, and we’ll just mill straight into the grist case, and chain convey over to the mash tun. I can’t imagine not getting a chain conveyor. You’ll be surprised, they used to be super expensive, but they are not nearly as expensive as they used to be.  

[00:22:12] TT: More gentle on the grain, too.  

[00:22:14] AJ: They just go all over, straight up, straight down, the hard turns. They’re beautiful.  

[00:22:20] TT: They look cool too as you’re walking people through the brewery and giving tours. It’s pretty cool seeing that grain flow throughout the brewing area. So it’s really, really cool.  

[00:22:29] GL: Oh, yeah. When you do one of those sight glass setups on it so that you can see it from the beer hall is really cool.  

[00:22:35] AJ: Yup.  

[00:22:36] TT: I want to jump back to one of the things you mentioned, making your head spin thinking about standing up a silo, but what about the business plan part of it? You mentioned dealing with banks.  

I’ve actually started a couple of businesses in the past, and the biggest pain in the ass for me was writing a business plan. For those listeners out there, is that something you guys went through? Do you find it’s important for financing, et cetera? Any suggestions there?  

[00:23:04] AJ: The things that you need in order to get a loan, to even find a landlord that’s interested in renting to you, or even to find investors, you have to have that solid bit business plan. I didn’t know this until afterward because I had Dick Cantwell’s book, Starting Your Own Brewery. It’s a good resource. It gives you some formats on business plan outlines, but another great resource is the Small Business Development Center.  

I think most cities have them. San Diego has a Small Business Development Center. You can get these advisors who will guide you through the entire process of starting your own business. I think it’s a subdivision of the SBA, which is also a great resource. I highly recommend people to go there. This advisor told me, oh, there’s a template that you can just simply fill in the information, and it will spit out this business plan in the format that banks are used to so that they can more easily get to the information that they need from you for big picture stuff.  

The other thing that they need is a solid budget. I would say the first thing that you need to do also, other than a business plan if you currently work at a brewery, is to walk every square inch of that brewery and write down everything in there. If it’s a hose clamp, write down the hose clamp. It does not matter; write it all down. Categorize it into a spreadsheet. Those are your startup costs.  

You have to think about every single element, every piece of equipment, and start getting quotes on those to see what it’s going to cost to even startup. That does also include three or four months of operating expenses. So you have to look at that budget, those monthly costs, and at least prepare for four months of operating expenses.  

Now the bank is still going to require that you have at least one, probably two years of projections. Those are monthly projections. It’s kind of in a cash flow format where you have your input and output of money. The bank is going to want to see that as well. Again, you need a solid business plan, you need startup costs, and they need that one- to two-year monthly projection.  

That’s what lenders want, investors want, and landlords want to see that as well. They want to know what kind of business they’re going to be dealing with. You need to do all these things.  

[00:25:35] TT: I think it absolutely helps you look forward past opening the doors. I think one of the biggest mistakes people have going into any business is just coming in undercapitalized. They think they’re going to open the doors immediately, start making money to pay the bills, and it’s all good, but you got to have some money set aside for all kinds of stuff that happens to come up in the process. You never know what will happen and what you need to pay for, but all good stuff is earned.  

[00:25:58] AJ: The bank that we’re working with—to be honest, we ended up with a better lender out of all of this—require that four months of operating expense and then they even required a 20% pad on that, and then a 20% pad on the build-out just in case stuff happens, so you have to be prepared for those things. Trust me, we don’t want to go further into debt, but I would rather go further in debt than shuttering within the first two months.  

[00:26:27] TT: It makes a lot of sense. One of the questions I get a lot—and Grant, and John, maybe you all do in the market as well—are arguments about floor coatings. I know it’s weird bringing that up, but honestly, there are people always arguing about, well, you know, my floor keeps falling apart, and what’s the best thing to do in my brewery as far as flooring? Do you have any suggestions, or have you asked yourselves the same questions?  

[00:26:52] AJ: I’ve never seen the perfect floor. I remember one time, we just installed this beautiful multi-layered epoxy sloped floor for our new brite tank cellar, a bunch of 200-barrel brite tanks. Every story starts at a brewery, but someone was driving a forklift, and we dragged a pallet across the floor, and it had a nail underneath it, and just carved it. This is the first day.  

The floor held up, and it was multi-layered, so it could handle that. It didn’t cut all the way through like a thin layer of epoxy. If you can afford to do something like that, that’s the best way. I’ll be honest; I love tiles. Those tiles are huge. When you actually see underneath how thick those tiles are, they can handle forklift driving on them. It’s just that they’re really expensive.  

Just don’t skip on the expense, trust me. Brandon and I, having done it for so long, the floor is going to be perfectly sloped. We’re going to get multiple quotes from multiple floor vendors. We’ve already talked them out and figured it out, but you’ll get multiple quotes. Then when you talk to that vendor, ask them who their previous customers are so that you can go see the floor yourself.  

Go around the floor and see the high traffic areas where there may be forklift traffic or where there’s going to be extreme heat near the hot liq tank or the brewhouse. See if you see any bubbling coming up on that floor. Maybe that’s a floor vendor that you don’t want to go with. I would say that that’s the best way to do it; just go see it for yourself. If they don’t give you a list of previous customers, you probably don’t want to go with that person.  

[00:28:39] GL: It’s funny how you get into it. I feel like a lot of brewers are very concerned about things like, oh, this canning line, or this piece of stainless, or this piece of eye candy. But then, if you do it for a while, the most important thing is really the floors and the slope drain, so you don’t pull your hair out.  

[00:28:54] AJ: When I started at Ballast Point, I was the 30th employee. At peak production, I think we had over 1000 people, but I started really early. Our indoor cellar floor was just concrete. So much chemical and stuff had touched that floor that it eroded into cobblestone. It looked like cobblestone, and we were supposed to pull full pallets of kegs off that cellar floor. It was a nightmare.  

One of the first things I did once we actually moved to Miramar, and we’re generating a little bit more revenue, is I got a new cellar floor installed there. This was several years later. I kid you not. Some of the brewers were a little misty-eyed. It’s life-changing.  

[00:29:43] GL: Awesome. Some kind of self-leveling product or something you were able to put over it or?  

[00:29:48] AJ: The thing is, for me, we scheduled it over the holidays because it was low production. This is Christmas. I’m thinking, oh, yeah, they’re going to work, and I don’t even need to be there. I had to be there every single day because when you’re trying to install the floor after the fact, nothing can drip. So every single drip had to be controlled.  

Now you have all these glycol pipes that are sweating and dripping down, so we had to control that. Our hot liq was generating steam, and so we had to drain the hot liq, turn it off. The cold liq was sweating as well. So we had to turn that off and drain it. I was there every day for several hours all the way through the holidays.  

[00:30:34] GL: It sounds like the moral of the story is just do the floors right the first time.  

[00:30:38] AJ: That is the moral of the story for sure.  

[00:30:41] GL: One question that I have for you that I wanted to ask you about. I just wanted to find out how you would approach this. There are quite a few breweries that are open, and there are more that are opening every day. How do you differentiate your taproom experience? Is it decoration glassware ambiance?  

I feel like in the past, it was like, oh, I got a metal building, and I make beer in it. But these days, it doesn’t go as far as it used to. You have to deliver a comfortable atmosphere. What do you think about that?  

[00:31:10] AJ: Ambience is everything. One of my favorite tasting rooms for at least Ballast Point was at the Scripps Ranch facility because it was big enough to have everyone comfortable, but it was small enough to make it cozy. There’s just something about that, where people will come there, and they’ll have multiple pints. We kind of wanted the cozy thing, but we also wanted to create this feeling that you’re inside a brewery.  

Once you come in and you’re at the bar, you’re going to be surrounded by stainless steel tanks. You want high tables, like stools and high seating, a stand-only section as well for people that are just standing around, for big groups. But you also need a low profile seating as well for people with kids, or they have a dog or something like that, so we have to mix and match all that stuff.  

Lucky for us, even though we’re downtown, we have the ability to have about 1500 square feet of outdoor seating. Being San Diego, we really want to hammer that home that it’s a great place to sit outside, enjoy the weather, have a few pints, whether or not there’s a baseball game or if there’s not a baseball game. The ambiance has to be there.  

[00:32:26] GL: I think one of the things that I see successful breweries do lately, at least in the areas that I’m frequent, especially with work from home, and remote work, and the direction the labor industry is going, they set it up to where people can sort of office out of it. I know that sounds hilarious, officing out of a brewery, but maybe they’ll put in an espresso machine or something like that. Have you heard or thought about that at all?  

[00:32:52] AJ: That’s funny you say that. That’s absolutely 100% because it’s downtown, and there’s a lot of office space. We’ll have nitro coffee. We’re going to have non-alcoholic options, just like these hot topics that you can make.  

[00:33:05] GL: Like hot water?  

[00:33:06] AJ: Yup, like hot water. You throw in a little bit of honey and carbonate it.  

[00:33:09] GL: It’s so cool.  

[00:33:10] AJ: Yeah, we have to have those options. Because exactly that, people want to meet right around lunchtime, and maybe they don’t want to have a beer. Maybe they want to have one beer but still stick around. We definitely want to cater to that audience as well.  

[00:33:24] GL: I love the coffee shop vibe.  

[00:33:26] AJ: I love it as well. We would actually do that every once in a while. We’d get out of the office and go to local breweries, post up at the bar, and work remotely. Those are great memories.  

[00:33:38] TT: I got to give a shout out to a Manhattan Project Beer here in Dallas. They got the same kind of model. You go in the early morning, and it’s a place to sit around, and have some business talk, and have a cup of coffee, and they make great coffee too.  

[00:33:52] GL: I love it. If anyone’s in Dallas, don’t sleep on the Manhattan Project. They’ve got it going on.  

[00:33:58] TT: What do you look for in a raw material supplier? Obviously, you have experienced brewing with all kinds of raw materials and grains, et cetera, but what are you all doing now? Are you all brewing on a homebrew system just to try out some recipes? Then going back to it, is that the time when you’re looking at suppliers and looking at different malt, grain, and hop options is when you’re formulating recipes?  

[00:34:22] AJ: When I was working at Little Italy, which is the small R&D Brewery for Ballast Point’s five-barrel system, we really had to sit there and assess raw materials, and really get down and dirty with these ingredients, and brew with them. But before you even mash in with any malt, you have to assess it. Luckily, Lindsey Barr and a couple of other people from Briess Malting came up with the worthy analysis or sensory analysis for malts.  

I kid you not. We pulled in pretty much every specialty malt known to man and analyzed all of them. We categorized them, so there’ll be pale chocolate, medium chocolate, dark chocolate. We even did a round of Special B and equivalent malts to Special B. Whether or not it’s a double roasted crystal or just a Crystal 120, we threw that in the mix.  

We, first and foremost, asked the question, do you like this malt? Then we also did a sensory analysis on it, creating the spider diagrams. Some malts, obviously, we like more than others, but also, we created a catalog to be able to chase a certain flavor. Once you have that in your back pocket, the malt side of things, you’re good. I should emphasize that this is for specialty malt.  

We trialed this with base malt, and I’m talking about base malt up to about three-level bond. We found that you can pick and choose which ones you like flavor-wise, but with base malt, so much flavor comes from what’s in the malt, the FAN, the food that goes to feed the yeast because whatever’s in there makes that malt unique to create an ester and sulfur profile in your final beer.   

We really found that out when we tried to perfect our Helles recipe at R&D Brewery. We found that certain malts would make the yeast more expressive than what we wanted it to be. You can play around with different yeast strains. Sometimes it’s good; sometimes it’s not what you want. We played around and thought, okay, well, if this malt is a little bit higher in protein, higher in FAN, that could work for a hoppy lager versus a completely naked Helles lager.  

Base malt, sometimes, it just comes down to trial and error. That’s just the way it is. That’s how we assess that. Hops, you can do the same thing. You can make your own little tees and see what kind of flavors you can get out of them. But there’s such variability with hops and where they’re grown that you almost just have to pull in. If you’re a small brewery, you just pull in an 11-pound box. If you like it, get that lot number, and reach out to your vendor, and buy more of that lot.  

Obviously, if you’re a big enough brewery, you can go up and do hops selection and talk to farmers to see what lots they’re excited about. Obviously, make your own selection and pick and choose what you want from there. But as a small brewery, for us, we’re going to continue our relationships with those farms and forge new ones with other hop farmers throughout the Willamette Valley, Yakima Valley, and obviously into Idaho and Michigan. It’s tough as a small brewery. We just have to play it by ear. We hope to make some hops selection, but the volumes are out there. We know people, though. We’ll figure it out.  

The other thing about raw material forecast and projections, going back to just coming up with how much work you need to produce a year by first starting with your breakeven number, we categorized our beers into—and bear with me here—the cheapest beer to make is lager. The second one would be kind of a malt-forward amber or stout that has the specialty malt and or like a premium base malt.  

IPA is after that. Imperial style is after that. Double IPA is after that. That’s the most expensive beer, or triple IPA, whatever. I just call them double IPAs. Then you decide what percent of each one of those beers you want to make. Like I said, 50%, IPA, great, 20% lager. Once you do that, you create a generic recipe for each one of those and say, okay, well, generic lager could have 50 pounds per barrel of base malt and two pounds per barrel of specialty malt. Once you do that, you can break it all down for all those beers, pounds per barrel of your needs, and get an annual projection.   

You need to have an annual projection of your raw material needs so that you can immediately reach out to your vendors and let them know what you need. You need to have those discussions early. The other big thing about a raw material provider, if they have a warehouse near your city, for instance, Country Malt has a warehouse up in Vista, you can use that to your advantage for storage because then, you order malt as needed versus having to pay rent on storing malt at your brewery. That’s super important as well, being able to have someone that can supply you malt and hops in a timely fashion.  

[00:39:37] TT: That’s a great point, especially if you’re in a downtown area or limited space for storage. That’s how the model, especially with us and others as far as it works. You can order at will, and whenever you need it, you don’t have to order for two months supply at a time. It’s in great storage and great condition up there.  

We also do the same thing with hops. You don’t have to take eight coolers full of hops; we got them up there for you, contracted hops so we can send when you need. I’m glad you mentioned that, Aaron.  

[00:40:08] AJ: It’s immensely helpful. When you think about it, yeah, you’re paying shipping, but just do the math on storage and how much you are paying for rent, and the math works out, trust me. If you can get storage off-site, you’re winning in life.  

[00:40:22] GL: You made a point that I found interesting. So you said that lager is the cheapest beer to produce, sort of, but I’ve heard mixed things. Some brewers say when you account for the length of tank time that it’s not, how do you handle that? Do you do a long lager, or you’re flipping lagers in 30 days? What’s your philosophy there?  

[00:40:42] AJ: I think, really, what it boils down to is just as long as you’re not at max capacity tying up a tank, and if it’s just sitting there, there’s not a whole lot of labor involved with that. This is something that we tried to tackle at Ballast Point. I guarantee, if one of the accountants were to listen to this podcast, I might make her listen to this, but we still are trying (until this day) to figure out the true cost of making a beer. Part of that equation that’s really difficult is utilities, but also labor.  

Having this kind of breakdown of different beer styles helps with raw materials, projections, but it also helps with labor because if you have a specific throughput and the labor involved with each one of those, which we do, so for a lager, we have the exact throughputs, we have your brew day and CIP in the brewhouse, that’s going to be on a good day, nothing goes wrong, that will be eight hours of labor.  

All the way through the life of that beer, we’ll be filtering our lagers. We calculate all that labor into there just to make sure that Brandon I can even handle it at max capacity, which we can. But think of it this way. For us, when we calculated raw materials and needs for IPA, our average dry hops can be four pounds per barrel. Nothing’s going to get more expensive than that.  

[00:42:09] GL: Yeah, good point. Okay.  

[00:42:11] AJ: Our throughputs, we’re not going to do fast lagers. I don’t believe in them. If you want to make a fast lager, that’s called Kolsch. You can get Kolsches, and you can ferment Kolsches really cold, or you can use San Francisco lager yeast, which ferments as fairly quickly as well and ferment in 55 degrees, either one of those. You can make something that tastes phenomenal.  

I’m not saying cold lager, but I’m just saying you can hit that flavor point for your customers without tying up the tank. But if you’re going to do true pilsner, you got to make that 45-, 50-, sometimes maybe a 60-day beer and ferment it up 45–48 degrees, spooned it, do everything right, and cold condition it. You got to do a slow chill. Every two days, drop it to a degree type thing all the way down to 28 degrees and let it sit for at least two weeks, just ice cold. We’re going to have long throughput lagers. We factor that into just our overall capacity.  

[00:43:14] GL: Got you. Just having more tanks available instead of trying to flip just a few fermenters, like just having a lager fermenter.  

[00:43:21] AJ: We will, and that will be the demand. If people start buying it like crazy, we’ll just have to cross that bridge sometimes.  

[00:43:29] GL: Sure.  

[00:43:30] AJ: We have to get another brewery then.  

[00:43:32] GL: Awesome, horizontal or vertical?  

[00:43:35] AJ: They’re all vertical. Our equipment manufacturer has been great. They fabricated the tanks exactly how we wanted. Because they’re so small, I’m not too concerned with the width versus height. So these are the three-to-one ratio. They are tall and pretty thin. I love the idea of horizontals. I’ve tasted phenomenal beers out of horizontals. The hydrostatic pressure is not that high with such a small tank.   

I know that once we started scaling up recipes because we had 50-barrel tanks at Scripps Ranch, 100-barrel, 200-barrel tanks, and then obviously, we scaled up further to other tanks, once you really get to those huge tanks, at least for me, just what I’ve seen through the years that I’ve was at Ballast Point, once you get to those really big tanks like 200-barrel and up, that’s when you start to see the yeast acting a little weird. That’s just my personal observation.  

[00:44:37] GL: That’s cool. I’ve heard of that before. When you say weird, you just mean it changes the fermentation time profile of what you’re used to on a smaller scale.  

[00:44:46] AJ: It is. Depending on which one you use, they can get a little fickle, I guess would be the word I’m trying to think of, where they start spouting out esters that you don’t want in there.  

[00:45:02] GL: The geraniol thing going on?  

[00:45:04] AJ: Geraniol and even apple cider, not acid aldehyde, but hexanoate-type apple thing. I’ll say this. I’m going to say what beer was, but we entered one of our lagers under Kolsch. It made its final round at JBF because it had those characteristics, but it was a traditional mother yeast. All the processes we had in place shouldn’t have had those esters, but it just did.  

You just have to really know your system, know the yeast inside and out, and obviously, know your raw materials, know what you’re feeding the yeast, know that there’s variability year to year, and there are ways to fix that. That’s a rabbit hole that we could go down, but I think that’s a whole different podcast.  

[00:45:50] GL: For sure.  

[00:45:51] TT: I think we’ve had that podcast. As a matter of fact, I think that was one of the subjects we wanted you to speak on, actually. We left the door open for you. I like how you mentioned forecasting, Aaron. It’s very important, especially for new breweries, to know and start that relationship with your suppliers early on, get to try some of the malts that are available, and find out which one you like and which ones you think are scalable, and start those relationships really early.  

You did mention that everything varies year to year. You look at malt, you look at hops, and with barley, specifically, it’s a challenging year right now. Even more important than people looking at what their expectations are at the brewery and what their forecasts look like, and working with their suppliers right now and right away, and continuously having an open dialog to let them know what they’re using, volume and expectations.   

We, on the provider side, can make sure that we have the availability and work with them however we can and give them what they need. Going back to the challenging harvest that we have now is certainly for another podcast episode for sure.  

[00:46:58] AJ: If you’re not having an almost monthly conversation with your raw materials provider, you probably should start. You have to have this continual dialogue for sure. I remember when we had the pre-sprout conditions, we were getting a lot of our malt from Canada, and that was 2014. The challenge with that malt was the variability and modification. It wasn’t necessarily that the protein was high; it was just the kernel. It seemed that some were better modified than others, just the general observation.  

The way that we had to deal with that was, it was me at the mill at least two or three times a day because we’re doing eight brews a day, adjusting the mill at least three times a day. Then teaching the overnight brewers, but all brewers how to adjust that mill so that if they are starting to see a trend of slower lauter times to immediately adjust that mill. I think priority number one for any brewer that’s going to be using domestic malt and Canadian malt is to adjust that mill every day if not, every time that you mash them or that you mill prior to milling.  

Just adjust the mill, treat your mill right, grease deserts, give it regular maintenance because it’s going to get overworked. When you have high-protein malt, it just makes that mill really unhappy. The thing is, with high protein, you can see some issues with lautering, but there are ways to work around that. You can mash them a little bit wetter and monitor your pHs. Make sure that they’re on target, but use the adjunct.  

If you don’t want to use commercial enzymes, because I know some people are against that, I can appreciate that. If you are okay with using commercial enzymes, use commercial enzymes. They can be your friend to get you through tough times. You can use adjunct. I kid you not, at the R&D Brewery, we made lager. We just wanted to push how far we could use adjuncts and still get a lager that tasted good. We used 50% sugar adjunct and a lager. That thing came out super low in color and pristinely clear, and it tasted good.  

[00:49:11] GL: You made malt liquor.  

[00:49:12] AJ: Basically, it’s malt liquor. Then we said, well, gosh, now we’ve done that, why don’t we just dry up the hell out of it and make it into an IPL? People love that one as well. It was still crystal clear. It doesn’t matter because you diluted the protein so much that it certainly helps with beer clarity.  

You just keep using adjuncts if you want. For something that’s flavorless, you can use a sugar adjunct. If you want something that adds a little bit of flavor, you can use rice, corn, or something else. Adjuncts are your friend, enzymes are your friend, and you’ll get through it. There’s no doubt in my mind; it’s not going to be the end of the world.  

[00:49:49] GL: Become one with the subset, it sounds like.  

[00:49:54] AJ: We have to mash in every three hours. If we did not mash in every three hours, I would get a personal email from the CEO, and trust me; he was not happy. The pressure of getting through 2014 gave me great perspective and maybe a few gray hairs on my head, but I can just appreciate the variability of barley.  

In fact, it made me love malt and barley that much more. I wanted to learn so much more about it because it can really affect pretty much everything in your brewery, the production, and the finished product. If you don’t understand barley, then you’re behind the game for sure.  

[00:50:35] GL: For sure. The job as the brewer is being able to manipulate all the different things and make it still work. I think that a lot of people are pretty young in this industry. You guys have been here longer than I have, so I don’t have much room to talk. That’s part of the brewers, working with what you got. Bad crop years, they’re going to happen here and there. Hopefully, they don’t happen often. You’re talking about 2014. I would say that’s the last great one, right?  

[00:51:01] AJ: It was. It was a doozy. It was a rough one. The thing is, if you have a slight haze in your beer, you can just communicate that to your customers. It was tough for us because we have brand integrity, and there’s the expectation that Sculpin is, for the most part, clear. So we made it happen.  

You have to adjust your filtration techniques and maybe get a finer micron, polishing filter, and just play around with it. The pH, I cannot overemphasize. Just make sure that your pHs are on target and that you have a healthy amount of calcium in your water. That certainly helps with the colloidal stability and finished product.  

[00:51:47] GL: For sure. All good tips.  

[00:51:48] JE: Definitely. The challenges that are happening right now, for the most part, this is going to make great brewers even better. Going through what you went through, and I went through as well back in 2014, everyone learned a lot. I think those lessons lead to better things.  

[00:52:09] AJ: You can just make a pre-prohibition lager, just high protein. Yeah, create a new brand.  

[00:52:16] GL: Yeah, craft malt liquor is coming back. It’s going to be awesome. I’m stoked.  

[00:52:24] AJ: King Cobra is making a comeback.  

[00:52:26] GL: Awesome. I did want to talk about one more thing before we have to go. This is always something we finish off our podcast with.  

What’s in your beer fridge right now, Aaron? What are you drinking, adult beverage–wise? It doesn’t even have to be beer if it’s whiskey or anything, but it’s the question we always ask our guests.  

[00:52:45] AJ: My ongoing joke is that my wife’s not the biggest fan of beer. So I have a healthy amount of wine in my house. With that said, before I left Ballast Point, working at R&D Brewery, we had a catalog of beers that we had entered into JBF in San Diego International. So my fridge is just full of all these wonderful beers that we brewed for competitions.  

I’ve got a nice Roth beer in there, and a couple mixed fermentation bottles, and then a case of Grunion. It’s going to be weird because right now, I’m in this transition where we’re not obviously making beer yet. It’s really odd now to go to the grocery store or bottle shop and buy beer.  

[00:53:35] JE: Yeah. It’s one of the weirdest things about transitioning from having a brewing job to not having a brewing job. All of a sudden, you’re like, where is all my money going? Oh, that’s where. Hey.  

[00:53:47] GL: That’s right.  

[00:53:48] AJ: It is. I can’t wait to start brewing again so I can just drink for free and then have been to trade if I get sick of my own beer.  

[00:00:00] GL: There we go. Obviously, I want to help you out and throw you a bone for coming on our podcast. I certainly enjoy having you on. Can you let us know, or can our listeners follow your new brewery on Instagram or anything else like that?  

[00:54:13] AJ: Absolutely. We’re still posting stuff as we do the build. We’ll get a little bit more active once construction really gets into earnest. You can go to our website at eastvillagebrew.com. Follow us on Instagram and Twitter, @eastvillagebrew. Facebook was kind of a pain in the rear. We have to go with East Village Brewing. That will be for Facebook.  

[00:54:36] GL: Right on.  

[00:54:37] TT: Another thing I want to plug too, and it’s good having you on, Aaron, but I think November 28th is actually Small Brewery Sunday, which is pretty cool. Small Brewery Sunday celebrates the values of small and independent US craft breweries during one of the busiest shopping weekends over the year.   

If you’re out there listening, go on and support the small breweries. Pick up some beer to go, gift cards, buy and wear some merchandise. Like, follow, subscribe, all that good stuff. Aaron, I’m looking forward to having you guys open up. I’m really excited about coming out at some point and tasting some of that fantastic beer. Thank you so much.  

[00:55:16] AJ: Absolutely. I am looking forward to it.  

[00:55:18] TT: Always. For the listeners out there, just a little sneak peek. We’ve got new BestMalz roasted products and an episode around that, and what consumers can expect from the new BestMalz roasted products we have coming in. Also, be sure and like and follow The BrewDeck podcast wherever you listen to podcasts so that you never miss an episode.  

We do have an email address, finally, after about six weeks of asking. It’s thebrewdeck@countrymalt.com. We would really love any feedback, questions, suggestions for upcoming episodes from the listeners. Thanks again to our guest, Aaron Justus. I appreciate you coming on. John Egan, always good to hear from you and Grant Lawrence. I appreciate it.  

[00:55:58] GL: Yeah, it was a pleasure.  

[00:55:59] JE: Pleasure. Yeah, thank you.  

[00:56:00] TT: All right. Everybody have a fantastic rest of the day. I appreciate it, and we’ll catch up with you in the next episode. Cheers. 

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