An alternating proprietorship, commonly referred to as an “AP,” is a business relationship in the brewing industry where an existing brewery, known as the host brewer, rents out space and equipment to another brewery, known as the tenant brewer. This arrangement allows the tenant brewer to operate and produce their own beer while utilizing the resources and infrastructure of the host brewery.
In order to establish an alternating proprietorship, the tenant brewer must first obtain a Brewer's Notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB). This notice is a federal permit that allows the brewery to produce, package, and sell beer. Additionally, the tenant brewer is also required to obtain the necessary state manufacturing licenses to comply with local regulations and laws.
The concept of an alternating proprietorship can be particularly beneficial for both the host and tenant brewers. For the host brewer, it provides an opportunity to generate additional revenue by renting out their excess capacity and equipment. This can be especially advantageous for smaller breweries that may not fully utilize their brewing facilities. By sharing their resources, the host brewer can optimize their production and generate income without the need for significant investment.
On the other hand, the tenant brewer benefits from the ability to start their brewing operations without the need to invest in their own infrastructure. This can significantly reduce the upfront costs and risks associated with starting a brewery from scratch. By renting space and equipment from the host brewer, the tenant brewer can focus on recipe development, brewing techniques, and building their brand without the burden of purchasing and maintaining brewing equipment.
The alternating proprietorship model also allows for collaboration and knowledge sharing between the host and tenant brewers. In some cases, the host brewer may provide guidance and support to the tenant brewer, sharing their expertise in brewing techniques, recipe formulation, and quality control. This mentorship can be invaluable for a new brewery, providing them with a solid foundation and helping them navigate the complexities of the brewing industry.
It is important to note that the specifics of an alternating proprietorship can vary depending on the agreement between the host and tenant brewers. The terms of the arrangement may include details such as the duration of the partnership, rental fees, operational responsibilities, and ownership of the brewed beer. It is crucial for both parties to have a clear and well-defined agreement to ensure a successful and mutually beneficial relationship.
In my personal experience as a brewer, I have witnessed the advantages of an alternating proprietorship firsthand. I have seen small breweries flourish by utilizing the excess capacity of larger, more established breweries. This arrangement not only helps in reducing costs but also provides an opportunity for collaboration and growth within the brewing community.
An alternating proprietorship is a flexible and collaborative business model that allows breweries to maximize their resources and foster innovation in the brewing industry. By sharing space, equipment, and knowledge, both the host and tenant brewers can thrive and contribute to the vibrant and diverse world of craft beer.