With Lagunitas Brewing announcing the decision to open a brewery in Chicago this week, various reports suggested different numbers when it comes to ‘capacity’ a.k.a. the amount of beer that a brewery can produce annually, typically reported in “barrels” (Bbls).

There are a lot of complexities that go into what is behind that word and the word, in itself, means relatively little. ‘Capacity’ definitely means something but it means more when you stick another word in front of it. Common examples are “functional,” “working,” “theoretical,” and “maximum.” And then there is “practical” or “rated.” Some of these descriptors clear up what we are referring to when we discuss capacity though even they may mean different things to different people. Functional or working capacity generally refers to the amount of barrels a brewery can produce in a year given its current product mix and circumstances. Theoretical or maximum capacity removes solvable inefficiencies from the equation such as tank-hogging specialty beers or bottlenecks in the production process.

Who cares?

Well, a lot of people. Restrictions to capacity is one of the big reasons that you may not have access to beer from your favorite brewery locally. Several breweries pulled out of certain markets in early 2011 because they didn’t, and still don’t, have enough capacity to supply what the market demands. The inability to meet market demand due to capacity constraints is one of the main obstacles facing craft beer growth right now. To address it, dozens of breweries are either A) adding equipment to expand capacity at an existing location, B) moving operations to larger locations, or C) building (or planning to build) second breweries.

Sierra Nevada Brewing is one of those breweries in the third bucket, having announced earlier in the year that it is building a brewery outside of Asheville, North Carolina. Sierra Nevada is right up against capacity, no matter which way you describe it, at its original facility in Chico, California.

BeerPulse turned to Product Development Manager, Bill Manley, to see what capacity means to them both in theory and in reality. Here, he goes into great detail on the challenges that various elements of production present and how all that adds meaning to this convenient little word…

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The short answer is… It is difficult to determine an exact bulletproof number. The largest variable is product mix and efficiency. Another variable is beer loss, which can be exaggerated due to the style of beer.

For example: we brewed 930,000 barrels (Bbls) last year but only 865,000 Bbls were sent to saleable packaged beer. Some of it went into wooden barrels for future release, some of it was beer loss that just goes due away to filtration, or tank movement, or the amount of beer or wort soaked up by hops or sent out with grain or caught up in kettle trub.

We say our theoretical capacity is 1,000,000 Bbls, but it is probably slightly more than that. How much? It depends. Our target is 989,000 Bbls of beer sold for 2012. Could be more? We’re constantly making little tweaks here or there to increase efficiency. We’re talking about making a small brewhouse lauter improvement that would help the runoff go a tad faster…like 3-5 minutes faster per brew. It takes roughly eight hours per batch of beer. Well, that 5 minutes, times 80 brews a week equal out to be about 400Bbl a week in added efficiency.

Now, factor in beer styles. We have WAY more beer loss on a product like Hoptimum, or Imperial Stout, or limited and one-off packages due to the amound of grains used, the amount of hops, post-fermentation hopping, poor lautering…etc. If all we were making was Pale Ale, our capacities would skyrocket because of the efficiencies we’ve built into that beer.

Keep in mind, with all these new breweries, all anyone ever speaks of is brewhouse size (200Bbl, 250BbL..etc). Hot wort knockout size is the true measure. Our 200 Bbl brewhouse nets 213 barrels of wort. After loss we get 200 barrels per batch. The real limiting factor is not only the brewhouse itself but the cellars (although the brewhouse has much to do with that as well). It takes about the same amount of time to brew 100 Bbls as it does to brew 300Bbls at a time in a modern brewhouse. But filling fermenters and moving the beer from fermentation to filtration to packaging and out the door is where things get tied up.

Determining capacity is an equation: (time it takes to brew a beer + time it takes for fermentation + time for maturing/filtration + time for QC + time for packaging).

This has to be determined for all products in a brewery’s portfolio and then given weights depending on product mix percentages. That’s the rough calculation determined to establish capacity. From there, you have to extrapolate even further. Brewhouse efficiency (not just the time it takes to run, but the amount of extract (sweet wort) gleaned from your grain. We want to as much extract (good wort) as humanly possible while leaving the astringent (poor flavor quality wort) out of every brew so we want our mash/lauter efficiencies to be very high without sacrificing wort quality.

Yet another factor is fermentation tank size and shape. If I have a 1000Bbl fermenter and a 250 Bbl brewhouse, it would take 4 brews to fill it. You want to get a fermenter full within 24 hours so that subsequent brews aren’t added after yeast is done with its growth phase (risk of flavor shift increases). The problem lies then, if it takes eight hours to brew, then I would need to be running sequentially to fill the fermenters in the given time-frame. This is consequently the reason most breweries prefer to run 24 hours per day. Either I speed up the process somehow by adding a wort receiver or a second kettle or running system simultaneously…etc. Yet another factor is yeast propagation..etc. etc. The closer you look, the more variables you find.

So to sum up: Theoretical brewing capacity and maximum saleable beer capacity will be different but related. 1.2 million is probably the actual cap of what is possible in a perfect world for us. 1 million barrels is closer to the sales number. Expandable… maybe 10,000 barrels… maybe. It is a cost benefit equation for every decision. Again, this will differ from the number of barrels that make it into market. When people ask, we tell them we brewed 865,000 Bbls because that’s what made it into market. Even if we can squeeze out 1.1 million sales barrels, the odds that more than a million can be sold is pretty slim. For us 1,000,0000 is a functional capacity number here in Chico.

We should be flirting with that number this year and up against it in 2013.