In the last few years, there have been a growing number of brewery craft businesses springing up in various parts of the world. According to research, there are about 4000 small breweries in the United States alone and the market has become so crowded in the past 20 years.
Therefore, if you are interested in starting a brewery business that stands out, you should be ready for the thrilling and terrifying experience you might go through. You must take time to evaluate the brewery market and create a business plan of what you want to achieve. Here are the top things you need to start a brewery.
Create a detailed business plan
Brewery startups that plan to grow 30% faster must have a well-detailed business plan which services as a guide. A business plan contains an executive summary, company description, market analysis, organization and management, services and products, marketing and sales, financials, and appendix. It shows the processes that must be followed to achieve organizational goals.
Choose a brand name
It is vital to pick a unique brand name that sells your business ahead. Your brand name must match your vision, mission and objectives. In addition, ask yourself, what type of brewery do I want to go into? Some of the breweries you could opt for include:
- Nano Brewery: This is the smallest brewery type; they have no targeted amount of beer to produce.
- Microbrewery: The microbrewery is owned independently and produces less than 15,000 beer barrels annually.
- Brewpub: This is a restaurant cum brewery; they brew solely for customers at the bar.
- Taproom Brewery: These are professional breweries; they sell onsite and through vendors.
- Regional Brewery: This type of brewery produces between 15,000 and 6 million beer barrels annually.
In creating a brewery, you need to think about financing your business. If you do not have the capability to finance all aspect of your brewery business; you should try securing additional finance through the following means:
- Investors: Pitching your business plan to investors is a great way to generate funding. This is why you need a well-structured and detailed business plan.
- Loan: There are several opportunities available to startup brewery businesses for loans. There can be conventional bank loans, short-term business loans, equipment loans, or Small Business Administration loans.
- Crowdfunding: Here, the brewery is funded by donations from the public through platforms like GoFundMe.
Brewery Business Permits
To legally operate a brewery business, there are specific licenses you would obtain. A permit from the Alcohol and Tobacco Tax and Trade Bureau within the US Department of the Treasury is vital. This organization regulates the beer industry. You also need to obtain a liquor license from the state in which the brewery operates. Depending on your style of service, you might need to apply for a limited or full license. You also need to get registered with the Food and Drug Administration and pass an impromptu test.
Choose a location for your brewery business
In addition, it is vital to pick a unique location for your brewery business. Remember that this type of business is quite different and cannot be situated in just any place. In determining the location for your brewery, there are certain factors to take into consideration. They include:
- Zoning: In some states, breweries can only be located in industry-designated areas. Take time to go through your state laws before choosing a location.
- Brewery Requirements and Building Space: Ensure that the building fits your production expectations. There should also be enough space for storage, machines, equipment and your employees.
- Safety Precautions: Ensure that the building passes all safety inspections to give room for safe daily operations.
It is important to invest in the appropriate supplies and equipment when starting a brewery. These machineries might be expensive, they are worth the investment: Some of the most important equipment needed in the brewery industry include the following:
- Beer brewing equipment such as Brewhouse, fermenters, boiling equipment, and brew kettles.
- Bear bottling and packaging supplies such as growler fillers and beverage shippers.
- Keg tapping, dispensing, and serving equipment like tap towers, beer dispensers, pump keg taps, and nitro infuser boxes.
- Refrigeration equipment for cooling.
- Beer-making accessories such as test strips and meters, portion scales, and stockpots.
- Beer glasses
- Beer ingredients and flavoring such as honey, wood chips, and chunks, cocktail bitters, liquid malt extract.
Before starting a brewery, you should work with an insurance firm to cover various damages that might occur in the future. Such damages could be workers-related injuries, intoxications of customers, business interruption, loss of business income, fire accident and many more. The insurance should also cover beer contamination, beer leakage, or equipment breakdown. If your products are transported, policies to protect the beer in transit should also be looked into.
Cost of Starting a Brewery
Depending on the brewery’s size and offering, the cost of starting a brewery could be between $250,000 and $2.5 million. Contributing to this are the equipment, building requirements, and cost of licenses. Taxes are also a contributing factor, and this depends on your state of operation. In 2018, the Craft Beverage Modernization and Tax Reform Act (CBMA) took effect. It reduced the federal excise tax per barrel from $7 to $3.50 for the first 60,000 for breweries that produce less than 2 million barrels yearly. Other breweries pay $16 per barrel on their first 6 million barrels and $18 per barrel when they pass 6 million. Other taxes include state excise tax, property tax, sales tax, payroll tax, federal, state, and local income tax.
A brewery business is quite a lucrative one. This is why so many startups are springing up in various parts of the globe. However, before starting a brewery business, it is vital to create a detailed business plan, know the total cost involved, get the right equipment and follow the guides listed in this article.