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Tips to Start Your Own Craft Brewery

There are now more than 4,000 small breweries and brewpubs scattered across the U.S. But like any business, surviving long term can be a real challenge, particularly because the market has become so crowded over the past 20 years.

To compete, you’ll need to carefully evaluate your market and create a clear vision of what you have to offer that other direct competitors do not provide. There is still room in the market for businesses that offer niche products and in less-saturated local markets. You’ll have a better chance for success if you can create a solid vision of what you want to offer, not just with beer recipes, but also with branding.

This article covers these topics related to starting a craft-brewing business:

There is a lot to learn to become a successful brewer. Experts recommend that even seasoned home brewers spend some time working in a brewery before starting their own business. Entry-level work usually involves a lot of cleaning, sterilizing and other tedious tasks, but you’ll learn the daily routines of a busy brewery. After you put some time in, you can move up and learn additional job skills that pay more, but it’s worth your time to learn all the job positions in a productive brewery.

If you have the time and resources, formal training programs are also available, including university degrees. Certificates and four-year degrees are offered in states such as Michigan, California, Colorado, Oregon and Missouri. International schools are also available in places such as Belgium, Germany and the United Kingdom. Alternatively, you can find online courses and even free programs. Portland State University offers a certificate program specifically focused on the business portion of running a brewery, whileCraftBeer.com offers free and low-cost educational opportunities.

Your first plan of action will be to create a solid business plan. And then, according to many brewers, to prepare to pay out twice the amount you think it will cost to launch your business. A lot of unexpected expenses can pop up, such as additional contractor expenses for altering your building, or delays in acquiring permits that push out your production date. Depending on the size of your operation, the number of barrels and whether you plan on operating a brewpub or a stand-alone brewery, your costs can vary greatly. Most industry experts report a general range of $500,000 to $1 million to start a small brewery.

Some costs to consider include:

  1. Equipment: Kettles, boilers, kegs, cooling systems, storage tanks, fermentation tanks, filters, tubing, pipes, cleaning equipment, waste management systems, canning or bottling equipment.
  2. Building: Often includes the costs of reinforcing the floor and remodeling to accommodate equipment and pickup and deliveries, lease or rental fees, inspections, water system alterations, consider room for future expansion.
  3. Supplies: Hops, malt, yeast, bottles, labels, packaging.
  4. Utilities: Energy, water, internet, telephone.
  5. Insurance: Business, liability, unemployment, workers’ compensation, property and others as required.
  6. Licensing & Permits: Varies by area.
  7. Professional Services: Brewing industry consultant or mentor, accountant, marketing, legal services.
  8. Furniture: Varies, if restaurant or brewpub expenses will be more.
  9. Payroll & Ongoing Expenses: Hourly and salary payroll expenses, payroll taxes, sales tax, legal services.
  10. Electronical Equipment: Computers, phones, POS system, automated monitoring systems, mobile devices, security cameras, printers.
  11. Software & Services: Network security, alarm monitoring, inventory control system, accounting software, credit card processing, website URL and hosting.

Having a realistic and thorough business plan is absolutely necessary to your brewery’s long-term success. Investors want to see not just a general plan, but as many as three years of projected financials.  Even if you have capital saved, you’ll still benefit from a bulletproof financial plan. We recommend that you consult with a professional who can help you create your business plan plus provide financial advising, legal assistance and help with obtaining funding. These services are not free (often around $5,000) but worth the investment.

Before you meet with your consultant put together as much as you can, including your startup costs, expected ongoing costs and revenue projections, business vision and anything else you think of to help you and your consultant put together the best business plan possible.

If you are looking to build a new brewery, with all new equipment, and ask for large sums of investment or loan money, you’ll need to quantify your passion and present it in a way that your potential investors will understand.

The U.S. requires a three-tiered system for alcohol distribution. This has been in place since the repeal of Prohibition. The three parts are producers (you, the brewer), distributors and retailers. You sell your product to wholesale distributors and they in turn sell to the retailers, who sell your product to the end-user, the beer drinker.

Most states also have their own requirements and are often involved somewhere in the distribution process (with the exception of brewpubs, which manufacture the beer and sell it directly to patrons in the pub). Some of the more prohibitive states ─ Utah and Pennsylvania, for example ─ control at the distribution and retail levels. You’ll need to research what your specific state requirements might be, as well as those states you plan to sell in.