In today’s article on how to start a brewery; we are going to discuss some of the key points to help you on your way. Today, we will start with the basics; and later discuss in more detail via some follow-up articles.
Starting a brewery isn’t the easiest project to get involved in and it’s a large capital investment. It can seem a daunting prospect when you first entertain the idea of opening a brewery.
However, the brewing industry is an exciting one and some of the people you’ll meet along the way are great. As a matter of fact; have been in the brewing industry for 25 years now and I couldn’t imagine doing anything else.
The fact you take malt, hops, water, yeast and turn them into beer to sell to the world is one that never grows old. I know many brewers who feel the same way too. So how to start a brewery?
Let begin with your purpose…
You can’t be successful without a clear idea of where you want to go. So what do you want your brewery to be?
- Are you planning on being a microbrewery with on-site tap room?
- Do you want to be a production brewery with distribution?
- Are you going smaller and having a brewpub where all beer is sold on-site?
These are all legitimate models with others such as farm breweries and sour only facilities. Before you plan your craft brewery; you need to understand the end goal you’re trying to reach.
Choosing the type of brewery, you want to open is the first step in the process. Then some other points to consider are:
- Why do you want to open a brewery? There must have been something that excited you
- What will you offer that’s different from what’s already out there? How will you stand out to customers?
- What is your UVP (unique value point)? Why will people drink your beer over someone else’s?
Once you begin to answer these questions it needs to be molded into your brand and marketing. You need to get your message across to your potential consumers.
To say nothing of a clear message will help bring people to your beers and grow your brewery organically.
How to Start a Brewery? Legal Requirements
Every country has specific laws for opening a brewery. Beer is a consumable product; so, it has its own laws. Depending where you’re opening your brewery it can be a long drawn out process.
For example, in Australia you need to consider:
- State liquor license
- Waste water treatment
- Building permit
- Australian Tax Office permission for the production of alcohol
- And last but not least permit and license requirements and zoning classification
In China the process is similar to licensing a food and beverage business. As such you will need to acquire some of the following permits:
- From the Administration of Industry and Commerce (AIC) you’ll need a “Notice of the Company Name Reservation”.
- You’ll need the relevant health and food licenses. Microbreweries need to obtain a Food Production License (食品生产许可证). If you’re a brewpub you’ll need a Catering License as well (餐饮服务许可证).
- You’ll need approval from your local fire department
- And also, Environmental Protection Approval
As you can see it can be slow going but it all needs to done. It would be good to write all of this out and how much it will cost. This is where a spread sheet can be your friend.
As an aside prepare to add 10-20% to this budget. When it comes to opening a brewery there is always unexpected costs. It’s a fact and one every brewery owner will tell you is true.
Crunching the Numbers
When it comes to starting a business, it is about understanding the numbers. As we said opening a brewery requires a significant capital investment. You need to budget for your start-up costs.
Here are just some of the points you need to consider:
- Your location – how much is you rent going to be (oh and deposit)?
- Brewing equipment – brewhouse, CIP unit packaging plus bottles/cans and kegs
- Cleaning suppliers – Brewing is 70% cleaning
- Marketing and advertising – If you’re outsourcing or doing in-house
- Salaries – How many and what type of staff do you need?
- Insurance – You’ll need to pay premiums
- Utilities – Electricity, gas, internet and phone costs
- Fees – For all the legal stuff
- Raw Materials – Malt, hops, yeast etc.
You need to think about the bigger picture when it comes to finances. You don’t want any surprises (all though there will always be some) as your costs may spiral.
Additionally most brewery owners will tell you budget for all of your known costs and then add extra to cover for the “unknowable’s”. There are more details on finance at this handy article by Nerd Wallet.
How to Start a Brewery – Getting Experience
I would always recommend for anyone getting into the brewery business to get some industry experience first. It can be:
Getting behind the bar of a taproom – understand the customers and what you need to provide them
Meeting with a brewery executive – to go over a brewery financials
Shadowing a pro-brewer – to see what actual brewing entails
The more real-world knowledge you have; the quicker you’ll be able to diagnose problems, gain the confidence of your staff or entice potential investors if you’re looking for capital.
The other or additional option is to gain the help of a mentor. If you can gain the advice and help of an industry veteran or brewery consultant, they can help you a long the way.
A good mentor will be able to give you actionable advice, act as a sound board and point out potential issues.
Make Beer That Shines
We spoke about your target market in this article and of doing your research to see what people want. However, you don’t always have to guess what the next beer trend will be. If you make good beer people will drink it.
You don’t need to have the latest pastry stout or fruited sour. Make good beer…which means don’t stint on your ingredients. Yes, I know you need to save costs but quality is what will keep people coming back.
Your integrity will help you stand out and customers will know if you’ve skipped on quality in the name of profit. You got into brewing to make beer…make it the best it can be.
Become Part of the Community
At the beginning of the article I said “some of the people you’ll meet along the way are great”. The craft beer industry is more than a trade; it is a community. I believe it to be unique so get involved.
As a brewer with a large network of friends in the industry I can tell you we share ideas plus information, we help one another and we love to see people succeed.
Reach out to other breweries (most will be approachable), especially those who have a similar set-up to what your planning. They maybe willing to talk and share advice so you can learn from their mistakes.
Build on those relationships over time. At some point you might be in a position to help those who’ve previously helped you. Always see it as a two-way street; never just take, take, take…of course sharing beer always greases the wheels of friendship.
How to Start a Brewery – A Conclusion
I hope this article offered you some help in thinking about how you are going to start a brewery. It’s a long journey with many processes to go through.
As I said; we will drill down deeper into the nitty gritty in some follow-up articles. Setting up a brewery is a thrilling, exciting and daunting prospect so if you need further advice let me help.
Need Some Help with Your Brewery Start-Up?
My name is Neil and I am UK brewer with 25 years in the industry. I have done a number of installs and helped breweries grows their sales in my career.
I can help you with your plans for opening a brewery through actual install and becoming operational.
Why don’t you give me a call or contact me? I look for to hearing from you and ready to help.
Also we have converted this article to a PDF if you want to reference it offline. Click here to download the PDF.