Starting a brewery
According to the Brewers Association, there were 6,372 breweries in the U.S in 2017, with microbreweries making up 3,812 (approximately 60%) of this total. A standard brewery produces beer in large quantities, normally more than 15,000 barrels per year. A microbrewery, which is also known as a craft brewery is a smaller operation, which produces less than 15,000 barrels per year. Microbreweries are generally owned by individuals because of the small scale. Owners of microbreweries produce beer in distinctive flavors and use a different technique than conventional breweries.
Although microbreweries are smaller in size than traditional breweries, they still require a significant amount of planning and money to get started. Entering the brewery industry requires a lot of investment because the beer industry is heavily taxed. However, there has been a new tax code that provides two years of tax relief for American brewers. Creating your first brewery business plan is essential to increase the likelihood of success of your brewery or microbrewery. Your first brewery business plan is a useful tool to help you to secure funding and to efficiently operate your brewery or microbrewery.
Download a Brewery Business Plan sample below to get started:
You should take the following first steps before crafting your first brewery business plan:
Research the brewery industry by reading all the information that you can find. Case studies, books, and articles all provide useful tips about what it takes to operate a brewery business.
Connect with other brewers who operate successful breweries and ask as many questions as possible. There is nothing like getting first-hand information about the pitfalls to avoid when starting your brewery business.
Brainstorm names for your beers and research whether the names have been trademarked. This step is important to prevent you from wasting money on marketing and promotional materials only to find out that you are not permitted to use the name.
Most brewers have a passion for making beer, however, this passion may not sustain a thriving business if they fail to plan for every eventuality in starting and operating a brewery or microbrewery. The questions below will help you to clarify your vision if you are planning to start a brewery, microbrewery, or craft brewery:
- Have you made a commitment to find out every federal and state law in the very heavily regulated brewery industry?
- Will you choose a production brewery or a brewpub?
- How will you differentiate your brewery from all the others?
- What types of drinks will you brew? Are you going to focus on just ales or will you include other drinks, for example, lagers?
- Are you thinking of opening more than one location?
- What will your distribution network and channels look like?
- Are you going to concentrate on selling your drinks in your own bar?
Crafting your first brewery business plan
You can start your brewery or microbrewery business plan from scratch or you can download this sample below:
Brewery Business Plan Sample Downloadable Link
The following sections should be included in your business plan irrespective of whether you are starting a traditional brewery, a microbrewery, or planning to sell craft beer:
An executive summary – The executive summary of your first brewery business plan is an overview, which provides an outline of the key points mentioned in the rest of the document.
Goals and objectives – The goal section informs the reader about where you plan to take your brewery business and your objectives specify how you will achieve your goals.
Company summary – You should provide details of your brewery company in this part of your brewery business plan. The company summary should include your history and what makes you unique. It should also highlight any accomplishments and awards that your beers have received.
Company ownership – It is useful for investors to know as much as possible about the person or people behind the brewery business. Use this section to describe your experience and qualifications for operating a brewery. Ensure that you focus on the strengths of each joint owner and how they will use their expertise to ensure the brewery is a success.
Market analysis – In this section of your brewery business plan, provide the reader with an overview of the brewery industry. You should state facts and figures about the growth and popularity of beers on a national and local level. Additionally, you will need to provide information about the demographics of the area where you will be selling your beer. Lastly, you must explain the reasons for the growth in beer sales and provide evidence to suggest that this trend will continue in the future.
Strategy and implementation – Use this section to explain how you will grow your brewery business. Provide advice about your sales strategy by giving details about the number of salespeople you will employ and the commission that will be paid. This section should also include information about whether you intend to provide discounts for wholesale customers.
Sales forecasts – You should provide details about your sales forecast for a minimum period of three years. Investors need to have an idea of how they will recoup their money and this section will give them details about how you believe your brewery will perform.
Management – This part of your brewery business plan will give details about the personnel that will be required to operate your brewery. You should list all the members of the management and non-management team, including the salary you intend to pay. At the end of this section, you should provide the total that you expect to spend on payroll.
Financials – The financial aspect of your brewery business plan goes into detail about the important numbers that investors will review to make a decision about whether to fund your brewery. The financial section of your brewery business plan should include a break-even analysis, profit and loss forecast, and projected cash flow.
Appendix – Use the appendix of your brewery business plan for supplementary information that could not be expanded on in the body of the document. For example, you could include a full breakdown of your personal plan and the general assumptions that you have made in relation to certain financial forecasts.
How to start a brewery
After you have researched and spent time creating your business plan for your brewery or microbrewery and you have received the relevant funding, take the steps below to start your business:
Choosing a location for your brewery or microbrewery is one of the most important decisions you will need to make. The ideal scenario is to start your brewery or microbrewery business in the area that you would like to serve. You need to consider whether the area of your choice has premises with enough space, the appropriate zoning, access for raw materials, and customer access.
The type of equipment you use can make or break your brewery or microbrewery. You could decide to go with a new customizable system to make your craft beer. However, this could take a considerable amount of time and might delay the opening of your brewery. Alternatively, you could buy a used system but you may face issues if the system breaks down and the seller does not provide support. The following are some necessary equipment when operating a brewery or microbrewery:
- A mash system – If producing at least 1000 liters of beer per batch, you will need a mash system that includes an electric steam generator, mash tank, lauter tun, malt mill machine, heat exchanger, and a wort pump.
- Fermentation systems – You will need a fermentation tank, cooling pump and equipment for adding yeast as part of the fermentation process.
- Filter systems – To get rid of sediments, you will require a filter pump and a diamite tank, which also improves the quality of your beer.
- A cooling system – A refrigeration machine and a large liquid tank are necessary to get your beer cool and to avoid bacteria growth.
- Controls – Controls are required for your refrigerator and you will also need a master controlling board for your pumps and all electronics to ensure the safety of your microbrewery.
- Cleaning and sanitation – An alkali liquor tank, a washing pump and a large tank are necessary for your sterilizing solution. This equipment should be used to sterilize your microbrewery’s equipment.
- A bottling/kegging tap – You must have a pump to keg your beer and a bottling plant if you intend to bottle your beer.
You should have already projected your brewery’s or microbrewery’s startup costs during the business planning process. You can choose several different routes to fund your brewery or microbrewery, including a conventional bank loan, private investors, or a Small Business Administration (SBA) loan. According to profitableventure.com your brewery’s or microbrewery’s startup costs should include the following:
- Business registration fee – $750.
- Legal expenses for securing licenses and permits – $1,300.
- Marketing and promotion expenses for the grand opening – $3,580.
- Business consultancy – $2,500.
- Permits, insurance and licenses – $5,000.
- Building or renovating your microbrewery – $200,000.
- Equipment for the brewery – $150,000.
- Office equipment – $15,000.
- Website – $700.
- Miscellaneous – $5,000.
The start-up costs for a medium-sized brewery is about $750,000. This figure includes staff pay for the first three months of your business. The start-up costs for a microbrewery ranges from $250,000 to $500,000. A large brewery will require start-up capital of around $2.5 million. Due to the significant investment required for starting breweries and microbreweries, it is critical that you understand your financials to have a realistic projection of when you will break-even and start generating a profit.
It is necessary to hire expert contractors to renovate your premises in order to operate an efficient brewery or microbrewery. Whether you have bought or leased a property, you will need people with the appropriate experience and skills to ensure that your brewery or microbrewery has:
- The suitable ventilation to cope with a large amount of steam that will be produced during the process of making your beer.
- Proper drainage to effectively deal with thousands of gallons of beer.
- Quality flooring to withstand the wear and tear and that can hold up under the high acid content of spilled beer.
Like any other business, your brewery or microbrewery will need to be covered by different types of insurance. The various types of insurance you will need to protect your brewery or microbrewery includes:
- Equipment breakdown coverage.
- Product recall coverage.
- Crime coverage.
- Market valuation coverage.
- Workers Compensation.
Time to start brewin’!
Crafting your first brewery business plan will take a significant time investment, however, this process is necessary for you to decide whether you want to turn your passion into a business selling beer that people love.
Once your business is up and running, why not give Deputy a try to take care of all your scheduling, tasking, timesheet, and internal communication needs. To learn more about employee management software and how it can benefit your business, click on the button below to begin your free trial: