The U.S. craft beer industry is projected to grow at an intermediate annual rate of over 10%. Despite nearly 10,000 breweries already operating in America, there remains a substantial market demand.
If you’re considering starting a brewery, developing a comprehensive business plan and outlining a road map for permits, financing, and marketing can significantly enhance your chances of success.
8 Steps to Starting a Brewery
Starting a brewery doesn’t require expert brewing skills. While beer is the centerpiece, multiple facets of the business need attention. Here’s what you’ll need to do:
Develop a Comprehensive Brewery Business Plan
A well-researched business plan is vital for small businesses, including breweries. Key components include an executive summary, company description, market analysis, organization and management details, a breakdown of services and products, marketing and sales strategies, financial forecasts, and an appendix with relevant documents.
Hire a Consultant
If your budget allows, consider hiring a brewery consultant to assist with various aspects of opening your brewery, such as finding a location and hiring a head brewer. A consultant can provide additional expertise on a one-time or ongoing basis, helping with large projects or specialized staff training. Choose a consultant with extensive industry experience, ideally as a brewmaster, and formal education in brewing or fermentation science.
Secure Financing
Even if you don’t need immediate financing, having a plan for managing increasing or unexpected costs is essential. You may use personal funds, investor capital, or commercial financing to cover startup costs. Loans from the U.S. SBA are also an option. The SBA guarantees loans through banks and other financial institutions, typically offering favorable rates and terms.
Apply for Permits
The Trade Bureau (TTB) requires beer industry businesses to obtain a free online permit. Additionally, brewery owners may need state and city licenses, including a liquor license. Local regulations can affect where alcohol is produced and sold. Breweries must also register with the FDA, comply with Good Manufacturing Practices, and be prepared for unannounced inspections.
Purchase Commercial Brewing Equipment
Investing in commercial brewing equipment, though costly, is crucial for long-term speed and performance. Key equipment includes a mash/lauter tun, brew kettle, heat exchangers, fermentation tank, bright tank, and containers like kegs, cans, or bottles. Custom-made equipment has long delivery times, while used options are more immediate but harder to find. This investment is significant, and equipment financing can help if capital is tight.
Establish an Insurance Policy
Having a business insurance policy is crucial before you start brewing. Brewery owners typically need liability insurance to cover damages or injuries related to employees or intoxicated customers. Additionally, business interruption coverage to compensate for lost income and commercial property insurance to protect your physical space are advisable.
Consider extending your coverage to include beer contamination, equipment breakdown, or beer leakage. If you plan to transport beer outside the brewery, look into policies that protect your beer in transit as well as retail auto policies.
Build a Taproom
Building or buying a taproom is a significant expense, whether you’re renovating a minimal space or transforming a cheaper building. Consider the intended use: if serving food, ensure sufficient kitchen space and dining areas. For tours and events, factor these into your layout. To stand out in the competitive brewery industry, invest in a distinctive design.
Location is key. Choose an area easily accessible to customers, either by foot or a short drive, or near other popular businesses. Balance the advantages of a prime location with the costs of renting or buying in a popular area. Major commercial areas and metropolitan locations are more expensive than smaller cities.
Open Your Brewery
When opening your brewery, focus heavily on advertising. Build a social media presence early to connect with your community. If budget allows, consider traditional methods like digital ads, print signs, billboards, or even TV and radio spots. Market analysis from your business plan can help craft a message that distinguishes your brewery.
Some breweries opt for a “soft opening” with a shorter group of friends and family before the grand opening. This can provide valuable practice for your staff in a real-world setting.
