ON THIS PAGE
- How to Start a Brewery
- 15 Steps To Start a Brewery
- How Big is the Brewery Industry?
- What are the Key segments of the Brewery Industry?
- What External Factors Affect the Brewery Industry?
- What are the Key Customer Segments in the Brewery Industry?
- What are the Key Costs in the Brewery Industry?
- What are the Typical Startup Costs for a New Brewery?
- Additional resources in the Brewery Industry
How to Start a Brewery
If you’re looking to start a brewery, you’ve come to the right place. Since we’re going to show you exactly how to do it.
We’ll start with key brewery industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated. Then we’ll discuss keys to not only starting a brewery, but succeeding in it!
Importantly the most important step in starting a brewery is to complete your business plan. To help you out, you should download Growthink’s Ultimate Brewery Business Plan Template here.
15 Steps To Start a Brewery:
Starting a brewery can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful brewery.
1. Choose the Name for Your Brewery Business
The first step to starting a brewery is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your brewery:
- Make sure the name is available: Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also, check to see if a suitable domain name is available.
- Keep it simple: The best names are usually ones that are easy to remember, pronounce, and spell.
- Think about marketing: Come up with a name that reflects the desired brand and/or focus of your brewery.
2. Determine the Type of Brewery Business You Will Launch
When deciding to launch a brewery, you’ll need to determine the specific type or niche of brewery you want to establish.
Here are several types of breweries you can consider:
- Craft Brewery: A craft brewery focuses on producing small batches of beer, often with an emphasis on quality, unique flavors, and local ingredients. Craft breweries can produce a wide range of beer styles, from IPAs to stouts.
- Microbrewery: Microbreweries are similar to craft breweries but are typically smaller in scale, producing limited quantities of beer. They may also sell beer directly to consumers through taprooms or brewpubs.
- Nanobrewery: Nanobreweries are even smaller than microbreweries, often operated by a single brewer or a small team. They produce very limited quantities of beer and often serve it directly to customers on-site.
- Brewpub: A brewpub is a combination of a brewery and a restaurant or pub. They brew their beer on-site and serve it alongside food. Brewpubs can be an excellent option for those interested in the culinary aspect of brewing.
- Production Brewery: Production breweries focus on large-scale beer production for distribution to bars, restaurants, and retailers. They often have a wide range of beer styles and packaging options, including cans and bottles.
3. Develop Your Brewery Business Plan
One of the most important steps in starting a brewery is to develop your brewery business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
To enhance your planning process, incorporating insights from a sample brewery business plan can be beneficial. This can provide you with a clearer perspective on industry standards and effective strategies, helping to solidify your own business approach.
Your business plan should include the following sections:
- Executive Summary: This section should summarize your entire business plan so readers can quickly understand the key details of your brewery.
- Company Overview: This section tells the reader about the history of your brewery and what type of brewery you operate. For example, are you a craft brewery, microbrewery, or production brewery.
- Industry Analysis: Here you will document key information about the brewery industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis: In this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis: Here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your brewery? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization, and/or social media marketing.
- Operations Plan: In this section, you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team: This section details the background of your company’s management team.
- Financial Plan – In this section, you will document the financial projections for your brewery. This should include your sales and revenue projections, cash flow statement, and your expense budget, detailing the brewery startup costs.
- What startup costs will you incur?
- How will your brewery make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
You can download our brewery business plan PDF template here. This is a business plan template you can use in PDF format.
4. Choose the Legal Structure for Your Brewery Business
Next you need to choose a legal structure for your brewery and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the brewery and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a brewery together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a brewery include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a brewery is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your brewery, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
5. Secure Startup Funding for Your Brewery Business (If Needed)
In developing your brewery business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a brewery to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a brewery that they believe has high potential for growth.
6. Secure a Location for Your Business
Finding the right space for your brewery is a crucial step in ensuring its success.
Here are factors to consider when searching for the perfect location:
- Zoning Regulations: Check local zoning regulations to ensure that the area you’re considering allows for brewery operations. Zoning laws can vary significantly from one location to another.
- Accessibility: Choose a location that is easily accessible to your target market and suppliers. Consider proximity to major roads, highways, and public transportation.
- Space Requirements: Assess the space you need for brewing equipment, fermentation tanks, storage, a tasting room, and potential future expansion. Ensure the space is adequate for your brewery’s current and future needs.
- Utilities: Confirm that the space has access to essential utilities, including water, natural gas, electricity, and sewage systems. Adequate utility infrastructure is vital for brewing operations.
- Ceiling Height: Breweries often require high ceilings to accommodate tall fermentation tanks and equipment. Ensure the space has the necessary vertical clearance.
- Flooring: Consider the flooring material. Breweries typically have floors that are easy to clean and are resistant to moisture and chemicals.
7. Register Your Brewery Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
8. Open a Business Bank Account
It is important to establish a bank account in your brewery’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use.
- Gather and present the required documents, which generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address.
- Complete the bank’s application form and provide all relevant information.
- Meet with a banker to discuss your business needs and establish a relationship with them.
9. Get a Business Credit Card
You should get a business credit card for your brewery to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
10. Get the Required Business Licenses and Permits
Starting a brewery involves obtaining various licenses and permits to operate legally and in compliance with local, state, and federal regulations. The specific requirements can vary depending on your location and the scale of your brewery, but here is a list of common licenses and permits needed to start a brewery:
- Brewery License: Apply for a brewery license from your state’s alcohol control board or commission. This license allows you to produce and sell beer.
- Federal Brewer’s Notice: Obtain a Brewer’s Notice from the Alcohol and Tobacco Tax and Trade Bureau (TTB), a federal agency. This federal permit is required for breweries producing more than 60,000 barrels annually.
- State Alcohol License: Depending on your state, you may need additional alcohol licenses or permits, such as a manufacturing license, distribution license, or on-premises consumption permit.
- Local Permits: Check with your local city or county government for additional permits, such as a business license or zoning permit. Local regulations can vary widely.
- Health Department Permits: If you plan to have a tasting room or serve food, you may need permits from the local health department for food service and sanitation.
Depending on the type of brewery you launch, you will have to obtain the necessary state, county and/or city licenses.
11. Get Business Insurance for Your Brewery Business
Operating a brewery involves various risks, from potential equipment breakdowns to product liability issues. To protect your brewery, employees, and assets, you’ll need several types of insurance coverage. The specific insurance needs may vary based on the size of your brewery and the services you offer, but here are common types of insurance for breweries:
- Brewery Insurance Package: Brewery insurance packages are customized policies designed specifically for breweries. They typically include coverage for property, equipment, liability, and business interruption.
- Commercial Property Insurance: Commercial property insurance covers the physical assets of your brewery, including the building (if you own it) and its contents, such as brewing equipment, fermenters, and inventory. It protects against perils like fire, theft, vandalism, and natural disasters.
- Equipment Breakdown Insurance: This coverage helps you repair or replace damaged brewing equipment, such as boilers, chillers, and bottling lines, in case of unexpected breakdowns.
- General Liability Insurance: General liability insurance provides coverage for third-party bodily injury and property damage claims that may occur on your brewery’s premises. It’s essential for accidents like slips and falls or injuries caused by your products.
- Product Liability Insurance: Product liability insurance covers legal expenses and potential settlements if a consumer becomes ill or is injured due to a defect or contamination in your beer products.
- Liquor Liability Insurance: Liquor liability insurance is crucial if you serve alcohol on-site in a tasting room or pub. It protects your business from alcohol-related claims, such as drunk driving accidents.
- Business Interruption Insurance: Business interruption insurance helps replace lost income and covers ongoing expenses if your brewery is forced to close due to a covered event, such as fire or a natural disaster.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
12. Buy or Lease the Right Brewery Business Equipment
To run a brewery, you’ll need a range of equipment to facilitate the brewing process, maintain quality, and ensure safety. The specific equipment you need can vary based on the scale of your brewery and the type of beer you plan to produce.
Here’s a list of essential equipment for a brewery:
- Brewing System: Brew kettles, mash tuns, and fermenters are the core components of your brewing system. The size and number of vessels depend on your brewery’s capacity.
- Hot Liquor Tank (HLT): An HLT is used to heat water for various brewing processes, such as mashing and sparging.
- Cooling System: A cooling system, often consisting of a heat exchanger and a chiller, is essential to rapidly cool the wort after boiling.
- Fermentation Tanks: Fermentation tanks are where yeast is added to the wort to ferment and produce beer. They come in various sizes and configurations.
- Cellar Tanks: Cellar tanks include maturation tanks, conditioning tanks, and bright tanks for storing, conditioning, and carbonating beer before packaging.
- Pumps: Pumps are used for transferring liquid between vessels and through the brewing process.
- Mash Mixer and Lauter Tun: These vessels are used in the mashing process to convert starches into sugars and separate solid materials from the wort.
When planning your brewery, consult with a brewery equipment supplier or consultant to determine the specific equipment needs based on your production goals and budget. Keep in mind that the quality and reliability of your equipment are crucial for consistent beer production and overall success in the brewing industry.
13. Develop Your Brewery Business Marketing Materials
As part of your brewery marketing plan, marketing materials will be required to attract and retain customers to your brewery.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your brewery. Your logo will be printed on company stationery, business cards, marketing materials, and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional brewery website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn, and/or other social media networks will help customers and others find and interact with your brewery.
14. Purchase and Setup the Software Needed to Run Your Brewery Business
Running a brewery involves various aspects of management, from production and inventory control to sales and marketing. To streamline operations and make informed decisions, you may need several types of software.
Here are some essential software tools for managing a brewery:
- Brewery Management Software: Brewery management software helps you manage and streamline your brewing operations. It often includes features for recipe formulation, production scheduling, inventory management, and quality control.
- Inventory Management Software: Inventory management software helps you track raw materials, ingredients, and finished products. It ensures you have the right ingredients in stock and minimizes waste.
- Point of Sale (POS) System: If you have a tasting room or brewpub, a POS system helps manage sales transactions, track customer data, and monitor inventory in real-time.
- Accounting Software: Accounting software is essential for managing finances, tracking expenses, and generating financial reports. It can help with budgeting and tax compliance.
- Customer Relationship Management (CRM) Software: CRM software allows you to manage customer relationships, track sales leads, and personalize marketing efforts to build customer loyalty.
Research the software that best suits your needs, purchase it, and set it up.
15. Open for Business
You are now ready to open your brewery. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
How Big is the Brewery Industry?
According to IbisWorld, there are 3,025 breweries in the U.S, that generated $37.8 billion in revenue last year. This represents an annual growth rate of 0.4% over the past 5 years.
What are the Key Segments of the Brewery Industry?
The key segments of the brewery industry are as follows:
- Premium beer: 42.1%
- Sub-premium beer: 16.9%
- Craft beer: 15%
- Super-premium beer: 14%
- Progressive adult beverages: 6.4%
- Malt liquor: 5.6%
What External Factors Affect the Brewery Industry?
A number of factors affect the performance of the brewery industry. These drivers include:
Excise tax on beer: The excise tax on beer represents federal and median state taxes levied on beer, which is charged per gallon of beer produced. The excise tax on beer is expected to decline slightly in the recent years.
Per capita disposable income: The level of disposable income affects spending on industry products, which range from affordable sub-premium brands to more expensive limited-edition and ultra-premium brands. Per capita disposable income is expected to increase in the recent years.
Per capita expenditure on alcohol: Trends in alcohol consumption can either positively or negatively affect beer sales. Consumers’ incomes, cultural preferences or personal tastes can influence demand for beer.
Price of coarse grains: The price of coarse grains tracks the prices of barley, oats and sorghum. Malted barley is a major ingredient for beer production, so the price of grains is a strong indicator of the overall level of costs for the industry.
The price of coarse grains is expected to decline, representing a potential opportunity for the industry.
Demand from beer wholesaling: Wholesalers are a crucial link in the supply chain. Therefore, breweries need to carefully plan distribution to influence the level of product promotion within beer wholesaling outlets in order to maximize market share.
Demand from beer wholesaling is expected to increase only marginally, representing a potential threat to the industry.
Trade-weighted index: The trade-weighted index (TWI) measures the strength of the US dollar relative to the currencies of its trading partners. An increase in the value of the TWI will make the industry’s products relatively more expensive on the global market.
What are the Key Customer Segments in the Brewery Industry?
At just over 23%, Consumers aged 35 to 44 are the largest market for the brewery industry. This is followed closely by consumers 25 to 34 (22.8%) and consumers aged 45 to 54 (21.8%).
What are the Key Costs in the Brewery Industry?
The key financial metrics in the brewery industry are as follows:
Profit: Industry profit margins declined slightly over the five years to present to 6.9% of revenue.
Purchases: The largest costs to breweries are purchases of raw materials, which IBISWorld estimates will account for 40.0% of industry revenue in the recent years.
Wages: Labor has declined as a share of industry revenue over the past five years, accounting for 5.0% of industry revenue.
Depreciation, rent and utilities: Presently, depreciation is estimated to account for 4.5% of revenue. Rent makes up 4.6% of the Breweries industry’s revenue, a figure that has steadily increased as a result of the industry’s largest breweries expanding the square footage of their facilities in recent years. Utility costs make up 1.9% of industry revenue.
Other costs: Marketing is estimated to represent 4.5% of industry revenue.
What are the Typical Startup costs for a New Brewery?
The typical startup costs for a brewery are $100,000+ and include:
- Building expenses
Brewery is a very capital intensive business and the cost to start varies tremendously based on the type and size of the company.
Additional resources in the Brewery Industry
For additional information on the brewery industry, consider these industry resources:
Brewery Business Plan Example PDF
Download our brewery business plan pdf here. This is a free brewery business plan example to help you get started on your own brewery plan.
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