how to start up a craft brewery？

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

 

Table of Contents：

1.What are the startup and ongoing costs?

2.Who is your target market?

3.How much can you charge customers?

4.What will you name your business?

5.Luckily we have done a lot of this research for you.

 

What are the costs involved in opening a brewery?

It can cost upwards of $500,000 to open a brewery. The major cost contributors include renting space for 12 months (typically over $50,000) the operational costs for the first three months (approximately $60,000), and the brewery equipment itself, which costs approximately $18,000. Start-up inventory can cost over $16,000, while equipment costs for counter areas, serving areas, and store equipment can $26,000 or more. Meanwhile, legal costs—including obtaining proper licenses and permits, hiring a consultant, and purchasing required insurance—is likely to cost approximately $7,500.

 

For those who want to get into this kind of business at a much lower cost, a nanobrewery is a better idea than a full-scale brewery. Because a nanobrewery typically produces fewer than 20 barrels per year, your equipment is smaller in scale and you need less of it and fewer annual materials. Needing less space means also means you can get away rent a much smaller office space than a brewery would require. In fact, many people convert their home garages into a nanobrewery.

 

What are the ongoing expenses for a brewery?

Many of the ongoing costs of this business are variable depending on region, business size, and fluctuating markets. The primary expenses will be paying for the materials required to brew (such as malt, yeast, hops), ongoing utilities costs (such as electricity, gas, sewage) and the ongoing costs to clean and repair equipment, including regularly purchasing cleaning equipment. Beyond this, ongoing expenses include paying monthly rent for the business and paying salary for any employees.

 

Who is the target market?

Brewers don't usually deal with customers directly. Rather, their clients are the beer distributors. One way to find distributors is to seek out the local major distributors that specialize in selling brands like Coors, Miller, and Anheuser-Busch. They may not be interested in selling your local flavor, but their deep history and network can likely point you towards local distributors specializing in imports (a good option for small brewing businesses) or those who specialize in handcrafted beers (an ideal option for a small brewing business).

 

How does a brewery make money?

A brewery typically operates on a three-tier system to make money. Under a three-tier system, the brewer uses a distributor to sell alcohol to local bars, grocery stores, liquor stores, etc. These customer facing establishments then sell to the consumers. Microbrews are sold consistently throughout the year and many brewers create unique seasonal offerings. Therefore, it is important to note that even though beer is sold regardless of the season, sales peak during the summer and winter seasons, but they experience dips going into fall and spring.

 

Brewers who are just starting out may consider self-distribution: while this is not allowed in every state, it enables the brewer to cut out the distribution middleman and sell beer directly to their local areas. In doing so, breadth of distribution will be limited, however reduced overhead means operational costs and beer costs can be lowered.

 

How much can you charge customers?

The final end-customer price of your microbrew to customers is usually a minimum of $10 for a six-pack. Depending your beer's popularity and brand qualities, you may be able to support pricing upwards of $15 per sixpack.

 

While these are standard prices in the industry, it’s critical that all ongoing costs are recovered in the pricing with a reasonable profit margin. Ongoing costs include brewing, bottling and packaging beer while also factoring in an average distributor margin of 21 percent and an average retailer margin of 31 percent, as well as relevant state, federal, and sales taxes.

 

How much profit can a brewery make?

In general, a brewery can turn a profit—microbreweries had a 9.1 percent profit margin in the Unites States in 2014. It's important to keep in mind that it may take over a year for a new brewery business to regularly turn profit, though, and that fluctuations in the cost of things like grain can cut into that profit margin. Finally, there is a constant need to reinvest some of the profit into growing the business to reach more customers and stand out from the competition.

 

How can you make your business more profitable?

Find a distributor willing to sell these craft beers to a larger demographic.

Start one of the sideline businesses mentioned in this article; open a taproom and/or a restaurant.

The steadiest path to increased profit is increased production: the ability to generate more barrels per year is directly tied to the amount of profit you can earn, which may eventually mean upgrading equipment in order to generate more business.

 

If you are ready to open a craft brewery, you can contact us. Micet Craft’s engineers will provide you with a list of craft brewery equipment and related prices. Of course, we can also provide you with professional turnkey brewery solutions, allowing you more time to focus on brewing delicious beer. Micet Craft very much hope to cooperate with you, my friend!

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