The desire for locally made, handcrafted items has extended beyond food and home decor and into the beer arena. Breweries are more popular than ever before, particularly those that focus on regional specialties. In 2012, there were 2,420 craft breweries in the United States. By 2017, that number had jumped to 6,266, plus a large increase in the number of microbreweries. A brewery is a great business that can draw a devoted crowd of craft beer aficionados, as well as locals who simply want a great place to kick back with a few beers after work or to watch a game.
Yet starting a brewery can be expensive, both in terms of the equipment needed and the licenses, permits, and insurance required to break into the business. But with careful planning, hard work, and a solid business plan, starting a brewery is within reach.
How to Start a Brewery
Building a brewery requires a significant investment, both in terms of time and capital. To start, you will need a location: a building that can house the equipment necessary for brewing, as well as support the plumbing and electrical needs for your work. The key is to find a building of the proper size that will allow you room for growth, without being so big that you are paying for space that you aren’t using. If you plan to have a retail establishment, you will also want to consider a place with ample parking and a space that can be converted into a bar-type area.
Next, you will need equipment to fill your space and make your beer. Certain equipment is absolutely essential to brewing beer. This includes kettles, kegs, boilers, bottling and canning lines, conveyors, cooling systems, storage tanks, fermentation tanks, filters and beer-labeling machines, piping and tubing, refrigeration equipment, cleaning equipment, waste treatment systems, and tap handles. A good flooring system that can absorb spills without eroding is a must. And you’ll also need licensing, permits, and insurance.
Getting started can be challenging but can be accomplished through organizations like The Brewer’s Association, which offers resources for small and independent craft brewers looking to begin a brewery. For many people, funding can be the biggest hurdle in starting a brewery. Looking to a number of sources, such as friends and family, a home equity loan, and retirement accounts, can be a great start. Crowdfunding may also be a way to help raise the money needed to purchase equipment and secure a location for a brewery.
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What Are Common Brewery Startup Costs?
The most common cost for most business owners in starting a brewery comes with the purchase of equipment. Depending on the size of the brewery and whether the equipment is used or new, the necessary equipment can range from $100,000 to upwards of $1 million. Purchasing the equipment is just a first step, however; there are still a number of other costs that must be considered in starting a brewery.
Other expenses will include renting or purchasing a building that will house the brewery. In order to accommodate the equipment and the brewery’s needs, you may need to do substantial construction on the building. Adding a composite flooring that can withstand shock and spills should also be factored into the total expenses.
Finally, depending on where you live, you will need to apply for and obtain the necessary permits and licenses. All brewers in the United States must apply for a federal brewing permit with the Alcohol and Tobacco Tax and Trade Bureau, in addition to any local requirements for brewing and selling alcohol.
While these permits may be free or low cost, the legal advice and assistance that is often necessary to obtain them is not; in addition, your brewery must be set up for inspection before the permits can be issued, so that you will be carrying the costs of your business before you can start brewing and selling beer. Insurance expenses, as well as any legal fees necessary to set up the business, should also be considered as part of the overall cost of the starting a brewery.
Is Starting a Microbrewery a Better Alternative?
For many first-time brewers, starting a microbrewery is a much better alternative because it allows them to dip their toes in the water of running a brewery without incurring the substantial expenses of running a full-scale brewery. Starting a microbrewery is still costly — but more feasible for many people.
A microbrewery differs from a standard brewery in that it produces less than 15,000 barrels of beer per year, with 75 percent or more of its beer sold offsite. In contrast, a regional brewery has annual beer production of between 15,000 and 2 million barrels of beer, and a large brewery has an annual production of more than 2 million barrels of beer.
Starting up a microbrewery is similar to starting up any other brewery; it requires planning, a significant amount of capital, and dedication. Using the Brewer’s Association and other organizations as a resource can be a great place to start, along with talking to family and friends about the possibility of a loan to help you get your business started.
How Much Does It Cost to Start a Microbrewery?
There are many advantages of starting a microbrewery instead of a larger brewery. First, the costs are lower because you are making less beer. Instead of spending $1 million on equipment, you may be able to purchase all of the equipment that you need for $100,000.
Because your equipment is smaller, the building that you need to house it can also be smaller, saving you on real estate costs. Finally, the tax code has certain advantages for micro-breweries — the first 60,000 barrels that a brewery produces are taxed at just $7 per barrel instead of $18.
Some costs for a microbrewery will remain similar, such as the need for composite flooring, plumbing and electrical work, as well as any licensing and permits. However, with lower production amounts, the total expenditures for equipment and real estate should be substantially less, making a microbrewery a more feasible alternative for many new brewers.
Although starting a brewery can be a challenge and quite expensive, it is possible with careful planning, enough funding, and a commitment to the art of brewing. Beginning at the microbrewery level can be a great way to get started, allowing your new business to flourish and grow over time.