By: Alyssa L. Ochs
In the United States, there are currently over 7,000 breweries, but that isn’t stopping entrepreneurs from opening even more in cities, small towns and rural areas. Fortunately, craft beer lovers are plentiful across the country, loyal to their favorite brands and curious to try new brews.
When making plans to open a new brewery, there are a few things to keep in mind.
Many things go into starting a brewery, even before searching for a physical location. You’ll need to choose a business structure for your brewery to operate within, such as an LLC with an operating agreement, which is often preferable to a brewery corporation because it’s quicker, easier and more affordable. You may choose to hire an attorney to handle these matters for you or give it a try yourself with online legal resources for a DIY approach. Insurance is also an important consideration to protect the business with liability, property and casualty coverage.
When it comes to the legalities of opening a brewery, things can get complicated quickly. Permits and licenses must be filed at the local, county, state and federal levels. Depending on where you live, regulations, licenses and permits vary, so be careful to do thorough research to eliminate surprises in this regard. Be aware of when to file permits as well. Filing permits in the wrong order can lead to delays or stymy plans altogether. State liquor licensing and a federal brewing permit from the Alcohol and Tobacco Tax and Trade Bureau can take several months to process, so file those as soon as possible.
You must also consider if you want a simple taproom or if you will include food in the business model. Those choosing to include food will face more permitting and costs for equipment and location modifications. The overall cost of opening a brewery is often between $250,000 and $2.5 million, and much of that money goes towards equipment.
The location you choose makes a huge difference in the type of customers you will attract and how your brand will grow in the future. At this stage of development, there is also the need to weigh the pros and cons of opening up on a busy street with lots of foot traffic versus opening in a more isolated industrial park with space to grow and more affordable rental prices.
Remember that you’ll need to secure the proper zoning for your new brewery and meet all the necessary legal requirements in your jurisdiction. Zoning laws matter because you want to create a favorable community gathering space that’s welcome with local neighbors.
While searching for a storefront, you must have at least enough funds for the first month’s rent and the security deposit for the lease. Also, consider any construction that will be needed to outfit the building for brewery purposes. For example, you will need a sturdy floor in your physical space that can withstand the beer-making process. Also, take into consideration the plumbing and electrical capacity of the building and start getting quotes from local contractors for any work that needs doing before opening.
Space requirements for your location may be based on equipment needed, but consider whether it’s in your best interest to secure a location with space to accommodate future fermentation tanks and storage needs.
Equipment is, by far, one of the biggest financial hits for a new start-up brewery. Equipment costs can range from $100,000 or less for a very small-capacity brewery, to over $1 million for a brewery that uses a new 30-barrel system.
The brewing equipment you need will primarily be based on the number, category and style of beer you plan to make. There are significant differences between a brewery that will only brew a couple of types of beer compared to one that is looking to launch eight to ten styles right away. Unless you have ample support staff and financial resources, most new breweries find it in their best interests to start small and build up their offerings and services over time.
The list of equipment needed for a brewery can be very overwhelming at first, but do your best to take it one step at a time. Some of the equipment to start thinking about and budgeting for early-on are kettles, kegs, boilers, bottling and canning lines, conveyors, cooling systems, storage tanks, fermentation tanks, filters, labeling machines, piping and tubing, refrigeration equipment, cleaning equipment, waste treatment systems and tap handles.
Now is also the time to learn about the differences in piping, tubing and brew pump equipment so you can make informed decisions about buying peristaltic, diaphragm or centrifugal pumps. Fermentation tanks and temperature gauges will be needed for beer storage. Meanwhile, immersion wort chillers and counter-flow chillers are essential for cooling systems, and brewing kettles and boilers are necessary for heating processes.
Andrew Ferguson, sales manager for Codi Manufacturing, told Beverage Master Magazine that packaging is more important than ever in today’s rapidly evolving beverage market.
“Codi manufactures complete canning systems that scale to meet the demands of our growing customers,” Ferguson said. “Codi’s counter-pressure filler allows for a high temp caustic CIP and over four CO2 vols, giving you the ability to package seltzers or other beverages.”
Ferguson said that a common mistake among brand-new breweries in the start-up phase is buying on price and speed instead of function and quality. He recommends always finding others who own the equipment you are looking at and asking for their advice.
“You can have the best hops, malts, yeast, water, recipe and brewer, but a bad packaging machine will ruin all your hard work,” he said. He also recommends buying spare parts to decrease your equipment’s downtime and avoiding machinery made with aluminum and cheap plastic materials so you can CIP with caustic at 180-degrees Fahrenheit.
“Form solid relationships with suppliers and stay in touch to get the latest updates and functionality out of the equipment you purchase.”
Stocking up on all the necessary equipment is often the first goal of a start-up brewery. According to Ron Mack, the regional sales manager for Bishamon Industries Corporation, one of the most common mistakes that new breweries make is being “laser-focused on production equipment and often forgetting to consider ergonomics that increase worker safety and productivity.”
Based in Ontario, California, Bishamon Industries Corporation specializes in quality, innovative, ergonomic products that enhance worker safety and productivity. The company offers a wide array of ergonomic assist lift equipment, including the EZ Loader Automatic Pallet Positioner, that are useful for craft breweries that hand-palletize cases of beer.
“This product keeps the top of the pallet load at waist height, eliminating worker bending, which can lead to back injuries,” Mack said. “The EZ Loader also features an integral rotator ring like a lazy Susan that enables near-side loading and eliminates reaching, stretching and having to walk around the pallet to load or unload. For breweries that do not have access to a fork truck for loading or unloading, we offer products that are pallet jack accessible, like our Lift Pilot and EZ Off Lifter.”
Bishamon products can significantly help reduce the risk of worker injuries related to lifting, bending, reaching and stretching while loading or unloading cases.
“Another great benefit is that the EZ Loader also significantly increases productivity, as pallet loading and unloading can be accomplished in much less time with much less effort,” Mack said.
Mack said breweries should “think about how to make the work environment, especially in the packaging area where the heaviest lifting is done, more ergonomic and efficient for the employees.” From ergonomics to scheduling and operations, making your employees’ needs a priority from the very beginning is a positive way to launch any type of new business.
Other Early-Stage Planning
Once you’ve gotten a handle on these aspects of opening up a new brewery, think about the customer experience and how your staff will work onsite starting on opening day. An efficient, friendly front-of-house staff can make all the difference for a brewery’s reputation, particularly in areas with a lot of competition. Start picking out and ordering glassware and growlers that reflect the brand image you want to create. Keeping the brewery hygienic and sanitary is essential to its long-term success, so make a list of cleaning products you’ll need and narrow down your list of suppliers. Before you get too entrenched in your operations processes, invest in a POS system to track inventory, outline your staff management system and begin thinking of ideas for a loyalty reward system to entice new customers.
Building a clear brand identity early-on to help you stay focused, and establishing a robust online presence as early as possible can spread the word about your new brewery.
Also, consider your relationships with vendors. Ferguson from Codi told Beverage Master Magazine new breweries would be wise to support family-owned suppliers who are invested in the industry.
“Private equity held manufacturers are lowering quality to meet your price point and are not concerned about your long term needs,” he said.
Starting a new brewery is rarely easy, but it’s often worth it if craft beer is your passion, and you have a great business plan and support team behind you. As you prepare for your initial launch, remember some things can wait. Focus less on merchandising, loyalty programs or decorating for every event and allow the business to grow a little at a time. Once you’re established with a good reputation, those things will come naturally and pay off quickly.