Are you interested in starting a microbrewery business? If YES, here is a complete guide to starting a microbrewery at home with little money and no experience.
Okay, so we have provided you an in-depth sample microbrewery business plan template. We also took it further by analyzing and drafting a sample microbrewery marketing plan backed up by actionable guerrilla marketing ideas for microbrewery businesses. In this article, we will be considering all the requirements for starting a microbrewery. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Beer Industry Overview
- Market Research and Feasibility
- Microbrewery Business Plan
- Microbrewery Marketing Plan
- Microbrewery Name ideas
- Microbrewery Licenses and Permits
- Cost for Starting a Microbrewery
- Microbrewery Marketing ideas
Starting a brewery plant is sure expensive. Also, at the same time it is a profitable business venture. The mere fact that entrepreneurs who intend investing in the brewery industry have the option of starting on a small scale – microbrewery makes the industry open to both big – time investors and small investors.
As a matter of fact, most entrepreneurs who may have plans to launch theirs might not have the start – up capital to build a standard brewery, which is why it is easier to find microbreweries scattered all around the United States.
Why Start a Microbrewery Business?
Beers are one of the drinks that are generally consumed in most parts of the world except for few countries (mostly Arab countries where sharia law is practiced). As a result, there is a large market for beer no matter the quantity you produce per time- which is why starting a brewery business is considered to be a profitable venture.
No doubt, if you have the skills to brew beers of various flavors, then you need not waste time because you can turn your knowledge and experience into money spinning venture by starting your own microbrewery in any city in the United States of America.
A standard brewery is a plant where beer is brewed in large quantity – this is usually well above 15,000 barrels of beer annually by fermentation. On the other hand, a microbrewery or craft brewery as it is called in some quarters, is a brewery (plant) that produces a small amount of beer per time (at most 15,000 barrels of beer annually). It is indeed a small scale brewery that can’t be compared to the conventional brewery plants and it is usually owned independently.
In order words, any entrepreneur who has some cash and brewing technique can comfortably start his or her own microbrewery business in the United States. Generally, the selling point for microbrewery is characterized by their emphasis on their unique flavor, the quality of their beer and their brewing technique.
What Does It Take to Start a Microbrewery Successfully?
It is important to state that before you can successfully launch your brewery plant in the United States of America, you are expected to meet certain laid down rules and regulations. First and foremost, you are expected to apply and get approval (license) from the Alcohol and Tobacco Trade and Tax Bureau (TTB), state wholesale license and any other license that is required by the local authority where you intend operating from. It is TTB that has the authority to approve your beer label and the facility that you intend brewing your beer from.
As a matter of fact, official from TTB would have to conduct site inspection of your brewery plant before you can be given the go ahead to start brewing beer for public consumption and this process usually takes between 6 months to one year to complete.
Starting a Microbrewery Business – A Complete Guide
- Industry Overview
According to statistics made available by the Brewers Association of America, the overall sale of beer in the United States grew by 0.5 percent, the volume sale of craft beer grew by 17.6 percent, and the sale of import beer grew by 6.8 percent, while the export of craft beer from the U.S. to other countries grew by 39 percent.
The overall beer market in the United States is worth $101.5 Billion in 2014 and the overall craft beer market is worth $19.6 Billion (experiencing about 22 percent sales growth).
- Interesting Statistics About the Beer Brewing Industry
Statistics has it that The United States of America is the second leading country in global beer production with an amount of about 224 million hectoliters of beer. For instance, in 2011, the United States of America was ranked 15th in the world in per capita beer consumption. The total numbers of registered breweries in the United States is 3,464.
A standard brewery plant is expected to brew well over 15,000 barrels of beer annually and should have at least a region presence. In other words, any brewery that has the capacity to produce less than 15,000 barrels of beer annual is considered a microbrewery in the United States of America and in most parts of the world.
This is why most people who venture into the beer production business start microbreweries because it requires very minimal startup costs than when compared to a standard brewery.
Records have it that loads of entrepreneurs started making money from microbrewery business as far back as 1970s. It started in the United Kingdom before spreading to other parts of the world. Owners of microbreweries became more creative and they were able to brewery their own unique beer and sell them in their own pub or restaurant. With that, they were able to increase their productions and maximize profits.
Ever since the introduction of microbrewery in the United States in 1982, there has been a tremendous growth in the industry so much so that the Brewers Association of America reported that in 2012 there were 2,075 regional craft breweries, microbreweries and brewpubs in the U.S. and they are indeed contributing their own quarter in the growth of the U.S. economy.
Despite the fact that there are well over 3,000 registered breweries in the United States the industry can’t be said to be saturated, as there are rooms for entrepreneurs and investors who are interested in the industry to still start their own breweries in the United States. Although starting a new brewery in the United States may require aggressive marketing, because there are well established breweries you will be contending with for the available market.
Some of the factors that motivates and encourage entrepreneurs to venture into brewery business is the fact that there is a vast market for beers and of course the business is profitable especially if you are able to penetrate the existing market within the region you intend launching your brewery plant.
Starting a MicroBrewery Business – Market Feasibility Research
- Demographics and Psychographics
When it comes to selling beers, there is indeed a wide range of available customers. In essence, the demographics and psychographics can’t be restricted to just a group of people, but all those who love beers and those who would want to try it out. One thing is certain, if you are going to sell beer in the United States, it must be sold to people who are above 18 years not to under age.
If you are looking towards starting a brewery, then you can be prepared to sell your beers to the following group of people;
- Corporate Executives
- Business People
- People in the entertainment industry
- Sports Men and Women
- Government Officials
- College Students who are above 18 years
List of Niche ideas Within the Brewery Industry You Can Specialize in
There are two basic niche ideas within the brewery industry that an entrepreneur who is looking towards starting a brewery business can choose from. They are;
- Standard Brewery Plant
- Micro–Brewery OR Craft Brewery
Aside from the sizes of breweries, breweries can choose to specialize in the brewing of different types / flavor of beers such as Pale Beers, Amber Beers, Dark Beers, Hebrew Beers, Gluten Free, Organic Brews, and Cider
- The Level of Competition in the Brewery Industry
The fact that beers are consumed globally encourages entrepreneurs to come into the industry hence the level of competition in the industry.
There are different levels of competition in the brewery industry and it exists between companies that own larger breweries and also between companies that own microbreweries. It is normal for standard breweries whose beers are distributed regionally or nationally to compete with one another while microbreweries that operates within same location competes for the available market share.
It is also worth mentioning the breweries in the United State also compete with breweries from other countries simply because beers are imported from other countries into the United States.
The truth is that, despite the high level of competition in the brewery industry, entrepreneurs who run the business are still making their profits and some of them generate as high as 50 percent turnover rate especially those microbreweries / craft breweries that are well positioned and over time have been able to secure loads of loyal customers.
List of Well – Known Brands in the Brewery Industry
- Anheuser-Busch Inc. – St. Louis, MO
- MillerCoors – Chicago, IL 0
- Pabst Brewing – Los Angeles, CA
- G. Yuengling and Son – Pottsville, PA
- Boston Beer, Co – Boston, MA
- North American Breweries – Rochester, NY
- Sierra Nevada Brewing – Chico, CA
- New Belgium Brewing – Fort, Collins, CO
- Craft Brew Alliance – Portland, OR
- Gambrinus – San Antonio, TX
- Lagunitas Brewing – Petaluma, CA
- Deschutes Brewery – Bend, OR
- Bell’s Brewery, Inc. – Galesburg, MI
- DuvelMoortgat USA – Kansas City & Cooperstown MO/NY
- Minhas Craft Brewery – Monroe, WI
- Brooklyn Brewery – Brooklyn, NY
- Stone Brewing – Escondido, CA
- Matt Brewing – Utica, NY
- Harpoon Brewery – Boston, MA
- Dogfish Head Craft Brewery – Milton, DE
Launching a brewery plant is just like starting any other business and it requires that you conduct your feasibility studies and market survey. This is so as to get your economic analysis right. As a matter of fact, you just have to get your economic analysis right if your intention of building the business is to generate profits, grow the business and perhaps distribute your beers beyond a region to other regions within the United States and other cities in the world.
When conducting economic analysis for your brewery business, you have to critically examine these key factors; place, product, pricing, and promotion. As a matter of fact, you would have to continue to review these key factors at regular interval while operating your brewery business.
It is important for entrepreneurs who are interested in starting a brewery to be aware that running a microbrewery / craft brewery is different from running or operating a standard brewery plant. Running a standard brewery plant attracts additional responsibility like comprehensive distribution network, bureaucracies, growth strategy, and operational guidelines et al.
Is the Brewery Business Worth Starting from Scratch or is Buying a Franchise Better?
When it comes to choosing how you intend starting a business, you should be guided by your business vision and mission statement. In other words, if your aim of starting a brewery business is just to earn money and make a living without much stress, then you can afford to look for a successfully brewery company and buy their franchise.
But if your aim of starting a brewery business is to build a business brand that will grow from just distributing beers in one region to different cities all around the world, then starting from the scratch is your best bet.
Although starting a business from the very scratch might not be easy, but one thing is certain, if you are diligent and you apply the right business strategies per time, it wouldn’t be too long before your business brand becomes recognized not only in your city or state, but throughout the United States of America and the rest part of the world.
Possible Threats and Challenges You Will Face When Starting a Brewery Business
The threats and challenges that is likely going to confront a start – up brewery plant is the fact that they competing with already established brewery plants / microbreweries whose beers are generally accepted in the United States and also other brewery plants / microbreweries that are likely going to be opened within the same location. You would have to go all out to compete for the available market in the region you intend distributing your beers.
Other threats and challenges that you are likely going to face when you start your brewery business are economic downturns which usually affect purchasing powers and also unfavorable government policies.
Writing a Business Plan for your Microbrewery
No matter the type of business or size of business you intend starting, it is a wise decision to first write a good business plan before taking any action. The truth is that, in order to successfully run a brewery business, you would need to have a good business plan in place.
A Business plan is the blue print that is needed to successfully run a business; with a workable business plan in place, you will reduce the trial and error approach of doing business. You will be able to manage your business with purpose and perhaps precisions; you will know what to do per time and how to handle challenges, growth and expansion.
So, if you want to start your own brewery business, you are required to write a detailed business plan that can pass reality test when subjected to it; you should work with the facts, figures and other indices in the industry as it applies to the location you intend establishing your brewery plant or microbrewery.
The whole idea of writing a business plan is not just for the sake of having a business document in place; but a detailed guide on how to effectively run your business from the scratch. Your business plan should outline and cover strategies on how you intend to manage your brewery business.
The rule of thumb in writing a business plan is to try as much as possible to be realistic and never to over project when putting figures on income and profits et al. As a matter of fact, it is safer to underestimate when writing a business plan so that you won’t be so disappointed when reality sets in.
These are the key areas that should be covered in your business plan;
Executive summary and Company’s descriptions: you are expected to write about the concept of your business, descriptions of your company, your company’s vision statement, mission statement and where your company will be located and also if you intend selling out franchise or opening outlets in different cities in the United States of America and in other parts of the world.
Other key components that should not be missing in your brewery business plan are product offering, SWOT analysis, competitive analysis, marketing and sales analysis / strategies, target market, market goals, pricing, costing and financial projection, publicity and advertising strategy, expansion and growth strategies, budget and start – up capital generation et al.
Choosing an Ideal Location for Your Brewery Business
The fact that there different sizes of brewery plant / microbreweries scattered across the United States of America does not mean that brewery business can thrive in every location. Before choosing a location for your brewery business, ensure that you conduct a thorough feasibility studies and market survey.
There are possibilities of you coming across a brewery business that just closed shop in the location you want to open your brewery business can’t be ruled out. This is why it is very important to gather as much facts and figures before choosing a location to set – up your coffee shop business.
These are some of the factors that you should consider before choosing a location for your brewery business;
- The demography of the location
- The purchasing power of the residence of the location
- Accessibility of the location (for distributors)
- The numbers of brewery plants / microbreweries in the location
- The local laws and regulations in the community / state
- Traffic, parking and security et al (for microbreweries)
Over and above, the location you choose for your brewery should be a location that is easily accessible. If it is a microbrewery / craft brewery it should be centrally located in a residential area where people can easily visit to get their locally brewed beer without stress. So also if you operate a standard brewery, then you should choose a location that will be easier for wholesale distributors to transport beers from your plant to retailers.
Starting a MicroBrewery – Technical & Manpower Details
When it comes to starting a brewery business, it is important to ensure that you acquire brand new equipment. As a matter of fact, brewery utensils and equipment are affordable.
You would need the following equipment to successfully launch your brewery company;
- Steam Generators – electric
- Steam Generators – gas
- Malt mills / grinders
- Screw conveyors for malt grist
- Self-cooled fermentation & maturation tanks
- Maturation (lager) tank
- Serving (bright beer) tanks
- Cylindrical-conical fermentation tanks
- Open fermentation vats
- Yeast storage tanks
- Machines for washing a filling of kegs
- Plate Filters for filtering of beer and cider
- Candle diatomaceous earth filters for filtering of beer
- Candle diatomaceous earth micro filters for micro filtering of beer
- Stainless steel vessels (pressure tanks, jacketed refrigerated containers vessels with agitators, containers for yeast growing)
As regard employees, there are certain roles that must be occupied before you can effectively and successfully run a brewery business. For example, if you intend operating a microbrewery, then you would need to employ a:
- Plant Manager
- Micro Biologist / Chemist
- Bar Manager
- Bartender / Baristas
- Accountants / Cashiers
- Greeters / Customer Service Agent / Table Attendant
- Security Officers, and Cleaners
On the average, you would need a minimum of 10 – 15 employees.
- The Production Process Involved in a Brewery
There are basic steps in the brewing process and the steps include malting, milling, mashing, lautering, boiling, fermenting, conditioning, filtering, and packaging (bottling, canning et al). So also, there are three main fermentation methods that are employed in brewing. They are; warm, cool and spontaneous.
Fermentation might take place in an open or closed fermenting vessel; a secondary fermentation could also occur in the cask or bottle. There are also a number of additional brewing methods, such as barrel aging, and double dropping et al.
When it comes to brewing beer, the first step a brewer needs to take before getting to work is to ensure that their brewing grain is available and well prepared. If you are not going to be malting your own barley, it means you will either choose to mill or out rightly crush the grains. This significantly important step can help define the success of the brewing process.
In essence you just have to crush the grains enough so much so that it exposes the starchy center of the barley seed without causing any damage to the grain hulls that enclose them. For example, if the grain – crush is too course, not enough of the starch will be converted to fermentable sugars and also if the grain – crush is too fine, the husks, which act as a filter bed for the brew will be destroyed, and the brew will become sticky and unusable.
The success of a brewing process cannot be said to be complete if the packaging is not attractive; so ensure that you brand your packaging container to help you attract customers and also to promote your beer brand.
Starting a MicroBrewery – The Marketing Plan
- Marketing ideas and strategies for a Microbrewery
Marketing your beers is perhaps a major part of your brewery plant business and as such you must employ an aggressive approach. This is so because there are well established breweries that have over tine been able to corner a good chunk of the available market and for you to get your own fair share; you must work hard and smart
These are some of the marketing ideas and strategies that you can adopt for your coffee shop business;
- Leverage on Direct Marketing
- Sponsor TV and Radio Programs
- Erect your Billboards in Strategic locations around the city
- Making use of sales Agents and sales reps
- Leverage on Online Marketing (via your official website, social media platforms and blog et al)
- Leverage on Referral Marketing
- Revenue Sharing Business Partners (Event Planners and Contractors)
- Public relations during exhibitions and corporate events
Factors That Will Help You Get the Right Product Pricing for your Beer
It is a fact that any fluctuation in cost of raw materials that are used in brewing beers directly impacts margins. One of the ways to get the right pricing and still make reasonable profit from the brewery business is to ensure that you buy your raw materials directly from a wholesale distributor or a farm market. This will help you to mitigate cost fluctuations.
You can as well employ only key employees and outsource some roles that are not essential. With that, you will be able to cut cost of running the business and that will in turn help you get the right pricing that will enable you sell at a lower price and in turn attract loads of customers.
Possible Competitive Strategies for Winning Competitors in the Brewery Industry
When it comes to competing favorable in the brewery industry, then you must always come up with strategies that will give you leverage over your competitors. Your strategies should not be restricted to only marketing and promotion, you should also ensure that you come up with unique beer flavors.
The truth is that, it is natural for customers to try out new stuffs especially if the new product is well promoted and advertised. If they find out that the product meets their need, they are likely going to make up their mind to start buying the product going forward.
Possible Ways to Increase Customer Retention in a Microbrewery Business
When it comes to retaining your customers in any business, you must work hard to continue to meet and even surpass their expectations whenever they buy your goods and services. The success of any business is directly proportional to the numbers of repeated business they are able to generate.
If a company is able to achieve over 60 percent retention the company will sure experience huge turn over. You should be able to perfect plans on how to improve your customer experience from time to time whenever they patronize your beers / locally brewed beers.
These are the ways you can make use of when it comes to improving your customer experience so that you can create a good impression and generate repeated sales from them:
- Ensures that your beer / locally brewed beers taste good at all times
- Ensure you get feedbacks from your customers at all times
- Give your customers the flexibility to choose from a wide range of assorted locally brewed beer.
- Give your customers to order for your locally brewed beers and get them delivered in any location of their choice within the area that we cover
- Make use of effective customer relationship management (CRM) software to effectively manage your clientele base.
- Ensures that you carry your clients along when making decisions that directly affect them.
Creating Brand Awareness and Corporate Identity for your Microbrewery
Your business brand has to do with the way people perceive your business to be which is why you should be deliberate when it comes to communicating and promoting your brand.
In promoting your brand and corporate identity, you endeavor to leverage on both print and electronic media. As a matter of fact, it is cost effective to use social media platforms to promote your brands, besides it is pretty much effective. Here are the ways you can adopt to create brand identity of our brewery / microbrewery company
- Designed a unique corporate logo
- Place adverts on both print and electronic media platforms
- Ensures that our workers wear our branded shirts at all times during working hours and also we will make sure we brand our vans, trucks and cars et al.
- Place our flexi banners with our company’s logo and contacts in strategic positions
- Sponsor relevant TV programs, Radio programs and community based programs
- Maximize our company’s website to promote our business
- Leverage on the internet and social media platforms like; Instagram, Facebook ,Twitter, LinkedIn, Badoo, Snap Chat, Google+ and other platforms to promote our corporate brand
- Install our Bill Boards on strategic locations
- Distribute our fliers and handbills in targeted areas from time to time
Tips for Running a Microbrewery Business Successfully
The truth is that, irrespective of the kind of business you run, your ability to get all the members of your team on same page at all times is one of the keys you need to successfully run the organization.
As the chief executive officer or plant manager of a brewery company, it is you responsibility to give direction to the business. Part of what you need to do is to ensure that you create time for office meetings; a time where challenges, feedbacks, projections and relevant issues are discussed. The meetings could be daily, once in a week, twice a week or once in a month. The bottom line is that there should be consistent meetings in your organization.
Carrying out appraisals on a regular basis and training your employees will help you run your organization effectively. Encourage your employees to pursue certifications in their various areas of specialization; it will help your organization’s profile and of course it will help the individuals. You can choose to fully or partially sponsor some of the certifications.
Lastly, you should keep your doors open for suggestions from members of your team and your clients. It is very important to reward excellent performance in your organization; it will go a long way to encourage healthy competition in your organization.