Do you want to know exactly how much it cost to start a brewery plant? If YES, here is a detailed cost analysis for starting a brewery plant and raising finance.
Starting a brewery plant is sure expensive and at the same time it is a profitable business venture. The fact that entrepreneurs who intend investing in the brewery industry have the options of starting on a small scale – microbrewery makes the industry open to both big–time investors and small investors.
Launching a brewery plant is just like starting any other business and it requires that you conduct your feasibility studies and market survey so as to get your economic analysis and your costing 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 profit, 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 costing 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 cost and responsibility like comprehensive distribution network, bureaucracies, growth strategy, and operational guidelines.
When it comes to starting a medium scale brewery company, you should be prepared to either rent or lease a standard facility big enough to accommodate your machines, workers and warehouse/storeroom; this is going to be one of the areas where you are expected to spend the bulk of your start–up capital.
Estimated Cost to Open a Brewery Business
These are the key expenses you are expected to make when starting a medium scale but standard brewery business in the United States of America;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
- Marketing promotion expenses for the grand opening of the winery in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580
- Cost for hiring business consultant (writing business plan inclusive) – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The budget for permits, Insurance and license – $5,000
- Construction of the brewery facility, tasting rooms and other administrative blocks could cost about – $200, 000
- Cost for the purchase of commercial brewery equipment (Steam Generators – electric, Steam Generators – gas, Malt mills/grinders, Screw conveyors for malt grist, Self-cooled fermentation & maturation tanks, Maturation (lager) tanks, 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, and stainless steel vessels (pressure tanks, jacketed refrigerated containers, vessels with agitators, containers for yeast growing)) – $150,000
- Equipment for the offices such as filing cabinets, safety gadgets, computers, printers, telephones, fax machines, furniture and electronics could cost about – $15,000
- Creating and launching an official website could cost about – $700
- Other expenses such as signage, business cards, advertisements, publicity and promotions) could cost around – $2,500
- The cost for opening party: $2,000
- Miscellaneous: $5,000
You will need an estimate of seven hundred and fifty thousand dollars ($750,000) to successfully set up a medium scale but standard brewery in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation.
Starting a small–scale but standard brewery business i.e. a micro–brewery in the United States of America will cost about two hundred and fifty thousand dollars to five hundred thousand dollars ($250,000 to $500,000).
Please note that in other to achieve this, you may buy off a small micro-brewery company that is put up for sale or you may purchase fairly-used brewery equipment and machines. With that you will be able to cut your start – up cost to the barest minimum.
When it comes to starting a standard and large-scale brewery business, a business whose products (beers) will be distributed all across the United States of America and other countries of the world and also a brewery business that has the intention of selling franchise, then you should look towards budgeting well over two million five hundred thousand dollars ($2.5 million).
Actually, the cost of opening a brewery business might not be the same in different countries, and even different states of the same country, but one thing is certain, the cost of certain equipment and machines may be the same across the board except for logistics and other negligible costs that might be associated with transporting, installing and customizing the machines and equipment.
With that in mind, it is safe to say that there are certain key factors that can influence the overall cost of opening a brewery business, and that is what we will discuss in this article.
Factors That Influence the Cost of Opening a Brewery
Table of Content
- The Location of the Brewery
- The Size and Production Capacity of the Brewery
- The Size and Types of Equipment and Machinery
- The Cost of Obtaining Licensing and Permits
- Your Supplies (Ingredients and raw materials)
- The Cost of Staffing and Labor
- The Cost of Marketing and Branding Your Brewery
- The Cost of Distribution and Logistics
The Location of the Brewery
One of the major costs that can influence the cost of opening a brewery is the location you want to open the brewery. In business, location is key to the success of the business, and that is why businesses will do all they can to make sure their business is located where their customers can easily reach out to them.
As expected, a business location that is central or in a metropolitan city will always cost more in terms of rent or lease when compared to a location on the outskirts of town. In essence, location is essential when it comes to opening a brewery and you must be ready to spend more if you want the best location for your brewery.
The Size and Production Capacity of the Brewery
Another major factor that can influence the cost of opening a brewery is the size and production capacity of the brewery.
The fact that we have different sizes of breweries with different production capacities means that they all come with different cost implications. For example, the cost of opening a nano brewery is far lesser than the cost of opening a standard brewery.
The Size and Types of Equipment and Machinery
The size and types of equipment and machinery you want to start the brewery with are yet another major factor that can influence the cost of opening your brewery.
Trust me, brewery equipment such as brewhouse vessels, fermentation tanks, refrigeration systems, kegging or bottling lines, boilers, and other specialized equipment comes in different sizes and types. There are cheaper brands and there are more expensive brands.
Your choice in this regard will go a long way in determining how much you will spend. If you go for premium quality or customized equipment and machinery, then you should be ready to spend more, and that will affect the overall cost of opening your brewery.
The Cost of Obtaining Licensing and Permits
The fact that you cannot legally open a brewery without obtaining the required licenses and permits means that you should create a budget for licenses and permits if you want to open a brewery.
If you are planning to open a brewery in the United States of America, you must budget for federal and state brewing licenses, local permits, health and safety inspections, and possibly special licenses for taprooms or brewpubs. Please note that the cost for these licenses and permits is different across different states, and across different countries of the world.
Your Supplies (Ingredients and raw materials)
There is no brewery without the regular supplies needed to produce brewed drinks. Before a brewery can commence production, there will be supplies such as ingredients and raw materials. Basic ingredients like malt, hops, yeast, and other ingredients, and bottling and packaging materials are part of what will determine the overall cost of opening a brewery.
Even if the costs of these items are the same in the market, the quantity and type (organic or inorganic) you settle for will go a long way to determine how much you will spend, and that can significantly influence the overall cost of opening a brewery.
The Cost of Staffing and Labor
The fact that you cannot run a brewery on your own means that there should be a budget for staffing and labor if you want to open a brewery. When it comes to starting a standard brewery company on a large scale, you would need the services of the following professionals;
- Chief Executive Officer (Owner)
- Brewery/Plant Manager
- Human Resources and Admin Manager
- Craft Sales Representative
- Brew house Operator (Milling, Mashing, Lautering, Boiling, etc.)
- Cellar-Related Operator (Sanitation, Fermenting, Monitoring, Capping, Chilling, etc.)
- Packaging Operator (Filtering, Carbonation, Packaging, etc.)
- Quality Control Operator (Sampling, Tasting, and Monitoring, etc.)
- Sales and Marketing Team
- Distribution Truck Drivers
Please note that your budget for staffing and labor will depend on the number of staff you want to hire and their experience level. The higher the number of staff, the higher your budget for staffing and labor.
The Cost of Marketing and Branding Your Brewery
Another major factor that can influence the cost of opening a brewery is, of course, the cost of marketing and branding your brewery.
The truth is that anyone who wants to open a brewery cannot escape creating a budget for marketing and branding. This is so because, without effective marketing and branding of your brewery and products, you will find it difficult to break into the market.
Interestingly, there are different ways and means you can market your brewery. You may want to consult with a branding and marketing expert to give you a guide on how you can penetrate your market.
The Cost of Distribution and Logistics
It is one thing to market and promote your brewery and products, but another thing to reach out to your target market. That is where distribution and logistics come in.
In essence, if you are looking to open a brewery, then one of the major factors that can influence the cost of opening the brewery is the cost of distribution and logistics. When we talk about distribution and logistics as it relates to a brewery, we are talking about taking your drinks to the market through different distribution and sale channels.
Trust me, the budget for distribution and logistics for a brewery is a significant part of the budget for opening a brewery because it will cover your distribution trucks and vans, freelance sales representatives, and even the cost of leasing or renting warehouse facilities in different locations.
How Much Does It Cost to Buy a Brewery Franchise?
In the United States of America, the Average Cost of Purchasing a Brewery Franchise is $219,000 + Minimum Liquid Capital: $75,000. Examples of 3 Well – Known Brewery Franchising Companies in the United States of America are;
- Growler USA Franchise America’s Microbrew
- Brew Rebellion Franchise
- Rock Bottom Brewery Franchising
It is important to note that there are other costs such as utilities and miscellaneous that are not listed above but they have the capacity to influence the overall cost of opening a brewery. In order to get a proper perspective of all the factors that can influence the overall cost of opening your brewery, you should carry out feasibility studies and market surveys in the city or location where you want to open your brewery.