You need an estimate of $750,000 to start a small-scale brewery (microbrewery / craft brewery) and nothing less than $1.5 million dollars to open a medium-scale brewery plant in the United States of America. The amount includes the salary of all employees and the CEO (Owner) for 3 months.
When it comes to starting a brewery business, loads of factors influences the amount that will be required to successful launch the business.
Factors like the location you intend starting the business, the type of brewery business you want to open, the size of the brewery plant you want to open, your target market and of course the state of the economy as at when you intend starting the business.
Estimated Cost of Opening a Microbrewery
No matter where you intend starting your brewery business, you would be required to fulfill most of the items listed below;
- 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 totaling – $2,500.
- Marketing promotion expenses suitable for microbreweries (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
- Cost for hiring Consultant – $2,500.
- Insurance (general liability, workers’ compensation and property casualty et al) coverage at a total premium – $2,400.
- Cost for payment of rent for 12 month at $1.76 per square feet in the total amount of – $52,800.
- Cost for facility remodeling – $10,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits – ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
- The cost for Start-up inventory – $16,027
- The cost of microbrewery equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.) – $18,000
- Storage hardware (bins, utensil rack, shelves, glasses case) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $9,500
- Cost for serving area equipment ( glasses, flatware) – $3,000
- Cost for store equipment (cash register, security, ventilation, signage) – $13,750
- Office equipment and furniture – $3,600
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al): $4,000.
- The cost of Launching a Website: $600
- The cost for our opening party: $5,000
- Miscellaneous: $2,500
Going by the report from the market research and feasibility studies, you would need an estimate of $750,000 to successfully set up a small scale brewery (microbrewery / craft brewery) business in the United States of America. The amount includes the salary of all employees and the CEO (Owner) for 3 months.
If you want to start a medium scale brewery plant in the United States of America, you would need nothing less than 1.5 million dollars. And if your intention is to start a large scale brewery plant that can compete nationwide in the United States of America, then you should look towards generating well over 5 million dollars as your start – up capital.
Actually, the cost of opening a microbrewery 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 microbrewery business, and that is what we will discuss in this article.
Factors That Influence the Cost of Opening a Microbrewery
1. The Location of the Microbrewery
One of the major costs that can influence the cost of opening a microbrewery is the location you want to open the microbrewery.
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 microbrewery and you must be ready to spend more if you want the best location for your microbrewery.
2. The Size and Production Capacity of the Microbrewery
Another major factor that can influence the cost of opening a microbrewery is the size and production capacity of the microbrewery.
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 microbrewery is far lesser than the cost of opening a standard microbrewery.
3. The Size and Types of Equipment and Machinery
The size and types of equipment and machinery you want to start the microbrewery with are yet another major factor that can influence the cost of opening your microbrewery.
Trust me, microbrewery 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 microbrewery.
4. The Cost of Obtaining Licensing and Permits
The fact that you cannot legally open a microbrewery without obtaining the required licenses and permits means that you should create a budget for licenses and permits if you want to open a microbrewery.
If you are planning to open a microbrewery 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.
5. Your Supplies (Ingredients and raw materials)
There is no microbrewery without the regular supplies needed to produce brewed drinks. Before a microbrewery 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 microbrewery.
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 microbrewery.
6. The Cost of Staffing and Labor
The fact that you cannot run a microbrewery on your own means that there should be a budget for staffing and labor if you want to open a microbrewery.
In order to open a microbrewery, you are expected to hire key employees to occupy key positions in your microbrewery. As expected, you will need a microbrewery manager, cellar workers, packaging operators, sales and marketing personnel, taproom staff, and administrative assistants.
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.
7. The Cost of Marketing and Branding Your Microbrewery
Another major factor that can influence the cost of opening a microbrewery is, of course, the cost of marketing and branding your microbrewery.
The truth is that anyone who wants to open a microbrewery cannot escape creating a budget for marketing and branding. This is so because, without effective marketing and branding of your microbrewery and products, you will find it difficult to break into the market.
Interestingly, there are different ways and means you can market your microbrewery. You may want to consult with a branding and marketing expert to give you a guide on how you can penetrate your market.
8. The Cost of Distribution and Logistics
It is one thing to market and promote your microbrewery 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 microbrewery, then one of the major factors that can influence the cost of opening the microbrewery is the cost of distribution and logistics. When we talk about distribution and logistics as it relates to a microbrewery, 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 microbrewery is a significant part of the budget for opening a microbrewery 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.
Financing Your Craft Brewery Business
It is often said that money is the lifeline of any business. No doubt raising start – up capital is perhaps one of the major concerns for entrepreneurs; it can be challenging raising capital to launch a business idea. Your business idea must be workable and promising for you to secure finance from financial institutions or from angel investors.
The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan.
Besides, investors will not take you seriously if you don’t have a business plan on ground before launching out to source for start – up capital. There are several options when it comes to raising money to finance a start – up business. Some of the options are;
- Raising money from personal savings and sale of personal stocks
- Raising money from investors and business partners
- Applying for loan from bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Sourcing for soft loans from family members and friends.
In conclusion,
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 microbrewery.
In order to get a proper perspective of all the factors that can influence the overall cost of opening your microbrewery, you should carry out feasibility studies and market surveys in the city or location where you want to open your microbrewery.