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How Much Does It Cost to Start a Beverage Company?

Soft Drink and Beverage Production Business

With a budget as low as $500,000, you can start a small beverage company, it is important to note that it could be more, because of the equipment and trucks needed to produce and distribute beverages.

Apart from that, other factors can influence the cost of starting a beverage company and that is what we will discuss in this article.

A beverage company is a company that manufactures, distributes, and sells beverages. A beverage company can produce a wide range of beverages, including non-alcoholic drinks such as water, soda, juice, tea, coffee, energy drinks, sports drinks, and flavored beverages, as well as alcoholic beverages such as beer, wine, spirits, and cocktails.

It is important to also note that beverage companies may operate on a local, regional, national, or even international scale, depending on their size and market reach.

Factors That Influence the Cost of Opening a Beverage Company

  1. The Scale of Operation

If you choose to start a small-scale or local home-based beverage company, it means that you will spend far less than even someone who chooses to start a medium-scale or large-scale beverage company from a rented or leased facility.

The operational costs for running a small-scale beverage company will generally be smaller compared to a medium-scale, and larger beverage company that operates from a commercial production facility.

  1. Your Choice of Location

If you choose to start your beverage company in a high-rent urban area, you should be prepared to spend more money on rent or lease, and the location will likely attract higher overhead costs, such as labor and utilities, compared to a rural or home-based setting.

Interestingly, for a beverage company, you can set up your production facility on the outskirts of the city where you can get cheaper rent, labor, and logistics and still make an impact on the business.

  1. Ingredients and Materials Costs

The reason why you are starting a beverage company is to produce and sell beverages so you must be ready to create a robust budget for purchasing all the ingredients and materials needed to produce beverages.

You should create a budget for sugar, fruit juice concentrates, flavorings, tea leaves, coffee beans, carbon dioxide (CO2), yeast, hops, barley, grains, herbs and spices, citric acid, preservatives, and coloring agents.

You will also need to budget for packing materials such as cartons, caps and closures, labels, cardboard boxes, shrink wrap, carriers (for multi-packaging), packaging tape, pallets, stretch wrap, packaging inserts (e.g., dividers, trays), packaging fillers (e.g., foam, bubble wrap), and shipping containers.

Note that the quantity, quality, and type of ingredients and materials you choose to use in your beverage production can vary in cost.

For example, it will cost you more to buy organic, natural, or specialty ingredients when compared to how much it will cost you to buy conventional ones.

  1. Equipment and Machinery Cost

Of course, you know that without the needed equipment and machinery you will not be able to produce beverages. In essence, part of your startup cost should be your expenditure for purchasing equipment and machinery such as:

Fixing tanks, fermentation tanks, filtration equipment, pasteurization equipment, carbonation equipment, bottling lines, canning lines, kegging equipment, labeling machines, packaging machines, conveyor systems, quality control equipment, refrigeration units, boiler system, and water treatment system.

As expected, high-quality brand-new equipment and machinery will cost more, when compared to used or low-quality ones.

Note that when you invest in high-quality brand-new beverage equipment and machinery you will be able to use it for a long time, and they will attract low maintenance costs at least for the first three years of using them.

  1. Packaging and Branding Cost

The design and quality of your packaging and branding materials are part of what will affect your startup costs. As expected, custom packaging and branding efforts will be more expensive than generic or off-the-shelf options.

  1. Regulatory Compliance, Licensing, and Permits

If you choose to start your beverage company in the United States, then you will be required to invest in testing, certifications, and legal compliance for your beverage products.

Apart from that, you will also be required to get the needed licenses and permits. For a beverage company that wants to legally operate in the United States, you should budget for a:

Food Manufacturing License, Business License, Health Department Permit, Alcohol Beverage Control (ABC) License (if producing alcoholic beverages), Water Use Permit,

Waste Disposal Permit, Fire Department Permit, Occupational Safety and Health Administration (OSHA) Permit zoning permit, environmental permits (if applicable),

Federal Employer Identification Number (EIN), trademark or copyright registration (if applicable), import/export license (if sourcing materials internationally), and special event permit (for markets or fairs).

  1. Your Staffing Cost

The fact that you cannot start and operate a beverage company on your own means that you must make sure you have a budget for recruiting, paying, and training your employees.

Staffing costs refer to the expenses associated with hiring, compensating, and managing employees within an organization. For a large-scale beverage company, you must be ready to recruit a:

Production manager, machine operators, sales and marketing manager, product development specialist, quality control inspector, packaging and labeling specialist, customer service representative, e-commerce manager, accountant/bookkeeper, manufacturing assistant, and driver.

Basically, the higher the number of staff members you recruit, the more you are going to spend in setting up your beverage company.

  1. Marketing and Distribution

If you want your beverages to be in every nook and cranny of your city, state, and country, then you must create a robust budget for your marketing and distribution effort.

Your budget for marketing and distribution should cover the cost of purchasing distribution trucks and engaging in marketing campaigns.

So also, expenses related to building a website, social media marketing, advertising, and distribution channels must be considered.