How to Launch a Craft Brewery Business: Guide For Beginners

Craft brewing demonstrates fast and steady growth both in the US and across the globe.

It’s a highly promising market with great opportunities for home brewers and enthusiastic beer lovers seeking to realize their entrepreneurial endeavors in this industry.

If you’ve decided to give it a shot and start a private craft brewery, in our guide, you’ll find detailed instructions that will walk you through the startup process step by step and helpful tips on how to make your launch a success.

How to Start a Beer Brewery Business

Step 1: Do the Planning

Opening a craft brewery business is a serious step and a multi-stage process. Hence, planning ahead is the key to launching it smoothly and keeping moving in the right direction. That’s why your starting point is creating an efficient business plan.

This document should outline your general business strategy and how you are going to realize it. It covers your short-term and long-term goals, operational principles, marketing research, competitor estimates, growth perspective, and investment aspirations.

A business plan is kind of a roadmap that will guide you through the venture startup process and help you further develop and upscale your business. Besides, it will greatly maintain your fundraising initiatives when engaging third-party investors.

To compile a business plan, you can use one of the multiple templates available online. It’s a complex document, and most of its sections will be reviewed below.

Step 2: Work on Your Craft Brewery Concept

While a business plan describes the keystones of your future venture and creates a conceptual framework for its realization and operation, you still need to elaborate on your brewery concept in more detail before you make any practical moves.

A concept is how you vision your craft brewery business and how you want your potential customers to identify it. It embraces everything that contributes to your entire company image and the way you will transact business.

However, at this point, you should not dig into tiny details but think in broader categories and consider three aspects that will be the pillars of your brewery business concept. It’s creating a name for your company, formulating your brand, and defining the type of brewery.

Inventing a Name for Your Brewery

A company name is a part and parcel of your future corporate identity. It will introduce your venture to customers, create the first impression, and become your company’s business card for years to come.

Concocting a name that will represent your brewery to a potential target customer pool and successfully market your company might turn out a challenging task since you’ll have a lot of options on your plate. 

To ease your choice, keep in mind a few essential features when pinpointing a perfect name for your business. Your brewery name should be:

• Unique: Distinctive from your competitors’ names, yet original and distinguishable i.e. such a name that will make your brewery stand out from the crowd;
• Memorable: A short yet catchy name that is easy to spell and pronounce, is easy to remember, and will be always on the tips of the customers’ tongues;
• Explanatory: The name should render the gist of your business conveying your major values and what differentiates you from the rivals;
• Engaging: Attractive to customers and getting them hooked emotionally;
• Wide-reaching: A moniker with a broad meaning will allow for various marketing and branding approaches. It will easily match graphic designs and won’t limit your advertising capabilities;
• Protectable: Suitable for trademarking, social media, and use as a domain name.

Creating Your Brand

When getting involved in a craft brewing business, you should work out your signature brand from the start since this is what will keep your business going and growing afterward.

A properly built brand will solidify your business image by making your brewery recognizable and work for its popularity by retaining customer loyalty and engaging more and more new visitors.

A strong brand is a reflection of your business concept. You should put your best company values, your business vision, and your most sincere aspirations at the core to gain the desired appeal and identify yourself in the industry, for the target audience and future employees.

In general, the brand is an intangible asset. However, the following components give some sort of practical form and contribute to its establishment:

• Company name;
• Logo and slogan;
• Visual design conception including a color scheme, fonts, and specific graphic elements;
• Website design. 

Note, though, that your product and your individual business approach should be the things you build a brand around, and the rest of the factors just work to maintain a brand that will set your brewery apart from the competition.

Choosing a Brewery Type

With classic recipes and time-tested technology in the focus, the modern brewing industry is open to innovations to catch up with changing tendencies and match the market demands. As a result, there are different types of breweries varying by scope and purpose.

So, you need to pick which of the existing types is the best format for your business goals:

• Microbrewery: Usually, it’s a small privately owned enterprise producing below 15.000 barrels of beer yearly and selling it mostly onsite;
• Brewpub: It’s a brewery making beer solely for its own pub or restaurant. It’s yet another small business format;
• Taproom brewery: It’s a full-scale brewery producing beer both for onsite sales (with no restaurant-level service provided) and for third-party distribution;
• Regional brewery: It’s a higher-scale enterprise producing from 15.000 to 60.000 barrels per year.   

The type of brewery appropriate to your business will depend on whether you plan to focus mainly on beer production or seek to establish your own brewing tradition and further popularize it via your branded restaurant.

Step 3: Estimate Your Startup Costs

There is no one-size-fits-all estimate for the cost of starting your one brewery. Your final subtotal will be largely determined by the following factors including but not limited to:

• Brewery type you are going to open;
• Production level i.e. how much beer you plan to brew;
• Restaurant function availability;
• The location where you plan to establish a brewery and serve beer;
• Property size and type;
• Your overall concept and business approach. 

Here are a few main categories of costs that will most add to your initial list of expenses:

• Equipment: It’s the cost item that will eat up by far the biggest hole in your startup budget. The price range is really vast, and the cost might vary from about $100.000 for the used low-capacity systems to over $1 million for the new modern professional line;
• Furniture: Here, the price will be defined by the chosen style and interior design as well as by the restaurant's size and level. Thus, the cost of furniture can fall anywhere between $4000 and $15.000;
• Property: Retail and production space rent rates greatly vary across the country. So, you can pay $10 to $30 per square foot or even more. And the total cost will depend on your business scope and how much space you need for the brewing equipment and retail area.

You can expect the average startup cost to open a common brewery to be between $500.000 and $2 million.

Step 4: Think Over Finances

Needless to say that before starting a craft brewery business, you need to get a clear picture of your finances. This rule works for all types of enterprises and activities. You should estimate your own financial capabilities to understand how much you could invest.

Yet, even if you don’t have $500.000 in your bank account, it doesn’t mean you can’t start the brewing business you dream of. Luckily, there are many options you can use to source extra capital and fund the business opening. The most common are:

• Third-party investments: With a good business plan at hand and a nailed project presentation, you will have a good chance to engage investors eager to finance your brewery in return for a share in your future business profits or at any other conditions you agree;
• Bank financing: Banks and credit agencies have a variety of programs aimed at business financing common business loans, equipment loans, business credit lines, etc.;
• Small Business Loans: Normally provided by the US Small Business Administration, this type of loan is aimed at maintaining fixed assets or working capital;
• Crowdfunding: This relatively new yet rather popular among restaurateurs funding option relies on public donations in exchange for some kind of benefit from you when you open up. You can check Kickstarter and GoFundMe websites for crowdfunding.

Step 5: Find Your Ideal Venue

A location means a lot for a business like a brewery, especially if you plan it with an adjacent pub or a branded restaurant. Not only is it important for your business since your client base and visitor inflow will much depend on it but also it’s a big investment to consider.

Whether you are going to purchase property or you will rent it, you should check the following aspects when doing your search:

• Zoning limitations: Since the brewing industry is exposed to a zoning ordinance, you will have to observe zoning requirements in your locality and place your brewery only in the areas allowed for this type of business;
• Brewery specs: To make your business a success, you should pick a property with a close eye on your production and retail requirements so that it matches your business needs to a tee;
• Building space: The property should offer enough space to accommodate all your activities and projections including equipment, personnel, storage, kitchen (if applicable), and guests. For a restaurant, also consider the parking area outside;
• Safety concerns: Safety is a priority both for production and for public places. If you plan to combine those, you have to double-check for a whole bunch of safety requirements and make sure the property you select will match those safety specs.

Step 6: Select Appropriate Brewery Equipment

Equipment is your brewery’s major asset and yet another considerable investment item. A final list will vary in each case depending on the business goals and financial capabilities.

Yet, there are a few key groups of equipment you should have in your arsenal to operate a brewery:

• Brewing machinery: Kettles, boilers, fermenters, and filters are what you need to start brewing beer. It will be your major equipment investment;
• Bottling and packaging lines: Machines and equipment that will ease and speed up the process of beer dispensing and packaging;
• Kegs handling equipment: You will need kegs to distribute craft beer and serve it on-site. So, appropriate dispensers, tapping devices, pump taps, and other equipment to work with kegs will be a must;
• Refrigeration systems: Beer tastes best when it’s cool, hence, take care of coolers, cooling systems, and refrigerators to keep it fresh;
• Storage equipment: The scope of your business will dictate which type of equipment you need here. Storage tanks, keg racks, and hand trucks are to name a few;
• Associated supplies: This includes brewing accessories to upgrade your experience, glassware for serving, and a choice of additional ingredients to juggle with beer flavors and scents.

Step 7: Examine the Legalities

A brewery business directly entails alcohol production and sales, so it's no wonder there will be a lot of legalities about it. Your best option at this point would be to hire an attorney to guide you through the legal hurdles.

However, we’ve still made a list of basic legal requirements you’ll have to observe when setting up a brewery business in the US.

TTB Registration

All breweries in the US are to register with the Tax and Trade Bureau for Alcohol and Tobacco to get the so-called Brewer’s Notice entitling them to operate in the industry.

The application review takes up to 150 days. And to obtain approval, you’ll have to verify that you match all the regulations and requirements set forth for opening a brewery.

Licenses and Permits

A brewery is a type of business that requires a whole pack of licenses to be legal and lawful. Once you have the Brewer’s Notice, you will have to register for other industry-related licenses:

• Federal brewer’s permit to authorize beer production and be able to have a restaurant on-site;
• State liquor license to be able to sell alcohol to customers;
• Brewer’s bond to ensure your enterprise operates in compliance with the law and pays all required taxes;
• Retailer’s permit to distribute products and goods other than alcohol;
• Restaurant licenses if you plan to run a restaurant on-premise and serve foods and other beverages.

Note: Licensing requirements vastly vary by state and jurisdiction. So, you should check with your state, municipal, and county governments for licensing regulations for breweries required at different levels. 

The same is true for licensing costs. The range of rates and fees varies from about $1.000 at the lower end to over $400.000 at the higher end. With that, licensing can add quite a bit to your startup budget depending on the locality.

Insurance

The brewing industry is heavily regulated by both federal and state laws. And local authorities are empowered to strictly control how you operate your business. At the same time, there are many inherent business risks you should consider when running a craft brewery.

As an enterprise owner, you’ll be responsible for your entire business and you should think about how to protect yourself from risk-related damage and potential emergencies.

While many beginner businessmen tend to get only general insurance that covers ongoing operations, it’s not enough for a brewery. Other types of insurance you should consider include:

• Liquor liability insurance to shield the business against injury claims caused by alcohol intoxication issues;
• Worker’s compensation insurance to protect your employees from job-related injuries;
• Property insurance that covers not only buildings but also a production area and other assets;
• Equipment insurance to compensate for breakdown-related damage and loss;
• Product insurance to get reimbursement of the lost income in case the beer gets contaminated or spoiled due to reasons beyond your control;
• Commercial car insurance to protect vehicles you use for business purposes.

Step 8: Craft Your Menu

If you start a brewery with an adjacent restaurant, pub, or tavern, you should also give a thought to a future menu. Not only should you create a food inventory and stock of supplies for your perfect brews but also you should polish the list of treats, snacks, and beers you are going to serve.

When opening a craft brewery, you should maintain a wide choice of beers including both traditional or most popular brews and signature mixes to match different tastes and preferences and satisfy the most demanding gourmets.

While beer will be the start of your menu, the food should complement it in the best way. Apart from common beer snacks such as onion rings, French fries, chicken wings, cheese sticks, and chips, you might want to add some roasts and barbecues.

Step 9: Prepare Your Marketing Strategy

To give the right impulse to your brewery business, you need to advertise its launch beforehand and draw your potential customer’s attention to the grand opening.

You can develop a thought-out marketing campaign to promote your new brewery using the following tools:

• Printed materials;
• Billboards and signage;
• Radio and TV commercials;
• Advertising in social media;
• Newsletters;
• Promotional emails. 

If you have enough finances, you can make a name for your brewery by sponsoring some noticeable local public events or collaborating with other businesses or industry influencers to get a special promotion.

In addition to these traditional and digital marketing strategies, it's essential to embrace modern online advertising techniques to maximize your brewery's visibility.

By implementing a PPC management guide for small businesses, you can ensure that your brewery's offerings and events reach potential customers actively searching for craft beer experiences in your area.

Step 10: Make an Initial Sales Forecast

It might seem hard to do any financial forecasts before you start a business. Yet, it’s a necessity to think about your future cash flows and envisage your profits. This will help you outline your venture growth and detect potential problems and risks at some point as well as secure capital where needed and plan expenses more efficiently.

Surely enough, you can’t be 100% accurate about future sales, and you’ll have to rework your forecasts over time. However, you must learn how to plan finances from the very start.

If you don’t feel that you can cope with this on your own, hire a financial specialist or a business accountant with some experience in brewing to help you out and break down the math for you.

Step 11: Off Your Go!

Planning might turn out a long journey and quite a challenge. Yet, it’s well worth the outputs you’ll get. When you are done with plans and preparations, you will know the fundamentals of the brewery business and even grasp some ins and outs.

You are finally ready to take off. You might want to make a soft opening first to give a shot at what is going to be your daily operations. Or you can delve straight into the grand opening.

Whatever the case, make your launch day a memorable event to show the best of your services and build reliable relationships both with customers and with vendors and suppliers.

Bottom Line

Opening a craft brewery is an exciting and intimidating experience at the same time, especially if you are new to the industry and know little about it. There might be a number of pitfalls on your way. Yet, nothing will happen if you don’t try.

Meanwhile, by thoroughly planning each step and thinking over every process to a tiny detail, you’ll get a solid startup base, launch your business on the right foot, and have great chances for success.