The decision to switch from brewing beer by hobbyists to operating a commercial brewery was very important. The craft beer market is booming, with more people entering the craft beer industry than ever before. According to the Brewers Association’s 2018 industry report, the number of US breweries in 2018 increased by 17% compared to 2017. Compared with 2008, ten years ago, the number of American breweries has increased by 80%, reaching 7,450 breweries.
If you want to join this highly competitive and evolving industry, it is important to understand the complexities that come with setting up and owning a brewery and running a healthy business from the beginning. You can succeed in your first year as a beer manufacturer and stand out from the competition by following the steps below:
Based on a niche market
The popularity of craft beer is a double-edged sword. In a sense, you understand that your beer has a large potential audience. However, because of the large number of craft beers you can choose from, you may have to fight extremely hard to get attention. Therefore, you must avoid making general-purpose craft beer. You need to make a unique selling point for your beer, allowing customers to choose your beer on the store shelves instead of choosing other breweries.
However, the above-mentioned approach may have certain difficulties: how to achieve differentiation without alienating the target market? As a suggestion, you can check current market trends and try to experiment with your beer. For example, non-alcoholic craft beer seems very popular.
Arm yourself with a reliable brewery business plan
To ensure the financial and commercial success of any new business, many factors should be considered. How will you run a craft brewery? How is your craft beer different from competitors’ beers? How long does it take for a company to be profitable? In addition, you also need to consider the scale of your operations, as this will affect utility costs, product quantities, distribution logistics, and procurement of raw materials and brewery equipment.
Be sure to include the following in your plan:
Responsible budgeting: You need to know where the money is spent and where it exists. When buying raw materials, ingredients, and other expenses, make sure you clearly understand where your money should be spent.
Realistic goals: When making a business plan, make sure that your goals are achievable. It’s easy to have high expectations and dreams for a new craft beer business, but setting realistic goals can help you organize your time and focus on the actions that have the most impact. When you work for a specific goal, you will have a short-term direction and a long-term vision to help your business succeed.
Contingency plan: Ensure that there is a backup plan and a safety budget to deal with the inevitable problems when opening a new business. Whether it’s equipment damage, an injury that prevents you from working from home, or a customer changing a large order, you will be relieved that you are ready.
It’s easy to dive into a new commercial enterprise, especially if you have a great craft beer recipe. When writing a brewery business plan, you should fully consider your budget and goals, and come up with a strong strategy to promote them. You can read our “Brewery Business Plan Guide in 2022” article for more detailed information.
Know your budget and costs
Although technology can lower the threshold for potential craft brewers, it still requires a lot of investment to start and allow breweries. When applying for financing, you need to consider many costs, including:
- Start all the equipment of the brewery
- Permits, security deposits, and license fees
- Raw material cost for beer production
- Utility expenses
- Cleaning supplies
- Marketing costs
- Employee salary
Your start-up costs will be substantial, but you must also consider the ongoing costs of the brewery. You need to ensure that you have sufficient funds to cover these ongoing costs. Because when your brewery just started, you might get nothing.
Looking for a strong partner
The quality and uniqueness of a brewer’s product firstly depend on the ingredients and brewing process. However, a new brewer often pays so much attention to sourcing the right ingredients, so much so that they are often the key ingredient in beverage gases.
Why is high-quality beverage gas a necessity for your brewery business? This is because, for foam, flavor, and safety purposes, you need to provide your brewery with an adequate supply of food and beverage-grade gas.
As a new brewer, choosing a supplier for all your beverage gas needs is a key decision. A good supplier should encourage a schedule for your brewery to help maximize your productivity while reducing unplanned downtime. A good gas supplier will provide you with advice and structure, and propose a timetable for other successful breweries of similar size and operation. The gas supplier can be a key factor in the success and failure of your brewery.
Once you find a supplier that can provide food and beverage grade gases and gas delivery systems with guaranteed quality, please consider calling them a single supplier of these products. This will allow you to have a consistent and reliable schedule.
Many winemakers find it very convenient to work with a gas supplier. Because this supplier can provide them with a wide range of products and services. This mainly includes:
- Food and beverage grade CO2, nitrogen, argon, etc.
- Gas equipment, such as CO2 monitors
- Dispensing system from maintenance to monitoring
- Security services and products
- Welding equipment and gas
If your gas supplier is very proficient in the brewing industry, they will be able to know that you are successful in meeting your gas and equipment needs.
The integration of technology in the retail industry may put start-ups and brewers in a more difficult situation. Because the cost of compliance will become a greater barrier to entry. Whether you like it or hate it, technology will continue to play a greater role in the industry.
Sometimes, the business side of the brewery can become a mess of tools, spreadsheets, and other common systems. At this time, integrating these tools and systems into an all-in-one solution for the brewery is a way to avoid these problems.
Whether it’s compliance or brewery automation, don’t ignore technology as a means to automate processes, cut costs, minimize losses, and maintain profitability. Remember, cheap tools are rarely a way to save money.
Expect growth, don’t over-expand
Craft breweries need to invest in production capacity based on projected growth. If the capacity decision is wrong, it will have a serious impact on individual breweries and increase a lot of pricing and profitability pressure. Therefore, please consider how to accurately forecast demand and arrange production accordingly. Excessive anticipation of demand will take on more responsibilities and open more stores, which is not conducive to the success of your craft brewery.
Maintain consistent quality
The brewery is an environment where craftsmanship, science, and exploration are integrated. It can continuously innovate and create new products, pushing the craft brewing industry to new heights. The beer flavor is at the core of the brewery’s success, especially in an era when educated consumers choose from saturated markets.
The quality, consistency, and innovation of beer have always been the decisive factors for the successful operation of any brewery. If you are interested in this aspect, you can read our “How to improve the quality and consistency of beer?” article for more detailed information.
Take care of your business
Competition in the craft beer industry will continue to become more intense. Everyone makes great beer, and now it’s time to hone the business. Some good starting points include:
- Maximize profitability through accurate and dynamic beer cost calculations
- Instantly update beer pricing and promotions to stay competitive
- Make informed and calculated decisions based on accurate and timely reports
- Simplify the procurement process (e.g. hop contracts)
- Eliminate bottlenecks caused by employee turnover
The strength of Craft Beer lies in its diversity, adaptability to the local market, and the changing preferences of beer drinkers. Craft beer can also satisfy beer drinkers’ perceptions of quality and enable craft brewers to be known as one of the most dynamic industries in the world.
Understand the rules and follow them
In the brewery planning process, it is very important to be familiar with local and national permits and regulations. For example, many new brewers do not consider wastewater regulations before entering the business, but each community has different regulations on what can and cannot be poured into the sewer. When planning a brewery, new brewers should contact local officials and ask about local wastewater regulations and related costs.
When obtaining certain permits, both federal and state permits are required to operate a brewery. Just like wastewater laws, laws may vary from region to region. So be sure to check the regulations with your state and understand the requirements. In addition, you have to ask about the laws regarding your product crossing state boundaries or exporting it to another state. Every business of your brewery needs to be handled in accordance with the specific requirements of the law.