How to Start Your Own Craft Beer Business
5 Min Read By Katie Lundin
Between 2012 and 2017, the number of craft breweries in the U.S. increased from 2,420 to 6,266 – an increase of 159 percent.
It’s no wonder craft beer is so popular.
Starting a brewing business is hard work. But we’re here to help.
Here are five of the nine steps you’ll need to know to start your own brewery business. If you like what you read here, be sure to read the complete nine-step guide on how to start a brewery business.
1. Choose a Business Model
In our guide on how to start a small business, we suggest that aspiring entrepreneurs choose a niche for the best chance at success. The Brewer’s Association for Small and Independent Craft Brewers identifies four separate market segments for the craft beer industry:
Microbrewery – The BA defines a microbrewery as one that produces fewer than 15,000 barrels of beer per year, and sells 75% or more of its beer offsite. Microbreweries may include a tap room that sells beer onsite.
Brewpubs – Brewpubs are restaurant breweries that sell at least 25% of their beer onsite. In some states brewpubs can sell beer, wine, and spirits from other manufacturers as well, other states prohibit this.
Contract Brewing Company – In this business model, one business hires another brewery to manufacture their beer. The contract company would handle the other business aspects such as distribution, marketing, and sales.
Regional Craft Brewery – This category is somewhat vague. The BA definesit as “An independent regional brewery with a majority of volume in “traditional” or “innovative” beer(s).”
Once you’ve decided which overall business structure is the right fit for you, we recommend that you write a business plan. For more information about how to create a business plan, the Small Business Administration has you covered.
2. Get to Know the Legal Stuff
The alcohol industry is governed at both the federal and state level. It’s important that you know and abide by all existing federal laws governing beer and alcohol.
These resources from the Brewers Association should help you get started with your state law research:
3. Fill in the Business Blanks
Starting a craft beer business isn’t all brewing and drinking. For instance, you need to choose the legal structure for your new business. Sole proprietorship or LLC? Will you incorporate or register a partnership?
We discussed these options previously in our article 15 Tips for Turning Your Craft Hobby Into a Successful Business.
Licenses and permits
This article walks you through the overall brewery license and bonding process. And, you can find a tutorial and get started with your permits here.
Vendor and Employee Agreements
If you need help with vendor or employment, take a look at Quickly Legal, which offers entrepreneurs, small businesses and startups an easy and inexpensive way to create, sign and manage business contracts.
4. Define Your Brand
Craft breweries are known and celebrated for their unique brand personalities. If you’re going to get noticed, you need to consciously develop your brand identity.
As we’ve previously discussed,
…your brand is your company’s public identity. Ideally, your brand should embody the best (and most essential) attributes of your company.
The importance of your brand identity cannot be understated – especially in the world of craft beer. With so much creativity and unique personality already on display, a lackluster brand will fail to take off no matter how good your brews are.
Here are a few questions to guide you as you think about your brewery or brewpub’s brand:
- What personality do I want my brand to project?
- Who will want to drink my beer?
- What can customers get from my beer that they can’t get anywhere else?
- What makes my brand unique?
- What is the most important part of my customer’s experience?
Your answers to these questions (and others like them) will build the core of your brand. All of your future branding decisions should expand on these ideas. Your business name, your logo, your website design, your beer can or label designs, and your brewpub or tap house decor should all grow from the concepts you lay out here.
5. Optimize Your Packaging
Before any consumers can enjoy your beer, it has to be packaged. And, it needs to look good. Luckily, you have more options for packaging than ever before. You’ll still be working with bottles, cans, and kegs. But, new technology in materials and labeling mean you can make smarter choices for your business.
Here are the topics that should be on your radar when planning your beer packaging …
DIY or Hire a Service
Depending on the size of your operation, and thanks to mobile canning and bottling services, you may be able to avoid purchasing, housing, and running your own bottling equipment. Look to see if there are mobile bottling and canning services in your area. Then compare their fees with the costs you’d rack up buying and running your own packaging system.
Alternately, keep in mind that packaging your own beer allows you to control the quality of the process to a more exacting degree. But, it also means training and paying staff to run the machines and paying for repair costs.
Bottling vs. Canning
Bottles are the traditional choice of craft breweries. But, cans are growing in popularity.
Purists will claim that beer tastes better from a bottle. But, cans keep beer fresher longer, are more eco-friendly, and are cheaper to ship due to their lighter weight.
The differences don’t stop there. Bottles offer the flexibility of a cap, neckband, and label to share your packaging design. But, cans offer more physical space for design.
There’s no wrong choice. But, don’t make a decision without weighing the pros and cons.
Choosing Your Packaging Design
When it comes to packaging design, consider both the materials the design will be printed on and the package graphics.
There’s a dizzying array of bottle label materials to choose from; including paper, matte film, glossy film, metalized film, wood finish film or clear film. Each of these communicates a different message to your consumer; so make sure to select a label material that reflects your brand identity.
Cans don’t offer quite so many options. You can print directly on cans or apply a plastic shrink-wrapped sleeve.
Printing directly on the can limits the number of colors you can use and it’s hard to achieve bright vibrant colors. Can sleeves offer a more vibrant look and a quicker turn-around.
Once you know what material your design will appear on, you can enlist the help of a professional designer. Make sure to let them know the dimensions and materials for your packaging, as well as detailed information about your brand and the product itself.
The more information you can provide about your brand personality, mission, and beer, the better. These details equip the designer to create a design that will embody your beer and your brand.
There’s no doubt about it – starting a craft beer business is hard work. But, brewing is a work of passion. And for those who follow its call, it’s a rewarding, fulfilling career.
Click here to read the complete nine-step guide on how to start a brewery business.