Opening a brewery is a dream for many entrepreneurs. But, the cost of starting a brewery can be prohibitive, especially if you don’t know what to expect. Understanding the costs associated with starting a brewpub is crucial when writing your brewery business plan This article will help you understand some of the expenses you’ll need to consider when opening your own brewery and making your own beer.
Construction And Land Acquisition Costs
If you are planning on building and designing your own craft brewery; many breweries find the cost of land and construction as the biggest initial costs. Though costs vary, depending on how much space you will need and the location of your brewery, as well as if you will have a tasting room, tap room, retail space, or will serve food, you can expect to spend an average of $3 million on construction and land acquisition. When picking out a location for your brewery be sure to consult local government zoning regulations as well as any square foot requirements.
Overhead Costs and Expenses
In addition to the cost of construction, you’ll also need to factor in the cost of overhead expenses such as utilities, rent, insurance, and licenses. These costs can add up quickly, so it’s important to make sure you have a clear understanding of all the ongoing expenses you’ll need to cover before you start your craft brewery. On average, new brewery owners pay $5,000 per month in overhead costs, this can be more when adding in rent or mortgage payments.
Licenses and Permit Requirements
Depending on the state in which you plan to open your brewery business, you’ll need to obtain a liquor license and permit. These can include business licenses, brewing licenses, federal brewing permit, and permits for serving food and alcohol. The cost of these licenses and permits can range from a few hundred dollars to several thousand, so be sure to check with your local authorities to find out what’s required before you write your business plan and start your brewery.
Insurance for a Brewery Business
It’s important to have insurance for your brewery, both for the protection of your business and for the safety of your employees and customers. The cost of insurance will vary depending on the size and location of your brewery as well as if you are part of a brewer’s association, but you can expect to pay an average of $1,000 per month in insurance premiums.
There are a few different types of insurance that breweries should consider.
This insurance covers the physical building and property that the brewery owns. It can help protect the brewery from damage caused by things like fire, theft, or storm damage.
This insurance protects the brewery from lawsuits related to injuries or property damage that occurs on the brewery’s premises. It can also help protect the brewery if it is sued for product liability.
Business Interruption Insurance
This insurance helps cover the costs of lost income and expenses if the brewery has to temporarily close down due to a covered event.
Workers’ Compensation Insurance
This insurance helps cover medical expenses and lost wages for employees who are injured or become ill as a result of their job.
Interior Design Costs and Expenses
Whether you construct your brewery or rent out a space, you’ll need to factor in the cost of interior design. This includes everything from the cost of furnishings or customer seating, to the cost of signage and branding. An interior designer for a brewery might be responsible for designing the layout of the brewing area, selecting and arranging the furniture and equipment, and choosing the colors and textures for the walls and floors. They may also be responsible for creating signage and marketing materials to promote the brewery. The cost of interior design can vary depending on the size and style of your brewery, but you can expect it to cost upwards of $10,000 for this expense.
Of course, you cannot start brewing without the right equipment. The cost of brewing equipment can range from a few thousand dollars to hundreds of thousands, depending on the size and scope of your operation. In addition to brewing equipment, you’ll also need to purchase kegs, taps, boiling equipment, and other supplies used in the brewing process to create your craft beer. On average, owners spend $50,000 on equipment and supplies, these costs should be taken into account when writing your business plan.
Craft brewery business equipment:
- Stock pots
- Fermentation tanks
- Bottling and labeling equipment
- Storage tanks
- Distribution and shipping equipment
Initial Supplies and Inventory
In addition to the cost of equipment, you’ll also need to purchase initial supplies and inventory for your brewery. This includes things like malt, hops, yeast, and bottles. You will also to consider the cost of beverage shippers as well as any interest payments required from startup capital. It is also important if opening a brewpub to consider the cost of food and how many guests you are expecting to serve. The cost of these supplies can vary, depending on the size of your operation, but you can expect to spend an average of $5,000 on initial supplies and inventory.
If you plan to hire employees for your brewery, then one if the major factors you’ll need to consider is the cost of labor. This includes things like wages, benefits, and taxes. The cost of labor can vary, depending on the size of your operation, but you can expect to spend an average of $3,000 per month on labor costs plus the cost to hire a head brewer.
Regardless of how much beer your are brewing, most breweries need to employ:
- Assistant Brewer
- Bottling line operator
- Lab technician
- Brand ambassador
- Marketing director
- Graphic designer
To get your brewery off the ground and attract potential customers, you’ll need to invest in some marketing. This can include things like advertising, public relations, and social media presence. The cost of traditional and social media marketing can vary for a small business, depending on the size of your operation, but you can expect to spend an average of $1,000 per month on marketing your brewery.
Breweries can market their products in a variety of ways. Some breweries choose to focus on the quality of their beer, while others may choose to focus on the experience of visiting their taproom. Some breweries also sponsor events and collaborate with other businesses to help spread the word about their product. Regardless of the marketing strategy, it is important for breweries to make sure they are creating a consistent brand that consumers can identify and connect with.
Software and Website Design
If you plan to sell your craft beer online or through a mobile app, then you’ll need to factor in the cost of software and website design. Brewery software is used to manage various aspects of a brewery’s business operations, from recipe creation and inventory management to sales and marketing. It can also help track production data and analytics to help brewers make better decisions about their brewing process.
Some important items to include on your business website are: a description of your business, your mission statement, your product or service offerings, contact information, and an online store if applicable. You should also make sure to have a blog on your website where you can share your latest news and updates with your customers. The cost of these services can vary, depending on the features you require, but you can expect to spend an average of $2,000 on software and website design.
Raising Money to Start a Brewery
There are a few ways to raise money to start a brewery.
Breweries are a fun and exciting business to invest in, and there are a few different ways to go about finding investors. The most common way is to find angel investors. Angel investors are people who have a lot of money and are looking to invest it in businesses that have a lot of potential. They usually invest in businesses that they think will make them a lot of money, but they also care about the social impact of the business.
Another way to find investors for your brewery is to look for venture capitalists. Venture capitalists are people who invest in businesses with high-growth potential. They are usually looking for businesses that can turn a large profit, but they also care about the social impact of the business.
If you can’t find any angel investors or venture capitalists, you can always try to get a loan from a bank. However, it can be difficult to get a loan from a bank if you don’t have a lot of collateral.
This can be a bit more difficult, as most lenders want to see some evidence that the brewery will be successful. But if you can provide a strong business plan and show that you have a good understanding of the industry, you may be able to get a loan.
Grants or Government Funding
One grant that may be of interest to brewers is the Small Business Innovation Research (SBIR) grant from the United States Small Business Administration (SBA). This grant is open to businesses with fewer than 500 employees and awards up to $150,000 per year. The purpose of the SBIR grant is to help small businesses develop innovative products or services.
Breweries can also apply for grants from state and local governments. For example, the Pennsylvania Department of Community and Economic Development offers a number of different grants for businesses, including the Pennsylvania Keystone Innovation Zone Grant Program. This program offers grants of up to $250,000 for businesses that are creating new jobs or expanding their operations in Pennsylvania.
There are also a number of private foundations that offer grants to breweries. The Samuel Adams Brewing the American Dream Grant Program, for example, awards $10,000 grants to small businesses that are brewing beer and selling it in the United States.
Try Our Brewery Startup Costs Calculator
Enter your expected initial costs below and then click the “Calculate My Startup Costs” button. We have included estimated/typical initial costs for each category, but feel free to modify our figures to reflect your solid business plan and specific business needs.
Starting a brewery can be a costly endeavor, but with careful planning and cost management, it can be a successful business venture. However, you should expect to pay anywhere from $50,000 to $5,000,000 in start-up costs, so be sure to factor this into your business plan. Be sure to factor in all the costs associated with starting your brewery so you can plan accordingly.