How Much Does a Brewery Cost to Startup?
How much would it cost to start a microbrewery? Do you want to start a brewery but looking for information in regard how much it takes to start one? Beer sales are huge around the world.
Doesn’t that tell you something? There is money to be made in the brewery business.
A brewery is just a part of the entire alcoholic beverage industry. The global beer industry is a multibillion dollar industry. Starting a brewery is surely profitable. To be able to produce beer, you would need a standard brewery plant.
WHAT DOES IT COST TO START A SMALL BREWERY?
When starting a brewery, you can decide to start at a micro level with a microbrewery or at a bigger level.
The cost of a starting a brewery plant can be very expensive, that is where the challenge is.
Starting a brewery also requires a very serious level of planning and understanding of the beer market and business.
Starting and running a brewery is no small operation and a brewery is a very capital intensive operation. When starting a brewery, a lot of costs come up. Some of the costs which you will deal with when starting the brewery include registration and licensing cost.
One of the most remarkable costs to deal with is the cost of equipment.
To be able to venture into the brewery business, ensure that you have a deep understanding of the brewery business. The cost of starting a brewery would depend on the scale of the brewery which you intend to start.
The cost of starting a brewery would also include such costs as labor and raw materials.
If it is a microbrewery, the cost would be less than for a medium or a large scale brewery.
If you want to find out the cost of starting a brewery you have come to the right place. We shall be detailing the cost of starting a brewery so that you can have the information required to make that brewery endeavour a success.
The Cost of Starting a Brewery
With all modesty, the cost of starting a brewery is a bit huge. Anyway, huge used here depends on your available capital and budget.
To start a standard brewery, the cost includes;
- Registration Fee
Before you can start the brewery you need to register the business, this cost could come up to $750 (U.S. dollar).
- Licensing Cost
Before you can operate the brewery, you are required by law to have the required brewery license and permit.
Accompanying the licensing cost include other costs such as the accounting and legal fees. These could come at a cost of $1,500 (U.S. dollar).
- Facility Construction Cost
You need to construct a standard brewery plant that meets the requirements of the government in order to get the brewery permit.
A standard brewery facility should comprise of administrative blocks and tasting rooms with standard security measure installed. The cost of constructing the facility would come at a cost of $250,000 (U.S. dollar).
- Cost of Insurance
Insurance is required for your brewery. The insurance cost would include such insurance costs for general liability insurance, property insurance for the facility.
The cost of the required insurance could come up to $1,700 (U.S. dollar).
- Cost of Administrative Equipment
Another important cost which you will be dealing with is the cost of equipment for the brewery. These include such equipment as computers, fax machines, filing cabinets, furniture, printers, electronics, telephones etc. The cost for all these could come at $20,000 (U.S. dollar).
- Standard Brewery Equipment Cost
At the hallmark of the brewery operation would be the brewery equipment which would be installed at the facility.
The brewery equipment which is expected to be found in the facility is:
- Plate Filters – this is used for filtering the cider and beer.
- Stainless Steel Vessels – this includes jacket refrigerated containers, yeast growing containers, and pressure tanks.
- Serving Tanks – for bright beer.
- Fermentation and Maturation tanks which must be self-cooled.
- Steam Generators.
- Yeast Storage Tanks.
- Washing Machines for kegs.
- Maturation Tanks.
- Malt Grinders.
- Screw Conveyors.
- Open Fermentation Vats.
The above-mentioned equipment and more are required for the brewery. They could all come at a cost of up to $165,000 (U.S dollar).
- Consultancy and Business Plan
You need to have a solid business plan document. The cost of consultancy and putting together a business plan for the brewery could come at a cost of $2,000 (U.S dollar).
- Labour Costs
The labor cost for the brewery could come up to $2,000 (U.S. dollar).
From the detailed costs here and more the cost of starting a brewery could come up to a minimum cost of $500,000 (U.S. dollar). Depending on your budget and scope of operation, the cost to start a brewery could go up to a maximum amount of $2 million (U.S. dollar).
Standard Cost of Setting up a Microbrewery
When starting a microbrewery, one of the most important things to consider is the startup cost. This article will consider the main microbrewery startup costs you are likely to incur.
Startup costs cover important aspects of a microbrewery business.
This will include running costs, purchase of equipment as well as renting or buying an existing property. As you read through this article, you will find relevant information that will enhance your chance of success.
Financing your Brewery Business
To start a microbrewery, you need to have clearly figured how to raise funding required. As with most business endeavors, funding /financing is the lifeline of your microbrewery business. Hence finding an answer to your funding needs is absolutely important. To cover your startup costs, there are several options available to you. One of such is to through savings. Other ways include lending from financial institutions or from individuals.
Obtaining capital for your microbrewery business through lending requires having a plan. Your business plan makes it much easier for you to strategize on the best ways of achieving set goals. It sets targets as well as definite ways of achieving them.
No one wants to lend their hard earned money to start a business without a future. Hence your lender would want to go through your plan in order to determine if it is worth investing in.
- Funding Sources
We have mentioned that to cover your microbrewery startup costs, adequate capital is a basic requirement. There are numerous sources of funding to help you achieve this objective. Such include the following;
- Accessing Soft Loans
This is one of the best types of loans you can get. Most times, soft loans come without interest rates or with very low interests. Another advantage soft loans confer to you include a long repayment period. Such types of loans can be sourced from members of one’s own family as well as from governments.
However such loans are only available to persons who can clearly prove that their microbrewery startup is viable as well as worthy to invest in.
- Personal Savings
This type of funding source is quite popular among small business owners. You can decide to set aside personal savings for this purpose. However this may take some time to save the desired sum.
To achieve this, you need to know just how much is required which is the subject of our discussion and will be provided as you read on.
- Business Grants
There are lots of business grants which you are likely to qualify for. Such grants are made available for entrepreneurs with workable business ideas but without the required funding to actualize their objectives.
- Loan Application
This is very popular among entrepreneurs as most types of businesses (large and small scale) apply for them.
However in applying for a bank loan for your microbrewery startup, there are several terms and conditions you are required to fulfill. Your business plan should also be ready before application as it is a requirement.
- Business Partnerships
These are also known as investors and are crucial to the process of actualizing your microbrewery startup idea.
Investors will readily commit their capital where it will likely generate returns. However you have to persuade them of the viability of your business idea to make that possible.
Microbrewery Startup Costs
Now to the central focus of our discussion, starting a microbrewery requires sufficient capital. There are several things that make up such costs. Such include registration costs, cost of equipment, insurance, modeling of facility among several others. We will be discussing these and more shortly.
At the end, you should have a general idea of how much startup costs is necessary to actualize your goal.
- Rent Costs
To start a microbrewery, rent has to be factored in your startup cost calculations. The amount of rent to be paid depends on the size of such property. Hence, rent costs will range from $40,000.00 to $75,000.00 depending on factors such as size and location.
However you can be spared from the above expenses if you own a property that can be used for such purposes.
- Insurance Cover
Insurance forms an important part of starting a microbrewery business. In order to apply for the best insurance plan, it is necessary to seek the services of a licensed insurance broker. Things covered by microbrewery insurance include equipment failure, liability insurance, liability caused by loss of brew, transport etc.
Other things to consider when applying for insurance include the coverage of beer casks and more. Your microbrewery insurance broker is able to provide the best advice and recommendations of the best insurance plans to apply for. This cost will range from $1,500.00 to $3,000.00.
- Consultancy Fee
This is also included in a microbrewery startup cost. Hiring the services of a consultant will cost you a fee that will range from $2,000.00 to $5,000.00.
- Facility Remodeling
Most times after renting a facility, remodeling such a facility to fit your needs and purposes becomes necessary.
Facility remodeling incurs expenses. There is no fixed cost for remodeling a facility. It all depends on the facility and what needs to be changed or modified. Hence, you should expect to spend anything from $8,000.00 to $15,000.00. This can be lower or even higher.
This plays a huge part in the success of your microbrewery startup. Several equipments are necessary to ensure the success of your startup. Depending on the type of equipment purchased as well as brand, you could incur a cost starting from $20,000.00
Other things that will influence your brewery costs include office furniture and gadgets, running costs, marketing costs, legal fees and more which costs around $95,000.00 with running costs taking the lion share.
We have seen that microbrewery startup costs consist of several things. None can be said to be better than the other as they are all necessary to efficient functioning of your microbrewery. It is also important to state that additional factors determine costs. Such include location as well as your state’s registration requirements.
We have been able to provide the required information on the cost of starting a brewery. You should also bear in mind that before you can get the license to operate the brewery the government expects to see a certain level of work, construction and facility at the site of the intended brewery.
You also need to put into consideration other miscellaneous costs and expenses and the cost of marketing and distribution and promotion of your product.