by Andrew Bartlett
Craft breweries seem to be everywhere. And if you don't have one near you they'll be there
soon and just as good, once open they never seem to fail. It's almost as if craft beer, be it a
new brewery or retail operation, is as sure to be a business success as McDonald's or
Starbucks once were.
Failure rates for new craft breweries are near zero, even for those run by individuals with little
or no real business experience. Some of course do fail mainly due to mis-management, under
funding, and a poor product but they are relatively few and far between. In part, success for
brewery startups is due to the cooperation and help from established breweries. In the ultra-
competitive business world that is truly unique.
The level of assistance varies however. Some established companies give advice on things
like best practices for sanitation to reduce spoilage; others might invite new breweries to
events and even feature those brewers’ beers in their taprooms; some will collaborate with
new brewers in making beer. The bottom line is as much psychologically important as it is in
practice - new brewers know they have someone ready to help.
There are of course other tangible things that are big reasons why craft breweries have
consistently done so well. Here are the top 4 in my opinion-
1. Barriers to entry are nonexistent. Licenses are needed but anyone can apply. Cost for a
brewery license is also significantly less than any other permit dealing with alcohol.
2. Home brewing experience is enough to get started. Notice I said "enough" and "started".
A great home brewer would probably make beer good enough for the company to survive.
3. Startup costs are low. In some places less than $100,000 is enough to open the doors, and
ingredients—just malt, hops, water and yeast—are manageable.
4. Sales start immediately - and that is significant. : A neighborhood brewery with a tap/tasting
room doesn’t need to bother with packaging, distribution or marketing beyond the front door. A
busy tasting room can generate substantial income all by itself.
5. Margins can be quite: A $5 pint of beer will often cost less than $1 to produce (all expenses
included) Beer in general total cost is about 20% or less of the retail price.
Needless to say if it was easy at it seems everyone would be opening a brewery. Since that's
not the case be sure to understand the drawbacks before you even think about opening one.
1. The price of success is brutally hard work, long hours and low pay. While that is true for any
small business it's especially so for a product like beer that is labor intensive.
2. Low-capacity starter brewhouses often require owners to brew beer around the clock—many
even sleep at their breweries. The advantages a bigger brewer has in this area make
competing most difficult for the new, small brewery.
3.New brewers often are forced to dump or “sewer” a lot of product as they struggle to
produce consistently high-quality beer. One of the most difficult things to do is replicating
a small batch beer on a larger scale despite using the same recipe.
4. When sales slow .Expenses have to be cut. For most new brewers that means a cut in their
own pay first.
5. Competition for staff is intense, forcing new brewers to do many jobs themselves.
6. Passion for making beer keeps craft brewers toiling away longer than most entrepreneurs
even when profit totals indicate getting out of the business should be considered. That
however can lead to massive personal financial problems.
Being an entrepreneur isn't for everyone. Opening a brewery isn't for everyone. However if
you have the love, passion, determination, and drive to succeed in making beer for sale then
this just might be the best time in history to give it a shot.
beernexus.com - SPECIAL REPORT
Guide for opening a craft brewery