How to start a microbrewery – all you need to know

Starting a microbrewery is a challenging but rewarding endeavor. At the outset, you’ll need to carefully select your equipment, choose the right ingredients, and develop a unique brewing process that sets you apart from your competitors.

You’ll also need to create and perfect signature recipes, market your business effectively, and manage your finances well. But with hard work and determination, you can turn your dream of starting a microbrewery into a reality.

Whether it’s crafting new brews for local craft beer lovers or experimenting with new ingredients around the world, having your own brewery will give you the opportunity to share your passion for great-tasting beer with others and make an impact in your community and beyond.

So if you’re ready to take on this exciting challenge, grab your brewing paddle and let’s get started!

What skills do you need to run a microbrewery business and who is it suited to?

The popularity of craft beers and ales in Britain continues to surge, defying the trend of declining alcohol consumption in the country. In recent years, the ale scene has experienced a remarkable revival, with over 2,000 microbreweries now active across the UK, the highest number since the 1930s. A report by UHY Hacker Young reveals a significant growth of 18% in new craft breweries in 2016 and a staggering 64% increase over the past five years.

Microbreweries, characterized by their emphasis on quality, flavor, and technique, offer beer enthusiasts a refreshing departure from mass-produced lagers churned out by corporate distilleries. Despite the saturated market, individuals driven by an unwavering passion for brewing have taken up the challenge of opening and running microbreweries. Paddy Johnson, hailing from a Berkshire-based microbrewery, highlights the allure of this idyllic lifestyle, where brewing becomes a labor of love rather than solely driven by economic gains.

However, Johnson reminds aspiring microbrewery owners that passion alone is insufficient to sustain a successful business. The focus should also be on developing robust business acumen, as selling beer and navigating the competitive market demands significant attention.

While the dream of owning a microbrewery may be alluring, mastering the craft often requires years of learning and refining brewing techniques. For those eager to embark on this journey, seeking formal education through brewing courses or even a brewing degree can save them from costly early mistakes.

In the ever-evolving craft beer landscape, creativity and innovation are vital for carving a niche in the market. The freedom to experiment with various ingredients has given rise to an exciting array of unique and quirky brews. B

uilding a strong brand identity becomes a pivotal aspect of success in the industry, setting one’s products apart from the multitude of offerings. Amidst the fierce competition, the brewing community stands united, ready to share knowledge, provide support, and offer guidance, fostering a sense of camaraderie among brewers.

How much can you earn running your own microbrewery?

The potential earnings in the microbrewery business largely hinge on the scale of production and the retail avenues chosen to distribute the beer. However, it’s essential to be aware that beer duty significantly impacts profit margins, making it unlikely to be a lucrative venture for those seeking to make big money quickly.

Paddy Johnson, speaking from his own experience in a successful beer start-up, emphasizes that running a microbrewery goes beyond mere financial gains. For him and his colleagues, it has become a way of life, offering unique perks like the freedom to enjoy beer and the fulfillment of building their own business. Nevertheless, he cautions against considering brewing as a get-rich-quick scheme, highlighting the need for a more realistic perspective.

To bolster visibility and enhance the microbrewery’s image, investing in merchandising with a strong brand identity can be a strategic move. Printing logos on various items like t-shirts or beer-related merchandise, such as beer mats, can be sold via the brewery’s website.

Engaging in tasting events or attending them provides an excellent opportunity to gain exposure, attract a loyal following, and gather valuable feedback on the beer offerings. These events can be instrumental in building a community of beer enthusiasts around the microbrewery.

Determining the right pricing strategy is crucial to appeal to the target market. Researching how other beers are priced within the industry can provide valuable insights into setting competitive and appealing price points for the microbrewery’s products.

While the passion for brewing may be widespread, Johnson candidly acknowledges that the industry typically offers limited financial rewards. Nevertheless, his positive outlook remains intact, as he affirms that he would gladly venture into the microbrewery business again despite its realistic challenges.

How much does it cost to start your own microbrewery?

According to Paddy Johnson, a Berkshire-based microbrewery owner, there is no fixed amount when it comes to the cost of setting up a microbrewery. The expenses can vary significantly, ranging from £1,000 to as much as £1 million. Determining the required investment depends on multiple factors such as production volume, location, and the type of equipment chosen.

The overall cost of establishing a microbrewery is influenced by various considerations. These factors include the scale of production, the brewery’s geographical location, and the specific equipment selected for the brewing process. Each of these elements plays a crucial role in shaping the financial requirements and making the cost of setting up a microbrewery a variable and individualized aspect of the venture

Equipment

Acquiring the necessary equipment is a significant aspect of launching a microbrewery, and it represents a major portion of the startup costs. While starting with top-of-the-line equipment is not obligatory, there are ample options for obtaining used but perfectly functional gear through online platforms.

To help you get started, here’s a list of integral equipment required for a microbrewery. While not exhaustive, it includes everything essential for commencing operations:

1. Mash System – This comprises a mash tank, lauter tun, electric steam generator, malt mill machine, wort pump, and plate heat exchanger.
2. Fermentation System – Essential components are fermentation tanks, yeast adding equipment, and a cooling pump.
3. Cooling System – To maintain the proper temperature, an ice liquid tank and refrigeration machine are required.
4. Filter System – This includes a filter diameter tank and pump for ensuring clarity and quality in the final product.
5. Controlling System – To manage the brewing process effectively, a meter controlling board, refrigerator board, and PLC control board are necessary.
6. Cleaning System – To maintain hygiene and sanitation, sterilization equipment, an alkali liquor tank, and a washing pump are vital.

Investing in the right equipment and maintaining it properly is fundamental to the success and efficiency of the microbrewery. While costs can vary, being resourceful in acquiring quality equipment can save on initial expenses and contribute to the long-term viability of the business

Ingredients

As a true beer enthusiast, you are likely aware of the four fundamental ingredients that constitute the essence of brewing: water, hops, malted barley, and yeast. However, within this core quartet lies an exciting array of combinations that hold the key to the diverse tastes and quality of your beer.

• Water, composing the majority of beer by volume, plays a crucial role in the brewing process. While tap water may suffice for cost-effectiveness, many brewers recommend using purified or spring water to avoid the interference of high sulphur levels that could impact the beer’s flavor.
• Hops, those tiny flowers, impart the characteristic bitterness and aroma to beer. With various types of hops available, each one affects the flavor and body of your brew uniquely. Conducting research on different hop varieties and their properties will help you craft the perfect profile for your beer.
• Yeast, the magical agent, is responsible for the alchemical transformation of barley sugars into alcohol, turning wort into beer. Diverse yeast strains bring distinct characteristics to the final product, making it worthwhile to explore and learn about their potential effects.
• Malted Barley, the most common grain used in brewing, serves as the foundation for your beer. The way barley is roasted imparts varied flavors, colors, and body to the beer, making it an essential factor to consider in your brewing endeavors.

Fortunately, a plethora of online and brick-and-mortar stores offer these essential ingredients, and knowledgeable staff are often available to provide advice and guidance whenever needed. Embrace the art of experimentation and craftsmanship, and let these foundational elements lead you on a flavorful journey in the world of brewing

Location

If you feel confident in taking the next step, finding a suitable location and installing the brewery is essential. In the UK, various companies offer brewery installations ranging from £10,000 to £80,000, depending on the size requirements of your venture. It’s crucial to conduct thorough research as the range of options and specialized equipment can significantly impact your choice. For instance, a £10,000 kit can produce approximately 400 liters of beer per cycle, while a larger 12-barrel brewery can handle up to 2,000 liters.

Selecting the right building to house your brewery is crucial. The premises must have essential amenities such as running water, electricity, and proper drainage. Many entrepreneurs are now repurposing diverse empty structures like stables, schools, and dairy farms. Spacious open floors provide flexibility for future expansion plans. Maintaining proper hygiene and safety is paramount, and investing in seamless, impact-resistant, impervious, and anti-slip polyurethane resin flooring from reputable UK companies is a wise choice.

Determining the required space depends on your projected beer production. For instance, a small 2.5-barrel brewery would typically need between 250-500 square feet and 240V of electricity, while a medium 8-barrel brewery would require 800-11000 square feet and 415V. Proper maintenance of your equipment, especially those made of stainless steel, is vital as they can last up to 30 years with the right care.

Once your brewery is up and running, the cost of production will be influenced by the batch size and brewing frequency. Adaptability to demand is crucial for sustainable operations. With government-imposed beer duty responsible for around 60% of your costs, estimating and managing production expenses becomes an integral part of the brewing business. Embrace these considerations, and embark on a flavorful journey of crafting exceptional brews for beer enthusiasts.

Picking a name

Choosing a name for your microbrewery is an important decision, as it will become an integral part of your brand identity. Here are some tips to help you come up with a unique and memorable name:

1. Reflect your brand identity: Think about the values, themes, and ambiance you want to convey through your microbrewery. The name should align with your brand’s personality and atmosphere.
2. Keep it simple and memorable: A short and catchy name is more likely to stick in people’s minds and be easily recognizable.
3. Avoid trademark issues: Make sure to do a thorough search to ensure that your chosen name is not already trademarked or in use by another business, especially in the brewing industry.
4. Consider your target audience: Think about the type of customers you want to attract and try to appeal to their preferences and interests.
5. Connect with your location or story: If your microbrewery has a unique story or is located in a special place, consider incorporating that into the name to add a personal touch.
6. Test it out: Share the name ideas with friends, family, or potential customers to get their feedback. Make sure it resonates positively with your audience.

Microbrewery rules and regulations

Navigating the world of brewing alcohol comes with its fair share of extensive and unavoidable legislation, when producing beer commercially with an alcohol strength exceeding 1.2% ABV, Beer Duty must be paid, and brewers need to register with HMRC to obtain a brewing certificate. Fortunately, small brewers like microbreweries, producing up to 60,000 hectolitres of beer annually, can take advantage of the Small Breweries’ Relief scheme, which offers reduced duty rates on a sliding scale based on production volumes.

Registering as a brewer involves providing a reasonable estimate of your annual beer production, meticulously recorded in a Beer Production Account. If you plan to sell directly to the public on your premises, acquiring a premises license and a personal license becomes essential. It’s worth noting that putting up a brewery requires careful consideration of planning restrictions and obtaining proper planning permission, as highlighted by Johnson.

To gain support and insights into the industry, joining relevant associations and bodies can be invaluable. For budding brewers, the London Amateur Brewers is a fantastic starting point, hosting monthly meetings where beginners and experts can openly critique each other’s beers, fostering improvement.

On the other hand, the Society of Independent Brewers (SIBA) represents the interests of the UK’s independent breweries and played a crucial role in advocating for a progressive beer duty system. By adhering to SIBA’s code of practice and by-laws, members ensure high-quality products.

Moreover, SIBA facilitates the Direct Delivery Scheme (DDS), streamlining access for microbreweries to lucrative trade opportunities.

Through DDS, SIBA purchases draught and bottled beer from its 520 participating brewers, facilitating sales to 18 national pub companies, fostering growth and expansion in the brewing industry. Embrace the support and guidance provided by these organizations to thrive in the dynamic world of brewing.

Creating a microbrewery business plan

Absolutely, crafting a well-thought-out business plan is an essential foundation for any exciting venture, including starting your own brewery. Being your own boss and delving into the world of brewing might be thrilling, but every successful journey needs a reliable map – and that’s where your business plan comes in. A comprehensive plan should encompass the following key components:

1. Company Summary: Offer a solid overview of your brewery, including its location, size, and ownership structure. If you have a mission statement, include it here. Clearly state your goals and highlight any milestones you’ve achieved. You can briefly mention your revenue, but remember to provide more detailed financial information later in the plan.
2. Product/Market Analysis: With the microbrewery market booming and competition fierce, conducting a thorough market analysis is crucial. Evaluate the market trends, identify your target audience, and understand your real chances of success. Provide a clear explanation of your unique product and its selling points, emphasizing how it fills a gap in the market.
3. Competitive Analysis: Identify your main competitors in the local market and analyze their strengths and weaknesses. Showcase how your brand will stand out and overcome the competition to carve its own niche.
4. Product Line: Describe your planned product offerings in detail, highlighting the uniqueness of each craft beer. Discuss your sourcing of ingredients and the brewing process, showcasing the distinctive features that will set your beers apart.
5. Sales Strategy: Include a revenue forecast for the next few years and outline the strategies you’ll employ to achieve your sales targets. Consider your distribution channels and marketing tactics to reach your target audience effectively.
6. Management Plan: Outline the management structure of your brewery, covering areas such as wages, staff training, and payroll management. Detail how you will onboard and manage your team to ensure a smoothly functioning business.
7. Financial Considerations: Address cash flow considerations, defining the overall costings of your brewery and projecting average profits. Calculate your break-even point and include a profit and loss statement to showcase the financial viability of your venture.

By carefully crafting each aspect of your business plan, you’ll be well-prepared to navigate the exciting yet competitive world of microbreweries. Your plan will provide the roadmap you need to make informed decisions and achieve success in this thriving industry.

Financing your Brewery start-up

Financing a brewery startup requires careful consideration of various funding options to ensure a solid financial foundation.

Merchant Cash Advance:

Securing financing through a Merchant Cash Advance offers a flexible option for a brewery startup. With this approach, the brewery receives a lump sum upfront in exchange for a percentage of future credit card sales. This can be advantageous for businesses with a consistent flow of credit card transactions, as the repayment fluctuates based on sales volume. While this funding option provides quick access to capital, it is essential for the brewery to consider the associated fees and potential impact on profit margins.

Business Loan:

For a more conventional funding route, a Business Loan can be an attractive choice for a brewery startup. With a fixed amount provided upfront, the brewery can use the funds to cover initial setup costs, equipment purchases, and operational expenses. Repayment terms are structured, allowing the brewery to plan and budget effectively. While this option may require collateral or a solid credit history, it provides stability and predictability in managing finances.

Asset Finance:

Acquiring essential equipment and machinery is crucial for a brewery startup, and Asset Finance offers a practical solution. This financing option enables the brewery to spread the cost of equipment over time, preserving cash flow and easing financial strain during the initial stages. The equipment itself serves as collateral for the loan, and once the repayments are complete, the brewery gains full ownership of the assets.

Invoice Finance:

To address cash flow challenges associated with outstanding invoices, Invoice Finance can be a valuable tool for a brewery startup. This approach allows the brewery to access funds tied up in unpaid invoices, providing a consistent influx of working capital. By leveraging their accounts receivable, the brewery can bridge gaps in cash flow and maintain smoother operations. However, it’s essential to weigh the costs and fees associated with this type of financing before making a decision.

Insurance

Insuring a brewery is crucial to safeguard the business against various risks and potential liabilities.

There are several key insurance policies that breweries should consider:

1. Public Liability Cover for Breweries: This insurance protects the brewery from claims and legal expenses if a member of the public suffers injury or property damage while on the brewery premises. It provides financial support to cover compensation and legal fees in such situations.
2. Brewery Product Liability Protection: This policy is essential to protect the brewery in case its products cause harm or damage to consumers. If a customer files a claim against the brewery due to a faulty or contaminated product, this insurance covers the costs of legal defense and potential settlements.
3. Insurance for Brewery Equipment: This policy covers the brewery’s machinery and equipment against various risks, such as accidental damage, breakdown, or theft. It ensures the brewery can quickly recover from equipment-related setbacks without incurring significant financial losses.
4. Goods in Transit Cover for Breweries: This insurance protects the brewery’s products while they are being transported to distribution centers or customers. It provides coverage against losses or damages that may occur during transit.
5. Brewery Business Interruption: This policy is designed to support the brewery during times of unexpected disruptions, such as fires, floods, or other incidents that temporarily halt operations. It covers lost income and helps manage ongoing expenses during the downtime.

Three UK examples of insurance providers offering these policies for breweries are:

• Hiscox: Hiscox offers comprehensive insurance solutions for breweries, including Public Liability, Brewery Product Liability, Equipment Insurance, Goods in Transit Cover, and Business Interruption insurance.
• Aviva: Aviva is another prominent insurer that provides tailored insurance packages for breweries, covering Public Liability, Brewery Product Liability, Equipment Insurance, Goods in Transit Cover, and Business Interruption insurance.
• NFU Mutual: NFU Mutual specializes in offering insurance products for businesses in the agricultural and food industries, including breweries. They provide coverage for Public Liability, Brewery Product Liability, Equipment Insurance, Goods in Transit Cover, and Business Interruption insurance tailored to brewery needs.

Take payments

As a brewery, it’s crucial to offer convenient and reliable payment options to your customers. Here are three common ways to take payments:

1. Cash on Delivery (COD): Offering COD allows customers to pay in cash at the time of beer delivery. This payment method is straightforward and can be appealing to those who prefer not to use other payment options or do not have access to online payment methods. However, it does come with the risk of potential non-payment or disputes if the customer claims to have paid when they haven’t.
2. Credit Account: Providing credit accounts to trustworthy and established customers is a way to build long-term relationships and encourage repeat business. With credit accounts, customers can place orders and receive the beer with payment due at a later date, usually within an agreed-upon time frame. However, managing credit accounts requires careful monitoring of payment deadlines and credit risk assessment to avoid cash flow problems.
3. Card Payments: Accepting card payments is essential in today’s digital world. Customers can use their credit or debit cards to pay for beer purchases, whether it’s at the brewery’s physical location or through online ordering. Card payments offer convenience, security, and faster transaction processing. It is crucial for breweries to invest in secure and reliable payment processing systems to protect customer data and ensure smooth transactions.

By offering a variety of payment options, such as COD for those who prefer cash transactions, credit accounts for loyal customers, and card payments for quick and secure transactions, breweries can cater to a broader customer base and enhance their overall customer experience.

What do I need to start my own Microbrewery in the UK & Ireland?

Frequently asked questions

Do you need a Licence to brew beer in the UK?

Yes, you need a license to brew beer in the UK, you must register as a brewer with HMRC to receive a certificate to brew. You must register for Beer Duty at least 14 days before you start.

Can you make money with a nano brewery?

Yes, you can make money with a nano brewery if you focus on selling beer to customers through bars or tasting rooms. This eliminates the need to distribute beer to bars and restaurants, which can be expensive and time-consuming.

Conclusion

Starting a microbrewery can be an exciting and rewarding venture for those with a passion for craft beer and a dedication to quality brewing. However, it requires careful planning, thorough research, and a solid understanding of the industry’s challenges and opportunities.

To get started, aspiring microbrewery owners should begin with a clear business plan that outlines their unique selling points, target market, and financial considerations. Securing the necessary finances through options like business loans or crowdfunding is essential to set up the brewery and purchase equipment.

Moreover, obtaining the appropriate insurances, such as public liability cover and brewery product liability protection, is vital to protect the business from potential risks. By carefully navigating the regulatory landscape, creating a standout brand, and offering diverse and innovative beer options, entrepreneurs can position their microbrewery for success in the dynamic and competitive craft beer market.