Brewery Ownership: How to Avoid Industry Pitfalls and Succeed

Photo: Paul Hale, co-founder of Queen City Brewery.

By Tera Dacek

Competition in the craft beer market is on the rise. That’s good news for consumers, but not so great for start-up breweries trying to make their mark in the industry.

An article published by the Brewers Association in 2013 says, “For a variety of reasons, lots of microbreweries and brewpubs close, and with the increased number of entrants into the industry, that number is probably going to rise a lot in the coming years.” The article goes on to add: “This is a sign of market competition, not a sign of problems in the craft beer market.”

Now, three years later, the market continues to grow and has even reached an historical high. So, is solely making the highest-quality beer possible enough to be successful in today’s market?

How to Start a Brewery in Today’s Competitive Marketplace

After talking with many brewers over the years and working in a start-up myself, below is my “hit list” for setting yourself up for success:

Develop a Budget.

We will start with taking some words of wisdom from UVM Business of Craft Beer Certificate Program instructor and co-owner of Jackalope Brewing Company Bailey Spaulding: “Be patient, and raise more money than you think you need.”

Remember when your parents or finance teacher told you to save, save, save? Well, the same goes for opening a brewery. Cushion your budget for more than you anticipate. Of course, be as accurate as possible, but there is always something you forgot, costs more than you thought, or needs updating once you truly get running.

Ask for Help.

Create a list of friends and family who may be able to help you out, whether it be a bar owner, your friend who loves social media, and even your accountant buddy. Write down a list of questions and get their opinions, listen, and learn. Also, visit as many breweries as possible and ask questions. Note what you liked and what you would improve.

According to Paul Hale, head brewer and co-founder of Queen City Brewery, “I sought out feedback from friends and colleagues while writing our business plan, and several ended up becoming partners and/or investors in the brewery.”

Write a Business Plan.

Developing a business plan is a must, but allow for it to shift. Planning will be your best friend, but it can be your enemy, too. Know that you are working against a plan, but be flexible when you have to. Things will come up, and they will.

According to Hale, “For me, the most important activity [when starting Queen City Brewery] was writing a truly comprehensive business plan that not only described my brewery’s philosophy and mission statement but also set in place a five-year plan with production and revenue targets.”

He also adds, “That being said, the business plan is a living document and must be revisited regularly. For instance, we ended up growing a bit more quickly than anticipated, and we had to purchase larger fermenters to increase our production capacity. We also recognized that it would be wise to work with an established distributor rather than try to sell our products by ourselves. This was a change from the business plan, but it has proved to be a good move.”

Keep a Project List, and Keep it Moving.

This is the beer geek in me, but I love a good project list or better yet, a true project status report that is reviewed and updated weekly. If projects are not moving, find out why and fix it. Progression is key when opening a brewery, and many items that were once important will start falling through the cracks, unless you keep track of them. You want to be proactive and not spend your time putting out fires.

Laugh and Enjoy Yourself.

Don’t lose sight of why you are doing what you do. Your passion, and yes, even your sense of humor, will get you through the rough times. Even though you’re getting down to business, you will have many great days. After all, it is the business of beer!

Cheers!


Business of Beer


-Tera Dacek is a consultant and freelance writer. She most recently worked as Marketing Manager for Alchemy and Science. When she unplugs, she can be found at her local mountain or one of the many wonderful breweries in her home state of Vermont.

 

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