Considering starting your own brewery to brew up some unique flavors? Pretty exciting.
But before you start your brewery, it’s crucial to understand how much this flavourful journey is going to cost you.
Don’t stress. In this in-depth guide, we’ll answer the question: how much does it cost to start a brewery? We’ll also provide a thorough understanding of all the costs associated with starting a brewery and help you calculate costs.
So, grab a drink, and let’s brew up some financial insights for your brewery dreams!
What is the cost of starting up a brewery?
The startup costs of a brewery business in the USA span between $250,000 to $1,500,000. These figures can fluctuate based on factors like location, equipment needs, and licensing requirements.
Brewing businesses usually make profits between 15% to 20%. You can expect to enjoy even larger profit margins as you scale and optimize your operations.
Average costs for starting a brewery
Before we dive into details, check out this startup cost checklist of brewing businesses. It will help you plan your startup budget and know how much financing you need to get started.
| Item | Average Cost |
|---|---|
| One-time Expenses | |
| Lease deposits | $10,000 – $50,000 |
| Brewery equipment (brew kettles, fermenters, etc.) | $100,000 – $800,000 |
| Renovation / Construction costs | $50,000 – $300,000 |
| Initial inventory (hops, grains, yeast, etc.) | $5,000 – $50,000 |
| Licenses and permits | $5,000 – $20,000 |
| Branding (logo, merchandise) | $2,000 – $10,000 |
| Initial marketing (website, promotional materials) | $5,000 – $20,000 |
| Professional fees (legal, consultancy) | $2,000 – $20,000 |
| Insurance (first year) | $5,000 – $30,000 |
| Total One-time Expenses | $184,000 – $1,300,000 |
| Recurring Expenses (Per Month) | |
| Rent or mortgage | $2,000 – $10,000 |
| Payroll (staff, brewers) | $10,000 – $50,000 |
| Ingredients restock | $3,000 – $20,000 |
| Utilities | $1,000 – $5,000 |
| Marketing and advertising | $400 – $2,500 |
| Insurance | $1,000 – $5,000 |
| Equipment maintenance | $400 – $2,500 |
| Total Recurring Expenses (Per Month) | $18,400 – $97,500 |
| Total | $202,400 – $1,397,500 |
Using this brewery startup cost checklist, you can plan your startup budget and get an idea of how much financing you will need.
How to calculate the cost of starting a brewery business
The calculator includes categories such as pre-trading, website setup, marketing, operations, and people. You can enter the estimated costs in each field and let the calculator estimate the costs for you.
Remember that many startup costs fall under recurring expenses, so cover those costs monthly, quarterly, or annually.
Calculate your startup costs using this calculator.
The Upmetrics method—financial forecasting tool
It is an intuitive and efficient method of calculating startup costs. Using Upmetrics will not just help you estimate startup costs but also help with financial forecasting.
All you need to do is enter your sales, costs, and other financial assumptions and let the tool calculate monthly/quarterly/ and yearly projections for you.
Pro-tip
Check out the financial forecasting tool for accurate financial forecasting. Once you have an accurate estimate of startup costs, you can easily identify funding requirements for your brewery.
Raising funds for a new startup is certainly a nerve-wracking and time-consuming process, but having a solid brewery business plan can make things a lot easier.
Let’s move ahead and discuss the factors that affect your brewery startup costs.
Factors that affect brewery startup costs
Various factors are taken into consideration when calculating brewery business startup costs. Let’s look at the key factors that greatly influence the initial investment for your business.
Location and permitting costs
The location of your brewery can significantly impact the costs associated with permits, licenses, and registrations. Different regions may have varying requirements and fees for operating a brewery business.
Key brewery licenses and permits include brewing permits, alcohol licenses, health permits, and zoning approvals. These credentials provide the legal framework necessary to operate your brewery confidently and within compliance.
The total cost for licenses and permits can range from $5,000 to $20,000 or more, depending on the specific requirements in your state or locality. While you may be eager to kickstart your brewery venture, it’s crucial to ensure full compliance with all regulations before proceeding further.
Equipment costs
When considering starting a brewery, equipment costs play a crucial role in your budgeting. The type and scale of equipment required will depend on the size of your brewing operation and the volume of production you aim to achieve.
For a small to medium-sized brewery, essential equipment may include brewing kettles, fermentation tanks, bottling or canning lines, kegs, and temperature control systems. Larger breweries may require additional equipment such as mash tuns, lautering vessels, and bright tanks.
Budgeting for brewery equipment can range from $100,000 to $800,000 or more, depending on the size and complexity of your operation. It’s essential to invest in quality, durable equipment to ensure consistent product quality and operational efficiency.
Additionally, don’t forget about safety gear for brewery staff, such as gloves and goggles, as well as maintenance tools like cleaning brushes and lubricants.
Business insurance
Insurance is important to safeguard yourself from financial losses and any unexpected situation. As a brewery owner, you’ll need a variety of insurances to protect your operation, staff, and customers.
Here are some of the common insurance categories:
- General Liability Insurance: $500-$2,000 per year
- Workers’ compensation insurance: $500-$3,000 per year (varies based on the number of employees and payroll)
- Commercial auto insurance: $1,500-$3,000 per year (if using company vehicles)
These estimates may fluctuate depending on your unique situation and the insurance companies you choose. It’s crucial to conduct thorough research and gather quotes from several insurance providers.
Payroll and Wages
Payroll and wages are ongoing expenses for a brewery business, encompassing all costs associated with employing staff to operate the brewery effectively.
Breweries require various staff roles, including brewers, cellar workers, packaging operators, sales representatives, administrative personnel, and taproom staff. The number and types of staff needed will depend on the size, production capacity, and complexity of the brewery’s operations.
Salaries or hourly rates for brewery staff will vary based on geographical location, experience levels required for each role, and local labor market conditions. For instance, entry-level positions such as packaging operators’ average salary is $17.34 per hour, while experienced brewers or managers may command higher salaries.
While payroll expenses can vary significantly, typical annual payroll costs for a small to medium-sized brewery might range from $50,000 to $200,000 or more, depending on staffing levels and wage rates. Effective management of payroll costs is essential for budgeting and maintaining profitability in the brewery business.
Utility costs
Utility costs are a significant consideration for breweries, impacting both startup expenses and ongoing operational costs. Essential utilities like electricity, water, gas, and waste management are vital for brewery operations. However, without careful management, these expenses can quickly add up and affect profitability.
To mitigate utility costs, breweries can implement energy-efficient solutions and proper waste management practices. For instance, using energy-efficient equipment such as LED lighting and high-efficiency HVAC systems can reduce electricity consumption and lower utility bills.
Similarly, implementing water-saving measures and efficient wastewater management can optimize water usage and minimize associated costs.
Marketing and advertising costs
Marketing is super important in establishing and promoting your brewery business.
Investing in marketing materials such as signage, banners, business cards, and brochures is essential to build a strong brand identity. These typically range from $5,000 to $10,000. Additionally, setting up a professional website and designing a logo can incur initial costs of $100 (basic) to $3,000 (premium).
Further marketing expenses, including online advertising, social media campaigns, and promotional events, may initially range from $500 to $2,000. It’s important to note that marketing costs are recurring and can vary based on the scale and strategies employed.
Monthly marketing budgets for breweries typically range from $400 to $2,500 or more, depending on the specific needs and objectives of the business.
Tips for reducing brewery startup costs
Reducing startup costs is crucial for the brewery business to maximize profitability. Here are some tips to help minimize the brewery startup costs:
Start small
Start with a few core beers to control costs and build a brand. Focusing on a manageable brewing process allows you to perfect your recipes, gather valuable customer feedback, and maintain consistent quality. As your brewery gains momentum, strategically introduce new beers and expand your offerings.
Utilize space efficiently
Maximize the use of available space in your brewery to avoid the need for costly renovations or expansions. Optimize layout and storage to minimize wasted space and reduce overhead.
Explore co-location
Consider sharing space with another business, such as a taproom, restaurant, or brewery, to split costs like rent, utilities, and equipment maintenance.
Source equipment
Look for quality, pre-owned brewing equipment, or consider leasing instead of purchasing new. Explore financing options or equipment-sharing programs to spread out costs over time.
Focus on digital marketing
Consider various digital marketing strategies to reduce startup costs for your brewery.
Explore cost-effective techniques such as email campaigns, enhancing your website’s visibility through SEO, engaging social media posts, and collaborating with other websites to expand your online presence.
Conclusion
And there you go. We’ve covered the average costs associated with starting a brewery, giving you a clearer picture of what to expect on your brewing journey. What’s next?
It’s time to estimate the actual costs of starting a brewery in your region and start budgeting. So, grab your brewer’s hat and start crunching those numbers.
Cheers to your brewing adventure!
