Expected Costs When Starting a Brewery
Written by Isabel Strobing (Mainvest)
The biggest hurdle for anyone looking to start a brewery is the cost. Thankfully, there are plenty of resources available to you to get up and running. In this article we’ll lay out some anticipated costs, but we’ll cut right to the chase- we have an amazing interactive spreadsheet that outlines all of these costs, which we are offering 100% free to Craft Beer Professionals. Click here to check it out.
Every state has different licensing requirements, so you’ll have to check on local requirements for more information. Most states, in addition to manufacturing licenses, may require the registration of brand labels as well as additional licensing for on-premise consumption. There may be fees for:
- Liquor licensing (and any other licensing)
- State and federal bond requirements
Given that you won’t be able to legally operate without proper licensing, it’s a good idea to make sure that the bare minimum of your budget is allocated towards these fees (as well as other housekeeping fees like legal and accounting fees).
Real estate & build-out costs
Your build-out costs will depend on the building you’ve chosen for your brewery. You could buy an empty building, giving you complete control over every construction decision, but this is expensive. You could find a partially built-out space, or a former brewery or kitchen,to save money- but it might limit some of your decisions. Generally, you’ll want to budget for the following:
- General Contractor
- Signage & interior decorating
- Miscellaneous Costs
- Bright Tanks
- Steam Boiler
- Grain Mill
- Gran Auger
- Ventilation Hood
- Piping (inc. glycol)
- Kegs (1/2 bbl)
- Keg Washer
- Glycol Chiller
- Walk in Cooler
- Filtration system
- Miscellaneous Equipment
Given the amount of equipment needed, it’s a good idea to find used equipment or built-out locations to save money rather than taking on a brand new project.
Are you building out a kitchen? Aiming to provide an incredible taproom experience? Focusing on distribution only? The structure of your brewery dictates what else you’ll need to budget for your build out. You’ll also want to think about labor costs and operational expenses like music licensing and your POS system.
Raising funds for your brewery
Depending on your plans, total startup costs can range from around $50,000 to well over $500,000, so you’ll probably consider a few avenues to raise money.
One option is to engage with commercial lenders. A business loan can be helpful because you can work with reputable lenders and access a large sum of money upfront with minimal effort. However, depending on your financial situation, it can be extremely difficult to qualify for a small business loan. SBA loan guarantee programs are another source of capital to keep in mind when considering options.
Another option that’s picked up steam in the brewing industry is Regulation Crowdfunding. Some breweries use this to share equity in the business in exchange for investment. Other breweries may crowdfund loans or other forms of debt. Mainvest is a RegCF portal that works with breweries to raise capital this way. A revenue sharing note (RSN) is a debt-based investment vehicle, in which a company borrows money from investors and agrees to pay back a share of revenue every quarter until all principal and interest is repaid.
If you’re interested in learning more about how Mainvest helps breweries raise funds, head to mainvest.com/for-businesses.
Isabel Strobing is the Director of Marketing Communications at Mainvest leading strategy for sharing their mission with the world. She and her team are helping to rebuild the American Dream, one small business at a time. Their online platform connects community investors to neighborhood brick and mortar businesses that require growth capital. Isabel is a full-stack marketer with experience in content creation, communications, digital marketing, and community building.