Business ideas for 2014: Microbrewery

The UK is witnessing a “craft beer revolution” and demand for small independent beer makers and other brews is on the rise. Should you start a craft brewery?

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People are falling back in love with independent beers and ciders, and in 2014 we see a microbrewery as a great business to start.

Typically defined as an independently-owned brewery which produces a limited amount of beer; microbreweries, otherwise known as craft breweries, are experiencing a resurgence and 2014 marks the perfect time to join Britain’s “beer revolution”.

Starting a microbrewery: Why it’s a good business idea

Following a growing craft beer renaissance in the US, microbreweries have begun to establish a presence in the UK as a move away from the large industrialised distilleries that dominate the market.

In comparison to commercially-brewed beers, craft beers have the capability to appeal to a much wider audience by giving choice back to the consumer; offering innovative new tastes and flavours, higher quality and the attraction of being locally-produced.

Pubs, bars and restaurants across the country have taken note of this rising demand; stocking unique and speciality beers on their premises, and new festivals are emerging to support beers produced by craft distilleries.

Craft Beer Rising, which launched last year, is an event which looks to support independent beer makers and will run for the second time in London next month to showcase the “world’s finest brews”. Founder Sam Lloyd believes that the “craft beer category will accelerate in 2014” arguing that the “demographic of beer drinkers is rapidly evolving, with craft beer appealing to a more discerning drinker – both male and female.”

In 2013, the Campaign for Real Ale (CAMRA) reported that the number of independent UK breweries had reached a 70 year high, totalling 1,147 distilleries, and predicted that this number would accelerate in 2014 as the market grows to support craft beer makers.

A prediction supported by the 2013 Mintel Report which suggested that the alcoholic drinks industry will grow to an estimated £45bn by 2017.

Microbrewery business opportunities

As the focus for craft beer rests on quality and diversity there are several avenues you can pursue as a craft brewer. Producing high quality beer would be the main operation but there is the option to expand into organic beers or to create controversial beers; such as BrewDog’s “art and taxidermy infused” beer which is brewed at 55%.

Incorporating beer tastings and brewery tours into your business model is also advisable as beer tasting is now just as popular as wine tasting.

With many pubs and bars backing the craft beer movement, there are retail opportunities in the UK as well as overseas markets with openings to export to countries such as America, Sweden and Japan. You could even launch your own “brewpub”, an establishment which produces its own beer, as these are beginning to gain traction across the country.

To start a microbrewery you need to purchase brewing equipment; starter kits are available from £10,000 and produce around 400-500 litres of beer. Finding premises for a low rents is one of the biggest challenges craft brewers face but there is the ability to utilise alternative premises; for instance there is a surge of independent distilleries opening in dairy farms and old school buildings.

Funding opportunities for microbreweries are on the increase and have proved especially attractive to crowd investors. Over the course of last year, independent breweries Hop Stuff Brewery, Green and Pleasant, and Quantock Brewery all raised substantial finance through equity crowdfunding site Crowdcube.

Who else has started a microbrewery business?

Craft brew company BrewDog claims to be “leading the revolution”; having launched in 2007 it has grown to become one of the most successful independent breweries in the UK, and the largest in Scotland.

Some well known names are getting in on the act too. Rockers Iron Maiden have created Trooper British bitter. Fellow band Madness are behind the Gladness beer. And Elbow started the Build a Rocket Boys! bitter.

A number of independent breweries have recently joined the market such as The Kernel Brewery and Revolutions Brewing Co., and with craft beer scenes emerging in cities across the country the trend for independent beer makers shows no signs of slowing down.

Insider opinion

James Wyatt, co-founder of BrewDog:

“The craft brewing sector has seen compound growth of 12% over the last five years and there has never been a better time to start an independent craft beer brewery.

“When we started out in 2007, there wasn’t a UK market for craft beer, but with the increased demand, amazing breweries are popping up all over the country. Drinkers are becoming more discerning, they are looking for quality over quantity and are tired of the same old soulless, mass-produced lagers.

“Craft beer brewing is about variety. Brewing in small batches allows you the freedom to try new things and experiment, and push the boundaries of what beer can be. The sky is the limit.

“We have a built a community of craft beer fans who are as passionate about great beer as we are, and if you have the enthusiasm and drive, there is nothing more fun and rewarding than running your own craft beer brewery.”

Published Jan 2014

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