Microbrewery business plan tips: What do you need?
Startups takes a look at creating a business plan for a microbrewery start-up
When starting a brewery, important things to consider are:
Creating a microbrewery business plan
Once you’ve done some thorough research and know you’ve got what it takes to start a microbrewery, the next step is to write a business plan. Starting a brewery takes a lot of hard work, patience and organisation – and creating a solid business plan will help iron out the rougher patches of starting up.
Just like any other business plan, Paddy Johnson, from a Berkshire-based microbrewery says, you need to primarily include the following: “What is the cost for you to produce beer, where are you going to sell it, and what price are you going to sell it at?” But the “absolutely critical bit,” due to the increasing saturation of the market, is “why are customers going to buy your beer […] why are you different?”
“And don’t say you’re going to produce good beer,” Johnson adds, “you need to have a unique selling point, otherwise you’re just another one of the 1,500 breweries in the country.” Remember that many of the consumers you’ll be targeting are likely to be experienced and passionate beer enthusiasts – they know what they like, and may have developed a sophisticated palette.
Which brings us on to identifying a target market: “You have to decide what you are offering, and then you name your brewery, and your beers with that consistent approach.” A mythology surrounding your business and its produce will draw people in, and help them identify with your brand. For example, aligning yourself with Britain’s rich brewing history creates an association with heritage and quality. Likewise you could build your brand around a culture, an ideology, or as many do – a location.
But, Johnson advises, “forget the names […] do they appeal to that target market? Can you produce them at a price that that target market is going to take?” It’s not just the look and name of your beer brand that you need to consider, the taste and the price should also be tailored towards your target market. “You can’t be all things to all people […] Do some research.”
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A well researched and detailed business plan is also an invaluable tool when it comes to securing start-up finance. Potential investors and banks will want to see you have a grasp of the business. This said, traditional forms of investment are not often the best form of finance for a brewery because of the relatively low return on investment. Due to the resurgence of interest in craft beer, appealing directly to the consumer via crowdfunding is becoming a much more viable means of seeking investment.
Another thing to bear in mind is that you are almost always selling business to business, rather than direct to the consumer, so you have to ask, “Is that business going to want to buy your product at that price?” And while there’s no harm in creating an online store, you can’t rely on online sales. Johnson explains: “online sales are nothing […] you won’t touch that marketplace […] you’ve got to be selling to pubs.”
The next most important decision you’ll have to make is the location of your brewery. Again, you’ll be operating in a market that is in many places over supplied so “you need to find a sweet spot where no one else is operating […] somewhere where there is a good marketplace but relatively low beer supply.” Johnson explains that his brewery is located 175 miles away from his home because there are around 15 breweries within a 10 mile radius of where he lives. As a start-up, you’ll struggle to gain traction in a crowded marketplace when there is so much competition.
In conclusion, Johnson warns that “whatever you think you’ve got in your business plan, the costs will be higher […] as a rough rule of thumb, whatever you pay for the kit, there’ll be at least twice that cost in the setup.”
To help structure your microbrewery business plan you may find it useful to download our free business plan template.