Wish to Open a Brewery?

HospiBuz Desk

So you’re thinking on investing on a brewery. It’ll be simple right? You love beer and you’ve been brewing it at home for a while now, so what could be that different? It turns out quite a bit. We’ve gathered information from interviews and blogs by amateurs turned professional brewers. Here are key points to start your brewery business.

The Legal Side

One of the most important parts of brewing is visualizing that it is a heavily regulated industry and that a brewer needs to be very updated with the laws concerning brewing and the sale of alcohol. There are national laws along with local laws that you need to familiarize yourself with before taking the spree into selling beer. The license is issued by the state excise government which permits the company to start operations in its microbrewery for commercial use. Prior the price for this license was over around Rs. 10 lacs/ year which was similar to the normal commercial large scale breweries, however due to recent developments it has gone to as much as Rs. 25,000/ year. But these figures may differ from state to state, because the excise regulations are state regulated and not centralized. An average of Rs. 1-2 lac/ year should be taken in to account while planning the investment of the project.

Importing fabrication equipments from various state in India involves some excise over the stainless steel used and in case the equipments are imported from china, or some European countries, a custom duty will be levied upon the goods from 10-30% of the total purchase, leaning on the nature of equipments, the shipment location and their use. In case of imported raw materials an excise also need to be paid for them along with the customs duty for the nature of materials that are used in the production of alcohol.

Local licensing is also essential if you want to serve beer at your brewery; this entails getting a liquor license which can take about 45 to 60 days if licenses are available. Some states municipalities restrain the number of liquor licenses based on the population of that area. If licenses are not available you could be waiting for an indeterminate amount of time until one becomes available.

It is also favourable to consider the corporate structure of your business. You can actuate your corporate structure by taking a glance at your financial situation and the number of people founding the business. We would suggest speaking with your accountant and determining what structure would work best for your business. You’ll also need an operating agreement. An operating agreement says how the business is going to be run, who will control it, how to resolve disputes, and how investors will be brought in. In this way when the time comes you’ll know exactly how to handle any situation.

You’ll also want to consider the types of insurance needed. “Any manufacturer of beer should have property, casualty, and liability insurance.”

Is your head spinning? Take a deep breath, there are plenty of entities to help you through this process. Organizations such as the Brewers Association have online resources to help those new to the industry get up and running. 

Expenses

Starting a brewery is very expensive. Michael Kane of Kane Brewing Company told “Everything is three times as expensive as you think,” Brewing is a capital accelerated business, meaning that surplus earnings often need to be poured back into the business. “You’re never really done investing in this business”. Start with the expense of applying for different licenses and permits. Some of these can be INR 7,000 and some can be INR 700425. Then comes the types of equipment. One barrel which holds 31 gallons, which is about 320 12-ounce beers, can cost around A lot of brewers suggests getting more than one barrel.

Foremost equipment includes:

• Kettles

• Kegs

• Boilers

• Bottling and canning lines

• Conveyors

• Cooling systems

• Storage Tanks

• Fermentation Tanks

• Filters and beer-labelling machines

• Piping and tubing

• Refrigeration equipment

• Cleaning equipment

• Waste treatment systems

• Tap handles

Keep in mind the government won’t approbate your federal brewing permit until all of your equipment is installed and fully operational so these are expenses will occur as soon as you decide to start your own brewery. Then, once you are up and running, different expenses like paying employees and providing them with benefits begin to become a factor.

If you aim to open up an eat-in area in your brewery, that comes with an absolutely new set of costs such as commercial furniture and additional equipment, inclusive of staff that part of the business. A cost that is often omitted when creating a budget is flooring. Composite flooring that will withstand impact shock, temperature shock, and acid from the beer can cost upward of $10 per square foot.

Clean Freak

According to Collin McDonell of HenHouse Brewing, brewing is 90% cleaning and 10% paperwork. Beer needs a lot of sanitary vessels for the fermentation process, which leaves behind a trail of dirty containers, tools, and instruments. Cleaning is an imminent part of everyday brewery life.

Not cleaning your equipment can lead to a multitude of problems that can affect your beer production as well as your patron's willingness to come back. Small amounts of leftover yeast can be found on surface areas of parts that are exposed to air. Parts such as faucets, keg couplers, and drains require on a routine check for growth. It can be noticed by its white or grey colour. Mould can be introduced into a beer system by exposure to the air and is usually brown or black in colour. Both of these growths can influence the taste of your beer.

Conclusion

The unsteady legal requirements for properly establishing a new brewery are numerous and complex and they can become complicated from routine business operations if not handled properly.  That’s why working with an barrister knowledgeable in these affairs is essential as you can focus on developing delicious beers and catering to customers, verses dealing with what seems to be a never-ending array of legal issues. Maybe all of this sounds much negative, there are challenges along the way, but if you choose to take them on... I can’t wait to try your Beer!