You ran the numbers for start a craft brewery – and you’re shocked at the costs. Or maybe you are lucky enough to already be in business, but you can’t keep up with the demand.
In either case, a less expensive alternative is contract brewing. Here’s what you need to know.
What is contract brewing?
With contract brewing, you rent another brewery to brew and pack beer for you, or you can rent another brewer’s facility and brew the beer yourself. It’s still your beer: you own the recipe and decide how the beer is made.
“The contract brewing model is often much less laborious and time-consuming to bring a brand to market, because you have a brewery already set up and ready to roll to brew that brand,” says Julia Herz, director of the craft beer program. for the Brewers Association, a trade group with more than 3,800 American breweries members.
Reduced brewing start-up costs
The start-up costs of a craft brewery can easily exceed $ 1 million, depending mainly on the size of the operation and its location. Costs include essential brewing equipment, such as kettles, barrels, boilers and fermentation tanks. Upgrading equipment to meet increased demand can also be costly.
“On top of that, when you’re a traditional brewery, you face a lot of compliance making alcoholic beverages in the United States,” Herz said, referring to the licenses, permits, and government documents involved in the industry. .
In contrast, for $ 5,000, startups can launch a brand of beer, says Page Buchanan, owner and founder of House of Brews in Madison, Wisconsin, which offers contract brewing services.
Once they get started, owners need to seriously think about marketing their beer and building a following, Buchanan says.
More established breweries are also turning to contract brewing to save money.
Disadvantages of contract brewing
Contract brewing can save you time, money, and stress, but it has potential drawbacks.
No local presence
You are transferring your production to another brewery, which may not be suitable for customers. New breweries often gain traction in the market by having a local presence, a brewery or a beer-brewed bar that people can visit, Herz says.
“The key with today’s craft brewers is the integrity behind the brand, the people and a presence behind the brand,” she says.
Contract brewer relationship
The brewery you work with must be reliable and trustworthy; he must fill your orders on time and follow the recipes exactly as directed. Ideally, you’ll want to work closely with the brewery and oversee their brewing process.
Finding a contract brewing service can be difficult, as there is no directory of contracted breweries. You could join a brewery association and network with brewery owners who have chosen the path of contract brewing. This can help you decide if it’s right for your business and, if so, find contract brewers in your area or near your desired distribution point.
Whichever route you choose, the goal remains the same: to produce a quality beverage that stands out from the competition.
“Beer is more than just marketing. For many beer lovers, it’s also what’s in the glass and where it comes from, ”says Herz.
For more details on starting your business, see NerdWallet’s guide at how to start a business.