Starting a Brewery and Setting It on the Right Path to Success

Starting a brewery – Step #1: Building your brewery team

One of the keys to brewery success is building a successful team. Surrounding yourself with qualified experts in your weakest areas (e.g. accounting, IT, sales, or any other part of the brewery) will let you delegate those duties to professionals who can do a great job, while you focus on the creative direction of the brand.

Key brewery roles and what they do

Here are some roles to consider so you won't do it all yourself:

• Head brewer: The head brewer is both a creative director and manager. While part of the role is to do with developing new recipes, much of it focuses on inventory ordering and management, people management, and scheduling.
• Senior brewers: Senior brewers have similar duties to a regular brewer, but at a higher level. They’ve likely been better trained in quality assurance and brewery maintenance, able to act with initiative and support the head brewer.
• Shift brewers: Brewers are the doers who have a hand in each part of the production pipeline, from milling grain to maintaining equipment to cleaning down after a brew is complete.
• Cellarman: A cellarman may have a variety of tasks, including dry-hopping, helping quality assurance, and operating the centrifuge, as well as cleaning in place, filtration, and potentially packaging.
• Quality control: Quality controllers are vital for the process to be successful. By monitoring the brewing process for red flags (like wild yeast or bacteria), they ensure the final product is consistent, stable, and up to the standard you require. A quality controller may have qualifications in microbiology or chemistry, allowing them to improve the product through the use of science.
• Sales and marketing: There are usually multiple people involved in the sales and marketing process. Ultimately, their objective is to help the brand reach more customers through distributors, vendors, events, digital advertising, etc.
• Accounting: As we’ll talk more about further into this article, managing costs is a vital part of running a successful brewery. While smart brewery software can help with much of this process, a financial expert will work to balance the books, take care of the brewery’s tax compliance, and monitor revenue/cash flow.

Starting a brewery – Step #2: Choosing your location

There is no ‘right’ answer when it comes to the question of brewery location, as the unique requirements of each business greatly affect where ‘good’ is. So, we put together a list of considerations for you to check off as you consider where to open a new brewery or expand operations:

• Utility needs: Ensure that local drains, water lines and plumbing will accept your brewery equipment, and that the supply of water, gas and electricity is enough for your needs.
• Loading and storage: Is there space for a loading area/dock and safe product storage? Can the building handle a walk-in cooler? If sharing a loading dock with other businesses, what is their actual use and can you realistically work around it?
• Infrastructure and distance to partners: Is local infrastructure sufficient to allow for easy delivery access to the building? Are partner distributors and vendors within an acceptable distance to the brewery to avoid freight cost blowout?
• Zoning: Does the council allow for a brewery in your preferred areas? Could you seek a zoning exemption? Will opening a brewpub instead of a pure brewery give you greater zoning flexibility in your city?

If you're opening a brewpub or restaurant, also consider:

• Parking: Is there safe and convenient parking in and around the area? If not, is there convenient bus or train access, or a place for taxis/ride-share cars to wait?
• Visibility: Does the building have street visibility? Do people know it’s there and can they find it without looking around too much?
• Access: Can people with disabilities access the building? Does it meet local regulations regarding counter heights, restroom design, number of entrances/exits, and so on?
• Foot traffic: Is the business in an area of heavy foot traffic that draws in customers? Is the population of the area high enough that the number of walk-ins will help outweigh leasing costs?

Starting a brewery – Step #3: Brewery inventory management

Inventory management is more than deciding how and where to store ingredients, equipment and finished goods. It also involves planning to improve efficiencies and potentially reducing unnecessary costs (such as wastage and spoilage).

Brewery management software like Unleashed lets you track and automate much of the entire brewery process.

This means you can keep an eye on each individual step, watch costs in real time, and effectively manage inventory so you don’t over- or underspend on ingredients, or overproduce products that you can’t sell.

To be more specific, when you look for brewery software, pick a tool that can help you:

• Improve visibility: Your system must be able to record and track everything coming into and going out of the business, including dates, item location, and costs. By tying this information to sales data, you’ll also be able to get clear on how much to spend to produce the perfect amount of finished product and automatically order new materials when stock levels run low.
• Track sales: Tracking data from every corner of the business and integrating it into a central database allows you to make reports that let you see the real, accurate performance of the business, plus areas that are underperforming.

Read more: The Role of Inventory Management in the Food Industry

Starting a brewery – Step #4: Sales

To ensure that all sales work is completed in line with the expectations of the brewery (its brand, values, and financial objectives), you need a sales strategy that will answer the following questions:

• What are your core values and mission statement?
• What is the history of the brewery, and who are its people?
• Who are your ideal customers, and where do they shop? Where do they hang out online?
• What are your budget figures, your historical sales, your various costs and overheads?
• How do you expect the coming year to go in the beer industry?
• What relationships do you already have with partners (suppliers, distributors, vendors)?

You’ll notice these questions blend financial data and forecasting with developing a brand and target audience.

To get the most from your sales team, they can’t just sell a brown bottle with a label on it. They need something to drive them, a story to sell to prospective customers, and that’s why brand is as important to sales as finances. We talk more about brand growth below.

To sell or not to sell to consumers

One thing on many brewers’ minds at the moment is: Should you sell straight to consumers?

The rise of online sales platforms such as Shopify has made it easier than ever for beer makers to sell their products to consumers directly. Some breweries swear by it, claiming it can increase profit margins.

Of course, the added work and legal requirements could also add costs that not every brewery can afford.

That said, you might argue that direct-to-consumer sales give a brewery more flexibility to keep selling even during times of economic crisis, as there’s less reliance on traditional beer supply chain partners like distributors and vendors, and a greater relationship between customer and brand.

So, questions to ask yourself:

• Do you have the knowledge to set up an online store and operate it in a legal, safe fashion?
• Do you have the infrastructure at the brewery to track orders and schedule them for delivery?
• Do you have a logistics partner who can safely ship your finished products to customers directly?
• Are you capable of complying with local regulations around the sale of alcohol online?

Starting a brewery – Step #5: Marketing

Your brand is everything a customer sees, hears, tastes, and feels when they interact with your business online, through a sales rep, or simply by holding a bottle in their hand.

Something as simple as colour can help customers recognise your brand instantly. For instance, 91% of consumers could correctly identify Google by looking only at its colours, according to a Reboot survey. 80% identified Starbucks, and 84% McDonald’s.

Reboot also found that, when shown a logo of a brand they’d never heard of and then asked later to recall that logo, 78% remembered the colour while only 43% remembered the name.

But brand is more than the visuals. It’s also your persona and your values.

Legacy advertising (e.g. TV or billboards) isn’t dead, but digital marketing has indeed proven itself to be more cost-effective, with better audience targeting controls and wider reach.

But what should you consider?

• Developing a strong social media presence with a strong focus on building customer engagement.
• Building relationships with influencers to create long-term partnerships and advertising opportunities.
• Populating your website with interesting content (e.g. articles, podcasts, videos) for consumers to enjoy, offering advice, information, and news.

Starting a brewery – Step #6: Managing costs

There are three key steps to getting a complete view of your costs, so you can manage them effectively and reduce waste:

1. Know your brewery costs

Everything to do with cash flow management starts with knowing your exact costs. That means labour costs, equipment purchasing, leasing and maintenance, the plethora of product-related costs, from ingredients to shipping to storage.

Plus, you must learn to identify the margins of everything you sell, known as tracking ‘Margins by SKU’, to learn how profitable each individual product is for your business.

The end goal should be total visibility. You know your earnings before interest, taxes, depreciation and amortisation (EBITDA), your costs, and, as a result, your working capital, or cash flow.

Read more: The Ultimate Guide to Beer Profit Margins

2. Track inventory turnover

Poor inventory management, as we’ve touched on, is a fast way to lose money without realising it. Inventory turnover specifically is the speed at which inventory moves through your brewery. The longer something stays in the warehouse, the more it costs. If it spoils, of course, it costs even more.

The key to a healthy brewery is keeping that turnover fast, which again is where you’ll want that professional brewing software that helps you record every little detail about every piece of inventory.

3. Learn how to forecast

The final piece of the cash flow puzzle is forecasting. Business owners must be able to look ahead to identify both opportunities and risks in the next financial year, to be able to position themselves in such a way that they can either take advantage or build resilience.

Using historical costs, you’ll work out what to expect in the future from standard operating costs, but having an eye on the market as a whole will help you spot those unexpected changes like a new market opening up.

Starting a brewery – Step #7: Managing costs

Now’s the time to be objective and not emotional about your business. The challenge to get to the next level of business is more than about passion. Instead, we're also talking about improving numbers and management.

You need to clearly establish the foundation you’re building on. Where are the weaknesses? What will crack when your business takes off?

Your audit checklist: Issues to look for

These are the areas you need to look at as they influence your ability to compete at the highest level. Look at the past twelve months and keep an eye on:

• Planning and forecasting
• How many times do you run out of stock due to demand exceeding supply?
• How many stock-outs due to demand exceeding planned production?
• Inbound supply chain (impacts the ability to produce finished goods)
• Do you have a formal supplier approval process?
• How many inbound deliveries were late?
• How many deliveries were rejected?

Stock control and materials

• How many times did you run out of stock (e.g. caps, labels, bottles, ingredients)? Are you ordering inefficiently?
• How many raw materials/ingredients issues/returns to suppliers were there? Are you monitoring inbound quality?

Production

• How many production breakdowns were due to equipment or machinery failure?
• How many were preventable by maintenance procedures?
• How many days were lost through waiting for replacement parts/spares?
• What were your preventable staffing issues?

Finished product stock control

• How many stock-outs, an event that caused inventory to be exhausted?
• How many are due to production failures?
• How many are due to demand exceeding the production plan?
• How many incorrectly picked orders?

Customer service

• How many late deliveries to customers?
• How many were due to being out of the stock they wanted?
• How many are due to transport issues?
• How many product returns?
• Wrong product order details
• Product quality
• Other reasons

Accounting

• Is cash flow under pressure?
• Are your payments to suppliers being delayed due to a lack of cash?
• Is your sales invoicing accurate?
• Number of disputed invoices?
• Is your cash collection period too long?

Other issues

• List other business problems you have experienced in the past year

This list is by no means complete. In fact, you’ll probably not have access to all the data. To compete at the highest level, you need to have these numbers at your fingertips, at least on a monthly basis.

Dos and don’ts for growing your brewery

This section is really about the don’ts, because if you follow these, you'll do almost everything else properly:

• Don’t take advice from the guy in the bar unless it’s about your beer recipes, and even then, be sceptical.
• Don’t try to expand too rapidly without adequate working capital. Avoid overtrading.
• Don’t accept business systems solutions that cannot easily be integrated to give you a smoothly flowing end-to-end business system. You need ‘pluggability’ so that the complete system can be built and evolve with your business.
• Don’t purchase any supply chain solution that’s not cloud or SaaS based. That means you can buy it as an online service (SaaS), paying typically by user per month, or buy and install the software on the cloud. Either way, you avoid the headaches, risks and costs of running your own hardware in-house.
• Don’t buy any solution from a supplier without brewing sector experience.
• Don’t buy a solution from a supplier that cannot provide reference site contacts relevant to your business.

Brewery software: Enterprise Resource Planning for brewers

You’ve done your business audit and engaged your advisors. You know what not to do, and what you should be doing. The next stage is to put in place new or upgraded processes and systems.

An ERP (Enterprise Resource Planning system) is a complete platform that allows you to run a closed-loop operation across all your business processes.

Different ERPs are either installed or fully cloud-based, SaaS products. However, we don’t recommend that small breweries opt for the former as they limit agility/growth and add cost. A SaaS solution will grow more easily as your business expands too.

What Enterprise Resource Planning looks like in a brewery

• You know how much you can physically brew in the next 12-24 months and...
• You have your marketing plan in place...
• Which drives the sales plan by brand and...
• Your software breaks that sales plan down using Bills of Material recipes to drive...
• Stock control and purchase ordering, including raw materials and packaging, and...
• You can evaluate this financially and ensure that your cash flow forecast stacks up, then tune it to maximise your use of cash and assets (i.e. your brewing plant).

That’s the planning side.

The execution is just as neat. Actual sales ripple through the system to generate purchase orders for ingredients, bottles, and so on. You can then smoothly track changes to the plan and predict finished goods stock-outs as well as shipment dates in advance.

Brewery software features to look for

These next features should be in your software of choice:

Beer recipes through Bills of Materials (BOM)

Unleashed’s BOM (for recipes in our case) feature means you can sell bundled products without having to pre-assemble them. Completing kitted orders lets you track the value of stock used, giving you an accurate finished goods cost. Easily create recipes and include multiple levels of packaging, making the admin side a breeze when you want to create finished goods.

You can also quickly set up trial recipes to establish a final product cost, instead of using spreadsheets.

Costed purchase orders

You might often deal with more costs involved in acquiring stock than just the buy price. Unleashed lets you add these additional costs (such as freight and duty) for each purchase order during the receipting process.

This lets you know exactly what your products owe you and is important if you import your goods prior to sale. Any cost fluctuations are automatically included in your margin management.

Serial and batch number tracking

Assigning batch numbers to your ingredients as you purchase them means you can track ingredients through your whole brewing process.

Are your kegs returned to you? Assign a serial number to ensure you know where they’ve gone and when they come back into your inventory.

Unleashed’s serial and batch tracking is integral for craft breweries that need to trace and report on every step of the brewing process to meet safety regulations.

Stock by location

Easily keep track of stock across multiple warehouses, in multiple locations (like different countries, states, or cities). Unleashed shows you exactly what stock you have and where you have it. Plus, you can segregate stock within your system to manage consignments or quarantined stock (such as bonded/unbonded).

Assembly costs

Adding costs to the assembly process is simple with Unleashed. This will give you a true representation of what each beer costs to brew, so your margins stay accurate.

Sales integration

Once your beer is created, you need to sell it. Those planning to scale up operations will want to use a number of sales channels, including:

• Direct to retail (pubs, liquor stores, retail outlets)
• On-site retail shop
• Distributors (online shops, local or from overseas)
• Sales agents
• Online shop

Most integrated ERP systems cater for all these options, but there may be some exceptions that you need to check for, depending on your precise needs:

• A brewery POS (point of sale) system or integration
• Your own online shop
• Fulfilment and shipping features

Management overview

Make the most of the insights you get with real-time profit and loss updates within your system. Stock control is both about quantities and values. By monitoring all stock and stock value movements, you can track exactly who has done what.

Other tools to consider when starting your own brewery

Other systems that will influence your brewery's growth and add to your starting a brewery cost are:

Accounting systems

For the kind of growth we’re talking about, you need an accounting system that will integrate with your supply chain and your business outputs. At the very least, you’ll need to:

• Produce a cash flow forecast automatically
• Ensure that the correct sales invoices go out on time
• Automatically match purchase order receipts to invoices
• Track actual cash flow
• Produce a regular set of management accounts

CRM (Customer Relationship Management) platforms

If you sell through a few beer distributors and don’t sell direct to bars, liquor stores, or retail outlets, an integrated CRM system isn't a must. But you’re still scaling your business, right?

The question then is: How will you grow your business if you don’t expand your list of sales outlets?

Most CRM systems typically provide a wide range of integrated, automated sales and marketing facilities, the most relevant ones for a craft brewery being:

• Salesforce automation (SFA): This delivers integrated sales processes and automation, including opportunity management, quote and order management, sales forecasting, order management, fulfilment, and
• incentive compensation management.
• Marketing automation: Automates the entire marketing process, including campaign and email management, sales lead reporting and analytics, website search engine optimisation and landing page and form creation.
• Customer support and service: Customer portals, complaint handling and communications management.

HRM (Human Resource Management) tools

Modern HRM systems can take a lot of the headache out of managing staff. Again, many are available as SaaS and cloud offerings, but unless you have 25-30 or more people, you can postpone getting an HRM app.

In the meantime, make sure you have a solid off-the-shelf system to keep you on top of the legal requirements of employment law or disciplinary proceedings.

Mobile sales agents

If you’re not already using mobile sales agents to boost direct sales, you’re drifting through space, hoping to run into a customer by pure chance.

Your direct sales agent must be able to hook into your ERP sales and stock management system from their tablets when on site with a prospect (or on the phone and email). The next stage of your business growth will hook the agent in through the CRM.

Whichever route in, they need access to real-time stock availability data and need to agree the order immediately with the customer, including any promotional discounts. They may also need to order promotional support materials like flyers, banners, flags, or glasses.

Case Study: Seven Bro7hers Brewery

Seven Bro7hers Brewery is a UK-based brewery run by seven brothers who all share a passion for beer.

As avid home brewers, craft brewery runs in the family. But their passion turned into their business four years ago, over a pint of beer. The seven brothers realised the growth of craft beer and decided to take their passion to the next level.

The problem

Before using Unleashed, the team was using a different tool to manage their inventory. However, they were experiencing stock control issues and struggled to maintain visibility over every keg, bottle, and can.

“Prior to using Unleashed, we had little idea of stock availability, other than doing a stock count,” says Kit McAvoy, one of the directors at Seven Bro7hers Brewery.

With stock going to different locations, they realised they needed to track every batch from production through to completion. With Xero as their accounting platform, they were looking for a cloud-based inventory management software that would integrate seamlessly with Xero.

The solution

The Seven Bro7hers Brewery team now use Unleashed mainly for production:

“Production is hugely important to us,” explains Kit, “Unleashed tells us what our products cost, down to the individual count.”

With Unleashed, the team have also found it easier to analyse margins and production costs. The reporting that used to keep Kit up all hours of the night is now a thing of the past.

To start a successful brewery, you need the right team, a smart business location, intelligent inventory management software designed for your industry, a solid sales and marketing plan, and the ability to record, track, and predict costs.

Make it happen with a free Unleashed trial!