Business Overview

A microbrewery is a business that grows along with its community. This is because many brewers start off by by using small distributors to sell to local retailers who then sell to customers. Good markets for this business include areas in which restaurants and beer retailers are growing as well as markets near colleges and universities. This is because the average microbrew consumer is more educated than a standard beer drinker and these environments also have Millennial populations that favor experiences (such as exotic local beer) over regular products (standard brands of beer).

Who is this business right for?

This business is perfect for outgoing and creative entrepreneurs who enjoy creating something special and then sharing it with their local community. The nature of a microbrewery lends itself to somewhat flexible hours, though the brewer may often be fermenting at odd hours and will have to liaise with various distributors and managers and accommodate some of their schedule restrictions.

What happens during a typical day at a microbrewery?

Operating a microbrewery business involves lots of cleaning. It takes a variety of vessels to ferment and package your product, all of which results in a variety of dirty tanks, tools, floors, etc. When the often-wet equipment ends up breaking during a time-sensitive fermenting process, the brewer will need to know how to fix many of these things. Finally, the actual act of fermenting requires a patience for repetitive tasks and a meticulous attention to detail and record-keeping.

What is the target market?

Brewers don't usually deal with customers directly. Rather, their clients are the beer distributors. One way to find distributors is to seek out the local major distributors that specialize in selling brands like Coors, Miller, and Anheuser-Busch. They may not be interested in selling your local flavor, but their deep history and network can likely point you towards local distributors specializing in imports (a good option for small brewing businesses) or those who specialize in handcrafted beers (an ideal option for a small brewing business).

How does a microbrewery make money?

A microbrewery typically operates on a three-tier system to make money. Under a three-tier system, the brewer uses a distributor to sell alcohol to local bars, grocery stores, liquor stores, etc. These customer facing establishments then sell to the consumers. Microbrews are sold consistently throughout the year and many brewers create unique seasonal offerings. Therefore, it is important to note that even though beer is sold regardless of the season, sales peak during the summer and winter seasons, but they experience dips going into fall and spring. 

Brewers who are just starting out may consider self-distribution: while this is not allowed in every state, it enables the brewer to cut out the distribution middleman and sell beer directly to their local areas. In doing so, breadth of distribution will be limited, however reduced overhead means operational costs and beer costs can be lowered.

What is the growth potential for a microbrewery?

Brewing can be done at very small scales, including having a nanobrewery. A nanobrewery is a smaller operation that produces fewer beers—typically no more than three barrels of beer per batch. A nanobrewery can be the first step towards opening a larger microbrewery, which usually produces fewer than 15,000 beer barrels a year. Expanding the business beyond that point usually depends on finding larger distributors willing to distribute to larger regions, which may eventually result in a national brand.

A microbrewery business can also grow by pursuing sideline business opportunities such as selling beer on site by opening a taproom or even running a full-scale restaurant at the brewery (though this requires an additional brewpub license).