Challenges people face while starting a brewery
Before getting into the business of brewing beer, one should consider many aspects other than securing capital and managing cash flow, writes Prasanna Kumar, CEO & Co-founder, BLR Brewing Co & Managing Director, Brew & Barbeque.
Craft beers and independent breweries in India is no longer a nascent industry. Covid may have put a few out of business but innovation, better business intelligence and outreach has helped many Indian breweries weather the storm.
It is a booming business, in fact, according to a recent market research report by Brandessence on Craft Beer Markets 2020 noted that the APAC region including India and China is expected to show the fastest growth in the market due to its increasing demand for beer, disposable income of the people, urbanized population, expansion of key companies in many countries and increasing craft breweries across the region.
Microbreweries or brewpubs are basically places of beer production in small quantities, between 300 litres to 2500 litres per brew batch. It is usually a large open style space for people to enjoy the ambience and drink craft beer with finger food.
Running a microbrewery is fun and cool
It may seemingly appear that owning a brewery is trendy and less stressful compared to other products, fun and most importantly, with beer at your grasp, anytime! The truth, however, is what a beer entrepreneur has learnt by starting a business in India.
The market is ripe for the taking, but like all other alcohol manufacturing permits, there is plenty of paperwork, regulation and restrictions involved in opening and running a brewery in India still. Additionally, advertising alcohol is not allowed in India.
Before getting into the business of brewing beer, one should consider many aspects other than securing capital and managing cash flow. Here I am sharing a few key areas that first time beer entrepreneurs can take a leaf out of, in their journeys to brew passion.
Key challenge areas and how to deal with them
Securing the necessary licenses
Depending on your state and scale of operations, these licenses will vary. There are four to five states which have set clear guidelines for the setting up of a microbrewery, with complete excise policies such as Karnataka, Haryana, Maharashtra, West Bengal, Delhi, Pondicherry and a few more.
Other than the state issued microbrewery license, one will also need a separate bar license. These licenses may cost high depending on your place of operations, so be mindful to include this in your capital cost. Some other licenses that will be needed alongside the ones mentioned above are:
- Commercial Electricity line
- Commercial water line- Municipality/ underground bore water
- Land registration/ Lease sanction
- Company registration
- Waste water disposal certificate from pollution control board
- Fabricated equipment quality certificate from third party inspection
- Water quality testing certificate from quality control labs
- Quality Control (QC) certificate of finished beer from govt. approved QC labs, on random inspection basis.
Staff selection and team building
This may not seem like much at the outset but be sure for this to bite back if not done right in the beginning.
Any budding business needs a few things to be inherent in their staff - enthusiasm, creativity, and team spirit. Pick and choose your staff for both the brewing process as well as brewery staff carefully.
A poor communicator cannot make a great Maitre’d nor can a layman understand and master beer making. So pick your staff with care, it will pay off a great deal in the initial years of your business.
Brand name and identity
The market for craft beer is still nascent so there is opportunity to get creative with the brand name for your brewery. Make sure you pick something that distinctly defines your brand and represents what it stands for. Keep this one close to the chest.
Choosing the right brews
This falls under R&D. You may know how to brew beer and the technical process, however, getting the taste that you want your brewery to be known for will have to be something unique.
This needs extensive experimenting, brewing a variety of batches and getting the recipe right, so ensuring you have spent time on researching and developing the brews you want to make is central to the whole plan of opening a brewery.
Understanding and investing in brewing equipment
Like a car cannot run without support for its mechanism, a brewery cannot run without quality equipment. Be sure to work with experts in picking up your equipment and while at it, don’t try to import everything.
Some of the common items one would be looking for are mash kettle, wort kettle, fermentation tanks, bright beer tanks, glycol chillers, beer dispensing systems, right glassware as per the beer style etc. Importing fabrication equipment from another country involves some excise / customs duty over the stainless steel used.
Identify a local supplier whom you can rely on, that way you can customize your equipment and get the support when needed. Make sure you test them for faults and errors and most importantly, the output quality.
Right location and competition handling
As critical as everything above, if your location is not well identified, your beer business will suffer. Do an extensive comparative study of feasible locations in terms of space, parking and crucially, mass crowds that can find you easily.
Since there are only a few cities like Bengaluru, Hyderabad, Mumbai, Pune etc that offer the right business environment and market for craft beers, the market is getting crowded gradually.
Standing out with the brews you offer, excellent design and service at your brewpub and great marketing is a no brainer for first timers.
Ultimately, opening a microbrewery is just the first step. As the business grows, the brewer learns more about the preferences of consumers, about flavours, and how to create them and running a brewpub business for all that it is.
In my view, every entrepreneur must choose the theme of their brewpub according to a demographic study of the potential audience. If you get the market and the taste right, there is nothing to stop at.
Edited by Anju Narayanan
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)