Things to Consider When Opening a Microbrewery

Dave Barton Aug 30, 2021 2:34:52 PM
Beer in Hand

Cracking Open A Fresh One?

When you’re taking those early steps towards opening a microbrewery, there’s a lot to consider. For instance, how do you track your purchases, sales, and production? How do you get your accounting in order? What legalities need to be covered? What permits do you need? All of these micro details add up to a macro picture. 

 

And if you’ve not run a business before, or this is your first startup in the brewing industry, these details can be a distraction when you really want to focus on brewing great beer. So let’s take a closer look at what you need to know, and how to take care of your day-to-day operations.

 

From Homebrewery To Microbrewery

So you’ve got down those recipes at home and now you’re looking to make the leap into larger-scale production? The first thing you need to know is that the process tends to be long. You’re probably looking at a year to a year and a half of planning. 

In that time, you’ll be making sure you’ve got the right product and right location. There are permits, regulations, and restrictions to consider before you can even start bringing in raw materials and figuring out how to get brewing.

 

Learning Your Craft

With the product, location, and permits in order, you’ll also need to have your vendors and operation workflow figured out. How will you track your inventory, accounting, and sales? Do you have a system for reporting and compliance? 

Six months from opening is a good time to get your tracking and accounting in place. Why? So you can alleviate any potential issues and hit the ground running when you officially launch. 

Your distribution network is another key consideration. What kind of network will you have? Are you a tap room? Are you canning for online sales?

Every province or state has different regulations for distribution. For example, craft brewers in some areas, many have to distribute for themselves. That means they need direct partnerships with liquor stores – and they might have strict requirements for production levels. Another channel to consider is selling directly to individual government-owned liquor stores.

 

Reporting Requirements

Whichever avenue you decide to take, it’s vitally important to understand the reporting requirements in your province or state. This will ultimately shape the way you do business. For example, in British Columbia a licence to produce beer doesn’t cover having a tap room.

Where you’re based determines how you’re taxed – and therefore how you report and when you report. 

In British Columbia and Alberta, breweries pay tax on a keg before it’s sold via a taproom, whereas in Ontario that’s not the case. 

So in British Columbia, if you move a keg from your production room to a tap room you are basically selling it to yourself, so at that point it’s taxed. On the other hand, in Alberta the same journey requires you to pay the full cost of the keg to the liquor board and then in five days they return your payment – minus the tax deducted(!). 

In Texas, there’s a three-tier system in place – to regulate the distribution of alcohol through producers, distributors and retailers. This means not only defines the roles of ‘who can sell what to whom’ it also sets out rules and regulations for what each party must to obtain accreditation for their respective liquor license.

 

Weekly reporting to the liquor board is common to most provinces or states. That means you’ll need to account for how much product you’ve sold and to which licensee (using their licensee number). You also have to submit a monthly report which states how much is in your inventory at the start and end of the month.  

 

Keeping An Eye On Your Inventory 

With your accounting and reporting in order, your final consideration will be how to manage your inventory. And it’s important to consider scalability. You might have five people or 50 people who need access to real-time information such as batch updates. How much visibility do you have over your numbers? Can you easily access sales data? 

Compliance also requires lot tracking and batch tracking. Is that data readily accessible? With an audit most likely within the first couple of years of business, do you have all you need in one place? 

 

Next Steps?

You’re going to have a lot more questions as you get everything underway. And that’s a good thing. There’s lots of information out there, and while we don’t have all the answers, we can certainly steer you in the right direction on the stuff we can’t help you with.

 

Show Them Your Brew Ninja Moves 

From full traceability to regulatory lot tracking, Brew Ninja streamlines your entire microbrewery operation into one mobile-friendly piece of software. 

 

Whether it’s knowing the value of your inventory at any time, or preparing weekly or monthly reports, Brew Ninja gives you everything you need in a few taps. That way, you can focus on what’s coming out of the most important taps.

 

Schedule a chat with Brew Ninja today.   

 

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