You don’t just love beer; you eat, breathe and, of course, drink it. And if your homebrewing has hit overdrive, it might just be time to start your own brewery. Craft beer has been steadily increasing in popularity during the past 10 years, so it’s a great time to join the movement. First, you’ll need to choose a strategic location both in terms of state and federal costs and beer culture and craft demand. Then, it’s time to get cozy with licensing laws and learn why you need an alcohol bond in your state of choice.
If you want to open a brewery, as with all things in life, nothing is guaranteed but death and taxes. If you’re serious about opening your own brewery, or if you just want to see if you have what it takes, then this is the time and place to educate yourself on the basics.
Top three most promising states for your brewery
In 2014, craft beer sales were up 17.6 percent and production was up 18 percent, according to the Brewers Association. Amazingly, most Americans today live within 10 miles of a brewery. With such exponential growth, starting a brewery in the United States is a no-brainer, but where to start?
If you’re excited about opening a brewery, these states are the places to be. All info taken from the Brewers Association’s state-by-state breakdown. Drum roll please…
Number one on the most promising list is Vermont! Vermonters sure do like their craft brew, drinking 16.2 gallons a year per eligible (over 21) drinker. They have a shocking 8.6 breweries per 100,000 people aged 21 or older. The impact per capita isn’t too shabby either, ranking third best in the United States.
Next comes Colorado, drinking 13.6 gallons per adult. Colorado also has a whopping 235 breweries, which equals 6.1 breweries per 100,000 adults in the 21-plus category. But no one should be surprised by this since Colorado is in many respects the home of modern craft brewing (though the popular Cascade hops were developed in Corvallis, Oregon). The economic effects of craft beer aren’t anything to shake a stick at either, and would you believe that 1,673,686 bbls of craft beer are produced in Colorado every year?
Rounding out the top 3 is Pennsylvania. Pennsylvanians drink 13.4 gallons per adult, even though there’s only 1.5 breweries per 100,000 people of legal drinking age, and a grand total of 136 breweries within state lines.
These three states definitely have the culture for craft brewing and that’s a great place start.
Planning for your brewery’s financials
You’ll also want to consider the financial costs of opening your brewery, which depend on your state. To produce and sell alcohol, you’ll need to get an alcohol bond and pay excise taxes based on the number of gallons you produce/sell.
Everyone who’s producing or selling alcohol in the United States is required to obtain a bond required by the federal government. The bond acts as a guarantee that you’ll pay taxes on all sales of alcoholic beverages. Alcohol tax bonds may also be required by the state in which you do business. Bond amounts differ state by state and vary based on the type of license you need. Some states have only 1 license option, while others have different ones for manufacturers, wholesalers, etc. Bear in mind that state and local government agencies have many different names for this general bond and may require additional, more-specific bonds depending on your operations.
The bond amounts can range anywhere from $500 to $100,000 based on your activities and production levels.
A recent state map of excise taxes for beer in 2014 shows us that the three cheapest states are Wyoming ($0.02 per gallon), Missouri ($0.06 per gallon) and Wisconsin ($0.06 per gallon). Colorado and Pennsylvania actually do really well — they’re both tied at 46th for the most expensive states at just $0.08 per gallon. Vermont is in the middle of the pack (23rd most expensive) at $0.27 per gallon. FYI: Tennessee has the highest excise tax rate at $1.29 per gallon and Alaska is number two with an excise tax of $1.07 per gallon. Yikes!
What it takes to start brewing legally
If starting your own brewery is something you’d seriously like to do, then there are some steps you need to take:
- Pick a name. This is always the first step and the most important one from a marketing aspect.
- Become an entity. For those who don’t know, this is where that whole LLC or Inc. comes in.
- File trademarks on your name and beers because you wouldn’t want anyone to steal them.
- Find a space to lease for your brewery.
- Get your alcohol bond(s).
- Get a license from the Alcohol and Tobacco Trade and Tax Bureau (TTB).
- Apply for the correct state and local licenses you’ll need.
- Pay your excise taxes regularly. Doing everything by the book will ensure success down the road.
So, license? Check. Funds? Check. Guts and creativity? Double check. You’re almost ready to go.
Final piece of advice
Knowing about beer is one thing, but brewing it is another. Many successful brewers have some down-to-earth advice about turning your passion into a career: Some say they wish they knew how fast they would grow, or that someone would have told them they’d need a bigger system. Others say that they wish they’d planned better, overall.
Beer is meant to be fun; being an entrepreneur should be exciting. Of course, there’s a serious side to business, but we like to think of that part as pretending to be a grownup for a little bit, before going back to having the coolest job in the world where you get to play and experiment every day.
Shire Lyon is a designer and a marketing specialist by profession and a writer by passion. Lyon loves sharing her knowledge of fine cuisine, new gastronomic trends and small business legislation. She’s also a regular contributor to JW Surety Bonds. We thank her for this article.