”Brew the beer you wish to see in the world”
How to start a microbrewery
Are you passionate about craft ale? Do you dream about starting your own business? A microbrewery could offer you an opportunity to develop a business that you’re passionate about and Moorgate Brewery Finance are here to help…
Why set up a microbrewery?
Here in old Blighty we love our beer, and we have developed a worldwide reputation, famous for our craft beer and ales. The demand for craft beer has increased exponentially, and it is believed there are now over 2000 breweries in the UK. There is no sign of the English tradition of summer beer gardens, quaint pubs and enjoying the flavours of locally sourced ales slowing down. Now many breweries are opening their own tap tooms for great margins on sales direct to the public, and supermarkets too are increasing the amount of craft beer on their shelves.
But with the initial outlay starting at around £20k for a good commercial Brewhouse with modest 2.5BBL production capacity, and costs increasing upwards from there to anything from £50k-£100k+ for a 10BBL, how does a brewer get going?
The answer in many instances is with a bit of finance to purchase the equipment and spread repayments to help cashflow. Hey, if finance worked for Brewdog when they needed to expand from their farmer’s market level of production, then the idea must be worth exploring!
Firstly, let’s establish what’s going to get you a better rate. Is there anything more important?
1) Get some relevant experience – brew schools, work experience, home brews, etc. You need to be able to show the bank that’s giving you money that you know what you are doing.
2) Do a business plan – sounds obvious, but many people don’t make one, and many that do then do it poorly. Properly identify your sales and costs, and then plan.
3) Hone your recipes, and get some sales feedback – how else are you supposed to know that your sales growth forecast is reliable? Googled graphs, showing the anticipated increase in the craft beer industry as whole over the next 5 years, copied and pasted onto a business plan look pretty, but don’t cut the mustard. Put yourself out there, approach local pubs, squeeze onto a festival, explore online craft beer distributers. Find your route to market. This is for your sake as much as any banks.
4) Speak to other breweries! Most breweries are happy to help their industry colleagues, and don’t see you as direct competition in the same single-minded way other businesses do. Brewers are (mostly) happy chappies, probably because they are brewers. Find out what they wish they knew when they started.
Ok, you have a truly awesome session IPA, an American Pale Ale that sings, a stout that puts hairs on your nan’s chest, the locals are already slurring for more, and you’ve even got your business plan nailed down. What next?
Location Location Location. What an overused statement. Yep, but so true for a brewery. Too many breweries are opening in saturated areas or in tiny premises that then stunt their future growth. So what are you looking for? Well, location you might not to be able to do much about, but it is worth knowing just about every city in the UK falls way behind London and Manchester for breweries per square mile or population size. Breweries in those cities are still growing rapidly, but consider your elbow room. More than this, is your location suitable/legal for a taproom? You sell pints to trade for little more than £1, and pints to the public for £4+. If I need to spell this out any clearer, don’t set up your own business. Finally, size matters. A bit. If your ambitions don’t go beyond a 5BBL with a few extra CTs strapped on, then not to worry. If you plan on growing in 2-3 years, consider the physical restrictions you may face and the costs and time delay issues of moving premises. If you can get a big enough location to double your brew length at some point in the next 5 years, or a location likely to give you that opportunity (like nabbing the business unit next door) then you should be sound.
The final piece in the jigsaw? Your brewery equipment!!!! If you have been doing your homework the chances are you may have a few ideas of who you want to use, and hopefully some recommendations. But get this wrong at your peril. Common mistakes? Poor quality manufactures, financially instable manufacturers that go pop and disappear with your deposit like the head on a flat bitter (surely that doesn’t happen, you shudder?…sadly it does) and pop-up metal fabricators posing as brewery specialists. Other danger areas are directly importing from China off your own back to try and shave a bit of the cost…some breweries do this successfully, and there are ways to make it work it should be said, but unless you really know what you are doing, this would be advised against the first time round. The quality and price range of UK suppliers make this option mostly unnecessary, and there are UK suppliers who own Chinese manufacturing plants so you get semi-eastern prices with all the UK based reassurance and support.
Ok, so you’re ready to push the button. You’ve got a lease on a premises lined up, a promising sales-pipeline to explore, a trusted brewery supplier identified with a known lead time, and you need to quit your day-job right now or you are in danger of wrapping your keyboard around your bosses head tomorrow morning…so finally we come to the money…
How can we help?
First, let’s be transparent enough to say there are other options to explore other than finance from banks. Your own money. Your friend’s and family’s money (for equity or love or both). Crowdfunding. All have pros and cons.
Ok, you’ve identified what money you do and don’t have from other sources, and now you need finance. Hurray, now we get to help! Moorgate Brewery Finance are experts in the field, and we have a dedicated team who have developed experience in the sector and supported both new and existing breweries UK wide, from new starts to house-hold names to some of those producing the cans you see on your supermarket shelves. We are actively pushing the funding of the brewery industry with FTSE banks to get them more involved, more familiar with the sector, and so ultimately lower rates for the breweries. We have also built up an extensive network of breweries and suppliers, and also spend all day looking at the accounts of breweries, so we know who and what works, and what doesn’t. So ask us. We are always happy to give you recommendations, or to let you get recommendations on us.
We’ll stop short of telling you how to do a bit of dry-hopping, because we aren’t experts. But we are experts at getting you the finance you need. So let us do that for you to save you time and money. For goodness sake don’t let us near your copper, but consult us and let us get the best and most suitable finance package for your brewing ambitions.
‘We are currently building a brewery, to say it has been complex is a vast understatement! Moorgate Brewery Finance & I have been in regular contact for over a year whilst the project developed and they have offered wise counsel throughout the process. Now that leases have been signed on our brewery we are in a position to buy the brewery equipment. Irrespective of whether I was going to seek funding from Moorgate Finance, they have been extremely helpful and through their existing brewing community relationships even secured us an alternative Brewery equipment manufacturer.
Moorgate Finance secured the most attractive finance option we found from any source & worked with us (and even our accountant) to meet the terms we needed’
For more information please contact Moorgate Finance on 01908 92 62 62 or visit our website- https://moorgatefinance.com/brewery-finance/Moorgate Brewery