How Much Does It Cost to Start a Brewery?

Starting a brewery isn’t something you rush into. You need to plan how you’ll get capital and how you can use it effectively. It’s also best to have a clear vision and business plan so that you can steer your venture in the right direction.

Let’s explore how much you can expect to spend in opening a brewery, the factors that affect cost, and how long it takes from launch to profitability.

What is the average cost of opening a brewery?

On average, opening a brewery can cost between $500,000 and $1.5 million. The scale you’re aiming for, like a nano, microbrewery, or regional facility, directly impacts cost.

Nano breweries, producing less than 1,000 barrels annually, can start with investments as low as $10,000. Microbreweries, producing between 1,000 and 15,000 barrels per year, often require $250,000 to $500,000.

Larger regional breweries, producing up to 500,000 barrels annually, may need investments ranging from $2 million to $10 million or more.

Starting this type of business is more expensive mainly because it requires specialized equipment and the construction or renovation of a brewing facility. Initial investments cover brewing tanks, fermenters, kegging systems, bottling or canning lines, refrigeration, and tasting room setup.

All brewery startup costs

There are many factors to consider for a brewery startup, and costs can add up quickly. Planning for each major expense is critical for long-term success.

1. Location, rent, or property costs

Choosing whether to lease or purchase property affects your initial costs and long-term flexibility. Leasing offers lower upfront costs, making it an attractive option for those just starting out.

Monthly rent for brewery spaces can range from $2,000 to $20,000, depending on factors like location, size, and included amenities.

Rent costs for brewery spaces typically range from $10 to $30 per square foot annually. For example, a 5,000-square-foot space could cost between $50,000 and $150,000 per year. These rates can vary based on the property’s location, condition, and included facilities.

Meanwhile, purchasing property requires a significant initial investment from $500,000 to several million dollars. Buying brewery space offers complete control over customization and potential long-term savings. It does come with responsibilities like maintenance, property taxes, and less flexibility to relocate.

Before selecting a location, make sure the property is zoned appropriately for alcohol production. Breweries often fall under specific zoning classifications, and operating in a non-compliant zone can lead to legal challenges.

You may need to apply for zoning variances or conditional use permits if the property isn’t already zoned for brewery operations.

2. Brewery equipment

The cost of brewery equipment depends on the size of your operations and the products. For a small to medium-sized brewery, equipment costs can range from $100,000 to over $1 million.

First, you need a brewhouse system, where the brewing process begins. It typically includes a mash tun, brew kettle, and whirlpool. This system can cost between $50,000 and $500,000 or more.

After brewing, you need fermentation tanks, where you place the wort to convert sugars into alcohol using yeast. Once done fermenting, you place the beer in brite tanks (for carbonation and clarification). These cost around $5,000 to $40,000.

You also need temperature control systems, like glycol chillers ($10,000 to $50,000) and heat exchangers ($3,000 to $10,000). These systems maintain consistent fermentation temperatures and efficient cooling of the wort.

Now, it’s time for distribution equipment. Depending on your strategy, you’ll need equipment for bottling, canning, or kegging. For instance, investing in a canning line ranges from $15,000 to $250,000.

Other essential equipment includes grain mills ($2,000 to $10,000), a water filtration system ($5,000 to $15,000), steam boilers ($15,000 to $60,000), pumps ($500 to $5,000 each), pipes and fittings ($3,000 to $10,000), and valves ($50 to $500 each).

3. Ingredients for beer and other inventory

The primary ingredients in beer are malted grains, hops, yeast, and water. If you’re running a mid-sized operation, you might pay around $0.40 to $0.50 per pound, while larger operations can secure prices as low as $0.23 per pound by buying in bulk.

For hops, prices fluctuate based on factors like weather and supply chain disruptions. Another ingredient cost to consider is yeast. Overnighting a batch of yeast sufficient for a 30-barrel brew can cost around $800.

Packaging is another significant expense, influenced by materials and design choices. Aside from the machine or system, you have to consider the cost of labels and designs for your bottles, cans, and kegs.

Don’t forget to purchase cleaning tools, such as line cleaning kits and sanitizers. You’ll also want spare parts for equipment to guarantee minimal downtime during repairs. Costs depend on the specific components and machinery used.

A great way to make the most of your bar inventory is to configure your bar or taproom in a way that enhances customer flow and encourages product sampling.

4. Renovation and interior design

Designing your brewery’s interior is important for an environment that reflects your brand and enhances customer experience. The cost of building out the design impacts how much you need to spend at the start.

For a basic setup, including essential renovations like plumbing, electrical work, and installing brewing equipment, you might spend around $50,000. However, if you’re aiming for a more upscale taproom with custom furnishings, advanced lighting, and high-end finishes, costs can escalate to $250,000 or more.

Investing in quality furniture and fixtures is also crucial for customer comfort and the overall ambiance of your brewery. Depending on your design choices, furnishing your taproom can cost between $50,000 and $150,000. This includes seating, tables, bar counters, lighting, and decorative elements that enhance the customer experience.

Take note that your renovations must comply with local building codes and accessibility standards. Make sure you have adequate restroom facilities, wheelchair access, and adherence to fire safety regulations. Non-compliance can lead to costly fines and delays, so it’s advisable to consult with professionals who are familiar with local regulations during the planning phase.

Shawn & Ed Brewing Co. is a perfect example of how thoughtful renovation can elevate a brewery’s brand and customer experience. When Shawn Till and Ed Madronich found the old Dundas Curling and Skating Rink, they saw an opportunity to create a space that honored its historic character while delivering a great beer experience.

Rather than opting for quick fixes, they invested in extensive restorations to maintain the authenticity of the venue. This included preserving original architecture and weaving it into a modern taproom design.

5. Licenses and permits

At the federal level, breweries in the United States must obtain approval from the Alcohol and Tobacco Tax and Trade Bureau (TTB). You don’t need to pay a fee to apply for or maintain a TTB permit.

However, the application process is comprehensive, requiring detailed information about your brewery’s operations, equipment, and ownership.

It’s at the state and city levels that business license costs vary widely. For example, in California, application fees for new licenses can range from $1,105 to $19,315, depending on the license type. Annual fees are also required and can vary based on the license classification. In Oklahoma City, a standard brewer’s license costs $1,250.

In New Jersey, a Limited Brewery License starts at $1,250 for up to 50,000 barrels. Fees increase based on production volume, allowing up to 300,000 barrels per year. It’s important to note that some states have quota systems, limiting the number of licenses issued.

Aside from a brewer’s license, you also have to consider the cost of selling alcoholic beverages. For a liquor license in Florida, you can expect somewhere between $280 and $2,000 annually.

Additional permits you’ll need are health and safety, zoning and building, and a food service license, if you plan to serve food.

6. Staffing and labor costs

Staffing is a major cost in opening a brewery. It includes hiring key personnel, covering wages, and managing recruitment and training expenses.

Essential positions include a brewmaster or head brewer, production staff, front-of-house employees like bartenders and servers, and administrative roles. Salaries vary based on experience and location. For instance, brewery staff salaries range from $35,000 to $60,000 annually, with benefits adding approximately 20% to the total compensation.

It’s important to understand how labor costs fit into your overall brewery budget. Aside from wages, it also includes payroll taxes, health care, vacation days, and training costs.

A good benchmark for labor cost percentage is about 30% of total revenue, similar to quick service restaurants and taprooms. For growing breweries, keeping an eye on labor cost percentage can help you plan staffing needs without hurting margins, especially as you scale up.

Hiring new employees also involves both direct and indirect costs. Direct costs, such as job postings and background checks, average around $4,700 per hire. Indirect costs, including training and lost productivity during onboarding, can increase the total hiring expense to two to three times the employee’s salary.

Manage labor costs by training staff to handle multiple roles. For example, your bartenders might also help with brewery tours, and production staff could assist with inventory management.

7. Marketing, branding, and PR

First, you must establish your brand identity. This includes designing a memorable logo, developing a user-friendly website, and creating distinctive packaging for bottles and cans.

Professional logo design can range from $500 to $5,000, depending on the designer’s experience and the project’s complexity. The cost of website development can also vary, typically ranging from $2,000 to $10,000 or more.

Even with top-tier beer and equipment, without a strong brand and visibility, it’s challenging to attract customers. Brainstorming through different marketing ideas and having a well-planned strategy can help you stand out.

Key marketing expenses include costs for online and offline campaigns. Breweries can leverage social media advertising, local event sponsorships, and collaborations with other local businesses.

Additionally, creating branded merchandise like apparel and glassware may add to your startup costs. Nonetheless, they allow you to build your brand while being an additional income stream for your brewery.

8. Insurance costs

When starting a brewery, securing comprehensive insurance protects your investment and paves the way for smooth operations. General liability insurance covers third-party bodily injuries and property damage occurring on your premises.

For breweries, this includes incidents like a customer slipping in the taproom or equipment causing damage. Monthly premiums typically range from $40 to $100, totaling $480 to $1,200 annually.

Given the nature of brewing, there’s a risk of a customer falling ill due to contamination or labeling errors. Product liability insurance protects against such claims, covering legal fees and settlements. This coverage is often included in general liability policies but can also be purchased separately.

Most states also mandate workers’ compensation insurance. It covers medical expenses and lost wages for work-related injuries or illnesses. Premiums vary but average at $45 per month, depending on the number of employees and state regulations.

Another insurance policy to consider is liquor liability insurance. It covers incidents where a patron causes harm after consuming your beer. Costs average around $45 per month, or $540 annually, but can increase based on alcohol sales volume and hours of operation.

Combining these policies, breweries can expect to spend between $5,000 and $15,000 annually on insurance. This range depends on factors like brewery size, location, and services offered.

9. Utilities and operating expenses

Brewing uses a lot of water. Producing one gallon of beer can require four to 10 gallons of water. Water costs are typically measured per cubic meter, with prices varying by region.

In San Diego, commercial water customers pay $8.41 per HCF, where 1 HCF equals 748 gallons. If your brewery uses 100 HCF (about 74,800 gallons) in a month, you’d pay roughly $840, just for water. That estimate doesn’t include sewer or wastewater fees, which can add hundreds more.

Consider your power consumption as well since you’re using brewing equipment, refrigeration, and lighting. The cost of electricity for commercial users averaged $12.85 per kilowatt-hour.

Additionally, breweries generate wastewater with high organic content, which needs treatment before disposal. Treatment requirements and associated costs vary by location and local regulations. Some breweries invest in on-site treatment systems to manage these utility costs.

10. Tools

Investing in the right tools can help you maintain smooth operations and focus on customer satisfaction. A reliable POS system is crucial for managing sales and inventory efficiently. For breweries and other stores selling liquor, the average software costs can range between $69 and $149 per month.

You’ll also need tools to help with inventory management and accounting. Basic solutions may cost just around $50 to $100 monthly, while more comprehensive systems can cost up to $300 per month.

When it comes to admin work, you can use bar and brewery team management software to create schedules with a drag-and-drop builder, notify staff instantly, and manage labor costs more effectively. Price starts at $29.99 per month.

What’s the minimum investment to open a brewery?

Starting with a nano brewery is one of the smartest moves if you want to test the waters. The absolute minimum investment to open one starts around $10,000. It can go up to $250,000 depending on your setup.

A nano brewery typically produces fewer than 100 barrels of beer a year, which means you can get away with less expensive brewing equipment, a smaller team, and a more modest space, which saves a lot on startup costs.

The next best thing is a microbrewery, which typically produces between 1,000 and 15,000 barrels annually. While initial investments are higher than nano breweries, ranging from $250,000 to $750,000, microbreweries provide more room for experimentation, larger production capacity, and greater potential to establish a strong market presence.

Many brewers who launch with a nano or microbrewery later grow into bigger operations once their beer gains a following. Plus, smaller breweries have a certain charm since customers love supporting local businesses that feel personal and handcrafted.

When can I expect ROI after my brewery opens?

Most breweries can expect to break even within three to five years after opening. This timeframe depends on factors like the size of the operation, marketing effectiveness, and customer loyalty.

Smaller breweries with efficient operations and strong local support may achieve profitability sooner. For example, a craft brewery with an initial investment of $500,000 and annual revenue of $276,500 could recoup its setup costs in just under two years, assuming stable sales and consistent pricing.

To accelerate ROI, focus on direct-to-consumer sales through taprooms, which offer higher profit margins. Hosting events and tastings can also increase foot traffic and customer engagement.

Make every dollar count

As you start your brewery, know that every decision you make impacts your overall costs and future profitability. Set a clear budget and invest wisely to make the most of your initial investment.

Keep the momentum going with employee scheduling software. 7shifts gives breweries an easy way to schedule staff, share updates, and control labor costs, all in one platform. Spend less time on spreadsheets and more time growing your brewery.