So you’re thinking about cracking into the alcoholic beverage industry — cheers to you! It’s likely that you have more questions than answers at this point, but rest assured, you’re in the right place. At Brindiamo, we’re committed to helping you achieve success not only by offering sound advisory services, strategically introducing you to key players within the alcoholic beverage industry, and by helping young companies raise the capital they need to achieve success, but by providing you with the tools you need to make informed decisions.
The big question remains, however: how much do I need to break into the alcoholic beverage industry? The honest answer is: it depends on your business goals. Unfortunately, with all the variables at play, we’re sorry to say that there’s no one-size-fits-all answer. In this post, however, we’ll do our level best to lay out what you’ll need to consider as you begin your financial planning.
Earlier this month, we spent some time discussing what you need to consider as start your beverage company and develop your business plan. This week, we’ll dive a little deeper into what it actually costs to start a distillery or brewery. You’re not going to see a magic number here because each business is different and every business plan is unique. What you will find here, though, is an honest and detailed breakdown of what you’ll need to consider as you begin to budget for your beverage business.
How Do You Define Success?
The bottom line depends on what your picture of success looks like. Craft beverage makers who want to take their brewing or distilling efforts to the local market have a different definition of success than an entrepreneur who wants to unveil a full-fledged distillery operation with a full-service restaurant and tasting area. In our experience, building a successful, scalable adult beverage business can cost millions. While you won’t need it all at once, you’ll certainly need a solid plan that paves the way to a successful venture.
What You Need to Consider as You Build Your Budget
Where is the Capital Coming From?
How much do you have to invest? If you’re planning on footing the bill yourself, carefully determine how much you have to invest while accounting for expenses and your salary. Keep in mind, this endeavor will likely become your full-time job, if it hasn’t already. Your time has value. If your business plan requires outside investors, you’ll need to decide if you’re going to rely on investments from friends and family, a bank, or professional investors looking for a strong return on their investment.
Legal Expenses
Regardless of how you decide to fund your business, you’ll want to make sure that every transaction is done professionally and “by the book.” Hire an attorney and an accountant.
Start-up Costs
Don’t skimp on your preliminary planning costs. These start-up costs lay the foundation for your long-term success. Pinching pennies here isn’t a wise move! These initial costs can cover consulting fees for business and financial plan development, consultations with adult beverage experts, logo development, branding, package design, prototype development, market research, testing, and more.
Property
Once again, your vision dictates cost. Do you already own the property? What kind of infrastructure already exists? Are you renting? Does your business plan include a tasting room and retail space? If so, plan accordingly
Production Costs
Manufacturing a top-quality adult beverage is hard and the market is increasingly crowded! Before you settle on a particular method of production, visit with different manufacturers to see what you want to produce in-house and what you’ll need to outsource.
Are you planning on purchasing or leasing equipment? What are the benefits of buying new versus used? Where will the equipment be housed during manufacturing? While you’re at it, consider sourcing and the cost of ingredients. Your product depends on your ingredients, so you’ll want to make sure your ingredients and bulk liquid sourcing options are top-notch.
Aging Inventory and Dry Goods
As your business grows, so will your aging and dry goods costs. Of course, that’s a good thing because your bottom line will be improving! Still, it’s an important consideration for anyone entering the adult beverage industry.
Branding
People do, indeed, judge a bottle by its label. Plan on working with an agency who knows the distillery and brewing industry. Your branding can absolutely make or break your adult beverage business. Be sure to dedicate adequate resources, both financial and time-based, to finding the perfect marketing partner and to testing different looks for your product. Find a brand identity you love and stick with it!
Salaries
To be the best, you need to attract the best and brightest. Certainly, you can trim costs by trimming salaries, but to find the best sales, marketing, and brewmasters, you need to offer competitive salaries and attractive benefits.
Ready to take the plunge? Contact Brindiamo Group for an honest assessment of how much you’ll need to launch your business. Our team is made up of veteran beverage industry entrepreneurs. We approach each project with passion, honesty, and transparency.