Wednesday, October 2, 2013

Steps to Open a Microbrewery in Texas

A microbrewery is a small-time brewery, producing beer and ale for local pubs, restaurants and even to be sold individually to consumers. Starting a microbrewery involves significant upfront capital. According to an article in the Wall Street Journal,"it costs roughly $450,000 to $800,000 to start a small brewery." Marketing and selling new beer brands can take on additional costs. Find out what is needed to start a microbrewery in Texas and what laws and regulations to follow to stay open.

Create a Business Plan

  • Write a business plan. The supplies needed to open a microbrewery cost a significant amount of money. Plan where the operation should be located, what type of beer should be produced and how the beer will be distributed. Texas laws limit the amount of beer a microbrewery is allowed to produce each year by 75,000 barrels or 2,325,000 gallons. Break down the cost of marketing, manufacturing and production. Experiment with or plan what type of beer or ale will be produced. Also figure for excise taxes on alcohol. Although Texas microbreweries are exempt from 25 percent of excise taxes, around $6 a barrel will still be charged.
    Decide on a name and file for a business permit or purchase an existing microbrewery. Investing in insurance, labor, machinery and product supplies should be included in the plan as well.

Apply for a Permit in Texas

  • To open a brewery in Texas, it is required by law to have a permit to manufacture beer. In certain states, microbreweries are allowed to distribute beer to the individual consumer. In Texas, microbreweries are only allowed to sell beer to wholesale distributors in or out of state. Refer to the Alcoholic Beverage Code Title 3, Ch. 12 of Texas. A permit in Texas costs $25 and is good for two years. After the two-year mark, microbreweries will have to apply again for a license. The permit also allows breweries to import malt liquor or ale.

Follow Health Guidelines to Distribute Beer in Texas

  • Fill out an application with the Texas Department of State Health services to distribute beer. An application will include the legal company name, taxpayer identification number, address, phone number, license number of the company as well as contact and address information for each of the respective owners. Cost of the application varies depending on the type applied for. Follow the Hazard Analysis Critical Control Points (HACCP) guidelines when producing beer to avoid E. coli outbreaks in the product.



How to Micro Brew Beer

Brewing beer is a terrific hobby, because it requires both nuance and skill, but also because the end result can be a truly terrific product. Many people brew their own beer in their homes, but some people enjoy it so much that they decide to micro brew in larger quantities and sell it. Either way, you can micro brew beer for very little money and make your own beer recipes for yourself or others.

Things You'll Need

  • Micro brew kit (or full-scale equipment)
  • Beer ingredients
  • License (may be needed)

Instructions

  1. Determine how much you intend to brew, and how often. If you are going to brew beer in small batches only, then you can get away with having minimal equipment. If you plan on creating a true microbrewery with the intent to sell your product, then you may need quite a bit of start-up capital.
  2. Experiment with different beer recipes, using some traditional recipes and altering proportion or changing ingredients (for example, adding more or less hops). This is how you'll develop your micro brew's distinct flavor.
  3.  Examine micro brew business models and decide the best way to proceed. If your operation is going to be seasonal, then you'll need to consider hiring part-time help. If you plan on your micro brew operation being a full-time, year-round endeavor, then you'll want to explore full-time employees and dedicated business officers (a chief financial officer, for example).
  4. Take care of any and all licensing and paperwork for creating your micro brew business. Look into incorporating to protect yourself, as well as ensuring that you have completed each of the documents required to market and sell liquor.
  5. Market and sample your brew to people outside your own circle of friends and family. Doing so will give you the best cross section of opinions regarding your recipes, and will help you figure out how to tweak them to make them better and more unique.

Tips

  • Invest in great equipment with someone else. While the cost for equipment for micro brewing can be very low, if you actually plan on brewing in larger quantities, then costs can add up. Get a partner, share recipe ideas and sell your beer together!
  • Always check with your state to find out what the laws are regarding any micro brew operation. Most states permit those who want to micro brew beer for personal consumption to do so without hindrance, but selling your beer or producing beer in greater quantities usually requires a license.


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How to Start a Microbrewery in Illinois

Microbreweries produce limited amounts --- usually not exceeding 460,000 gallons per year --- of what are considered "craft beers." Beer is brewed in smaller batches using traditional methods and often using specialty ingredients. Due to the limited amount of space and equipment you need, starting a microbrewery is less expensive than opening a full-scale brewery, but it still requires a significant amount of startup money. Additionally, as manufacturers of alcoholic beverages, microbreweries are still subject to the laws of the state in which they're located and/or distribute. In Illinois, the Liquor Control Commission oversees and licenses microbreweries to ensure compliance with the law. To start a microbrewery in Illinois, you must follow the appropriate licensing procedures as both a business entity and an alcohol manufacturer.

Suggestions

  1. Draft a business plan that provides an estimate of the funds and equipment you need to start brewing and how these will be procured; a plan for how you'll package and distribute your beers; a list of what beers you'll produce; and how you'll manage production flow to ensure steady supply. Also include accounting methods, advertising strategies, and employee and safety policies.
  2. Select a location for your microbrewery. Ensure that the site has adequate space for your equipment and a plumbing/drainage system that can handle the amount of water used in the brewing process. Depending on how much beer you intend to brew at one time, this can even be a home location, such as a detached garage.
  3. File an assumed name with your local county clerk if you'll operate as a sole proprietorship. Otherwise, file your incorporation with the Illinois Office of the Secretary of State. In addition, trademark any logos, bottle labels or other business insignia you'll use to brand your microbrewery.
  4. Apply for a business license from your local county clerk's office and your city, if applicable. Note that you may receive only conditional approval of this license until you've obtained all of the state and federal permits required. Additionally, you might need zoning permits or water/waste management permits prior to being allowed to operate your microbrewery.
  5. Obtain a Business Tax Number from the Illinois Department of Revenue and a Federal Employer Identification Number, or FEIN, from the IRS --- even if you won't have employees, this number is required to obtain the other licenses you will need. You may also be required to hold tax permits from your local county and city government. The county clerk's office can advise you of whether these are necessary.
  6. Apply for a Federal Basic Permit, a Label/Bottle Approval Certificate and a Brewer's Notice from the Alcohol and Tobacco Tax and Trade Bureau. You're required to submit information about your business, including copies of your assumed name/articles of incorporation, FEIN and anticipated brewing volume per year. Additionally, note that you must receive these approvals prior to applying for an Illinois manufacturer's license.
  7. Complete and submit an Application for State of Illinois Manufacturer's Liquor License to the Liquor Control Commission, including copies of your Federal Basic Permit and Label/Bottle Approval Certificate, as well as the appropriate licensing fees. File a tax bond with your application in the form of an insurance bond, letter of credit or certificate of deposit.
  8. Prepare your microbrewery for inspection by the Liquor Control Commission, which usually occurs within 30 days of receipt of your application. Once the inspection has been completed, you're issued a manufacturer's license or notified that your application has been denied, along with information regarding fixing any deficiencies or instructions on providing additional information so that your application can be reviewed again.
  9. Fill out and submit an Application for State of Illinois Craft Brewer's License to the Liquor Control Commission. You must provide copies of your Manufacturer's License, your Federal Brewer's Notice and Label/Bottle Approval Certificate, and your previously submitted tax bond. Although this license isn't a necessity to run your business, it does establish you as a microbrewery and allow you to self-distribute a large portion of your beer.

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How to Start a Microbrewery

Most states have one or more microbreweries. These local beer producers churn out fewer than 15,000 barrels of brew a year. Some microbrews are occasionally shipped out of region and hit it big in other markets. Other brews stay close to their town of origin. Either way, microbreweries are big news. If you like to make your own beer and want to expand, consider the following advice.

Suggestions

  1. Perfect your magic formula. Make sure your brew has passed the taste test by folks other than your poker buddies. Once you start getting compliments on your homemade brew from guests and friends alike, it's time to consider expanding. Check your ingredients and brewing process and think about how to adapt your beer for a larger audience.
  2. Study microbrewery success stories. Redhook Ale, the Brooklyn Brewery and a few others paved the way for today's expanding microbrewery market. Read about their start-up trials and tribulations. Pick up copies of "The New Brewer," "Brewer's Digest" and "Modern Brewery Age" to study the competition.
  3. Assemble your team. Even the smallest at-home start-up microbrewery needs a CEO, a lawyer, an accountant and office or sales help. Hire dedicated people who will work for low or deferred wages at first. Unless, of course, you have a huge bankroll ready for them.
  4. Know where you are going. It helps to have a legitimate business plan. You can buy a do-it-yourself business plan kit from several online sources, or have a business expert or writer draw one up. Consider the cost of equipment, office and warehouse rental and employee salaries.
  5. Lock up financing. Go over your credit. If you have superior credit, it can be quite easy to get loans or a business credit card. If not, you will need a co-signer. Once you have a plan of attack ready, inquire about different types of financing at your local bank.
  6. Buy beer-making equipment. Some companies offer equipment such as steam-operated brewing systems, kegs, kettles and other items at a discount. Some start-ups have bartered for equipment. Once you figure out how much beer you can comfortably brew to begin your company, price start-up equipment like fermenters, and hot and cold storage tanks.

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