How To Start A Microbrewery Business In India – A Detailed Guide
The rise of the microbrewery business in India has created a wave of newer trends in the food and beverage industry. The growth of beer consumption in India is quite evident in the past decade. The beer sales are predicted to see an increase of 6.9% annually between 2018 and 2022, which is why many restaurateurs in India are preferring to start a microbrewery business instead of a regular bar.
According to a report on Indian Beer Market Outlook to 2023 in the Hotel Times, it is expected that the demand for premium and craft beer will rise in the future with an increase in personal disposable income and higher living standards. It is also expected that most of the state governments will start to delink beer taxation fro IMFL soon on the basis of alcohol content making way for rational growth in the market, the report added.
Before getting into the details, we must understand what a microbrewery is and why people are going crazy about it. Typically, microbrew or craft beer brewery is the kind of brewery that is responsible for the production of smaller quantities of beer. It is generally independently run by brewmasters who have prior knowledge about the process of production of craft beer.
A Step By Step Guide To Open A Microbrewery Business In India
Once you’ve understood how you want your microbrewery to be, you need to get into the technicalities of it. But before everything else, you should know what are the factors to consider for starting a microbrewery in India.
- You need to know the structure and size of your target market and your potential customers. A microbrewery set up works most where there are more people indulged in going out and drinking.
- You need to look into the preferences and popularity of beer as a drink in your target market.
- The right location will always be a promoting factor.
- Before you actually get your hands dirty with all the work, get all your licenses, distributive trade practices, local approvals and product approvals in place.
Once all of this is sorted, you can move forward with the step by step procedure.
(i) Finalize On The Design And Theme Of The Place
The first and foremost step to include in your to-do books is the finalization of the design of the place. The perfect design of your dream microbrewery should obviously have adequate space and attractive interiors at that. These interiors are solely dependent on what type of vibe you want for your place. Most of the microbreweries go for a classy place with a hipster vibe, which goes with their customers’ preferences.
ii) Choose The Location Of Your Place
Location becomes one of the driving factors in the success of a brand. Different cities have varied limits for liters of beer produced, which impacts the size of your microbrewery. There is a minimum space requirement of approximately 0.1 square meters per liter of beer produced in a microbrewery.
Also, on average, 5000 liters of beer are produced each day in a microbrewery, so you must decide your space according to the production units. The minimum space required to open a microbrewery is 700-800 square feet.
iii) Sort Out Your Resources And Capital
There are many subparts to the capital that you would require, like equipment cost, production cost, licenses, rent, and staff. The one-time permit fee for starting a microbrewery is Rs. 2.5 lakhs.
The major expenses for you would be for your production cost, as different cities will have different excise duty. If we talk about the brewery, it would cost you about 50 lakhs to 1 crore for the setup. The total cost including licenses, rental costings and other minute costings will be around 1-2 crores as a whole.
Investment and operational costs are some of the major challenges while starting a microbrewery. “Operational costs and wastage costs are generally higher in a brewery, as the shelf life of raw materials is too small. This means that if you don’t sell enough fresh beer, it will all be a waste,” said Ashish Dangwal, a restaurant consultant from the Hospitality Solutions, New Delhi.
iv) Know About Your Machinery Equipment
We have listed down the most important set of equipment that you’ll need in order to run your business smoothly. In case you are adding a microbrewery to your existing restaurant, you may also use the existing infrastructure for it.
The basic equipment that you would need in a brewery would be a separate water tank, water softener machine, an RO machine setup, and separate fermenters. Other equipments that you may require are mentioned below.
- Mashing tuns and Kettles
- Refrigeration machine
- PHEs (Physical Heat exchangers)
- Electric Cabinet
- Beer Filters
- Distribution Tanks
- PLC touch type process controller
- Serving System
- Lauter Tuns
v) Keep All The Licenses And Permissions Handy!
Obtaining the liquor and food license along with fire permits should be your top priority for opening a microbrewery business. After you obtain these, you must focus on the brewery licenses which would cost you around 2.5 lakhs to 6 lakhs, varying from state to state.
You are not eligible to even stand in the queue for getting a liquor/brewery license before setting up your place and machinery. This is why licenses and permissions come at number 5 on your to-do list. Getting these licenses are crucial and equally hectic.
“The first barrier I faced while starting a microbrewery was licensing issues, working with cops and BMC officials to procure liquor licenses, etc. , said Dishant Pritmani,” founder at The Daily Bar & Kitchen. “Luckily, because the industry is booming at such a fast pace, it has created consultants of every kind”, he added.
To ensure that you get these licenses in the first go, you need to keep a checklist of the factors that would help you in obtaining all these licenses. Here is a checklist that you can keep for the last minute in order to avoid discrepancies.
- Commercial Electricity Line
- Commercial water-line- Municipality/ underground bore water
- Land registration/ Lease sanction
- Company Registration
- Wastewater disposal certificate from the pollution control board
- Fabricated equipment quality certificate
vi) Finding Your Head Brewer
Oh, this is a task! Since the microbrewery business is still in its early stages in most of the cities, some of the people even related to the food and beverage industry don’t have a clear insight into it. This makes it difficult for you to find your dream head brewer or to even train your bartender to be your brewer.
The head brewer that you hire should have deep insights on the process of brewing and should be familiar with the technical terms related to it. He/she would be required to have analytical and managerial skills to make sure the process of brewing is not distorted. The head brewer must also be aware of all the business trends going around in his/her city to be able to come up with different campaigns to attract customers. He should also have a fair idea about the post-production processes of brewing and fermentation
vii) Taking Care Of The Beer Production
Reaching this step does not mean the end of your process of starting a microbrewery business. It means you’ve just begun. Generally, hiring a head brewer or having some training sessions for your bartender would be beneficial. There is lesser wastage expected during the beer production process if your staff knows about each step of the process.
Craft beer production involves malting, boiling of grains and fermentation. The head brewer should be able to identify the consumption of barley/wheat grains at each step, to optimize production. The grains are then put into hot boiling water to activate enzymes that extract sugar out of these grains.
After that, the fermentation process takes place in huge fermenters enabling alcohol production. These four basic steps lead to the production of freshly brewed beer. The head brewer, therefore, needs to know the process, equipment involved, and the technical details for each of the steps for the best possible outcome.
viii) Promoting Your Microbrewery Business
By researching your market place, you need to find that missing element in your market and how your brand can fill the void. Making a social presence is an absolute priority, be it your own website or through other social media platforms. This needs catchy advertisements, a classic brand name, an exquisite quality of beer and an ambiance people can’t resist coming to. ‘
Many brands work on different marketing campaigns to hype up craft beer in such a way that the customers get excited about it. Pravesh Pandey, owner of the Byg Brewsky Company tried a campaign to promote its craft beer which was earlier not accepted by its customers.
Incorporating it as a campaign called October Fest, the customers were more than ready to try the new beer and it eventually became a huge success. Microbreweries need to work constantly on their marketing campaigns to ensure awareness among their customers and to maintain the hype.
ix) A Point of Sale Software becomes your savior here!
Whilst taking care of production and distribution, the presence of a restaurant management software streamlines the processes by a huge factor. A proper POS software manages your brand’s inventory, maintains a standard recipe for your beer and also helps you analyze your sales and growth all on one screen.
A good POS will also help you to analyze how well your marketing campaigns are working by giving you illustrated data on the number of sales during the duration of that particular campaign. This will also help you decide happy hours and when to run a particular campaign.
The most important job of a restaurant management software in your microbrewery business is taking care of the inventory and your raw material. Since a microbrewery is functionless without proper management of the raw material and an efficient relationship with your suppliers and vendors, it becomes crucial that you have an efficient Point of Sales software.
Summing it up, going through each step from this guide will help you take care of the smallest of details and help you flourish your business in no time. Starting a microbrewery business is a huge risk taking business, but once you have a checklist, the process becomes easier.