Brewpub or production brewery: choosing your model

What each model really is

A brewpub brews and sells beer on the same premises, usually with food. Its customer is whoever walks in. A production brewery brews for sale elsewhere in kegs, cans or bottles and often has a small taproom. Its customer is a distributor, a bar, a shop or a retailer.

Many businesses start as one and add the other. The mistake is to design for both on day one with money meant for one.

A third route exists: contract or gypsy brewing, where you brew on someone else's kit. It lets you test a brand with little capital, which suits some founders better than either full model. See starting a beer brand with contract brewing.

Where the money comes from

A brewpub earns at pint prices and carries the cost of a front-of-house team, a kitchen and a lease on a visible site. A production brewery earns on a lower price per litre and carries the cost of packaging, delivery and distribution. Volume is the lever for the second. Margin per litre is the lever for the first.

Our guide on forecasting demand helps you test volume assumptions before they become equipment orders.

Do the arithmetic honestly. A pint sold at a bar is worth more per litre than the same litre sold in a keg to a pub. It also comes with rent, wages and a licence for serving. Write revenue and cost per litre for each model, then compare. Our guide on pricing a pint in a brewpub covers the first half.

Space and kit

A brewpub needs a brewhouse that fits in view or behind the bar, serving tanks, a cold room and a kitchen. Footfall matters more than industrial floor space. A production brewery needs a unit with drains, loading access, power and room for stock. Rent per square metre is usually lower, but you carry packaging lines or a mobile canner.

Packaging adds real cost: cans, bottles, labels, kegs and cold storage. List them all before you decide.

Do not forget the cold chain. Packaged beer that travels needs cold storage and ideally cold delivery, especially in hot countries. A brewpub avoids that by serving beer a few metres from the tank, which also makes it fresher.

People and hours

A brewpub runs evenings and weekends and needs steady service staff. A production brewery runs on a brew and packaging schedule, plus sales calls and deliveries. One brewer may run a small production plant. A brewpub also needs people to talk to customers, which is a different skill.

Think about who will do the selling. A production brewery with no one to sell to bars and shops will sit on stock. A brewpub with no one who enjoys hosting will feel empty. Be honest about which job you want.

Risk and cash

A brewpub risks a bad location and a slow opening. A production brewery risks unpaid invoices, a crowded shelf and thin margins. Both risk running out of working capital because beer takes weeks to make before it earns anything.

Read opening a brewpub in a new country if you are weighing the first model abroad.

Both can be hit by a slow first year. Decide in advance how many months of costs you can cover from reserves and what you will cut first if sales lag.

Questions to answer before you decide

Who is your customer on a wet Tuesday? How many litres a week do you need to sell for the business to break even? Who delivers the beer? Who collects the money? What happens if your best week is half what you planned?

If you cannot answer these for one model, test the other, or run a smaller pilot, such as a few months of contract brews, before you buy a brewhouse.

A simple way to choose

Write down your likely monthly volume in litres, the price per litre you can really get and the people you need to hire. Do it twice, once for each model. The one whose numbers close with the smaller loan is usually the right start. If both close, choose the one you can run best yourself.

Keep records of every brew and sale from the first day so your assumptions become facts. See logging brewery data you will use.

Common questions

Which costs less to start, a brewpub or a production brewery?

It depends on the site and the kit. A brewpub carries fit-out and kitchen costs. A production brewery carries packaging and delivery. Price both with real quotes before deciding.

Can a brewpub also sell packaged beer?

Often, if the licence allows it. Many countries treat on-premises and off-premises sales as different licence types, so check with the regulator.

Can I start as a brewpub and become a production brewery later?

Yes. Many do. Choose a site with room to grow. Size the brewhouse for the larger volume if you can afford it.