Moving from contract brewing to your own brewery

The case for staying under contract

Contract brewing keeps capital in your brand instead of in steel. You pay per litre, so a slow month costs you less. You also benefit from a host that already has a licence, a lab and trained brewers.

The costs show up elsewhere. You pay the host's margin on every litre. You queue for tank space in the busy season. You have limited control over how your beer is made. If two or more of these start to cost you sales, it is time to run the numbers on moving.

Compare cost per litre properly

Your contract cost per litre is easy to see. The cost of your own brewery is not. Add up the annual cost of owning one: loan repayments or depreciation on the brewhouse, tanks, chiller, boiler and packaging kit, plus rent, staff, utilities, licence fees, maintenance and insurance. Divide by the litres you will actually sell, not the brewery's capacity.

Here is the trap. A brewery sized at 5,000 hl a year that sells 1,500 hl spreads its fixed costs over 1,500 hl. Its cost per litre may be higher than the contract price you were trying to beat. Our guide to cost per litre of beer walks through the full calculation.

Volume tells you when

Plot your sales by month for the last 12 to 18 months. If volume is growing steadily and your contract cost per litre is clearly above what your own brewery would cost at your likely volume in year two, the case is strong. If volume is flat or seasonal, a bigger brand on contract is usually a safer bet than a half empty brewery.

Leave room for the timeline. Land, building approvals, equipment import, installation and the manufacturing licence can take a year or more in many states, with the licence often the slowest piece. Keep contract brewing running until your own brewery has passed its first batches.

Keep the beer the same

Your customers know the beer, not the brewery. When you move, the beer has to match. Different kit, different water and different yeast handling all change flavour. Expect to adjust the recipe over several trial brews.

Use triangle tests to check. A taster gets three samples, two the same and one different. The taster has to pick the odd one out. Guessing gets it right one time in three. If a panel of ten to fifteen tasters picks the new beer out well above that rate, the beers are not yet the same. Match the specification on paper first: gravity, bitterness, colour, pH and carbonation.

Plan the handover from the host

Read your contract for notice periods, minimum orders and who owns the recipe, specification and yeast. Give notice in good time and keep the relationship warm. A host that has brewed your beer for three years is a useful backup if your new brewery has a breakdown or cannot keep up in its first summer.

Some brands keep one beer at the host permanently, often a high volume packaged lager, while their own brewery makes the rest. That hybrid can make more sense than moving everything at once. Our guide to moving a brewery to a larger site without losing sales covers the stock planning side.

The skills you will need

Owning a brewery turns a marketing business into a manufacturing one. You will need a head brewer, quality systems, maintenance routines and a team that runs the place on days you are not there. Founders who plan for this before the steel arrives have an easier first year. The modelling, financing and planning behind that decision are exactly where a structured business course earns its keep.

Fund the gap, not just the brewhouse

Founders budget for steel and forget working capital. A new brewery needs raw materials, packaging stock, duty paid on the first batches and salaries for months before sales cover them. Meanwhile your contract volume may have to keep running in parallel. Build a monthly cash flow for the first 18 months that shows both, month by month, with the brewhouse loan repayments starting when the lender says, not when the beer is selling.

Many founders find the peak cash need arrives well after opening day, when the brewery is running but not yet full. Knowing that number before you sign for land or equipment is the difference between a confident launch and a scramble for money in month nine. Our guide to brewery cash flow in the first year shows how to build it.

Your first step

Take your last 12 months of sales in litres. Estimate next year's honestly. Then ask a brewery supplier what size of plant fits that volume. Add up its full annual cost. Divide by your litres and compare the result with your contract price per litre.

Common questions

When should a beer brand stop contract brewing?

When steady, growing volume means your own brewery would make beer at a lower full cost per litre than the contract price. You also need the capital and time to build it.

How long does it take to open a brewery in India?

It varies widely by state and site. Many founders allow a year or more for approvals, licensing and installation.

How do I make sure my beer tastes the same after moving?

Match the specification on paper, run trial brews and use triangle tests with a tasting panel until the new beer cannot be reliably told apart.