Starting a Business

6 Secrets for Success in the Craft Beer Industry

6 Secrets for Success in the Craft Beer Industry
Image credit: The Bruery

In Start Your Own Microbrewery, Distillery, or Cidery, the staff of Entrepreneur Media Inc. and writer Corie Brown with Zester Daily Contributors explain how you can get started in the craft alcoholic beverage industry, whether you want to start your own microbrewery, distillery or cidery. In this edited excerpt, the authors suggest six critical elements that will determine whether you succeed or fail in the craft alcoholic beverage industry.

To thrive in today’s craft alcoholic beverage business, you'll need to bring brains, heart, and brawn to your venture. And while your entrepreneurial personality may trend one way or the other, what matters is how you take those small identifiers in your own story and work them in your favor. Following are six key characteristics that will help you succeed in the craft alcoholic beverage industry.  

1. Start prepared

There's no time to learn on the job these days. You may not need specific credentials, but you need to come to craft with enough business savvy to stay ahead of the throngs of other newcomers. Ask yourself if you and your partners have:

  • An understanding of the business of producing perishable goods;
  • Detailed knowledge of alcoholic beverage production processes;
  • The marketing savvy to stand out from a boisterous crowd of competitors;
  • The legal skills to navigate byzantine federal, state, and local regulations;
  • The physical strength to shoulder labor-intensive tasks; and
  • Access to a minimum of, respectively, $250,000 to open a brewery, $2.5 million to open a distillery, and an apple orchard to launch a cidery?

If the answer to any of these is “no,” it may be useful to do more legwork in terms of familiarizing yourself with the craft world. If the answer to all of these is “yes,” then get ready to take the leap. You’re on your way to a life in craft.

2. Know yourself

Vision and stamina are the hallmarks of a successful entrepreneur. In the craft business, character counts, too. The people really do make the business, and you’ll find that marketing your brand often means marketing yourself. Craft producers are self-motivated strivers who take devotion to producing high-quality specialized products to extremes. To compete, consider if you can be:

  • Fearless when you face far better equipped and educated competitors;
  • Steadfast in your vision despite failures and disappointments;
  • Honest about your product and transparent in your operations; and
  • Devoted to your customers and able to honor their loyalty.

These are the hallmarks of the entrepreneurial craft spirit. Be honest with yourself about whether they're also the hallmarks of who you are as a person. Identity is everything in this business, so know yours well.

3. Stand tall

Craft exists as an alternative to industrial production. Craft producers sell more than products; they sell the idea that craft offers a better way forward. These are insular craft communities populated with idiosyncratic folks who may have gravitated to craft because, well, they didn’t really fit in elsewhere. Do you have:

  • The generosity to embrace the craft beer tradition of supporting craft competitors;
  • The forbearance to wait for craft distillers to establish a meaningful code of ethics;
  • The curiosity to learn absolutely everything about your corner of the craft world;
  • An appreciation for obsessive-compulsive colleagues who actually do know it all; and
  • The wisdom to see the coming ethnic and gender integration of craft?

Starting to see a pattern here? That’s because there is one. Though everyone involved in the craft business brings a unique entrepreneurial story to the table, each has his or her own approach to the application of it to everyday business.

Related: Samuel Adams Brewing the American Dream Pitch Contest

4. Set goals

In addition to evaluating your strengths and weaknesses, it's important to define your business goals. For some people, the goal is the freedom to do what they want when they want, without anyone telling them otherwise. For others, the goal is financial security. When setting goals, make sure they are specific, optimistic (but realistic), and offer both short- and long-term plans so you can evaluate your progress.  

The most important rule of self-evaluation and goal-setting is honesty. Going into business with your eyes wide open about your strengths and weaknesses, your likes and dislikes, and your ultimate goals lets you confront the decisions you’ll face with greater confidence and a greater chance of success.

5. Be nimble, be smart

The “no failure” days are coming to an end with so many new producers jumping into the craft market. Failure can happen, and success is not a foregone conclusion in craft. According to Ken Grossman, founder of Sierra Nevada Brewing, you'll need to think fast and move quickly. Heed the words of one of the businesses’ craft masters:

“Craft breweries are beginning to compete with each other on price, which has never happened before. Only the large craft brewers can afford to play that game. The national tier of craft will continue to grow, but I don’t see room for dozens of brands.

“The majority of new breweries are very, very small, or they are brewpubs. At that size, they can scrape along for a long, long time. But there will be casualties, not tomorrow but two years from now. It isn’t sustainable to have two new breweries open every day.

“Distribution is a challenge. There's a lot of consolidation among beer distributors, shelf space is limited, and the market is crowded. Self-distribution is a rational option for a new brewery in the right community, but it is limited.

“In the early days, we could expand pretty easily without someone on the street selling for us. That’s no longer true. Distributors want you to spend money marketing and provide sales support, or they won’t handle your beer. You cannot start now without a decent marketing plan, unless you are a stealth brewery with cache. There are not a lot of players like the 10,000-barrel Russian River Brewing Company making Pliny the Elder.”

6. Make friends

Big Beer is a fierce competitor with a lot at stake. Never forget your beer must taste great. You have to be better than Anheuser-Busch, always one step ahead of the big guys. Jim Koch, founder of Boston Beer (Sam Adams), says one of the best ways to do that is to unite with other brewers. “Life is a whole lot better if you respect and enjoy the company of your peers and colleagues. Embrace your fellow brewers with magnanimity. We'll succeed together or not at all. We need to focus on growing the overall craft market.

“We should expect vigorous, effective competition from big brewers. They're good at what they do. They know how to deliver refreshment. When it comes to marketing, none of us can afford to compete with what they do. When Anheuser-Busch went after us in 1996, we got kicked out of dozens of their wholesalers. They launched an advertising campaign attacking me personally. I couldn’t afford to take them to court. The Better Business Bureau stepped in and made them stop, but the damage was done. The whole craft category stalled. Would they do it again? I don’t know. I’m sure they want a piece of what we have.

“Don’t get caught up in the romantic image of craft brewing and forget about the beer. No one is buying your story -- they buy your beer. Don’t take your eye off of quality. Direct sales to consumers are the model for new breweries. It preserves your margins.”