Starting A Craft Brewery
Opening a craft brewery and taproom requires careful planning and compliance with various pieces of legislation.
It goes without saying that before opening a business you should do your research. Research your product, the market and the industry. Make a plan and ensure that you address the key considerations.
To assist with your planning, we provide a short non-exhaustive list of items that you may need to consider.
Structure, Business Name and Registrations
Importantly, you should consider how you are going to operate your business whether through a company, partnership, trust, etc. (or a combination of these). You should seek specific advise from your lawyer and tax / financial adviser ahead of establishing your business.
Next, you will need to decide on and register a business name. It is important to ensure that your business name is not the same or deceptively similar to others in the market. You may also need to undertake other registrations at this stage such as registering for GST, PAYG withholding etc.
You will also need to apply for appropriate excise licences through the ATO including Manufacture Licence (alcohol), Storage Licence (alcohol) and Brew on Premises (if applicable).
This applies irrespective of the State or Territory that you are in.
Trade mark protection
Once you have registered your business name, you should ensure it is protected. In order to protect you brand, you should register a trade mark over your business name, logo, distinctive product names etc. Trademarking is often overlooked at the early stages of business however is vital to ensuring that the brand you are building is protected. This applies irrespective of the State or Territory that you are in.
Depending on the State or Territory that you are based and where you intend to sell your products, you will need to apply for certain liquor licences.
It is important to apply for the correct type of licence for your planned operations.
In Queensland, there are a number of liquor licences that could apply when opening a brewery / distillery. Most commonly, breweries are required to hold a ‘Producer / Wholesaler Licence’ which allows liquor to be produced and sold for consumption on the premises during ordinary trading hours (or approved extended trading hours) and sold to appropriately licenced third parties (i.e. resellers) for consumption off the premises. This licence also allows alcohol to be sold to customers and taken off the premises as a ‘souvenir of the visit’.
The application process requires completion of a number of forms, presentation of a number of plans (such as location and layout), various consents (such as town planning consent), a survey and a number of other documents (such as a company extract if the applicant is a corporation). Note other documents may also be required such as a risk-assessed management plan (RAMP), a community impact statement (CIS) and menu (if you plan to serve food).
Other licences that may apply depending on your business operations such as a ‘commercial hotel licence’.
There are specific licences applicable to wine producers and merchants.
It is important to plan whether your business will sell your beer / liquor online as there are specific licences and requirements applicable to this.
Opening a brewery can be a costly experience. It is important to ensure that you have adequate financial capacity to fund your planned operations. Most new breweries are either self-funded by the owner/s or are funded through ‘traditional’ financing methods such as bank debt / business loans.
Other funding arrangements that are increasingly being used by new (and expanding) breweries include rewards-based and equity crowdfunding. See our article about Crowdfunding and breweries.
Premises for your brewery / taproom
Brewing can take up a lot of space so it is important that you find an appropriate commercial premises for your operations. When looking for a premises, consider the rent amount, the lease term and your growth strategy. We have seen a number of high growth breweries outgrow their premises within a few years of opening. Be sure that your equipment will fit and that there is adequate access to get your equipment into the site.
Ensure that you have a written lease which has been reviewed and that you have received appropriate legal and financial advice. Seek specific advice as to whether you require a Local City Planning Permit / Development Approval (DA). Specific Codes and City Plans apply in most instances and vary depending on your location.
You should also be mindful of the requirements for opening a taproom from a commercial premises.
Breweries use a lot of water and have a lot of waste. You should also seek specific advice in relation to the water and waste requirements applicable to your proposed site.
Equipment purchases / leases
Breweries require a lot of equipment such as tanks, pumps, cooling systems, controls, bottling / canning / kegging, cool rooms, fridges, taps etc.
Depending on your circumstances, you may buy or lease your equipment. If you are buying your equipment, you need to consider if you are buying new or second-hand and whether you are buying domestically or importing.
All options require appropriate contracts to be in place.
If you are importing, you need to consider a range of further considerations like freight forwarding, customs clearance, warehousing, quarantine, tariffs etc.
Websites relating to the sale of liquor require compliance with licencing requirements. Depending on your State or Territory, your website should / must contact certain content such as age disclosure / warnings (i.e. 18+ to enter site), liquor licence number disclosure.
Staff and contractors
Another often overlooked consideration to opening a brewery is how you engage your staff and contractors.
All staff should have a written employment contract tailored to suit their specific role and modern award (if applicable). Similarly, you should ensure that any contractors engaged by your business are subject to a written independent contractor agreement. The employment agreements and contractor agreements should contain, amoung a range of other things, clear restraint of trade (for employees) and confidentiality provisions.
Labelling compliance for alcoholic beverages
Strict legislation applies to alcohol labelling. There are mandatory and optional labelling requirements together with a range of additional labelling elements.
Failure to comply with labelling requirements can result in product recall and/or prosecution.
Labelling requirements include a product description, volume statement, standard drinks statement, alcohol content, country of origin, supplier and packer name (and address), recycling refund statement (if applicable), best before date, lot identification, sulphites and allergens notice, use of certain other ingredients disclosure, pregnancy advisory and a range of other requirements.
Labelling requirements apply to the product itself, the packaging and may apply (in part of full) in other circumstances (i.e. where beer is supplied in growlers / squealers).
A number of these disclosure requirements also apply to certain types of advertising. It is important that you properly understand these requirements (and ensure compliance) before offering products for sale, advertising or undertaking any type of marketing.
Selling your craft beer
Like any business, it is important for breweries to ensure that they have appropriate written commercial contracts. Particularly, breweries need to consider how they are engaging with resellers and how products are supplied.
The above is a short list of matters relevant to opening and operating a brewery and should not be relied on as specific advice for you or your circumstances. You should seek professional advice in relation to any of the above. Ramsden Lawyers are experts in beverage law and regularly advise clients on compliance matters. If you produce beer, wine or spirits and have queries or concerns about your operations, please contact one of our expert beverage lawyers.