Hop Law

Things to Consider When Opening a Brewery: Dos & Don’ts of Business Relationships

Starting a brewery takes passion, bravery, a solid business plan, and plenty of capital. Don’t forget about familiarizing yourself with the local regulatory environment and zoning laws.

Amidst all the stress and excitement — and paperwork — of opening a brewery, one thing you may forget to consider is making friends with your neighbors. We’re talking about building healthy working relationships with the breweries, bars and restaurants in close proximity to your location and the regulatory bodies you will regularly deal with.

The consequences of poor relations between businesses are rarely dire, but starting a new business venture is hard enough without alienating (or worse, starting feuds) with your peers. The same businesses that are your biggest competition can also be your biggest allies, so don’t overlook the importance of developing relationships with fellow business owners.

Here are some dos and don’ts for building positive, mutually beneficial business relationships.

When Starting a Brewery Don’t:

• Backstab your peers

Most new breweries start out by self-distributing their products to bars, restaurants and stores. Sales work can seem exhausting and sometimes cutthroat when you’re the new kid on the block trying to get your foot in the door, but be mindful of which tap lines you set your sights on and how you do it. Don’t talk down your peers’ products — just don’t do it. Competition is one thing, but let your product stand on its own rather than bad-mouthing others.

• Expect regulatory certainty

In the highly regulated but continuously evolving brewing (and distilling) industry, changes in business outpace regulations. This means regulatory bodies aren’t always set up to give straightforward answers to questions you have about production methods, approaches to business, etc. Therefore, you’re often subject to regulators’ discretion, and it is often not imposed uniformly.

For example, some labels may or may not be approved by the Tax and Trade Bureau depending on the examiner reviewing your application. Some inspectors will approve brewhouse or distilled spirits plant layouts that others will not. It can be frustrating, but it helps to establish cordial relationships with regulatory agencies and their staffs. Treat them kindly and with respect — it goes a long way.

• Have a kitchen in-house

This one isn’t a hard “no,” but it should be carefully considered. Bars and restaurants are generally not threatened by breweries opening up near them because breweries by comparison have a small product selection and limited hours of operation. Having a kitchen in-house makes your establishment a direct competitor to the restaurants in your area that you hope to sell your products to.

A commonly accepted way around this issue is to permit customers to bring outside food into the brewery. A steady rotation of food trucks is also a welcome addition. These options have substantial benefits: your customers can have food, the “menu” never gets old, and you don’t shoulder the extra costs (and reduced margins) of a kitchen, food inventory and additional staff.

When Starting a Brewery Do:

• Join the local SMA

Becoming a member of the local small business association will allow you opportunities to network, get advice from other entrepreneurs, and take classes in areas like business management and financing. You’ll also be able to keep up to date on news and events. A small business association offers many benefits, but joining the local business community and getting involved with your peers is one of the biggest.

• Give back to the community

Donations (of money, time, product or merchandise), volunteerism, and other philanthropic causes are great ways to give back more than just delectable brews. Some breweries even establish their own nonprofit charities for causes they hold near and dear. Sponsoring local events, sports teams or clubs are also great ways to show community support.

Charitable giving also drives brand awareness, creates positive publicity for your business and offers tax relief, so there are no downsides to having a spirit of generosity.

• Collaborate on projects and events

Connect with fellow brewers and other businesses in the community to develop or participate in special events that are mutually beneficial for everyone. Great examples include local festivals, fundraisers (see charitable giving above), tasting events, beer pairing dinners hosted at local restaurants and more.

Collaboration beers are also gaining major popularity in the beer world. More and more breweries are teaming up for special, limited edition (and sometimes perennial) beer offerings in the true convivial spirit of brewing.

In business, as in life, relationships are key. Show that you’re adding value to the community rather than detracting, and you can solidify a strong position in the local business scene.