The competitive advantages microbreweries receive

At Square Mile Accounting, we understand the struggles that go with turning the idea of a microbrewery of your own into the reality of owning and operating one.

Before setting up the accountancy firm, I had dreams of doing it myself. In our previous blog entry ‘the brewery that never was’, we looked into the real challenges of setting up a microbrewery, and why in the end it wasn’t for me.

The dream did not die when I set up Square Mile – my love of the craft, the process, and the product produced by brewing is one of the reasons we get so excited with working with brewers.

Setting up a brewery is an exciting prospect. So what are the real competitive advantages that microbreweries have above larger breweries? And what help can microbreweries turn to in facing this challenge,so you gain the biggest reward?

Why brew?

It goes without saying (but we’ll say it anyway). People are really, really passionate about beer.

Sitting down in a pub for great conversation and a pint of something familiar has its place. But for most beer drinkers, the excitement of trying something new, something unique is incredibly exciting.

Pubs are one of the few places that chalkboards still seem to exist for this very reason. Drinkers want to sit down at their favourite stool and choose something new.

That excitement likely lives in you, as it does in us, and as it does in huge numbers right across the globe.

From choosing a unique looking guest ale in a pub, to trying out a Trappist Beer, brewed in European monasteries, to buying a brewing kit and having a go at making a home brew, the passion for beer is in no way dying in drinkers.

It is not surprising then that so many are looking to take that passion to another level and begin making beer that they will do more with than surprise dinner guests.

One of the greatest advantages microbreweries have is the drive within those who wish to create their own beer, to push the boundaries and taste something that they have never tasted before, or to perfect the taste of something already loved.

Another is the diversity in the product, with so much variety and a willing audience to try it.

The inbuilt passion and curiosity of the huge audience of drinkers is of great benefit to microbreweries, and a beer just being different can itself be enough for it to be picked out on a beer list. But making a beer stand out on a list is so important to the success of a microbrewery.

Shout out about being different

As beer drinkers, we want to drink something that tastes great, and creating a great tasting beer that is consistent and same every time is one of many exciting but difficult parts of the process.

Beers are often described as having character in their taste but it’s important that they have character in the way that they look too.

Microbreweries have to take the opportunity to stand out amongst the crowd, and you can do this in a way that large brewers are not able to.

Discovering that identity and shouting about it is absolutely key to success.

It’s not the aim of every microbrewery to become a BrewDog, with their irreverent branding capturing the attention. Or a Wychwood Brewery, infusing fantastical imagery into their branding ensures that they resonate with a certain kind of audience. But these tell a story of brands that are full of visual and brand character.

While certain types of theme can be captured by a larger brewer, a microbrewery is tied to a sense of place that a large brewer will always struggle to maintain and so microbreweries can find great success in talking about where they come from.

In a world where people have become more and more sceptical about where their food and drink come from, talking about locality and in local dialect is a great way to make a beer stand out on a list rather than get lost on it.

Many microbreweries have found success in their local regions in this way, and local drinkers get a great sense of satisfaction and feeling of participation in drinking something that was made nearby.

Tapping into this sense of place is a huge advantage of the microbrewery. Local beers, brewed by local people, can speak in the local tongue. This creates a sense of camaraderie impossible for large brewers to recreate authentically.

The small matter of money

At the end of the day though, while passion and excitement for beer is the driving force in starting a microbrewery, the issue of finance is a significant one. The start-up costs for microbreweries are large, and the continuing costs associated with it can be daunting. That said, with a little knowledge and savvy, they are not insurmountable.

Grants can be obtained in certain areas to aid in the initial working set up of the business, contributing to costs of equipment, stock, and marketing – all crucial parts of your business.

Used equipment can also be found, and is generally good enough for starting up production while you save up enough capital to invest in new equipment that can be used to brew bigger batches.

As brewery owners invest an average 23.7% of their annual income on upgrading and expanding capabilities, having a place to start and build from, and taking the time to grow naturally and not too quickly is important.

In order to aid in growing microbreweries, brewers who brew no more than 60,000 hectolitres of beer annually are eligible for a 50% tax relief on the beer tax duty. It’s a huge aid in maintaining profitability as a microbrewery, especially if it is content to stay within this limit.

As people passionate about your craft, knowledgeable about the challenges you face, you’ll know how important experience is.

Our experience in accounting (and with breweries) can help grow your business and address these competitive advantages. As you grow further, you may experience issues that need real planning, innovative thinking, and understanding of the numbers involved.

To be in a place where these problems have to be thought about is an exciting place to be as a microbrewery.

We would love to join with you on the exciting journey that creating a beer and sharing it with others should be.

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