To say that craft beer in America is a growing industry is an understatement. Since 2012, what used to be a small community of creative brewers has transformed into a force that big beer brands must consider a significant threat. Growth in this industry from 2012 to 2017 has been an impressive 159%, and in 2018, the craft beer industry brought $76.2 billion to the US economy. With numbers like these, should aspiring craft beer bar operators like you get in on the game? Read on to find out if this is still a viable business.
The Pros
The numbers thrown about when it comes to the craft beer industry are undoubtedly attractive, but it’s not only money that attracts people to buy and sell craft beer. Apart from sizable profits, here are the other pros that craft beer bar operators will list about their business:
- Creative Control
Creating and running your craft beer bar offers immense creative freedom. Many entrepreneurs love the idea of building a business from the ground up. From the name, the logo, the brand, the identity, the slogan, the recipes of the craft beer, how much beer you make, how you price the beer—you get to decide it all.
Even more appealing is the fact that no big beer brands are looking over your shoulder and dictating how you should market their beer, how much you should price their beer, how much you can order, and how many bottles you have to sell.
- Uniqueness & Authenticity
What appeals to the craft beer-drinking community is the uniqueness and authenticity they get from a diverse range of craft beer brands and craft bars. The grassroots appeal of craft beer includes the flavor that comes from exotic ingredients like Mandarina Bavarian Hops, the look, and the overall feel of the brand, and the different, un-commercial feel of savoring craft beer in a craft beer bar. There are no hard and fast rules to brewing and enjoying craft beer, only that it must be real and distinct from commercial beers—an offering which big beer brands simply can’t match.
- Growing Community
To think there was only one craft beer brewery in America in 1965, and now there are over 7,000 as of December 2018, with another 1000 more expected to open. In terms of sales, growth for craft beer is projected to be 4% in mid-2019. As the industry grows, so do the support services for it. There is legislation allowing for the production and sale of craft beer, and it’s rooted in the US Constitution. What this means is that more lawyers and law firms are specializing in craft beer, making it easier to get into the craft brewing business and protect their intellectual property.
The Cons
All businesses have their downsides, and a craft beer bar is no exception. Here are the caveats of opening and operating a craft beer bar you should consider:
- Fierce Competition
The big beer brands aren’t willing to lose market share to smaller players, so they’re on the offensive by buying up craft brewers. Depending on how you see it, this can be a boon if your craft brewery is being bought out at a profit, or a bane if you feel you had to swallow your pride and kill your baby for money. Competition is also fierce among the existing and new craft beer breweries and bars.
- The Devil is in the Details
As appealing as it may sound to own and operate your craft beer bar, the creative freedom it promises has accompanying headaches. You’ll have to worry about everything from the licenses, taxes, hiring staff—all this apart from all the marketing, establishing and maintaining your identity. Remember that the craft beer drinker is a finicky one, and if your brand identity isn’t well-crafted (pun not intended), you could fail despite having a great-tasting craft beer. Note also that bars—especially unique ones cost money. Prepare to shell out upwards of $100,000 or more to start your craft beer bar.
- Difficult to Sustain
Not only is it challenging to maintain your brand’s identity, but smaller craft beer breweries and bars are also under a lot of pressure to deliver their product consistently. This is in terms of both quantity and quality. The bigger you get, or the higher demand for your brew gets, the harder it will be to keep your brew tasting the way they like it.
Like any business, opening a craft beer bar has its challenges and opportunities. If you plan your business model and brand identity well, partner up and hire the right people, invest in a location and equipment wisely, you can have a thriving craft beer bar that can stay profitable for years.
