If you enjoy craft beer and want to break into the brewing industry, opening your own microbrewery might be right for you. The craft beer industry can be competitive in Australia and takes more than just good beer. Having a solid understanding of the legal considerations of running a successful business can go a long way. In this article, we run through some of the main legal and regulatory issues to help bring your microbrewery dream to life.
Naming Your Brewery
Building a brand name for your new brewery is essential. Equally as important as great beer is a memorable business name.
Once you have decided on your name, you should ensure nobody else has taken it through a few simple searches. Google and the Independent Brewers Association are good starting points, as well as ASIC’s Business Name search. Next, you would register your business name and potentially talk to a lawyer about trade marking your brand. Further, check social media to see if others are using your name. If not, it is a good idea to save those usernames.
Creating a strong brand identity is critical for any new business. Though you might be a small scale business today, building your brand and online presence can allow you to grow and succeed.
Choosing a Business Structure
| Business Structure | Description |
| Sole Trader | A sole trader structure is the simplest and most common form of business ownership. As a sole trader, you would have complete control over your microbrewery, making all decisions independently. This structure offers flexibility and minimal formalities, making it an attractive option for business owners with limited resources. Moreover, as a sole trader, you retain all profits the new business generates.However, being a sole trader also means that you are personally liable for any debts or legal issues your microbrewery may face, which could put your assets at risk. Being the sole decision-maker regarding important business decisions is also time-consuming and stressful. |
| Partnership | A partnership structure is a business model between two or more individuals who come together to run a business. It allows for shared responsibilities, resources, and expertise. Traditional partnerships can be general partnerships or limited partnerships. In a partnership, general partners are liable for business debts, and limited partners are limited to their investment amount.Traditional partnerships offer shared decision-making and potential tax benefits, but you should carefully consider conflicts between partners and the need for a well-drafted partnership agreement. |
| Private Company | A private limited company is a popular business structure that provides limited liability protection. Establishing a private limited company creates a separate legal entity distinct from its owners. This structure enables microbrewery owners to separate personal and business assets, reducing personal financial risk. Moreover, a private limited company allows for share ownership, making it easier to attract investors and raise capital. Private limited companies are perceived as more credible and established, which can positively impact relationships with suppliers and customers. However, a limited company’s setup and administrative costs are higher than other structures, and compliance with company law and accounting standards is essential. |
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
Producer/Wholesaler License for Brewers
To sell your product, you will need a Producers/Wholesalers Licence. In NSW, you can obtain this from the Office of Liquor, Gaming and Racing. The license will allow you to:
- sell your product to other licensees;
- sell your product to the public; or
- conduct tastings of your product.
You may want to run brewery tours or allow the public to come and taste your beer as a way of introducing your product to new customers and selling more beer.
The Producer/Wholesaler license will enable you to sell your product to other licensees (their employees or related corporations) at any time. However, you can only make retail takeaway sales to the public between:
- 5am to 10pm on Monday through to Saturday, and
- 10am to 10pm on a Sunday.
While you can apply for extended trading hours, there is a 6-hour closure period that applies to all licenses.
The annual fee for a Producer/Wholesaler license is $500. If you produce less than 100,000 litres per year, you may qualify to pay the reduced annual fee of $200.
Additional Permits
Along with extended trading authorisation, you may consider attaching additional permits to your license, including the drink on-premises authorisation. This allows you to sell your beer to the public for consumption on your premises. You will also need this if you are considering opening a bar, café/restaurant, guest accommodation or function centre.
You can also apply for an industry liquor-show and producers markets authorisation. This allows you to provide samples for tasting and selling unopened beers to the public at industry shows and farmers markets with at least ten stalls.
To obtain your Producer/Wholesaler license, you will also need to lodge the following notices that you can find at the end of the application form along with lodgement instructions:
- public consultation – site notice;
- police notice; and
- local consent authority notice.
You will also need to have a Responsible Service of Alcohol (RSA). For more information on this in NSW see the Office of Liquor, Gaming & Racing.
Beer Excise
Home-brewed beer produced for your personal consumption is excise-free. However, once you make the move to nano or micro-brewery, you will need to pay excise on any beer you produce to sell. Excise is a tax that is placed on:
- alcohol;
- tobacco;
- fuel; and
- petroleum products.
The actual alcohol content, as well as the volume in which you sell your beer, determines the excise rates. For example, the excise rate differs depending on whether you sell your beer in a bottle or keg (>48 L). The rate of excise on beer is indexed twice a year in line with the consumer price index in February and August. For the current excise rates see the Australian Tax Office website.
Labelling of Alcoholic Beverages
The Australian and New Zealand Food Standards Code (Code) forms the basis for food and beverage regulation in Australia.
The Code contains general food standards that apply to all food and a standard specific to beer (Standard 2.7.2). The Code covers not only the production of Beer but also labelling requirements. A copy of the code is available Food Standards Australia New Zealand and regulates the inclusion of information such as:
- volume;
- alcoholic content;
- standard drinks;
- country of origin;
- best before date; and
- barcode.
Key Takeaways
There is a lot more to commercial brewing than just malt, water, yeast and hops. You need to consider:
- what you will name your business;
- your licencing requirements;
- tax requirements; and
- labelling regulation.
If you need help setting up a microbrewery, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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