So, you’ve decided to take the plunge and transition from homebrewer to commercial producer – Congrats! The process of establishing a new business from scratch has its own joys and challenges. If you have never started your own business before, then take some time to read through the steps listed below.
Your local Small Business Administration has FREE consultation available to help you navigate this process.
Does your country, state, county or city have an office that you found helpful? Leave a comment below to update our knowledge base!
Determine Your Business Structure
In the United States, we have a couple of different options available for how to set up a business. Many small business owners start out as a “sole prop” which simply means that all of the income generated will be reported via that individual’s social security number. However, there may be a time when it makes sense to shift to a Corporation type of structure.
For example, if you have partners, if you have assets you’d like to protect from liability (ie property, house, buildings) or a lower tax rate will save you money on the profits being generated by the business.
- Sole Proprietor or Corporation
- If Sole Prop, then will use your own SS#
- If Corporation, apply for EIN (federal) Employer Identification Number
- Need to discuss with accountant or CPA as to which tax structure is most beneficial for your Corporation
- Can depend on the number of partners involved in the business or how those partners are related (if married vs friends)
Apply for Licenses & Fictitious Business Name (FBN)
In order to be able to operate your business, your local government may require registration.
State level registration of your business will allow you to apply for a Reseller’s Certificate. This enables you to purchase ingredients and supplies at wholesale prices tax exempt.
County level may be required as certain taxes and permits will need to be fulfilled.
City level can also have taxes and fees in order to operate your business.
It will also be important to establish a unique name for your business. You may want to do a trademark search before applying so that you don’t have to change your name later. A few Kombucha brands ran into that issue and they can be expensive to fight even if you aren’t technically violating their trademark.
General Liability Insurance minimum is $1M and will protect you from lawsuits. First start with a broker as they can help you source best quotes for a variety of policy types – auto, general liability, workers comp, etc. Some insurance companies consider Kombucha “risky” due to the ethanol content. If you are having difficulty, let us know so we can point you in the right direction.
- Apply for business license (state/city level)
- Apply for Fictitious Business Name (state)
- Advertise in local paper per your state’s requirements
- Set up bank account (use EIN if applying as corporation)
- Apply for Reseller’s Certificate (state)
- Use to purchase supplies at wholesale
- Gives you the opportunity to sell your products
- Also requires you pay sales tax
- Purchase General Liability Insurance
Set Up Wholesale Accounts
Set up wholesale accounts with tea/flavors purveyors; bottle manufacturers, and more. Check our Recommended Supplier List for references.
Brewing Space
Nearly every Kombucha brand on the planet gets its start at home in the kitchen, basement, spare bedroom and so forth.
While some places in the world will allow you to brew in your home and sell to the public, most have rules or regulations in place to protect consumers.
Here are some potential places you can get started.
- Find space to brew in
- Consider partnering with a local cafe/restaurant and barter for space
- Rent space in a shared kitchen
- Rent a solo space that is zoned for food production
- BE AWARE – our organisms are considered spoilage for most types of beer and wine – so use caution if looking at sharing space with a brewery to avoid cross contamination
- Take ServSafe food handlers test to receive certificate
Branding & Logo
Your brand name does not have to be the same as your FBN (see above). However the same principle applies – make sure you aren’t stepping on someone else’s brand name by doing a google search, trademark search and so forth. You can use the same name as a brand provided they are not distributed in your country. They may try to send “cease and desist” letters, however until they are actually sold in that location, they will not have the legal ground to chase you off the name.
Your logo will likely go through many iterations in the life of the brand – so don’t feel like you have to get it perfect. If you need branding/marketing support, check our our Suppliers List for recommended vendors.
Brew, Log, Rate, Repeat
Brewing Kombucha is a craft. Yes, there are scientific metrics that can assist with refining the process yet it truly is an art. This is why no two Kombuchas will ever taste the same and that could be from brewer to brewer or from batch to batch!
If this a path you desire to walk, then the concept of logging, testing, rating is key. Yes, we are witches brewing up magic potions and for us to be able to replicate that, we need to assess our metrics, rate what we are creating (and ask others to rate them as well) and then repeat. It is vital to close this feedback loop because you will be kicking yourself when you realize you didn’t write down how much you put in the potion to yield such a tasty flavor!
Testing – Must Do’s for Every Batch
- pH – for safety, to make inspectors happy and can provide some information on “stuck” ferments
- Brix – some will use hydrometer, I prefer our digital refractometer because it takes the “human error” part out of the equation
Testing – Advanced Yet Necessary When You Grow
- Titratable Acidity – this is definitely one of the harder skills to master without a degree in chemistry. Purchase equipment that can help you do this down the line.
- Ethanol – send out to a lab and then grab an ethanol tester for in house to make sure you are hitting the right mark for your shelf life.
Recommended equipment on the Supplier List.
Rating your batches can be as simple as giving it a 1-5 star rating in a couple of key categories. Or grab the sensory testing materials from the KBI Member Forum if you are a member or learn more about joining Kombucha Brewers International (KBI) here.
Suggested Categories
- Smell – delicious or funky
- Flavor – can you taste all of them?
- Fizz
- Color
- Off flavors?
How Many Flavors to Launch?
Kombucha is a blank canvas and it is so much fun to create unique flavors with her. That said, too many flavors can be a challenge to produce on a regular basis.
We recommend selecting your top 3-4 flavors for your launch. From the sales data, ginger is always popular. Then the fruity and berry flavors rank next.
If you do farmers markets or offer seasonals, that’s where you can experiment and have fun knowing they will be available only at certain times of the year thus creating its own demand due to scarcity. Its also a great way to know which flavor profiles are most successful. You can always convert a popular seasonal into a staple.
If you decide to sell to grocery stores, you will need a SKU for each product and package size. Example, 12oz ginger and 16oz ginger and 4 pack of 12oz ginger will each need their own SKU. Same for certifications, each label will need to be approved.
Keep It Simple Smarty!!
