How to Start a Beverage Company

If there’s one takeaway from the long-running Bravo reality show "The Real Housewives of New York," it’s that you can make a fortune by starting a beverage company. Full-time cast member Bethenny Frankel ended up selling her brand of low-calorie pre-mixed Skinnygirl Cocktails for a whopping $100 million. Yes, it’s kind of hard not to be jealous that you didn’t think of it first.

Starting a business in the beverages industry doesn’t always require a ton of capital considering you can make drinks in small batches. Still, it’s not the easiest thing to get off the ground, but if you’re successful, the rewards are huge.

Decide on the Type of Business

Before starting a beverage company, you need to think about what kind of business you want to start. If you have a truck and enjoy taking on a sales role, you might want to become a beverage distributor. If you have a great idea for a unique energy drink, you might consider starting an energy drink company. You could also open a brewery, create your own artisanal soda pop brand or jump into the world of cocktail mixers.

Research Local Laws

Every business in the beverage world has different laws, so before you launch your business, you’ll need to look into what type of permits are required. If you want to open a small cart that sells drinks in the park, you’ll probably need a vendor's license. If you want to sell craft soda, your manufacturing facility will have to be inspected by the Department of Public Health. If you plan to open a brewery and bar, you’ll need a liquor license. Figure out the legalities of what you’re doing and don’t proceed until you sort it out.

This also includes registering your business with the government, deciding on a tax structure and obtaining the necessary insurances (you’ll likely at least need general liability insurance).

Find a Production Facility

If you’re starting a beverage company, you’ll probably need to find a production facility. You may want to buy production equipment and manufacture your own drinks (especially if you’re launching a brewery). You may want to start by making small batches by hand in a rented-out commercial kitchen to sell to farmer's markets. Whatever the path, do your research and find a place to make your drinks.

Test Your Recipes

When you’re starting a beverage company, it’s all about the recipe. If you’re planning on becoming a distributor, find vendors whose products you believe in. If you’re creating a beverage brand, you need to test your recipes and find out what is and isn’t working. You can test it among your family and friends or even ask a local grocer to test things out on customers. If you’re starting an energy drink company but your drink doesn’t provide enough energy, you’re going to have problems. Fine-tune your formula until it’s ready for the masses.

Do Some Market Research

Whether you’re starting an energy drink company, selling soda pop or opening a brewery, you should probably do some market research. Examine the competition in your area and ask yourself how your product is better or different. Why will consumers choose you?

It’s also important to test any flavors with a small group to figure out your demographic. Who are you marketing to? Is your artisanal soda or energy drink better suited for sweet-toothed adults, tired millennials or children? This is the most important step, and you can develop and execute a solid marketing plan once you figure it out.

For example, Old City Soda, which appeared on CNBC’s reality business show "Cleveland Hustles_,"_ fell short of their $300 daily sales goal when selling their sodas to children. When they transformed their shop into a bar during nighttime hours, they brought in more than $1,000. You just never know who’s going to latch on to your brand.

Develop and Execute Your Business Plan

Once you’ve got your recipe, product line and demographic nailed down, it’s time to start shaping your brand. Starting a successful beverage company isn’t impossible without a solid business plan. Your plan should include things like:

  • Overhead and manufacturing costs.
  • Where the money is coming from to pay for those costs.
  • Prices for your product line.
  • A marketing plan.
  • How you’re going to enter the market.
  • An estimated path to revenue.

Once the plan is in order and the product is ready to be manufactured, it’s time to launch your brand.