If you’ve always wanted to learn how to start a beverage company from home, then this is the article for you. Because in this essay, I’m going to lay out the exact step-by-step guide you need to follow to create your own drink brand.
Fair warning though, starting a drink beverage brand is not for the faint of heart.
There are billion dollar beverage brands in every category imaginable, from Red Bull to Coca-Cola. This means while there is a lot of money to be made in selling your own beverage, it’s also insanely competitive. The product process also isn’t a walk in the park. So have fun, but also make sure you’re prepared to do whatever it takes to win.
With that said, this guide will help demystify most of the process.
Starting with the single most asked question…
What Are A Beverage Company’s Start Up Costs?
I hate being the bearer of bad news, but if you want to learn how to start a beverage company, it’s better we rip off the band aid now.
Beverage businesses are some of the most cash intensive business models in ecommerce, especially if you’re just starting out. It’s not uncommon to see minimums of 100k cans of your drink, which also means a 6 figure investment, especially when you count packaging and other variables.
There is good news though.
You don’t have to start with a 6 figure startup budget.
If you’re comfortable with just testing your concept while losing some money in the process, then it’s possible to actually lower a beverage company’s start up costs by a ton. I’m talking about shrinking your minimums from 100k down to a few hundred cans. Again, you won’t be able to make a profit because the cost of each can will easily go over your potential asking price, but it’s enough to test the concept.
Once you’ve tested your drink brand and it works, you can work on raising money. In some cases, this part is actually easier with beverage brands than products in other food & beverage categories.
So keep this in mind as we move forward.
How To Start A Beverage Company: The Ultimate Beverage Startup Business Plan
Because of the beverage industry’s interesting challenges, you can’t start one like you could other types of businesses. Otherwise, you’ll find yourself in debt quicker than you can say “I declare bankruptcy!”. So, let’s go into the entire business plan.
Step #1: Decide Who The Beverage Is For
Before you even think about spending money on a beverage, you need to know exactly who the beverage is actually for. Why? Because there are tons of different types of beverages and different reasons why people buy beverages within each category.
In other words, you can’t make an energy drink for someone looking for help sleeping.
The best example is Red Bull. They only sell one beverage and they sell it to the extreme sports market. In fact, at this point, the extreme sports market and Red Bull are almost synonymous with each other. The key here is to not just jump into a massive market. Even Red Bull starts with micro-niches like speed racing.
So who are you helping?
Crossfitters? Vegans? Students? Drinkers?
The smaller, the better.
Step #2: Nail Down Your Beverage Company’s USP
You can’t stop at just who you’re serving. That’s because the beverage industry is so competitive, chances are the market you pick is still too competitive. You now need a USP to find a blue ocean within the tribe you picked.
Ideally, this USP is attribute based.
For example, let’s say you’re targeting Crossfitters who want to recover faster. Well, there are different forms of recovery. There is pre-workout, intra-workout, and post-workout recovery windows. There’s also sleep. And there’s also micronutrient inefficiencies you can help solve.
And that’s not counting ingredients or other features you can differentiate.
So you want to brainstorm how you can be the 1st product of your kind for the audience you picked. No, it doesn’t need to be some crazy, groundbreaking invention. It just needs to be a small, but significant difference maker.
For example, pea protein used to be an ingredient few beverage brands used.
For more help on this, check out my list of best digital marketing books for ecommerce.
Step #3: Figure Out The Math Behind Your Success
The biggest mistake brand owners make in learning how to start a beverage company is not figuring out what it takes to succeed. And the #1 factor that decides that is the economics of the business. In other words, the minimums, costs, and margins to make your business profitable.
You want to figure these numbers out as early as possible.
For example, it’s critical to know that volume is the name of the game for beverage businesses. This fact not only means you’ll eventually need to find a large source of funding, but also a distribution source that can handle the volume you need to sell. This is why most beverage brands live and die by their retail sales.
The best part of this process is that it gives you a clear picture.
Once you’re done, you know exactly what actions to prioritize over others and achieve the same success others see in 10 years in a fraction of the time.
Step #4: Validate Your Drink Brand ASAP
While it’s expensive to start a drink brand, it’s also relatively cheap to test. Again, you will not see a profit. In fact, you’ll lose money as you’ll pay near double digits for a drink you could only sell for a few bucks. But the point isn’t the profit.
The point is to test traction.
Do people even feel compelled to buy your product? Do paying customers actually like your product after trying it? Do people come back to buy more? Is it a concept that you’re optimistic about after looking at the data?
This is your stress test to find out if your idea has legs.
Otherwise, you’re going to have a hard time in the next step. But if you are able to prove that your product idea has the real potential to scale based on consumer demand, life is going to get a lot easier for you.
Step #5: Find An Investor And Scale
You’ve finally reached the big leagues.
If you’ve done everything right so far, you’ll have a compelling pitch for any investor. There is one major problem with this step though…
You don’t want to raise too much.
You only want to raise just enough to fund the business and marketing. Otherwise, you risk diluting yourself. It also makes life a lot more complicated as you’ll feel compelled to find more and more people to invest. That’s why the best thing to do is to first go over the easy sources of funding like friends and family, plus any pre-sales you can make.
Then, look for angel investors.
In the best case scenario, you picked a category that didn’t need as much funding others. In the worst case scenario though, you want to make sure you only take in money to fuel the business. Hence why all the other prior steps were so important.
Once you get the money though, start scaling by hiring advertising agencies and or additional employees.
Heck, try getting on Shark Tank if you’re *really* ambitious.
How To Start A Soft Drink Business
If your idea happens to be in the soft drink business, then you’re in for one hell of a ride. The soft drink industry is the same industry dominated by brands like Coca-Cola and Pepsi. These are some of the biggest, most iconic brands in the world.
So what do you do?
You want to follow the exact same steps as before, but you need to pay extra attention to niches. This is a category where you need to think of building a premium priced product that caps at around $3MM-$5MM in total revenue, which is ultra small in the world of beverages.
And you do this by niching down until there’s no obvious player in the space.
In other words, you want to be the official beverage of badminton. You don’t want to go head to head with Red Bull.
How To Start An Alcoholic Beverage Company
Alcoholic beverages are an interesting category. They’ve been the same since people started to record history. People have drank everything from wine to vodka and more.
But things are changing.
The new trend in the alcoholic beverage industry is to have LESS alcohol. And if you can take normally alcoholic beverages and remove the alcohol in them, even better. This is the blue ocean category of the beverage industry right now.
Why is this happening?
Because the next generation of beverage buyers are health enthusiasts. This means beverages that have additional “good for you ingredients” without all the fluff. This includes alcohol because it’s not a healthy beverage and it has side effects like fat gain and hangovers. These are not attributes people want to pay for anymore.
So if you want to tackle this space, this is the way to go.