There is an ever-increasing amount of government red tape in Australia for planning a brewery. You might be good at making beer but trying to navigate and deal with a highly regulated and convoluted liquor licensing process and government compliance framework is another beast all together.
Every state in Australia has their own liquor legislation act. We live in an over governed country, with three tiers of government i.e. Federal, State and Local. Think of the planning & licensing approval processes as a giant jigsaw puzzle, in which the aspiring brewery owner must get approval from all three tiers of Government.
EXCISE LICENCE – LIQUOR LICENSING PROCESS
The first one is the Commonwealth or the Federal Government, which involves excisable goods. For this you will need an Excise Licence, which simply put is a brewery licence under the ATO. The excise licence is the approval for you to be able to manufacture and produce beer or alcohol. The ATO is going to ask you how you are going to calculate the alcohol by volume (ABV) for your products, the volume produced annually, what your packaging type will be i.e. bottles, or is it cans etc., as well as the size of the packaging, and an approx. percentage between kegs and packaging you will most likely be selling your beer to consumers in. It is important you know and understand all these reporting metrics for the ATO, as it will all need to be completed in an online application via the ATO website.
PRODUCER WHOLESALER LICENCE
The second is at the State Level in which your brewery will be primarily based and operating out of. The title can vary state to state, but this licence is primarily known as the Producer Wholesaler Licence. You can be either a Producer or Wholesaler or both. If you make just enough beer to be a small local tap house, that only locals take home, and you do not wish to grow beyond that, then obtaining a wholesaler licence might not be of relevance to you. But if you do grow and scale up different rules will apply to you in regard to this licence.
Model One – if all you wish to do is sell your own beer via local tap room sales, 4 or 6 pack takeaways and growlers or local wholesale opportunities then it’s the Producer/Wholesaler Licence.
Model Two – If you want to sell someone else’s beer, guest taps, or the market wants some wine for different demographic drinkers or you plan to have functions rooms, weddings which demand different product offerings, you might need a second licence, a Producer Wholesaler Licence PLUS. Two different licences and blending them together.
Model Three – is a Commercial Hotel licence which allows you to produce and sell your own beer and anyone else’s beer as well as wine or spirits. This type of liquor licensing is the Australian Gold Standard, and many brewery owners are not going to get much change of the hefty costs to obtain it.
All these licences will be tailored to each business owners unique situation. You need to sit down and work out what type of brewery you want to be and product offerings you wish to have before deciding which liquor licensing to apply for.
Within other states there are packaging liquor licences and drink on premises authorisations.
Engaging a consultant to navigate you through this process will allow you to open up earlier 1-2 3 mths etc, every week you open up earlier the expenses of using a consultant will pay for itself in sales you make being open up earlier.
FOOD LICENSING & TOWN PLANNING
The third tier of government you will deal with is your local council. They look after two main elements, the first one is Food Licencing and when making a food product. You will need to engage with your local council Environmental Health Officer to get a Food Licence. You will need to have systems in place as breweries heavily rely on using a lot of grain in their beer products, so you will need appropriate storage for the grain, so you are not attracting rats and cockroaches. The other element council looks after are the town planning laws, which normally requires a brewery to undergo a Development Application or if they are lucky the fast-tracked path of going through the Complying Development Certificate process via a Private Certifier.
We mapped out earlier at a State Level you might apply for 1 of 3 Liquor licences, all the decisions you make from there flow down to that of Town Planning laws. If you want a Commercial Hotel Liquor Licence then you are going to need Town Planning as a Hotel, that is expensive real estate and an expensive town planning process. So if you want to go that way and be a full hotel, understand that it is the more expensive end of the scale and will generally need investing backing.
UNDERSTANDING TOWN PLANNING
Most of the smaller scale breweries are in industrial estates and are just selling their own beer, and that generally flows from a Town Planning element. Site is critical, you have got to find a site that will allow you to legally operate as the type of brewery wish to be. Easier said than done thou.
If you look in simplified generic town planning terms, in country towns, cities, suburbs etc, town planners identify an area where they put all the industrial businesses at, such as Automotive workshops, Panel Beaters, manufacturing etc. They put them all in these isolated areas and you will generally find there are no residents there. Generally in an industrial estate at 7am, parking and the general area is busy and full. All the tradies are there, semi’s and trucks. They put them there at one historical level. If you go through at 4pm majority of the area is emptied and is a deserted precinct. At a planning level they put them all together and are classed as medium impact industry. If the police drive through at 7-10pm at night and see a group of 20 year old kids wandering around drunk, the police will pull over and have a chat with them. This how town planners think, so they put similar uses in the one spot. That’s why you don’t see any restaurants and bars in industrial estates. Town planning apply assessment tables, and they say in this area, in this suburb or estate, your use as a factory is self-assessable, it’s just accepted you can just do it. If you are leasing a tenancy that used to be a paint factory you can generally put a brewery there without any further approval and your liquor licensing application will cost you about $5,000 and will generally only take about 6 weeks and you are done. That is the dream run if you are only making your own beer.
But if you are then wanting to add other people’s wine or beer, then you might need town planning approval for a bar or café and there generally not allowed in those industrial estates so you end up with this code assessable application to council via a town planner and this will add 10-15k to your application and 4-6mths.
Wherever you can put cafes or bars as an accepted development, such as shopping centres, centre activity zones, mixed use zones, commercial zones, when you get into our CBDs it’s the other way round your allowed to have bars here, cafes here Town Planners support these uses in the middle of our CBD but you cant put a factory there. So, if you want both these things, you might not be able to have them and it is a really difficult jigsaw puzzle to put together, so you need seek help on navigating this early on.
Any liquor licence application must be accompanied by evident of the Town Planning approval. If your town planning approval gets a condition saying you can only operate between 6am – 6pm, because you only told them you are a factory, then that will be become your hours of operation under your liquor licence. So you need to tell them at a planning level that you need to have a tap room and the hours of that tap room, or you will end up with unfavourable restrictions to your hours of operation if you don’t communicate this and be as transparent as possible to regulators.
COMMON MISTAKES IN THE LIQUOR LICENSING PROCESS
The common mistakes seen in the liquor licensing application process are usually by people wishing to do it by themselves. This can be found in brewery owners agreeing to constrictive hours of trade, such as Thursday, Friday and Saturday only or Thursday through to Sunday 4pm to 10pm only. They have told the government that they are only the hours they want to trade. Then all of a sudden, a public holiday comes along on a Monday. Now its ok in your normal trading hours to think that Monday Tuesday is you will be operating as a factory and don’t want customers there while you are brewing beer. But if a public holiday falls on a Monday it’s like a weekend and you want to be open. So always make sure you ask for ordinary trading hours and maximum trading hours, try not to accept a condition that constrains you and your business.
Another example on common mistakes a brewery owner tends to make during the licensing process is accepting conditions on their liquor licence where they are only allowed small numbers of patrons in their brewery during hours of operation. This leads to having to consider hiring or contracting a security guard to stand at the door checking IDs and counting patron numbers with a clicker because none of your staff are trained or have a Security Licence to carry out these duties. This could be an extra $50/HR for this person, an unnecessary cost to your business, and could potentially be avoided if you were to do more due diligence with your liquor licence application and not accepting these silly conditions.
The only reason experts would advice against this, is if you are bent over the barrel and the difference between you opening now and fighting that battle later is to simply get open start making sales and then lodge a repechage around your liquor licence.
In QLD you can’t sell takeaway liquor after 10pm. So you’ve got this compliance risk where patrons can drink in the bar till midnight, but you can only sell them takeaways till 10pm. This has a flow on effect because if patrons are sitting there having a good night, they’ve tried 7 or 8 of your specialty beers and have decided to grab a couple of growlers or squealers, and there is a rule that says you can’t have takeaways after 10pm. Those customers decide to leave, where they might have otherwise left them in the tap room fridge and settled in the taproom bar for a couple more hours and had a few more of your beer and then taken those takeaways home, so simply put, that is money that does not go into the cash register. So, it is important to pay close attention to those conditions on your liquor licence which can impact your business commercially as a brewery particularly in the retail element and high margin tap room sales which is crucial for a small new brewery owner in the first couple of years.
If you want to make sure you are fully capitalising on the viability of your liquor licence you should be engaging Liquor Licensing and Town Planning professionals. But if you wish to still do these applications on your own you should still reach out to them for some specific advice and also peers within the industry.
OTHER LICENSING & APPROVAL CONSIDERATIONS
As stated earlier, approval at the Federal level for an Excise Licence this allows you to legally produce beer, where at a State Level they allow sale and supply. Once again, every site is very unique and specific in acceptable uses. If a Brewery Owner decides they want to have a food offering, live music or entertainment onsite further licensing is required for these premises uses and service offerings.
If you are putting a brewery in a residential suburb then you are going to have a harder time as opposed to an industrial area. These added requests for uses at your brewery will attract Impact Assessable applications to local council, such as paying a traffic engineer to conduct a traffic management report/survey on how many car park spaces you are going to need which could cost you another $5,000. You will likely need to engage an Acoustic Engineer which might cost you similar depending where you are and there are a lot of hidden costs around this.
A lot of brewery owners do not actually have a food licence, and councils actually have not cotton onto this, but they are starting to catch up as the craft beer scene and industry grows and becomes ever more under the watchful eye of government officials and regulators. To put simply, if you are to bake a cake and sell it commercially you need a food licence, but breweries have traditionally always been treated as a factory, but now government regulators are making breweries get a food licence if they wish to sell a food offering to patrons as well.
In regards to Food Trucks, which is a growing trend amongst a lot of small craft breweries to avoid having to build and install their own kitchen, is another legal and licensing consideration a brewery owner needs to be thinking about.
If a super popular food truck pulled up in your suburban cul-de-sac and started cracking out music and slow cooked ribs, and 400 people rocked up, you would be pretty upset if they decided to choose your area to do this. There are rules around where they can and can’t be, but they are generally accepted to be most industrial or commercial zones. But imagine you are a bricks and mortar restaurant that has spent thousands of dollars a week to be there on a busy high street, and they have a nice interior designed restaurant with a full commercial kitchen, and all of a sudden, a food truck rocks up and starts targeting your customers with a similar food offering you’d be pretty annoyed about it. So if you want a food truck at your venue consult your local council and make sure they have the right food licence for it, and that you are allowed to have it there before you commit to your overall business.
There is a very commonly acceptance on the fact that drinking on an empty stomach can put you in a much faster and messier state if you were to have had a big, hearty meal whilst on a session. And this is why having a food offering is beneficial for all parties, it’s also been spoken about on the podcast that not having a food offering reduces average patron time in your brewery buying your product, with some breweries reporting a loss of 30% of sales on peak business days such as a Saturday or Sunday if you don’t provide it.
If you rewind and look at old movies from the pre-prohibition era they all had nuts on the bar. Why? The common ingredient of all bar snacks is salt. You can provide patrons with a nice salty pizza, slow cooked ribs and salty bar snacks and you’ll find your patrons will drink more beer in a more responsible fashion by slowing down the rate of consumption and effect on them.
LIVE MUSIC & ENTERTAINMENT
So live music is another hot challenging topic in the licensing space. You cannot just play live or recorded music in Australia in a commercial setting without a licence. In Australia there is a regulator called One Music, there use to be two APRA and PPCA, and essentially you are paying for the copyright to the person who 1) performed the song and 2) the person who wrote the lyrics of the song. They all have rights to their music, this all flows onto movies and tv as well. You cannot just use your personal Spotify account to play music at your venue, and they are part of the terms and conditions of Spotify from a commercial standpoint. You can’t use your personal Fox Sports or Optus Sport login to screen and play an NRL or Premier League game or the big upcoming UFC fight on Main Event.
LIQUOR LICENSING PROCESS CONCLUSION
As you can see, there is a lot to consider in the overall licensing and government compliance phase for a brewery. If you are well versed or experienced in navigating the red tape of liquor licensing and town planning applications then you may find yourself reading this and saying “I’ll take all this onboard but I’ll save myself some money and do it myself still”, and that’s great. If you are confident with this, then go for it, there are no rules or laws saying you can’t. However, if you have never trodden this path before, then you might find spending some extra money upfront for a Liquor Licensing Professional/Consultant or Town Planner to help guide you through this process, which will give you 1) greater piece of mind 2) minimise your compliance risk 3) allowing you to open up faster, taking advantage of sooner sales, due to a faster approval process & 4) avoid accepting any unnecessary restrictions or constraints on your liquor licence which might impact your commerciality of your business.
In regards to other Licensing & Approval considerations, just like food offerings at a venue, live or recorded music in a venue is another value experience you are adding to the overall customer experience, which flows onto increased patrons coming into your venue as well as increased patron time and essentially leads to increased sales. But just make sure you are paying all the right people doing your due diligence on what ducks you need in a line in terms of a licensing and approval aspect. Do your research and don’t cut corners. So many craft brewery owners start off in craft beer as their hobby. Once you move into this licensing space it is a business. Run it a like a business and not a hobby and get advice.
FURTHER CONTENT ON THE LIQUOR LICENSING PROCESS
Majority of the information found in this article was transcribed from the RSA – Russell Steele Interview in Series 1 of the Podcast. You can also read our article on Navigating the Planning Process for your Brewery Build and the benefits of using a Town Planner.
Having an obsession for information, Chris found that there was a massive gap in his part of the world on how to go about starting a brewery, as well as being delivered in a way to provide a foundation for the layman to understand and act upon it.