Financial feasibility

Opening micro-brewery in Shanghai

In Asian pacific locations, people like American beer. In the near future, there is a projection of growth the beer industry. More so, in America it accounts for an estimated 450,000 jobs. In fact, benefits are not in America lone .But, craft beer gains popularity everywhere in the world with each passing day. Shanghai is a populous city in China and seems to be a good ground for a startup microbrewery business venture. Shanghai is part of the Asian pacific region. In this region. The craft beer business may grow to $202.0 billion dollars in the next five years. Hence, it is a god decision to invest in the sector (West Coast Brewery Co).

Starting up a microbrewery in Shanghai is economically sound due to its high population and its drinking habits are not that much differing form the western world. The average worker in a microbrewery takes home $ 18.62 per hour which is enough rendering other factors constant. Brewery business in Shanghai projects to experience 3% growth rate annually. Most of these growths will be because of microbrewery enterprises. Moreover, microbreweries tend to succeed due to the regulated surrounding in which they conduct the business. For instance dominant brewers that can sell as much as 60,000 barrels annually, part with $18 per barrel in terms of exercise tax. On the other hand, small microbreweries part with only $7 for every barrel sold within a day (Technical feasibility Tullio (1).

Target market

Shanghai is a location that attracts millions of people every day. Tourists, photographers, politicians and business conferences all take place at the Centre of the city. Hence, it offers a potential spot to start up a microbrewery and   tap into potential customers within the market. Therefore, the target market will focus on everybody including corporates, businessmen, etc (Technical feasibility Tullio (1).

Input

Craft beer needs certain ingredients in right quantity and quality. For example, water. Accessibility should not be an issue as production of beer heavily depends on fast transportation and production under certain calm conditions. All types of alcohol sold will have the same ingredient content to cover an extent economic scale. The craft supplies of Shanghai will be the main supplier of ingredients to the microeconomic business venture. For each 1000l of 7.2% alcohol, the price of craft beer will vary. Water costs $0.81 for each cubic meter used. For each production, the total cost of water is equal to $45.67.Hop is one of the ingredient that will cater for the production of craft alcohol and it will cost $73 per 15kg.Yeast is sold in units and one unit incurs $37. Malt is an essiential1 component in making craft beer and costs an estimated $ 246.In short ingredients and other associated inputs will account for $1330 (Technical feasibility Tullio (1).

Cost of production

The cost of operation after setting up a microbrewery system is $75,000. To break it down further, type one beer will cost $45,000.Type two beer will cost $15000.Type 3 will cost $15000.This translates to $75000 annually.200, 000 liters barrels of beer per year is the aim of the business venture. Cleanliness in the brewing industry is mandatory. Equipment used in brewing process cleaned per session to avoid germ contamination. In fact, hot water is essential for most clean ups and the equipment requires intensive care and maintenance. In effect, hygiene requires specialized labor, electricity and other associated. All these costs are under the production costs (Technical feasibility Tullio (1).

Information collection and laws

In in order for make a business into reality, there must be some financial factors to put into consideration .All the resources required need to be specific and defined .Capital debt establishes the production stage of the business and gives it a red light to proceed with the business venture. The services permit needs approval from the county government of Shanghai before the microbrewery assemblage begins. After approval, the form proceeds to other offices for clarification and documentation of the matter. This procedure may take time and consume financial resources to cover the expenses of the procedures (Technical feasibility Tullio (1).

 

The system is set to produce 200,000liters of beer but has the capacity to double the rate of production to 400,000litres.Hence; the business will meet future needs of the market and can expound further to deliver mores services (Technical feasibility Tullio (1).

Labor and management

Cheap labor is an essential factor that needs deep consideration. Nonprofessional activities will require cheap labor. For example, sweeping, plumbing and maintenance of cleanliness cheap labor will come in handy. This cheap labor can come in form of annual contracts or long terms contract. For instance a bar attendant in Shanghai earns $55.For every 1000litres of alcohol containing 7.2% the costs vary based on time and type of services rendered. For example, cooking for a maximum   five hours is equal to $27.5.Washing and checks for around two hours or two hours thirty minutes costs $11; Drumming within the brewery for 3hours costs $16.5.Other miscellaneous services can account for 2hours and may cost   an estimated $66.Putting into consideration labor gives the business ‘legs’ to move forward and enter into production (Technical feasibility Tullio (1).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Technical feasibility Tullio (1)

West Coast Brewery Co