Foreign brewery investing

[ChefJoeR]

Does anyone know anything about this? I have a buddy in Mexico who is opening up a brewery and I have been developing recipes with him. He has a couple of bars in the Yucatan that are very interested in the beer, but the costs are a lot for him right now (shipping and ingredients). If I put my investment in, where do I stand legally in both countries?

 

[ChefJoeR]

We are looking at drawing a partnership plan, but with me being in the US, I would rather make it an investment rather than a partnership. Do I have to file brewery papers here? Thanks.

 

[A4J]

Are you going to be selling the beer here in the US? If not, I would think that the only issue you need to worry about on this side of the border is related to income derived from foreign investments and taxes related to that.

Is there anything about the recipes that you're worried about or wanting to protect? Is that what you mean by legal issues?

(I am not a lawyer nor do I play one on teevee).

 

[Curtis2010]

"Foreign Brewery" that sounds like an almost certain way to lose money to me.

A brewery is a low probability business success anywhere. I've watched a couple of friends lose money that way. Add to that, a foreign investor who is not familiar with doing business in Mexico....I would not give you good odds.

I've not done business in Mexico specifically, but have lived, and done business in, Central America (Belize & Guatemala) since 2005. I've watched many naive foreign investors lose their money. Some even ripped off by their own attorneys. What are you doing to do if it all goes bad? Sue someone? Yeah right.

So, if you are determined to go through with this then you need to hire an attorney in Mexico. Someone to represent you and you alone (not you and your buddy). And, even then you may get screwed. And, if there is a USA aspect to this business hire a USA attorney too. I would not base this decision on legal and business advice picked up from a home brewing forum.

 

[Wirk]

I don't know about the legal part but I think you should observe the Mexican market.

Here in Chile the first modern microbrewery that became a industrial brewery was owned by a German(he sold 51% of it recently), 15 years ago craft brewery was an unknown concept in my country... and 10 years ago it started growing a lot, it became trendy, he saw this opportunity, an expanding young market and little knowledge of the Chilean population of how to start breweries, in 2003 he started Kross and in 8 years it was already huge. Another example is Szot, nowadays is the second biggest craft beer brewery and is owned by an American from California, he also saw the opportunity and had the guts to take it(he started later than Kross though).

Maybe the Mexican market is similar, but I think it might be hard to compete with American breweries and I don't see how it will be much different to the competence in the US. I bet American microbreweries will start exporting to Mexico if the demand for quality beer grows in their population(if they are not doing it already) and since you are close, and you have NAFTA nothing will protect your product from the same competence you would have in the US.

 

[Curtis2010]

I agree that now maybe a good time to get into craft brewing in Central America, but it is not like doing business in the USA. If you want to give it a try then go for it, but be careful. And of course, never invest more in any business venture than you can comfortably afford to lose (regardless of the venue). Because odds are good that you will lose it. Regardless of whether in the USA or Mexico -- start-ups are high risk.

For example, as the middle class and the foreign resident population expands here in Guatemala, there is a growing interest in better brews. A few bars are just starting to carry limited quantities of imported craft brews.

A couple of ideas: why not brew under contract and not risk the capital investment in brewing equipment & supplies? Retail location: I suggest targeting a venue that has a combination of affluent locals, tourists, foreign resident's...etc. These are the people that will pay more for your better brew. I would not worry so much about the price -- they will pay for interesting beers -- don't try to price compete with the local mass produced brews (you cannot) -- go for the the up scale market and set the price accordingly. And, of course, brew a really good beer or they will drop you like a hot rock --- few things more disappointing then to pay top dollar for a supposedly good beer and it turn out to be lame.

For example, I spent part of last year in Bocas del Torro, Panama. It's demographic includes most of the above. And, as a result, there is a pleasantly surprising range of beer available there. I even found Chimay Trappist Ale!