How To Start Your Own Craft Spirit Brand

Do you have a passion for craft spirits? Have you been dreaming of the day when your own distinct label will be on the market, and people from all over the world can enjoy your unique creation? If so, then starting your own craft spirit brand is something worth considering. Whether it's moonshine or whiskey that you love crafting in your home distillery, there are plenty of opportunities available to diversify into larger-scale production. 

In this blog post, we'll provide guidance on how to get started with building up a successful craft spirit brand, covering topics such as creating quality spirits, designing labels and packaging designs, marketing strategies and more! With dedication and hard work - along with establishing strong relationships within the industry - becoming an established name in crafted spirits could be just around the corner.

Let's get started!

Craving some craft beer and spirits? Visit us today at Tar Barrel Mornington Brewery & Distillery for an unforgettable experience with craft beers, spirits and more!

How to Start A Distillery

If you are interested in opening a distillery, you are likely familiar with the scientific principles involved in the process. In addition, you have already developed feelings for a spirit that you wish to create; nevertheless, at this point, you lack a strategy for really creating that spirit. 

Start with the destination in mind: how much you intend to create and the number of hours per day you would like to work in order to reach that destination. This will assist you in determining the size of the gear you will require as well as the additional equipment you will require to hold raw resources.

When you have a good idea of the gear you will need to begin a distillery, you ought to have a good idea of the minimal expense of doing so, and you will also have a beginning layout for your structure. You will require a facility that is large enough to accommodate the necessary pieces of equipment, along with some floor area for storage facilities and a sampling room. 

Additionally, you will necessitate some floor area for office space. Whether you want to sell cocktails from your tasting room, you should be certain to check the legislation in your area to see if you are allowed to do so; if you are, it would be useful to locate your business in a location that sees a lot of foot traffic.

As soon as you have an estimate of how much it will cost to construct a structure that can adequately hold your distilling apparatus in addition to a tasting room, you will be able to begin working on the remainder of your distillery's expenses.

Is There a Difference Between Craft Distilleries and Micro Distilleries?

In the field of distilling, the word "micro-distillery" does not have a defined by law meaning. However, the phrase is frequently utilised to refer to distilleries that are on the smaller side, often in the style of a shop, and that were founded to manufacture only limited quantities of alcohol that is suitable for consumption.

The most important distinction is that a craft distillery makes use of genuine components and is privately owned and operated. Even though it is much smaller than the bigger brands, a micro-distillery is nonetheless capable of producing significant quantities of their products. Micro distilleries, in contrast to artisan distilleries, are not always privately held in every instance.

What Kind Of Profits Can Be Expected From A Craft Distillery?

When taking into account applicable licencing regulations and fees, as well as the expense of equipment, such as rentals or buying stills, fermenters, and mash tuns, the actual start expenses of a small craft distillery may necessitate a financial investment of somewhere from $30,000 to $500,000 in order to get the business up and running. 

It is impossible to establish an accurate forecast of the annual revenue that a craft distillery might anticipate earning without taking into account important elements like the company's size, position, business strategy, and management philosophy.

Craft distilleries are required to provide a high-quality spirit that satisfies consumers' needs and a service that can be easily differentiated from the offerings of other competitive craft distilleries. 

Packaging significantly impacts the profits of a craft distillery because it not only differentiates one handmade spirit from another but also drives demand by playing a part in consumers' decision-making process. Ninety per cent of customers look at the product's packaging before settling on a buy, and the majority of sales choices in the beverage market are taken at the point of purchase (75 per cent).

It is realistic to anticipate that spirit distilling will be more successful than craft brewing, given that profit margins for craft spirits vary anywhere from 20 to 40 per cent and that spirit distilling will require fewer resources than craft brewing will. For example, not taking into account the production of barrel-aged spirits, which include letting the spirit sit for a number of years before it is consumed and, consequently, sold.

Cost of Starting a Distillery

The expenditures of beginning a distillery will soon build up, and many of the expenses will be for things that you will not even consider necessary at the time. 

You have, without a doubt, included in the price of cereals and yeast, bottles and caps when calculating the total price of producing your item; however, have you given any consideration to the logistics of how you will move everything throughout the distillery? How do you plan to bring people's attention to the product that you sell? How do you plan to maintain a file for the ATO? Who exactly is going to be responsible for selling your product?

There are five line items in your plan that, although they have the potential to raise your budget significantly, are absolutely essential for the day-to-day activities of your company.

• Forklifts - It's possible that having a forklift is one of the most crucial pieces of machinery you can own. You will require the use of the forklift beginning on the day you get your gear and continuing every day after that. A forklift is essential whether you need to remove gear from the delivery van, move gear about your distillery, or lift totes/super sacks, containers, or pallets of completed goods. Pay attention to the importance of allocating sufficient funds to the forklift's regular maintenance; doing so will assist in minimising unscheduled downtime at crucial times.

• Extra Components - When you're in the middle of manufacturing and find out that you require a particular component all of a sudden, keeping a few spare components like gaskets, clamps, and sight glasses can seem a little needless.

• Marketing Budget - Don't compromise on an advertising budget! It is essential to have the ability to promote and advertise your product so that it may be distributed all over the world. Employing a marketing professional or working with a marketing organisation will be the most important step in bringing clients into your establishment. Therefore, the budget you set up for marketing ought to be one of the higher figures in your business strategy.

• Work smarter, not harder, with today's computer software. You should do some research and look for a good software programme that can assist you in tracking your production outputs to ensure that they are in line with the guidelines of the ATO. Findings that can be used for accounting purposes and findings that can be given to the ATO are both available in certain software programmes. In the long term, this saves you lots of person-hours of labour.

• Staff Members - Get yourself a competent group to collaborate with in order to achieve a fantastic product and sales, and be aware that this will most likely not be an inexpensive endeavour. There is no situation that is more distressing than one in which a company suffers financial losses because its workers behave irresponsibly with regard to its products or gear or are impolite to the company's clients. Therefore, find individuals in whom you would have complete confidence to manage your company in the case that you were unable to be there.

Secure Funding

Obtaining the necessary funding to launch a new business is one of the most challenging aspects of any new enterprise.

As a result of the low-profit margins and the high risk associated with the loans, financial institutions are unlikely to extend credit to artisan distillers. Although it does get simpler though, once you have established yourself to be a valuable commodity, channels like funding from venture capitalists and banking firms can be excellent methods for expanding your business's operations.

If you want to borrow a loan from a bank, you need to be aware of what you are prepared to use as collateral in the event that the bank requires it. Would you be willing to begin this company, even if it meant putting your home on the line if you had one? Is it a good enough concept for you to place all of it in a setting where there is a high danger of something happening?

There are a variety of approaches that can be taken for individuals operating on a smaller scale; however, the two most straightforward options are going to be discussed here. The concept of crowd fundraising comes first and foremost. The most desirable outcome would be to acquire all of the necessary capital without having to part with any of the company's equity while simultaneously expanding one's dedicated customer base.

A cursory examination of crowdfunding websites, on the other hand, will reveal a virtual detritus of unsuccessful attempts to secure funds for the establishment of a new distillery. The majority of the great successes involve locations that were searching for cash to grow rather than those who were trying to start completely from scratch.

The second option is to seek funding from private investors, which is by far the most prevalent method. The majority of distilleries obtain funding from friends, relatives, or, after conducting thorough pitching, angel investors who are interested in becoming a part of a distillery.

There is no simple way to calculate how much you will require because the magnitude and size of the project largely determines it. Premises and licencing, build (particularly if you're building a sampling room, fitting in tour facilities and a shop), stills, equipment, bottles, closures, labels, and packing are all determinable in ahead of time; however, the most seriously under-funded part, where distillers struggle to understand the real price fully, is when it comes to implementing your company to a new global market. The general rule of thumb is that you should spend twice as much on marketing and creating sales in the first year as the price of your still.

If you intend to age items, you must have sufficient funds to produce them on a scale that can be maintained over time. You'll have to maintain a stock for many years, which requires storage capacity to develop the fluid that you won't be capable of selling for three to five years. All the while, you'll have to consistently produce more. Even when producing a clear spirit such as gin at a modest size, sales revenue will not be enough to cover operational costs for more than a couple of years on its own.

If your primary objective is to have a small operation and make a modest profit, you can be self-sufficient after only three years. This is particularly true if you can have a sampling room and an efficient direct-to-customer online retail business. However, on average, it tends to take over 5 years for big profits to begin coming to fruition for a craft distillery.

Infrastructure And Ingredients

It is important to emphasise how important it is to maintain a legal and secure workplace environment before getting into the specifics of the kinds of things you could need. However, your approach to establishing the workflow, the systems, the checks, and the procedures will play an essential part in determining the level of success that your distillery achieves.

Several people choose to disregard the consequences that result from not paying sufficient consideration to safety, yet, numerous distilleries are burned to the ground each year, and sadly, all too often, also have caused loss of life in the previous decade. Even more worrisome is the frequency with which insurers don't really make out claims after discovering that their procedures and processes just weren't legal in some way or other and were, as a result, in violation of the insurance contracts they had in place.

It is important to be methodical in your attitude to this aspect of the distilling process, despite the fact that it may be tedious.

In addition, some nations have made it a legal necessity to provide information about dietary restrictions and food allergies. Even if it doesn't happen very often, consumers might suffer significant consequences when it does. As a consequence of this, lawsuits are frequently brought about. Trading standards and authorities can also issue fines for violations related to filling heights and alcohol by volume (ABV). Accuracy is important, and the consequences of errors, such as the blocking of imports or the return of products, can result in significant financial losses.

It is far simpler to get it correct the first time around and to approach it with the appropriate level of care right from the start.

Items of Machinery You Probably Didn't Realise Your Distillery Required

Mash Chiller

Based on the experiences from previous customers, a mash chiller might not even seem like the most obvious option to begin this list. Still, it has a significant influence on the flow of your operation and the quality assurance it provides. 

If you chill the wort before pitching the yeast, you can start the fermentation process sooner and avoid wild yeast or germs from establishing a foothold, which can avoid off-tastes from developing in the mash. The most important advantage of owning a mash chiller is the time it saves, which is superior to financial gain because it is impossible to create more time.

HLT

An HLT is yet another helpful item of distillery gear that can perform multiple functions and save your business a lot of time. For example, when you have one, mashing takes less time because the beginning temperature is higher, and you are not required to wait for the entire mash tun to reach the desired temperature. In a factory setting, it can also serve as a supply of hot water that can be used for cleansing and a variety of other purposes.

Grain Separator and Solid Waste Handling Equipment 

The additional solids and water that are produced as a byproduct of distillation need to be used for anything. Still, there are likely only a certain number of possible bakeries and farms in your vicinity. You will need to find another use for them. 

You won't have had to carry the water and cereals together when you dispose of the grain thanks to a device called a grain separator, which does exactly what its name suggests: it differentiates the grain that has been used from the water that is used in the processing of the grain. This will ideally end up saving you money on transport costs.

Additional Heat Exchangers 

Reusing or recycling energy that you have previously paid for is one of the best ways to improve the effectiveness of a process while simultaneously reducing costs. However, incorporating additional heat exchangers into your operation does have an additional advantageous effect. 

Because there is a restriction on the temperatures of the effluent coming from your facility, set by both the EPA and, in most cases, the municipality, you should always consult your local inspectors to find out their acceptable tolerances. This issue can be solved in real-time by configuring heat exchangers, and a cistern or storage tank can be utilised for batch processing. 

High Proof Hoses 

This particular piece of apparatus is frequently neglected, despite the fact that it serves an extremely vital function. Inadequately maintained hoses can have a significant impact on the flavour of a drink. 

If you've ever been to a pub and had a delicious beer spoiled by a dirty tap hose, then you have firsthand experience with the magnitude of this impact. Because different materials can dissolve at high temperatures and/or proof, it is essential to have the appropriate instrument for the task at hand. It would be a shame to waste all of the time, work, and energy that you've put into crafting beautiful spirits only to have them ruined at the very end by using the incorrect hoses.

Infrastructure And Other Items

Aside from the materials, one of the most significant learning curves and considerations that every new distillery will face is assuring that they have the proper tools for keeping liquid, transferring liquid, analysing liquid, packaging liquid, and transporting liquid.

Begin with large, heavy items like storage systems and containers, and think about their sizes, their functions, and how you're going to assess, load, unload, wash, and manage them. You will need answers for both before and after the distillation process, and the structure of a distillery and the manner its activities are carried out are frequently determined by the storage units that are employed because of the order in which they are utilised and the purpose for which they are utilised.

The installation of apparatus for packaging and filling bottles is an evident component of the construction of a distillery, yet, pumps that transfer fluid around from a container to a tank or from barrels to still are sometimes disregarded. As if that weren't enough, there is also the matter of air ventilation, cooling systems, filtration to remove particles, filtration systems, balances to weigh as well as other tools to evaluate, not to mention protective gear; these are all factors that contribute to a substantial financial outlay. Determine what you require and create a budget in advance.

Once you have, determining where those tools are stored is the single most crucial component of your plan and build, so make sure you do that. They cannot be left lying around like that. They cannot be a hindrance in any manner. Not only will this hasten the depreciation of your tools, but it also increases the potential for various hazards in and around the distillery.

Not only will your tools require consideration, but wastage and purchasing in bulk also contribute to daily complications. For example, where are the pallets stored? If you are purchasing several thousand bottles at once, where are you going to put all of those bottles? Where are you going to store the cardboard that will be used for the cases? etc.

Sadly, we've come across hundreds upon dozens of distilleries that, although having processes that are on par with the most cutting-edge technology available, are hampered and overworked as a result of objects that stand in the way of the procedure. 

This frequently results in them incurring repair fees and ultimately causes businesses to give unreliable goods to their customers. During the process of planning your distillery, you must make hanging, sorting, packing, palletising, and racking some of your favourite verbs. Operations that have been well choreographed will always have reduced costs, a better record of safety, and great products.

A useful piece of advice is to check whether or not you have taken into account any stairs or obstacles. Then, eliminate every step along the path, beginning with the point where the product is delivered. 

It's not a problem to hoist a bag over an obstacle, but how can you move around with IBCs that weigh thousands of pounds each? Consider the dimensions of the doorways (make them extra wide). The appearance of gravel and pebble stone is rather nice... But if you try to wheel a pallet truck across them, you'll see the problem that will arise with every delivery. Get rid of that before it turns into a constant source of annoyance.