A commercial distillery requires an immense amount of research and resources. There’s costs, equipment, and compliance requirements to take into consideration when you’re making your distillery business plan.
When asked what the most important thing to think about when deciding to open a distillery, we hear distillers say cost more often than anything else. Not only are there startup costs to consider but you’ll also have recurring monthly expenses while your spirits are still in production or aging. It may be months after opening before you’re able to start bringing in any sales.
- Raw materials including packaging
- Water and utilities
- Renting a space
- Any updates to the space to get the equipment setup properly
- Barrels and additional warehousing space
- Rental space
- Water and utilities
- Employee payroll
- Supplies and raw materials
There are at least 3 main pieces of equipment needed to begin distilling spirits. Here we’ll cover the basic three, but there’s more or less that may be required depending on your own processes and what you’re making.
When choosing a still it’s important to consider the type, cost, and size. As craft distilling has grown there’s more manufacturers to choose from who specialize in making stills. You’ll generally look for a pot still if you’re looking to make whiskey, rum, or moonshine. If you’re making vodka or gin look for a column still. The vapors are purified by going through multiple chambers in a column still, instead of just one with a pot still. Another thing to look for when choosing a still is whether or not it has a boiler or refrigeration included.
Boiler and Mash TunThese are used to make the fermented liquid by combining raw materials and then extract the liquid from.
Fermenters and tanks
These pieces of equipment are important for holding liquids either before or after the distillation process.
Investing in food grade, high quality pumps will save you in the long run.
Depending on the municipal water supply, you may need to buy additional equipment. If the water is filled with minerals or the like, you may need to get charcoal filters, UV sterilizers, and/or a reverse osmosis unit.
The TTB is the federal institution that monitors the alcohol and distilled spirits industry. The website provides guidance on reporting requirements, labeling, and a variety of other compliance issues distillers need to oblige.
Before you can sell your product to the public you must get your label approved by the TTB to ensure it meets all of the requirements. You must have the class or type designation of your spirits, brand name, address, alcohol content, warning statement, and the net contents all on your label. More information regarding the label process can be found on the TTB website.
Hire a Lawyer
With so many compliance structures to follow with both the TTB and any state laws that apply to you, it’s a good idea to hire a lawyer experienced in the industry. They can help you navigate the compliance requirements, file paperwork, and apply for necessary permits and licenses. They can also help if you accidentally break a rule, like the Tied House Laws in California.
Not every piece in this article will apply to every single distillery startup, but we feel it's important for everyone to have a glimpse at the basics of distillery startups. Your process may start from semi-finished goods not raw materials. You may send off your product to be bottled at another facility or you may want to buy an automated bottling and labeling system. There's no one right way, there's only the best way for you.
For further reading we recommend joining the ADI forums, checking out reddit, and listening to industry podcasts.
If starting a distillery sounds like a huge undertaking, you’re spot on. It’s an industry full of hard work and artistic passion. The passion that drives distillery owners isn't often found in other industries. OnBatch applauds that drive and work to create innovative tools that make your passion easier to execute.