How To Open A Distillery: Part 1
Ever thought about opening your own craft distillery? The past two years have seen unprecedented amounts of small batch distilleries start. If this is something that you have been daydreaming about – then you’ll be happy you’re reading this.
We get emails on a daily basis with people asking us for more information and advice on how and where to begin. Let us just say this, it’s a long answer. We are also frequently asked to review new gins fresh on the market, where inevitably judgement is then cast over the story, the team and often the early stages of a distillery’s career. When we write a review, we look at all parts of a new business and the team that make a gin, not just the flavour profile. In doing so we have seen first-hand what it takes to build a successful craft distillery and the many pitfalls that have tripped up even the most talented distillers, marketers and owners in their first stages of getting a gin to market.
Clearly and most importantly, there are many ways to go about making gin and many people have different routes to becoming distillers. There is no right or wrong way to go about it and one size does not fit all. However, we decided to write (a somewhat simplified) 10 step guide to starting a distillery so that – at the very least – we could point people here to give them a rough idea and get them thinking.
Hopefully, for those of you others who aren’t looking at becoming ginsmiths, the following will be an interesting read at understanding the sheer amount of hurdles people have to face to get off the ground. By the end, you’ll have a better understanding of what craft producers have gone through to get that gin into your hands.
Step 1. Getting started.
The first thing to understand is that you are starting a business. Accept that it can be scary. If a mild sweat is induced at the very thought of this, just remember that it can also be extremely rewarding to create a company from scratch. Fundamentally however, it means you need to be an entrepreneur to make it work. You’ll need a diverse skill set and a willingness to work seven days a week for the foreseeable future.
So often the very idea of “innovation” belies the graft involved in turning those burning, middle-of-the-night desires into a viable, profitable business.
When you look at the last dozen success stories in Gin, what underpins all of them is their ability to combine their talent for innovation and creating a new product with the sheer determination to make it happen. These are not two skill sets that combine frequently and people like Tarquin, the team from Sipsmith, Paul Hlekto at FEW Spirits and Jon Hillgren from Hernö Gin are impressive examples of those who have done so.
Step 2. The dream still alive and feel like that’s you? Good, now onto…
Many people aren’t put off by the workload and the sacrifices that a new business will bring, but grafting until you feel broken also means something else – you will need to love it. Yes, cheesy as it sounds, actual love.
If you don’t love the drinks industry, the spirit, the category, the challenge of being in the driving seat, the relentless pace, then you’re almost certainly toast. Starting a business, especially craft distilling – is a lifestyle, not a job. Ask yourself: do you love this enough to survive the onslaught of late nights, tastings, trainings and early starts beneath the still? Much like parenting – it’s the love that makes having a newborn worthwhile. Those sleepless nights, endless working hours, seemingly infinite new challenges, learning random skills and making tough decisions are – while a quite extreme metaphor – comparable to having a new craft distillery.
So this part might be a buzz kill but it’s the truth. Hopefully you know that you love gin, that you want to be your own boss, that the hours don’t scare you and that having thought it through, you are ready for this and going in eyes open.
Step 3. Do your research.
It might sound like fun but by “research” we don’t mean going to the local bar and drinking a few gins. Okay, so we do a little, but it can’t just be about knocking back a few G&T’s. Read books, learn about the history of Gin, the origins of distilling, how alcohol was and is made, rectified and even imbibed.
Learn about cocktails, not just their history but how to make them and what bartenders are doing today. Visit distilleries. Talk to the makers. Do your homework as if your life depends on it. Trust us on this – it will make a huge difference to the success of your venture.
It can be really fun too. Being around inspirational characters and learning about the heritage of a spirit that has so many unbelievable moments in history is a really inspiring part of the journey. Many have said that it was at this point that their interest turned into a complete obsession.
So many people launch products claiming to be the first, the only, “a unique blend” etc… Our inbox alone is littered with subject lines filled with ‘firsts’. The reality is that for 80% of gins out there, it’s just not the case. There are over 300 gins available in the UK, more in the US.
If you haven’t heard of at least 100 of them and don’t have a basic idea of what they are about, think again and get back to your homework. The probability is that there is someone out there doing exactly what you are thinking of doing.
All the romantic personal stuff aside – why is this important to your business you ask? Knowing context and where you stand in relation to others is imperative.
If nothing else, it’s solid competitor analysis, but potentially it’ll inform you into making the right decisions FOR YOU.
For example, you might be tempted to buy a little 100lt still. A quick talk with Warner Edwards and a look at their meteoric rise in their first 18 months will have you wondering if you should future proof yourself as well. They did so by getting a bigger still to begin with and growing into it rather than having to delay production because of a small still.
Look to the other side of the UK and you’ll see Tarquin’s Gin doubling up on stills having opted for a micro-sized alembic pot still when he began. It works for him and that was a part of the plan but would this suit you better? How about the American model of mixed spirits – will you be looking to make other spirits down the line?
Just knowing about all these ginsmiths will mean that whatever your decisions are – they are informed and even if they prove to be the wrong ones – it wasn’t because you were unprepared.
If you’ve overcome this hurdle, you are on solid ground. To be fair, it’s a constant and interminable learning curve so you have to call it a day at some point, move on and start building.
Going back to do more research thereafter should be a monthly ritual. The landscape changes so fast that what you know now will be out of date in a year’s time so keep looking around. On the other hand – stick to your guns too. Just because a couple of other gins move in one direction, it doesn’t necessarily mean you need to as well.
You’re a craft distiller, not a flamingo.
Listen to what people say, but in the end make your own assessment.
Step 4. Time for some soul searching.
It’s time for the BIG question now. And it’s not what you might think. All the business books will tell you the importance of finding a USP, to have a distinct identity, to have a niche, to be original etc… All valid points, but what they all miss out on and never actually say is how are you adding to the category in a positive way?
It’s one thing to be original but being original isn’t always a good thing. When Allen Katz of NY Distilling talks about the development of his two gins Dorothy Parker and Perry’s Tot, he talks about adding to the category.
He didn’t want to make another gin simply because he liked a certain flavour profile but wanted to make a positive addition to the category by adding something that was missing.
He asked himself as a gin lover, a drinks connoisseur (which if you did step 2 fully, you should be too) what he felt was lacking rather than what was just unusual? It informed his decisions and his results speak for themselves. They have their place on any shelf, not just because they taste great, but because they offer something that at that point, just didn’t exist. He contributed to the Gin category, rather than just clutter it with another brace of products.
If you can combine both, you are onto a winner and will have an idea that is worth pursuing. Whatever gets you there – dark rooms and solemn contemplation or an epiphany whilst on the toilet – just get your idea to a point where is does both facts. New because it’s genuinely new ground and adds to the category as a whole. Different because it’s unlike all that came before it.
Yes, we know – unfortunately it’s really difficult to do this.
Step 5. Get you’re hat out and get begging.
Find the funds to get started! There are multiple ways of going about this so let’s look at two obvious solutions. First and foremost is crowdfunding. Getting all of the funds without giving up equity while also growing a solid fan base is the most attractive of solutions.
A quick look on Kickstarter and other crowd funding sites alike however will show a veritable debris of failed attempts at securing funding to start a new distillery.
We all hear of the success stories that seemingly happened overnight, but they are not only few and far between, they are also a rare success due to the level of experience already behind them.
Dodd’s Gin was not a weekend project that came to fruition after a few beers and some mathematics on the back of a napkin. Darren and the team spent years learning their trade and knew exactly what they would need to present to the public to secure enough financial backing.
Currently, for every one craft-distilling venture that has been a success on crowdfunding sites, there are four that sit there “incomplete”. Don’t be fooled into thinking it is easy pickings.
Second is to go via private investors in the financial world. This option has its pros and cons. Pros include the availability of higher funds upfront and at favourable rates with some expert guidance in terms of raising more money and managing balance sheets – ultimately making your business more attractive if you wish for a quick exit strategy. Cons include giving up large chunks of equity and the possibility of being tied to investors who have different ideas for your business who can also cunningly manoeuvre it by controlling said balance sheets.
Now on to the nuts and bolts of the business. Proper stills from the likes of Carl or Holstein will set you back £50K – £250K depending on what you are looking for. Getting them installed will be pricey too, especially if you opted for a steam jacket rather than an electric one. Base spirit, botanicals, bottles, corks, seal, licenses and duty all need to be factored in.
Don’t forget the fact that most things cost triple what you think they will, as they will have to have safety ratings to deal with the fact that you have alcohol that is stronger than 80% ABV and therefore legal requirements are very different. Running costs, overheads and marketing need to be considered. That’s assuming you are doing everything in-house. Distributors, agencies and consultants will all cost more.
Everyone is coming in with different circumstances and different aspirations so this is where a simplified 10 step guide breaks down but… Do your maths as best you can based on where you are at, then add 40% to it. Trust us.
We’ve never heard of a single distillery that was on budget in their first year and there are always unexpected costs that arise. Have a three to five year plan but adjust constantly, changing those yearly goals on a six month basis.
Draw up a business plan, scrutinise it and have others do that too before you even get started on Step 6…
If you’re interested in learning more about How To Open a Gin Distillery, we have created a one day workshop at our studios in Fulham, London as well as host webinars on a regular basis. Please check below for the most up-to-date schedule.
FULL DAY WORKSHOPS:
Want to know how to establish a Gin Distillery? Got that burning desire to create your own gin and bring it to market?
Held in Gin Foundry’s HQ in London, this 1 day intensive workshop is for you…
Gin Foundry have created this workshop especially to provide a one-stop-shop for those seeking to gain valuable insight into establishing their own gin distillery. Here’s what they have to say about it:
As a team who have had a front row seat on the world of Gin since the current boom began in the mid 2000’s, we’ve seen the journeys of dozens of gin makers first hand. We’ve covered their stories before, during and after their launch and have experienced it from their perspective. We’ve even become micro-distiller’s ourselves and consulted on dozens of recipes and distillery set ups.
This 1 day workshop is aimed at those looking to get a crash course in the vast array of elements that have to come together in order to make a dream of opening a gin distillery come true.
Wide reaching, yet designed to give a comprehensive view into each of the essential components, we’ve fine-tuned the day’s activities to offer a perfect foundation off which to build from. Crucially, it will arm you with the right questions you need to answer to ensure your venture will be a success.
Next upcoming date for the How To Open A Gin Distillery Workshop is Friday 04 October 2019. Click here to buy tickets.
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