thinking
SMALLER
for success WRITTEN BY COLIN BLAKE WRITTEN BY COLIN BLAKE
O
ver the years I have heard nearly a thousand people tell me their plans for opening a distillery. After you throw out the extreme outliers, like the gentleman who wanted to distill in the back of a roving semi-truck, or the team that was going to beat Jack Daniels in case volume sales in their first five years (needing nearly a space half the size of Rhode Island for all their facilities), you keep coming back to the same models time and time again. And while each one has its own unique spin and story, really when you look at all the business plans, they’re one of three kinds of models.
MEDIUM-SIZED DISTILLERY The most popular business model that I see is the medium sized distillery, which is also generally sized for growth. It’s like the “common cards” when opening a pack of baseball cards. While there are many of them, they’re still worth saving and checking out because they are cards of people who are getting paid to play baseball. So, don’t write these distilleries off as the hoi polloi; they’re often making amazing product and worth checking out. The medium-sized distillery is one that generally uses pot stills, but as large as possible before you would have to switch to a column still. They produce one to five barrels a day and are looking at being in five to ten markets at the end of their first year, with the hopes of being in 25 or more within the first five years. This is the area in which we’ve seen the most success since the beginning of the craft distillation boom. As long as the company doesn’t underestimate the capital needed to pull off such an endeavor, there has proven to be plenty of opportunity for this size distillery (so far). While there is still room for more distilleries this size to enter the market, it’s going to get harder and harder as distilleries in the US start to number 4,000-5,000. There are only so many brands a distributor can take on, and there is only so much shelf space at retail stores. It will always be easy to get your foot in the door in your local region, but the further away you get from your home state the harder it gets unless you’re winning all double golds, getting acclaim from every spirits writer, and have packaging that makes St. Germain look like a half-finished. We’re seeing people needing more and more money to enter the market with this size distillery because it’s becoming increasingly competitive as more brands hit the market and these brands need more money for marketing, sales, and promotion in order to stand out and get noticed.
LARGE DISTILLERY The next business model we see is the large distillery that can produce far more than they need to support their own brands. Occasionally we have someone come through who is going to buy, rehab, or build a large distillery where they are going to run a column still and can produce 3-20 barrels an hour. The strategy behind this model is that they have plenty of capacity should their brands take off but are opening with the initial WWW.ART ISANSP IRITMAG.COM
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