plan to sell that extra capacity for contract distillation. We’re seeing more and more of these distilleries open, which is proving to be great for the nonproducing brands on the market. As more of these large distilleries are opening, we’re seeing a sizable amount of available capacity out on the market, which is going to drive the price a distillery can charge per barrel down, and make it hard to sell off all their capacity in the first place. Death’s Door is a perfect example of how it can be detrimental to the company if that extra capacity isn’t sold.
SMALL-TO-MEDIUM DISTILLERY And finally, the small- to-medium-sized distillery. These are distilleries that are looking to do most of their sales at their facility by being a destination, experience, or existing in the midst of a popular tourist area. We’ve seen people who have done this model achieve great success.
While the cost per square foot might be a huge upfront cost, these distilleries are getting by with very little equipment, in some cases even sourcing their spirits elsewhere (depending on the individual state regulations), and dedicating the majority of their space to a tasting room, bar, and retail. That’s why we are seeing some great potential for future distilleries to be on the smaller side — not only the ones looking to do a lot of sales because they are in a high foot-traffic area but also those looking to take advantage of the ability to serve drinks. Even though it is a bit more work, you can maximize how much you make off a bottle if you can sell it by the drink. You and Yours Distilling Company was one of the highest rated bars in San Diego, and that was even before the distillery was fully operational. We’re seeing so many of the small distilleries do well because they’re thinking beyond the still and the markets they want to be in. Keeping in mind that small producers must still maintain cash flow and meet production demands with
the smaller footprint. They’re succeeding in one market, and it’s generally bound by a property line.
— As the distilling landscape continues to expand, it’s going to change and become a far more competitive place. The capital required to enter the industry successfully is going to keep going up if you’re looking at the medium to large size operation. Which makes the small operations more and more feasible. As local and state laws continue to change we’re going to see it become easier and easier for a small distillery to open up with a unique position. Be it through an amazing tasting room for tourists, a craft cocktail bar, or a pubstillery, there are so many ways to be successful in the distilling world.
Colin Blake is the Director of Spirits Education. For more information visit www.moonshineuniversity.com or call (502)-301-8130.
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