You need a minimum of $664,525 to start a medium-scale distillery business in any city in the United States of America. Note that this amount includes the salaries of all the staff for the first three months of operation.
The fact that there are growing numbers of people who still drink alcoholic beverages or spirits such as whiskey, vodka, gin, rum, and other distilled beverages makes the distillery business lucrative.
When it comes to starting a standard distillery, one is expected to spend the bulk of the startup capital on leasing a facility and of course purchasing and installing equipment such as stills and fermenters and mash tuns. Note that the exact cost of opening a distillery depends on the size of the distillery and where it will be located.
You can actually start a small distillery for around $30,000. This includes spending about $5,000 on the initial lease and relevant licensing and $5,000 on equipment. This are the key areas where you are expected to spend your startup capital on;
Estimated Cost Breakdown to Open a Distillery Business
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
- Marketing promotion expenses for the grand launching of the distillery in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
- The cost for hiring Business Consultant (it includes writing of business plans) – $4,500.
- Insurance (general liability, workers’ compensation and property casualty and other related insurance policy) coverage at a total premium – $12,400.
- The cost for payment of rent for a facility for 12 months at $1.76 per square feet in the total amount of – 75,600.
- The cost remodeling the facility and constructing a standard distillery (including installing the needed machines and gadgets) – $150,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500) – $3,000
- Operational cost for the first 3 months (salaries of employees, fueling and maintenance of the distribution trucks, and payments of bills et al) – $150,000
- The cost for start-up inventory (grains, yeast and water, flavors and other ingredients and packaging materials et al) – $40,000
- The cost for storage hardware (bins, rack, shelves, creates) – $20,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $4,500
- The cost for distillery equipment (20 Gallon Stainless Steel Boil Pot (heating water or making 10 – gallon mashes) Nylon Mash Bag (for making easy all grain mashes) Boil Pot Thermometer (measuring water temp during boil) Wort Chiller (for cooling mash before introduction of yeast)) – $150,000
- The cost for store equipment (cash register, security, ventilation, signage) – $750
- The cost of purchase of distribution trucks – $35,000
- The cost of launching a website – $600
- The cost for our opening party – $5,500
- Miscellaneous – $5,000
From the rough estimate as listed above, you would need a minimum of six hundred and sixty four thousand five hundred and twenty five USD ($664,525) to establish a medium – scale but standard distillery business in any city in the United States of America. Please note that this amount includes the salaries of all the staff for the first three months of operation.
Factors That Influence the Cost of Opening a Distillery
The Location of the Distillery
As expected, a business location that is central or in a metropolitan city will always cost more in terms of rent or lease when compared to a business location where your potential customers will travel a distance before they can locate your distillery.
In essence, location is essential when it comes to opening a distillery and you must be ready to spend more if you want the best location for your distillery.
The Size and Production Capacity of the Distillery
The fact that we have different types and sizes of distilleries with different production capacities means that they all come with different cost implications.
For example, we have the Artisanal Distillery (these distilleries focus on small-batch production, often using traditional methods and emphasizing craftsmanship.), Commercial Distillery (these distilleries operate on a larger scale and are designed for mass production.),
Craft Distillery (these distilleries fall somewhere between artisanal and commercial, often producing in smaller quantities but with a wider range of products.), and Micro Distillery (These distilleries are even smaller than craft distilleries, often producing limited quantities of spirits and focusing on experimentation and innovation.)
The bottom line is that, the larger the distillery, the larger the space required, and the number of equipment, manpower, and supplies you will need to get the distillery up and running.
The Size and Types of Equipment and Machinery
Trust me, distillery equipment and machinery such as pot stills, column stills, fermentation tanks, mash tuns, wort coolers, spirit receivers, condensers, boilers, mash rakes, hydrometers, aging barrels, bottling lines, and other specialized equipment come in different sizes and types. There are cheaper brands and there are more expensive brands.
Your choice in this regard will go a long way to determine how much you will spend. If you go for premium quality or customized equipment and machinery, then you should be ready to spend more than is required.
The Cost of Obtaining Licensing and Permits
You cannot legally open a distillery without obtaining the required licenses and permits, so you should create a budget for licenses and permits. Interestingly, suppose you are planning to open a distillery in the United States of America.
In that case, you must be ready to budget for a Distilled Spirits Plant (DSP) Permit, Alcohol and Tobacco Tax and Trade Bureau (TTB) Permit,
Federal Employer Identification Number (EIN), State Alcohol Beverage License, Local Business License, Health Department Permit, Fire Department Permit, Environmental Permits,
Building and Zoning Permits, and Water Pollution Control Permit. Note that the cost for these licenses and permits is different across different states.
Your Supplies (Ingredients and raw materials)
Before a distillery can commence production, there will be supplies such as ingredients and raw materials. Basic ingredients such as:
Grains (such as barley, corn, rye, or wheat), water, yeast, enzymes, sugars, fruits or botanicals (for flavored spirits), herbs and spices, filtration agents, oak barrels, cleaning and sanitizing agents, cooling water, fuel for heating (if applicable) and bottling and packaging materials are part of what will determine the overall cost of opening a distillery.
Even if the costs of these items are the same in the market, the quantity and type (organic or inorganic) you settle for will go a long way to determining how much you will spend.
The Cost of Staffing and Labor
To open a distillery, you are expected to hire key employees to occupy key positions in your distillery. As expected, you will need people to occupy the following positions:
Distillery manager, cellar workers, packaging operators, sales and marketing personnel, taproom staff, and administrative assistants.
Note that your budget for staffing and labor will depend on the number of staff you want to hire and their experience level.
The higher the number of staff, the higher your budget for staffing and labor. So also, the more the qualifications and experience of employees you want to hire, the more you will spend on staffing and labor.
The Cost of Marketing and Branding Your Distillery
The truth is that anyone who wants to open a distillery cannot escape creating a budget for marketing and branding. This is so because, without effective marketing and branding of your distillery and products, you will find it difficult to break into the market and gain a fair share of the available market shares in your target market locations.
Interestingly, there are different ways and means you can market and brand your distillery. You may want to consult with a branding and marketing expert in your city to give you a guide on how you can penetrate your market.
The Cost of Distribution and Logistics
When we talk about distribution and logistics as it relates to distillery, we are talking about taking alcoholic beverages or spirits such as whiskey, vodka, gin, rum, and other distilled beverages to the market through different distribution and sale channels.
The budget for distribution and logistics for a distillery is a significant part of the budget for opening a distillery because it will cover your distribution trucks and vans, freelance sales representatives, and even the cost of leasing or renting warehouse facilities in different locations.
Note that this is a rough estimate and we usually advise our readers who are interested in opening a distillery business to have a clear picture of what they want to achieve, go to the market or directly contact wholesalers and suppliers of the type of distillery equipment and raw materials, and also sellers of the items in order to get the real time prices of these items.
The truth is that if you are a good bargainer, you can get a better deal that will help you beat down the estimated price as listed above.