Do you want to start a distillery business and want to know the cost? If YES, here is a cost breakdown to open a distillery and the profit margin / ROI. The distillery industry produces a variety of distilled drinks (spirits and whiskeys). Spirits in this classification are made from cereal grains such as barley, rye or corn mash.
The Federal Government of the united states of America is responsible for regulating distilleries to a high degree and the Bureau of Alcohol, Tobacco, and Firearms (BATF) and the Alcohol and Tobacco Tax and Trade Bureau (TTB) are responsible for enforcing Federal statutes as they apply to all manufacturers of beverage alcohol.
They do not distinguish treatment of distilleries in terms of size (i.e. micro – distilleries from mega – distilleries). Of course, this is what is responsible for preventing micro – distilleries from growing as fast as its counterpart micro – breweries which enjoys somewhat more relaxed government control.
In the United States of America, states such as California, Indiana, Iowa, Kansas, Michigan, Utah and Washington, have all passed legislation aimed at reducing the stringent regulations for small distilleries (micro – distilleries) so as to facilitate their growth and survival.
Over and above, the distillery industry is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can chose to start on a small scale (micro – distillery) or you can chose to start on a large scale (mega – distillery).
The Estimated Cost Breakdown to Open a Distillery Business
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. Please 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;
- 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.
Please 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.