You can start a small to medium-scale tequila brand with about $120,000 in the United States. Note that this amount can be less, and can be more. However, there are certain factors that influence the total cost of starting a tequila brand.
A tequila brand is a company or distillery that produces and markets tequila, a distilled alcoholic beverage made from the blue agave plant.
When it comes to how much it will cost you to start a tequila brand, we cannot categorically place a figure because, apart from the fact that starting a tequila brand is complex, demanding, and expensive, there are certain factors that can influence how much it will cost you to start your own tequila brand.
Factors That Influence the Cost of Starting a Tequila Brand
Tequila Production License and Compliance
If you want to start your tequila brand in Mexico and supply your tequila drinks to the United States of America, and other countries of the world, you will be required to obtain the necessary licenses and permits and also make sure you obtain a compliance certificate from Mexican regulatory bodies such as the Tequila Regulatory Council (CRT).
No doubt, the amount you will spend in this regard will form a large chunk of the expenses you will make at the early stage of the business.
Note that meeting labeling and certification requirements is important when it comes to tequila brands. It covers the costs for label design, registration, and certification with authorities such as the CRT.
The Location of the Tequila Distillery
Most tequila brands are based in Mexico, and this is done for obvious reasons. Mexico happens to be the home of tequila, and you can easily produce tequila at the cheapest rate possible.
If you choose to establish your tequila brand in the United States, you will be required to spend way more than someone who established his or her tequila brand in Mexico.
This is so because you will have to import most of your ingredients from Mexico and that will greatly impact your running cost and may dip into your profit.
Of course, some areas in Mexico, like the Tequila region in Jalisco, are known for their premium agave production and can be more expensive to set up operations in.
Agave Sourcing and Other Supplies Needed for Producing Your Tequila
Where you choose to source the agave you want to use in the production of your tequila is yet another major factor that can influence the cost of starting a tequila brand.
Agave prices can fluctuate due to factors like agave plant age, regional availability, and market demand. If you don’t have your own Agave farm, and you are left to source 100% of the agave tequila, you will need a consistent supply, which can affect your costs.
Apart from that, your source of yeast, sugar, and other ingredients will also influence how much it will cost you to start your tequila brand.
Distillery Equipment and Infrastructure
Before you can start producing tequila, you are expected to first build the needed infrastructure. Trust me, building or outfitting a distillery with the necessary equipment for fermentation, distillation, and aging can be expensive.
The amount you are expected to spend in this regard will cover the purchase or lease of stills, milling equipment, fermentation tanks, distillation stills, oak barrels, bottles and caps, labels, steam generator, cooling system, heating system,
Storage tanks, filtration equipment, bottling and packaging machinery, quality control tools, barrels racks, Agave harvest tools, and other infrastructure.
The Aging Process
The aging process you settle for when it comes to producing tequila is yet another important factor that can influence how much it will cost you to start your tequila brand.
For example, if you plan to produce aged tequilas (reposado, añejo, extra añejo), the cost of aging in oak barrels can be substantial.
Apart from that, the length of aging and the quality of barrels you want to use for this process will add to both your start-up and running costs.
Branding and Marketing Cost
The area where you need to do much work if you want your tequila brand to be well accepted in and outside your city or country is branding and marketing.
For example, if you choose to start your tequila brand in the United States of America, you will be competing with established tequila brands such as Patrón, Jose Cuervo, Don Julio, Sauza, Hornitos, Espolon, Tres Agaves, El Jimador, Avión, and Herradura. You will agree that developing a brand identity, packaging, and marketing materials for a tequila brand can be costly.
Distribution and Sales
Apart from spending money on branding and marketing, you should also have a robust budget for distribution and sales.
This is important if you want your tequila brand to be seen in every nook and cranny of your city or state. Your effort of starting a tequila brand will be an effort in futility if you don’t establish distribution channels and marketing efforts that will help take your tequila to retailers, bars, and consumers.
Any tequila brand or business that plans to generate sales and become profitable usually spends money on sales representatives, marketing campaigns, and distribution logistics.
The amount you are expected to spend on your distribution channels and sales efforts will no doubt form a significant part of your startup capital.
The fact that you cannot start a tequila brand as a one-man show means that labor costs must be part of your budget. As a matter of fact, skilled labor is necessary for producing quality tequila, and you must make plans to hire competent employees to occupy the role of:
Master distiller, agave harvest manager, fermentation supervisor, distillery operations manager, quality control analyst, sales and marketing director, and finance and accounting manager.
Note that implementing quality control measures and testing to ensure the consistency and quality of your tequila can add to your startup and running costs.