How to Open a

Distillery
The ultimate one stop
guide to opening a gin
distillery. By Olivier Ward

Overview
IF YOU'VE EVER HAD THAT BURNING DESIRE TO START A DISTILLERY
BUT DON'T KNOW WHERE TO START, YOU'VE COME TO THE RIGHT
PLACE AND TO YOUR FIRST ANSWER. RIGHT HERE.

Over the four tabs you'll find many of the next questions you need to ask yourself in
order to start mapping out your project, as well as some useful links.
Ever thought about opening your own craft distillery? Have an unquenchable desire to
make craft spirits from Gin, Rum or Whisky? You are not alone. The past decade have
seen unprecedented amounts of small batch distilleries start.

From less than 100 distilleries of any kind in the UK in 2010 and fewer than 500 in the
US, there are now comfortably over 600 and 2000 respectively. South Africa and Australia
have also boomed into the hundreds and it’s now quite rare to have a country without a
couple of Craft distillers.

We get emails on a daily basis with people asking us for more information and advice on
how and where to begin. Let me just say this, it’s a long answer (which is why I send them
to this article!). Having been on the front-line reporting on start-ups, new ventures,
growing businesses and occasionally the odd financial implosion since 2008 – as a team
we’ve seen these journeys up close and first-hand.

There’s no fixed template for success and no one size fits all, but there are commonalities
between those who succeed in becoming sustainable, successful small to medium
operations and those who plateau after 3 years and then merely endure rather than thrive.

I’ve even been lucky enough to be involved in helping hundreds of newbie distillers get
started through our courses, created dozens of new releases with the best distillers in the
world, as well as getting hands on rigging a few stills and setting up new distilleries from
the foundations upwards. What is clear is that there are many pitfalls that have tripped up
even the most talented distillers, marketers and owners in their first stages of getting a
gin to market. You will not avoid all of them and the learning curve will cost you one way
or another.

To help the next generation - we decided to write a simplified guide to starting a distillery
in order to help minimise these costs and frustrations. It is not a complete compendium,
more a field guide to give some ideas on the areas to focus on in the planning stages and
our aim is simple – to help you save money and time, and to arm you with the right
questions to ask yourself. That, and dozens of helpful links to suppliers…

I’ve written this from a UK Perspective, but the concepts apply anywhere in the world. I’ve
also used Gin as the choice of spirit in examples as that’s my area of expertise, as well
as what the majority of distillers make even if they are also maturing spirits like Whisky or
Brandy.

Just use the tabs to navigate the various chapters, we’ve split in into four, with a ‘Getting
Started and Funded’, followed by ‘Models and Routes to Market’, ‘Stills and other
Apparatus’ and ‘Bottling and Branding’.
Getting Started
BEGIN WITH THE FUNDAMENTALS

The first thing to understand is that you are starting a business. Accept that it can be
scary. If a mild sweat is induced at the very thought of this, just remember that it can also
be extremely rewarding to create a company from scratch. Fundamentally however, it
means you need to be an entrepreneur to make it work. You’ll need a diverse skill set and
a willingness to work seven days a week for the foreseeable future.

Not all business require frequent seven day working weeks, but Drinks as an industry is
different. Distilling in particular is different and to begin with, it will be all consuming. Even
when you are further into your journey, expect consumer shows, fairs, events and more
to happen in the evenings and on weekends.

So often the very idea of “innovation” belies the sheer graft and utter resolve involved in
turning those burning, middle-of-the-night desires into a viable, profitable business.
When you look at the last dozen success stories in Gin, what underpins all of them is their
ability to combine their talent for innovation and creating a new product with the sheer
determination to make it happen. These are not two skill sets that combine frequently and
almost all the distilleries who have are founded on a side hustle concept (taking up a little
time here and there) have never broken through the three to four thousand bottle a year
mark until they’ve gone full time. There are too many great products on the market for it
just to “happen” because you think yours is a good idea, tastes balanced or has some
nice branding. Craft distilleries need a substantial time investment.

Many people aren’t put off by the workload and the sacrifices that a new business will
bring but grafting until you feel broken also means something else – you will need to love
it. Yes, cheesy as it sounds, actual love.

If you don’t love the drinks industry, the spirits that are out there, the category you chose
to be a part of, the challenge of being in the driving seat, the relentless pace, the pressure
cooker moments - then you’re almost certainly toast. You’ll definitely become jaded too,
which will then kill your momentum.

Starting a business, especially craft distilling – is much more of a lifestyle, not a job. Ask
yourself: do you love this enough to survive the onslaught of late nights, tastings, trainings
(which are all fun, but can become repetitive) let alone the early starts beneath the still or
the additional hours squaring the books and dealing with taxes and permits?

DO BETTER RESEARCH.

It might sound like fun but by “research” we don’t mean going to the local bar and drinking
a few gins. Okay, so we do a little, but it can’t just be about knocking back a few G&T’s.
Read books, learn about the history of Gin, the origins of distilling, how alcohol was and
is made, rectified and even imbibed.
Learn about cocktails, not just their history but how to make them and what bartenders
are doing today. Understand the bar business and its economics. Visit distilleries. Talk to
the makers. Network as much as you can. Do your homework as if your life depends on
it.

Trust me on this – it will make a huge difference to the success of your venture. We’ve
never met a single successful distillery whose owner or distiller wasn’t completely
passionate about spirits. I’ve met many failing ones whose owners or distillers got into it
as just a business opportunity.

It can be really fun too. Being around inspirational characters and learning about the
heritage of a spirit that has so many unbelievable moments in history is a really inspiring
part of the journey. Many have said that it was at this point that their interest turned into
a complete obsession.

So many people launch products claiming to be the first, the only, “a unique blend” etc…
Our inbox alone is littered with subject lines filled with ‘firsts’. The reality is that for 95%
of products out there, it’s just not the case. In our area of expertise, there are over 3000
gins available in the UK, more in the US. It is so unlikely that you have a genuinely unique
idea and the only advantage you have is to accept this, see what your predecessors did
and build on that by doing it differently and hopefully – better.

If you can’t sit down and list at least 100 competitors in the same spirit category as you
and don’t have a good idea of what they are about, who makes them and how - think
again and get back to your homework. How do you differentiate your product from every
other craft producer unless you truly know them?

Knowing the broader context of a category and where you stand in relation to others is
imperative. If nothing else, it’s solid competitor analysis, but potentially it’ll inform you into
making the right decisions FOR YOU. It will show you how to contribute to the respective
categories like Gin, Rum or Whisky, rather than just clutter them with yet more ‘me too’
products. Adding another because there is space isn’t good enough anymore. What does
yours fulfil that earns it a place on a shelf (be it at home, in bar or for a retailer) that has
already curated 2000 offerings down to 10? What makes yours one of those elite
offerings? Taste and price are only part of the answer as you will be beaten on price by
the multinationals and taste is subjective – what are drinkers buying into that makes it
irresistible?

SECURE FUNDING.

Finding the funds to get started is one of the hardest parts of any start up venture.

Banks will be reluctant to lend to craft distillers because the profit margins are small, and
the loans carry a lot of risk. It does get easier though, once you are a proven commodity,
avenues such as venture capitalist funding and finance institutions can be good ways to
expand your operation.

If you look to get money from a bank, you must know what you are willing to put up for
collateral. If you own one - are you willing to put your house on the line to start this
business? Is it good enough an idea for you to put all of that in a high-risk situation?

For those on a small scale, there are multiple ways of going about this so let’s look at two
obvious solutions. First and foremost is crowdfunding. Getting all of the funds without
giving up equity while also growing a solid fan base is the most attractive of solutions.

A quick look on crowd funding sites alike however will show a veritable debris of failed
attempts at securing funding to start a new distillery. Most of the success stories are
places looking for funds to expand, not those looking to go from scratch.

Kickstarter / Indiegogo / Circle Up / Lending Club / Funding Circle.

Second is to go via private investors, which is the most common route - many distillers
raise money from friends, family or after some careful pitching, find an angel investor who
wants to be part of a distillery.

There’s no easy number to say how much you’ll need as it’s entirely size and scale driven.
Premises and licencing, build (especially if you are doing a tasting room, fitting in tour
facilities and a shop), stills, equipment, bottles, closures, labels, packing are all calculable
in advance, but the most critically under-funded part where distillers fail to truly
comprehend the real cost, is when it comes to introducing your brand to a new
marketplace. Rule of thumb, whatever the cost of your still, spend double on marketing
and generating sales in the first year.

With the market is so saturated, it would be very, very unlikely for a new British gin
distillery to make it to medium size (40-60K bottles sold per year) in 3 years on a total
investment sum of £80k. Other markets offer bigger potential with less competition, but
each has complications that can frustrate growth and demand far greater initial
investment. For those looking to make Whisky in the US, there are many examples and
interviews of craft distillers who openly state it takes around a million dollars to get
a distillery up and running and their product onto shelves.
If you want to age products you need enough money to make it on a scale that is
sustainable. You’ll need to carry an inventory for years which takes storage space to
mature the liquid you can’t sell for 3-5 years, while also needing to continuously make
more. Even on a white spirit like gin, when done at a medium scale, the sales revenue
alone will barely cover operating costs for a couple of years (which is why so many have
tours, schools and secondary income streams).

On average, it takes over five years for real profits to start materialising for a craft distillery,
but if your goal is small profitability and to have a small operation – especially if you can
have a tasting room and an effective direct to consumer online retail - you can be self-
sustaining after three years.

Routes to Market
COST OF GOODS

There is no one-size-fits-all business strategies. The location, size and range of spirits a
distillery makes will define each, so too will their starting funds. The commonality between
all the distilleries we’ve seen succeed however, are true to any industry and can be broken
down into two areas – Cost of Goods vs Revenue Streams.

Cost of Goods (COGS) refers to the amount it costs you to produce and pack a bottle and
ship it to your customer. Margins will be tight, and it will come as no surprise that the more
efficient and ruthless you are on honing your base cost, the bigger the margin and the
more likely you to be able to survive.

Reducing overheads, spend, supplier demands and lowering the COGS does not mean
having to compromise on quality or reliability. There is a trade-off, but seldom is there a
situation where there is a commodity or service that is on the extreme end of this
spectrum. Finding the right balance is key.

Luckily for you starting this process today, due to the proliferation of the craft distilling
industry there has been a subsequent boom in specialist supplies, resources, consultants
and more that provide new start-ups with both information and options to choose from.

We’ve gone through some of the more obvious ones like stills and core ingredients on
the next tab along to help with early planning but it’s helpful to meet many of them and
go to these conventions.

The best thing you can do at this stage is to become an expert in distillery operations and
expand your knowledge about what to look for, what best practice looks like and where
potential savings can be made through clever set ups, processes and economies of scale.
Here are a few conferences and conventions to consider:

Ginposium / ProWein / Worldwide Distilled Spirits Conference / American Craft Spirits

Association / American Distilling Institute / World of Spirits Expo

While it’s hard to comment for distilleries around the world, a good exercise for any
prospective gin maker is to model out the cost of a bottle ready to be shipped duty paid
before buying a single thing and committing to an idea.

Include botanicals, neutral spirit, time, wear and tear, wastage, overheads and services
(water / power), bottle, closure, labels and alcohol duty (ex VAT). In the UK, if that number
is higher than £19 do not continue. It will fail as a business as that’s too high.

Go back to suppliers, look at your process (single shot vs multi-shot), think about how to
gain economies of scale (bigger stills, bigger bulk orders), look at your design and route
to market strategy. Many micro-distilleries can make a bottle of gin for less than that price.
Some achieve COGS of as little as £15, meaning that it’s eminently possible. To restate
this point so that you fully understand it; If you can’t achieve under £20 cost price for a
bottle of gin, you are nowhere near competitive enough even at the hobby end of the
market.

ROUTES TO MARKET.

An effective route to market should have at least five areas covered.

Distillery door and tasting events are a good place to start. In the US, repeated data and
insight generated by alliances, guilds and organisations point to the fact that for the
majority of micro-distilleries, a third of all income comes from sales generated at the
distillery door. Gift shops, tours, tastings and an active open-door policy will help engage
drinkers, build fans and generate valuable revenue.
“Direct to Consumer” shouldn’t stop there though. The pandemic dramatically shifted
consumer expectations and shopping patterns. Unless there are state or country specific
laws preventing you, each distillery should have an online retail platform to make their
goods available to consumers. It’s not an easy task as licencing aside, there is
procurement, order tracking, data protection, customer services and marketing to
consider. It’s also vital to understand how your offering doesn’t undermine other retailer
partners who sell your product. Don’t discount because the margin is there, add value for
shoppers by doing something extra.

The US is set up slightly differently, but in Europe and Australia, wholesalers and
distributors will provide the best way to get your product out there. They supply the trade
and will be able to get your product on shelf. It’s key to understand their margins, and
how they then pass on to trade who apply their margins… and therefore just how low the
starting cost price needs to be, as well as what you will need to do in order to support
them.

Wholesalers do not actively market your product; they merely facilitate orders from trade
so without a demand from the trade it will just sit in a warehouse You will need to be the
one creating that sell-through and it’s important to comprehend the need to meet ‘hurdle
rates’ in order to remain listed. On the other side, most good distributors who have sales
teams, marketing campaigns and who actively champion your brand and create sales on
your behalf will demand monthly retainers. You will need to budget ahead for that.

It is possible to sell directly into the OFF-Trade, with many independent stores and
retailers dealing with brands directly. You should be looking to create a dialogue with as
many as possible.

Selling to the On-Trade is more difficult as most will have contracts with distributors and
wholesalers who supply them. It’s not impossible though and even if they say no because
they only get their spirits from a certain distributor or wholesaler, it will act as a good way
to show that company that if they listed you, there is a demand from their own customers
already in place and so will likely be quick to flow through their hands.

BUILDING AWARENESS.

We live in an image driven era. PR, Social Media, websites, retail, event collateral,
marketing materials all need images that convey your identity. Take the time to invest in
good photography. Then take even more time to re-invest after 6 months as you will have
evolved your proposition and extensively used most of the assets during that first phase,
meaning a refresh isn’t just ideal, it’s imperative to maintain momentum.

A good website, with the ability for e-commerce as well as active social media is a good
place to start. Be warned – badly executed social media is worse than no accounts at all.
Have a think about which platforms will work for you and for your tone of voice as you do
not need to be everywhere just because it is possible to open an account.

Look for events and how they can be leveraged to create PR opportunities and feed the
content demands of social media. Many will allow you to sell during the event that help to
cover costs, but don’t lose sight of the bigger picture – generating awareness and
exposure.

Here are a few good consumer and bartender events to look into in Europe:

Junipalooza / Quercus / Berlin Bar Convent / The Whisky Show / Whisky Live Paris /
London Cocktail Week
Stills and Equipment
WHAT STILL DO I BUY?

Like moths to a flame, glorious amber stills are what everyone love to focus their attention
on, often at the detriment of the bigger picture and what will work best for their needs.

Question what your basic requirements are to start off with. Calculate your initial volumes
beginning with how much you need in a year and how that breaks down into how many
batches you will need to make. Factor in the distillery footprint and what the building is
forcing you to do. This will help inform the initial considerations around size and shape.

Ask yourself how do you envisage scaling up production? So many buy small stills and
then look to upscale, but in doing so take money away from creating new sales by
diverting them into re-building infrastructure, while also creating some challenging
moments upscaling a recipe. Futureproofing yourself isn’t just about size, but about all of
the factors in a distillery from pipes and pluming, to recipe formulations to bottling, packing
and dispatch – let alone the health and safety considerations and environmental impact
you make when a hazardous or wasteful process is expanded.
Give yourself some flexibility in what you can make with your still. You might have a clear
idea for your first product but what happens if you need to pivot and make another spirit,
or distil in a different way in order to deliver different ideas?

Last and most paramount is matching the reality of your budget and making an honest
assessment of your skill set. You may think that the lion’s share of your budget will be
spent on stills as it’s a big-ticket item, but when seen as an overall cost in the full budget
of a distillery starting up, it tends to only be a quarter of your investment. Infrastructure,
goods, ingredients, bottles and introducing your brand to the market all add up.

If you do not think you will be the one distilling, think about how your set up will be able
to attract a qualified distiller. A home-made, hacked together system will not suffice if you
are looking to employ talented and qualified individual. Even if it does, it would be a false
economy given the fact that it would be paying the salary of someone highly trained but
not providing them the tools to be able to create your spirit consistently, safely and with
efficiencies that will save money and be able to grow with demand.

Once you have considered all of the above, start shopping around to see what might suit.

Here are some of the better known still manufacturers for you, ranging from rustic and
small hobby sized alembique systems, to traditional pot stills, hybrid high technology
systems, build it yourself modular options, modern still with packed columns and vacuum
stills.

Al-Ambiq
http://al-ambiq.com/en/

Carl
https://carl.info/en/

Holstein
https://a-holstein.de/en/
Muller
https://brennereianlagen.de/en/

Kothe
https://www.kothe-distilling.com/newsite/

ABE Brewing (Predominantly USA)

https://www.abebeverageequipment.com/

Vendome (Predominantly USA)

https://vendomecopper.com/

Hoga
http://www.hogacompany.com/

DYE
https://www.dayuwz.com/

Forsyths (Larger Scale)

https://forsyths.com/
 StillDragon
https://www.stilldragon.eu/en/

I Still
https://istill.com/

Genio
https://g-still.com/

Buchi (Rotary Evaporators)

https://www.buchi.com/gb-
en/products/laboratory-
evaporation/rotavapor-r-300

Heidolph (Rotary Evaporators)

https://heidolph-
instruments.com/en/products/Rotary-
Evaporators~c19

Use the four areas mentioned above to question your decision making, but remember
these little tips when you start talking to suppliers.

There’s a difference between fill heights and total capacity. Be sure to understand that
otherwise it will throw all of your calculations out of sync.

Note that infrastructure around the still needs to be compliant with regulations and safe
to use or be in proximity of highly volatile, highly flammable substances and before you
purchase anything, make sure it is safe and legal (for example ATEX ratings).

It's easy to look at copper stills and be mesmerised by how they gleam in the light. What
you should be perving over is just how organised the pipe work is, the drainage, the
electrical rigging.
Know what your local laws before ordering as they are not the still makers problem to
resolve. For example, can you place a boiler in the same room as a still? Do you need to
install active air extraction / circulation in the still room? Can you pour effluent down the
drain or do you need to treat it first?

Lastly, consider timings. Most still manufacturers require months of lead time, not weeks.
Some of the best have six to nine months wait times. Factor that into the build and launch
strategy.

Infrastructure and Ingredients

Before going into the details of the kind of things you might require, it’s worth re-stating
the need to have a compliant and safe working environment. How you go about setting
up the workflow, the systems, the checks and the processes will play a vital role in making
your distillery a success.

Many ignore the repercussions that occur when you do not pay enough attention to safety,
but several distilleries burn to the ground every year, and unfortunately all too frequently
have also involved loss of life in the past decade. Perhaps even more concerning is how
often insurers do not pay out as they find that systems and operations were not compliant
one way or another and therefore in breach of their coverage agreements.

It may be boring, but you have to be rigorous in your approach to this part of distilling.
Furthermore, food allergies and nutritional information is a legal requirement in some
countries. While rare, getting it wrong can involve serious harm to consumers. Frequently
there are the lawsuits as a result. There are also fines sanctioned by trading standards
and regulators around ABV and filling heights. Precision matters and the ramifications of
a product recall or even a block on import due to this can cost thousands to fix.

It is far easier to get it right first time and give it due diligence from the beginning.

INGREDIENTS

We can’t point to all suppliers for all spirits here, so we’ve focussed on some of the ones
whom we know supply into the UK and Europe. Most will also be able to ship to
elsewhere and we’ve included several in Australia.

Neutral Spirits UK / Neutral Spirits Europe / Neutral Spirits Australia / Botanicals

(Predominantly in UK) / Botanicals (UK / Europe / Global Supply) / Malts & Yeasts /
Casks & Coopering
INFRASTRUCTURE AND OTHER ITEMS.

Ingredients aside, one of the big learning curves and decisions facing any new distillery
is ensuring they have the right equipment for storing, moving, testing, bottling and
shipping liquid.

Start with big bulky items such as storage solutions and tanks and consider their sizes,
their use and how you will fill, measure, empty, clean and maintain them. You will need
solutions for before and after distillation and often its storage containers (due to the
sequence they are used in and what they are being used for) that define the layout of a
distillery and the way the operations are run.

Machinery for bottling and filling bottles is an obvious part of a distillery build, but often
overlooked are pumps to move liquid around from tank to tank or from barrel to still.
There’s also air ventilation, cooling devices, filters to remove particulates, water filtration
systems, scales to weigh and other tools to measure (let alone safety equipment) - all of
which add up to a sizeable investment. Figure out what you need and budget ahead.

Once you have, the single most important part of your layout and build must
resolve where those tools are kept. They cannot just be left around. They must not get in
the way. Not only does that lead to rapid deterioration of your tools, it can create multiple
hazards around a distillery.
It’s not just your tools that will need to be factored in, wastage and bulk buying causes
daily problems. Where do pallets go? Where are you storing bottles if you are buying
several thousand at a time? Where are you putting the cardboard for cases? etc.

Unfortunately, we’ve encountered dozens and dozens of distilleries who have otherwise
state of the art operations that are frustrated and overburdened by items that get in the
way of process. This often costs them repairs and leads them to deliver an inconsistent
product at the end of it all. Hanging, sorting, packing, palletizing, racking should become
your favourite verbs as you plan your distillery. Carefully choreographed operations are
always the ones whose costs are lower, safety track record higher and products
excellent.

Top tip – Ask yourself if you have factored in any steps and obstructions. Start from the
point of delivery and eradicate any step in the way. Lifting a bag over something is ok,
but how do you deal with IBC’s that weight thousands of kilos? Think about the width of
doors (make them extra wide). Gravel and pebble stone look lovely… but try to get a
pallet truck to roll over them and you’ll see the issue that will occur for each delivery.
Eliminate that before it becomes a daily frustration.