Distilling Contractor

How much does it cost to start a craft distillery?

18 Botanicals - Coriander

We’re in something of a golden era in the world of drinks. As consumers, there have never been such rich pickings in terms of the variety of artisan ales, wines and spirits available to us. For this reason, you might call it an excellent time to enter the drinks production business yourself. At Kettlesing, our expertise lies in distilling, so we’re here to give you some idea of the costs involved in setting up your own micro-distillery.

Glass Bottles

Empty glass bottles on the conveyor. Factory for bottling alcoholic beverages. Production and bottling of alcoholic beverages.

Before we go any further, what exactly is a distillery? Well, it’s a facility where spirits, such as gin, whiskey, rum and vodka, are produced through the process of – you guessed it – distillation. You can read all about that process right here. Distilleries come in all sorts of shapes and sizes, from small craft micro-distilleries specialising in one or two spirits and producing small batches, to huge industrial plants. You may even have visited one on a guided tour!

We won’t beat around the bush here; when it comes to setting up your own distillery, there is a lot to think about and significant investment needs to be made in all of the necessary equipment and certification in order to operate. Let’s take a look at what’s involved:

  1. Research and planning – few of us just wake up one morning and think, “I reckon I’ll start a distillery today!” It’s important to do your research into the market, trends, target market and potential niche, as well as what you want to produce and how you will make it stand out from the crowd. Once you have everything gathered together, you’ll need a solid business plan which includes all of the above and your marketing plan, financial projections and operational plan.
  2. Make it legal – quite rightly, you can’t just start a distillery, because there are multiple legal requirements you must meet to keep yourself and consumers safe. You can read more about what’s involved in this step, here. In brief, you will need to register with HM Revenue & Customs, obtain the necessary licences and permits and apply for a Distiller’s Licence.
  3. The where and the how – you’ll be needing premises, so it’s time to find the right location for your distillery. As you will have goods coming in and out, it’s a good idea to think about the logistics and accessibility, with space for storage, production facilities and any retail arm you’ll be adding as well. Then you can bring in the equipment, which might include stills, boilers, storage tanks, bottling lines and labelling machines.
  4. Ingredients and the all-important recipe(s) – a product lives and dies on the quality of its ingredients, so source the best quality you can. You can take advice on recipe development or experiment with different recipes and flavour profiles until you produce a winning formula.
  5. Refine your production process – you will need this to be as seamless as possible, as time is money and mistakes can be costly. Make sure you conduct sufficient test runs, and put quality control measures in place to maintain the high standards the industry demands.
  6. Brand identity and a marketing plan – All the hard work you have poured into creating a unique and delicious spirit drink should also be reflected in your branding, labelling and marketing. This is where your earlier market research is key. Use marketing strategies such as social media, in-person tastings and events, and consider partnering with complementary businesses to reach as wide an audience as possible. You might want to time this seasonally, too! When it comes to labelling, you must ensure your labels comply with legal regulations, which you can read more about here.
  7. Distribution and sales – will you sell direct to consumers, or via retail or wholesale? Do you plan to export your product? You’ll need a distribution strategy and a strong network to expand your reach and build those sales.
  8. Launch! – it’s time to release your product into the wild. Give it the best start with a carefully planned launch and grow sales by constantly evaluating what works, what doesn’t and what’s happening on the market.

As you can see, there are a fair few challenges to navigate to set up a distillery and then launch a spirit successfully. If at this stage you’re ready to give up on the idea – wait! There is a way to bring the next big thing in spirits to market without all of the trials and tribulations of navigating every stage yourself. You could choose to work with a third-party contract distiller for all or part of the process. This gives you access to their facilities, expertise and legal guidance, recipe development arm, streamlined production process and bottling and labelling service. If you felt a weight lifting from your shoulders as you read this bit… feel free to get in touch about your plans, or read more here about what we can do for you.

Column Still

You might be wondering how much space you might need for your distillery. This can vary according to the number of spirits you plan to produce, and the scale of production. A few things to consider include:

  • The size of your production area. Equipment such as stills, boilers and storage tanks need to go in here, and you should plan for sufficient ventilation and drainage.
  • Storage needs: As part of your operation you will need to store both raw materials and finished products awaiting their onward journey, as well as packaging such as bottles. You will need enough space to keep these areas clean to meet hygiene standards.
  • Packaging area: Bottling, labelling and packaging will all take place here. At Kettlesing, we offer a separate bottling and labelling service for those who want to send their spirit to us ready for packaging.
  • Office space: Depending on the size of your operation and number of staff, you might need an area for admin, processing orders, marketing functions and inventory management.

There is still one outstanding consideration when it comes to setting up on your own, however, and that’s cost. It’s hard to put an exact estimate on the overall cost because there are so many variables in there, such as the scale of your operation, changing licencing fees and your location. Very generally, though, a small craft distillery would command an investment of anything from £100,000 to £500,000 or more. This is due to the range of considerations, from facilities to ingredients, packaging to marketing and labour. Don’t forget to consider those miscellaneous costs, such as utilities and insurance, too.

Pallets of Glass Bottles

Phew! That all sounds a lot, but wise decision-making and thoughtful planning are key to setting up a successful distillery, so it’s a good idea to take this back to step one and do plenty of research and planning so that you are fully aware of all of the steps, requirements and costs involved in setting up your operation.

Fancy removing all of the potential headaches and using a consultant to help you instead? Or perhaps you’d rather hand over part of or the whole operation and concentrate on launching your spirit into a ready marketplace. Try us on for size – have a chat with us about your plans and we’ll be more than happy to offer guidance to get you started.