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How to Open a Distillery: Starting a Distillery Checklist

Marcel DeerAuthor

If you’re planning to open a distillery, your timing might not be any better. As of 2022, the distillery industry in the US was worth an incredible $17.2 billion and grew an average of 2.4% per year over the previous five years. This growth is predicted to continue, so if you’re curious about opening a distillery, now is a great time to break into this industry.

To start producing spirits, you need more than a rusty old still and a crick-jumping Charger. You’ll need to plan out all aspects of your business, find funding to start the business, source materials and equipment, hire and manage employees, market your wares, and a whole lot more. Don’t feel overwhelmed - we know there’s a lot to think about. That’s why we’ve created this starting a distillery checklist to help you on your way.

In this article, you will learn:

  • How to get your distillery business started

  • What you need to create your product

  • How to succeed in selling your spirits

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How to Open a Distillery: Your Complete Checklist

When you’re seduced by spirits and crazy about a great quaff, there’s only one thing to do – open your own distillery! While this is likely a pipe dream for many people, there are some entrepreneurs out there for whom this is the ideal industry. So, if you’re seriously considering a distillery, we’ve created a checklist of all the major steps you’ll need to take, from planning to getting your finished product out there.

Choose your concept

The very first step for most distilleries is to answer the question, “Why?” The answer to why you want to open a new distillery when there are already plenty out there should be based on a unique identity and new products. Think about the name of your company and the brands you want to use. These will help you connect with specific markets. The products you create should have some distinctive features. You may want to produce something of superior quality or with local ingredients. Alternatively, you can create a product that’s cheap and delicious. Regardless, your product and target market will define your brand identity and its core details (like your logo.).

Set up your business structure

Do you plan to be a sole proprietorship, a partnership, an LLC, or a corporation? Each of these business structures has its positives and negatives. Owning a distillery all by yourself means you’ll have complete control over operations and decision-making. Taking on one or more partners can help with decision-making and dividing up responsibilities. However, it also means sharing power.

When it comes to choosing a business structure, it highly depends on your needs and what you aspire for in your business. If you’re dreaming of growing a large distillery business potentially with multiple locations, a corporation might be the right go-to. On the other hand, limited liability companies are great for small or medium-sized pursuits and are especially liked as they protect your personal asserts. Those who own LLCs will never be personally liable for what happens in their business.

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Write your distillery’s business plan

When you have the basic idea of your company created, it’s time to flesh it out by creating a distillery business plan. This plan should be comprehensive and clear so that potential partners or investors can read in and understand exactly how the business will work.

While the end result is a document that you can present to interested parties, the real purpose of writing a plan is to think through all aspects of your business. You’ll need to consider funding, structure, location, operations, staff, marketing, distribution, and much more. At the end of this exercise, you’ll ideally have turned over every stone with no surprises left to come back to bite you in the future.

Figure out funding 

Do you have enough money to get your distillery off the ground?

First, you’ll have to decide just how much you’ll need to get started in this industry. This means quantifying your set-up costs, including outlay for rent, equipment, and materials. From there, it’s important to determine how much income is required to operate by defining your fixed and variable costs. You can estimate your income by figuring out how much you’ll need to break even and how much you project you can sell above and beyond that.

Once you know these numbers, you can look at taking on private investors or taking out a bank loan. In both cases, you’ll have to factor re-payment into your financial plans. Crowdfunding is an alternative source of start-up funds. You may need to give gifts and special privileges to your donors, but you won’t have to pay back their funds.

Follow the legal requirements

Unless you’re planning on becoming a moonshiner, you’ll need to comply with many legal requirements as a producer of spirits. By obtaining a tax identification number, you officially turn your business into a reality. From there, you’ll need to find out how to obtain and comply with the licenses and permits your state requires and get your distillery insured. It’s a good idea to get in touch with professionals to help you, including an attorney and an excellent accountant, to make sure everything is upfront and by the book.

Choose a location

You may already have a location in mind but don’t forget that zoning laws may limit your choices of where you can set up. The location depends a lot on how you plan to operate. If you’re focusing on distribution, you will want to be somewhere well-connected with transportation. If you include a taproom experience, you will want to be easy for your customers to access as well.

Should you choose to buy, build, or lease your premises? Buying and building demand lots of money upfront. Leasing costs a lot less initially but will cost a lot more in the long term. The choice is ultimately up to you, your funding, and your overall goals for your distillery. 

Design your layout 

Now it’s time to think about your actual premises. What do you want them to look like, and what equipment do you need to make space for inside? Think about a layout that will use your space most effectively. If you need any special technology to make your operations more efficient, now is also the time to consider them.

Branding and packaging 

To attract market share away from your competitors, you’ll need to offer a compelling brand story, name, logo, and packaging design that reflects your distillery's values and offerings. 

Though you may be tempted to do it all yourself, working with branding professionals and marketing experts will help to ensure a cohesive and impactful brand presence.

Choose your suppliers & vendors

A big consideration for deciding how you will produce your product is the suppliers and vendors who have the materials and equipment you need. Local suppliers may have access to excellent water and grain, but that can come at a premium. Large suppliers can offer you great savings, but it may be harder to create close relationships with them. 

Hire staff

A distillery, like any business, is only as good as its weakest link. Great staff can keep your business running smoothly and efficiently, so hiring and retaining them is crucial to your success. Identify the most important positions you need to fill, like your distillery manager and master distiller. Once you’ve interviewed and selected successful candidates, they can help you build out the rest of your staff team, ensuring that you have all the necessary positions filled. Don’t forget the important roles of office staff, cleaners, security guards, and other support staff.

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Create your marketing plan

By now, you’ll have a business set up and a staff ready to produce a great product. Now, how will you let people know it’s for sale? This is why you need an extensive marketing plan that defines your KPIs, target audience, and state of the competition. You need to create strategies to market your product that will attract attention and promote loyalty so that you can expand your market share. Unless you hold a marketing degree yourself, it’s wise to work with a professional firm or a consultant who can give you professional direction.

Develop a distribution plan 

Once your product is ready and people want to buy it, you need to get it to them. So, how will you choose to distribute your spirits to reach your customers? You can expand your distribution channels by securing partnerships with distributors, establishing relationships with retailers, and considering online sales platforms. After all, most retail consumers don’t buy their spirits directly from the distillery. Still, having a tasting room can help drive DTC sales for your business while also educating on the quality and uniqueness of your distillery.

How to Open a Distillery: Starting a Distillery Checklist Summary

Ironically, we’ve just outlined a 12-step program to help you attain your dream of opening a distillery. Each step is crucial to the development of an effective distillery operation set for success. So, if you still feel excited and encouraged to get into this business after reviewing this checklist, get ready - because it looks like you’re ready to open a distillery!

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.