About the Business of Distilling (part 1)

There’s lots to think about when you’re starting your distillery. Here are a couple of key points to think about before you turn on the still.

How much you want to spend?
This is one of those tricky questions because you probably need to navigate what’s ahead to work it out. But generally are you thinking big or small?
Some people when they start out are working on A$100,000 start up capital. While this is possible, especially if you are inventive and able to build some areas of the business yourself, at this scale you will probably still have a fairly small operation. So working out the costs early on will help you make some of those decisions.

Ongoing costs
Cash flow is king. Or so they say. When you are planning your distillery and looking at set up costs, also keep in mind that you will also have significant ongoing and operating costs. These will be things like:

  • Raw ingredients
  • Barrels (if you are making whisky)
  • Bottle and labels
  • Water
  • Electricity
  • Packaging
  • Wages
  • Marketing

Make sure you seek advice from a professional to plan the finances of your distillery business. WE find doing some different scenarios will also help eg. What if I make 100 bottles a day, what if I make 500?  OR what if I make 50,000 litres a year compared to 20,000? Either way, remember you have to be able to sell them at the end of the process for the scenarios to work.

Are you doing for a hobby or as a business?
This is key. Its a fairly big outlay for a hobby so you probably want to have a good plan as to what it’s going to look like for you in 2, 5 and 10 years.
What is the difference between a hobby or a business? If you are planning to make it and sell it then you’re already thinking about it like a business. Either way – hobby or business – you still need a licence from the ATO. If its a business, then start creating it like you would any other business. If you want some help then we can also refer you to some people we work with.

What’s your role going to be?
Are you just going to be the distiller, or the ‘everything’ in the business.
Once you get going you will probably discover that being the everything is hard going, so talk to your better half, or your business partner (or both) to be clear on this. The ATO will also want to know who is undertaking various roles in the business when you submit your paperwork.
Typically, in a new distillery, the Distiller (that might be you) is also the Manager, Marketer, Front of House, Cleaner and Record Keeper. Its a big job for one person so talk to some other distillers before you get going to get an understanding of what to expect.

Is there a market for your product?
This is not a simple question and involves a fair bit of research. What are you going to sell, where, how much and via what channels. We recommend having a talk to a marketing person early on to get your head around this and other distillers to understand your options in relation to distribution. This is usually a consultant, or an advertising/marketing agency.
You then also need to think about brand, including: What’s your story; what will you brand/logo look like; your bottle and labels and other packaging; and website and marketing channels.

All of the above relates to your planning, what outcome you want for your distillery, and how big you are planning to be. It is like any other business.

Having a think through these ones is a good place to start.

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