Patio29Dadio

Working with a prospect distributor that is asking me what brand launch incentives I offer. I told him I would get back to him. His general expectation is a 60-90 day program where I pay a dollar premium for product placement. One for on-premise sales and one for off-premise sales. So much for each #-bottle placement, etc. Interested in hearing from others for what they have done. I get the need. A new brand has more work associated with it to get on the shelf. Sales reps are motivated by compensation.

Put this together.

Interesting. It can get a bit convoluted with the math for margins vs markup, but it sounds like you are doing a simple 40/30/30 based on the MSRP? So if you have an aged rum or whiskey with total COGS of $10.50 including federal excise tax and your target MSRP is $40 your price to the wholesale/distributor is $16 and your gross profit is $5.50. Assuming 30/30 wholesale-retail split their gross profit would be $12 each. Do I have that correct?

This may seem like a dumb question, but I am considering being completely open about my pricing strategy with distribution partners I am courting. This includes my complete COGS and expected margins. Does anyone with experience on the wholesale side have any advice or recommendations for full disclosure vs holding more internal details private?

I think one of our changes needs to be lower barrel proof. We have been doing 60% ABV. Took a recommendation from a pro producer using 30 gallons. Lowered the proof, left some head space and back into the barrels. Already noting the improvement after a month. Smaller barrel lower barrel proof? Don’t fill to the top? Seems oxygen is in shorter supply in the smaller barrels both lack of head space and lower ratio of liquid... thus more H20 and lower fill will help make up some difference. Interesting if this is the answer, as it means using more smaller barrels... which really starts to help the financial calculation for full sized barrels. Which may just be what everyone has to go through to get to that final epiphany that the small barrel program does not pencil out.

Other problem is that they cannot handle anything hot because it will melt the glue used in the belt.

There is definitely a chemical reaction as adding water to ethanol will increase the average temperature of both when combined. Which brings up another question about the temperature of both for proofing. Colder or warmer? Warmer would seem to better facilitate integration. We proof all at once while agitating vigorously and then continue to agitate for a couple of hours. Nothing gets bottled until at least 4 weeks of rest... but generally 6-8 weeks. My problem with a multi-day proofing process is the risk of end proofing error. Spend several weeks proofing down to bottling proof... are you going to take a proofing read each time? What are the risks that an employee will go too far and under-proof? Then what are you going to do? The risk of that failure, at least for us, is enough to convince is that any potential benefit for slow proofing it not worth it. Also, we create a fresh batch of RO water for blending and I don't like it sitting around in the tank... even though we use multiple filters and a UV light sanitizer at the end of the filtration process. But I am going to try some smaller batches with slow proofing at different temps just to see if there is a discernible difference enough to warrant a change in our process.

It is a value calculation. Some like to take several numbered measures of cut increments around the tails to blend the next day or two after some of the volatiles have settled. There is flavor and aromas you want from the early tails. Depending on the size of your distillation batch and the consistency of your process and outcomes, it can be difficult to nail the cuts during distillation. So you would distill deeper into the tails and save them off in smaller number containers from 1 to ??. Then you start with one and decide to add it to your collected distillate or to do something else. Something else... if your time and energy costs are low, and you don't like to discard any alcohol your yeasty employees have produced, you might collect deep into the tails after the cut... and then put all of that into the pot for the stripping run along with the next batch. The problem with this is that you might have raised the ABV charged in the still and it will impact your distillation run. Note that it is not too big of a problem in a stripping run. However, if you are doing a single-pass distillation (stripping and finishing run at as one run), you want a consistent wash going into the pot. Collect all your tails to use for a neutral spirits run. Maybe this makes a reasonable vodka... but more likely it is high proof spirit to use for cleaning, etc. In a production operation, it is generally not worth the cost to keep distilling after the tails cut on a finishing run. We stop when we get to the line (determined by taste, smell, parrot proof and still temp), and the spent wash goes down the drain after cooling down.

I am in Nor Cal and have bunch of experience in this area with our two year build out. First, there is both building code AND fire code. So you will have two sets of officials that you will need to negotiate. Also, the building code and fire code are not in sync. For example, the fire code allows for the storage of casks filled with alcohol outside of the MAQ calc; however, the building code is at least nebulous here... and thus a building official can make your life hell by putting you into that higher hazardous material and occupancy standard where you will need sprinklers, containment, etc., etc.. The fire marshal can also have local authority to take it to extreme. Building size does play a part; but ultimately it is up to the local officials. However, given the MAQ limitations there are very few paths for building and running a successful distillery without sprinklers. You will also potentially run into problem getting liability insurance without sprinklers. I say DSP=fire sprinklers. And pay attention to the sombrero of death dimensions and plan on explosion-proof electrical everything inside the perimeter. Buy the DISCUS manual and study it. Then provide copies to your fire official, and educate them on all the requirements if they don't already know. If they see you are being concerned about compliance for this, they will likely become more a partner and less worried that you would be a hazard to their career in the future when your facility catches fire and explodes. Best of luck. Starting a distillery in CA is a very, very difficult and costly undertaking because of all the code requirements for the facility. I thought I would have less of a problem in the small rural town I located in, but the code they are required to comply with is international, federal , state and county. The last two being extra specially onerous as CA has grown about as business unfriendly as anywhere on the planet.

7 months. Good 5 months and we thought needed another couple, but then the summer hit where the barrel room would get to the mid-high 80s during the day, and high 60s at night. #3 char. It quickly went to a bit of a tannin bomb. 25 gallon barrels from same cooperage at 10 months now is almost there... thinking it will make a year before the same problem. Going in at 120 proof. I wonder if maybe for the small barrels a lower proof new make would cut back on the tannin extraction. Like the idea from JustAndy.

15G barrels have resulted in over extraction. It just crept up on us. Now we have several barrels of over-oaked bourbon and rye. Moving it to totes to stop the extraction and aging and considering that we will keep it for blends. Any other ideas? Bourbon and rye are both good, just with a bit too much oak.

Not sure the issue you're having. Looks like the retailer is just doing CYA

A retailer is requiring a form be signed to acknowledge compliance with Prop-65, California Safe Drinking Water and Toxic Enforcement Act of 1986. I am just learning about this yet another costly regulation for the great state "business friendly" state of CA. There seems to be some exception to companies with less than nine employees which is very weirs as, yes, you would logically deduce that companies with less than 9 employees are incapable of putting toxic chemicals in their products. I am seeing this requirement: WARNING: Drinking distilled spirits, beer, coolers, wine and other alcoholic beverages may increase cancer risk, and, during pregnancy, can cause birth defects. For more information go to www.P65Warnings.ca.gov/alcohol. But then my labels have the standard warning label: GOVERNMENT WARNING: According to the Surgeon General, women should not drink alcoholic beverages during pregnancy because of the risk of birth defects. Consumption of alcoholic beverages impairs your ability to drive a car or operate machinery, and may cause health problems. Anyone with experience with this that can chime in?

Yeah... Sketchup and I have a relationship for quick plans. Like many distillery founders I am bit of jack of all trades. Started off wanting to be an architect. Worked in building construction, cabinet making, plumbing... then IT... then marketing... then business. But love mechanical design and problem solving... just not a great welder and metal fabricator... but can usually make useful stuff from dead trees. Pop up a photo when done.

Nothing fancy. Tapered bottles are a major PITA for labeling unless getting creative like Stranahans for example.

Ok... here is the basic design of the 6x manual tapered bottle labeling jig. Cut the diameter of the half circles to match your bottle size at the base where it will sit in the jig, and the neck. If you get a board twice as wide as you need, then cut with a hole saw and rip down the middle and you will have two of these so you can make two jigs. You don't want the bottle too snug, but you also don't want too much wiggle room. the spools for the labels are just plumbing parts. I used a couple of drawer pulls with a string across to line up where the bottom of the label goes. The only other thing to consider is how you will line up the 180 degree turn for the front and back label. Our bottles have a notch and I put a screw or long nail as a guide. Put on the back label for all six, and then turn them all 180 degrees, and affix the front label. I will look for a video. With two of these and a 6x pneumatic bottle filler and three people working the line, we can bottle about 150 per hour. Not bad, but definitely not a long-term system if planning growth.

Are you just using plastic stretch wrap around the cases on a pallet of spirits to ship to your distributor, or are you also using strapping?

This is the basic design of my system. Comments welcome. My equipment is similar to Golden Beaver. Having a process engineer at the local university design and build the control panel. This is to run a 300 gal stripping still and 150 gallon finishing still at the same time. Chiller is 6 ton. Water tanks are 1600 Gallons. Mash chilling is a separate process that will not run with distilling. It is a tube-in-tube heat exchanger. Today we are pumping a glycol water mixture through the mash chiller and we have to watch it as it exceeds the capacity of the chiller and can overheat the glycol and shut down the chiller. We believe 1600 gallons of 55 degree water will get the job done for a 300 gallon mash (actually about 380 gallon as the manufacturer over-sizes his stuff). That is the idea here... keep the chilled water at 50-55 degrees at all times. The hot water tank is stainless, the cold water tank is poly and insulated. The process dumps the output process water (warm/hot) into the stainless, and the system uses it as input water to the chilled water tank as needed. If running out of water from the hot water tank, the system will inject city water into the loop. Not using the chiller pump in this design for anything other than pumping glycol through the heat exchange.

I am being asked by a retailer to provide them a "swell allowance". I had never heard that term before and read that is some allowance for unsold product that would be returned. Anybody out there with first-hand experience on this that can explain what this can or should look life from a producer perspective?

I will look for the plans and post them here... assuming I can find them!

This sanitizer business sucks. At first I did not expect that flood of demand, so I had not purchased enough supplies. When I went back to reorder, they were out and back-ordered. Then I had to scramble to find containers and parts to meet the demand. That required re-pricing and retooling the process. Then those ran out and I had to use different containers. Now with my distillery stocked and the process of efficient production implemented, the demand seems to have died. I have noted in social networking a flood of offers for hand sanitizer from various sources. My sense is that the free market has resulted in the typical flood of late-comers trying to cash-in. It has been impossible to plan for this business and to execute the plan due to the crazy volatility of this COVID-19 political and media narrative. The good news is that we have benefited from a lot of local good will making this essential product for local first responders, medical and essential business. We have donated about 1/3 of what we made, and the margin we made on the rest helped fund the donations. But since I am sitting on thousands of dollars of supplies that appear to be no longer needed, this effort was a bust. Anyone else out there with a different experience, sense?

I don't know about the rest of you, but we are facing a tsunami of requests for the product. I am pricing it so we are making a bit of margin. It is more expensive than commercial hand sanitizer (which cannot be found anywhere). The main challenge we are having is sourcing small containers. Also struggling to get some of the needed ingredients. I am getting calls from almost every local area first responder department and from companies that have field workers. We are providing a lot of free product to first responders and medical business. Letting the other business know that they are helping to fund that by paying for their orders. My biggest problem is employee burnout... we just decided to close on Monday and Tuesday, but now tomorrow is going to be a shit show of backed up orders and requests. I am going to have to find short-term help.

Talking to an epidemiologist in my college town they say that 65% - 75% is more ideal because the alcohol evaporates too quickly if higher proof. However, the glycerin helps, and so does the H202. But I had the same question about the FDA standards... seems higher than it needs to be. I am using medical grade ultrasonic gel for the gel-type. Not too expensive. I can find it and it is really awesome how it emulsifies and blends well with the ethanol. Our little bottle filler pumps it fine. Today was our first day selling and delivering and we are all exhausted with the flood of people and businesses we provided sanitizer to. The challenge is getting supplies.

Does anyone know what the rules are for shippers for hand sanitizer. I assume 70-80% alcohol of a certain quantity requires hazmat shipping. I cannot find anything definitive on this.

Awesome information and ideas DrDistillation!