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I'm looking to understand the costs of barrel aging a product so I can project a financial model for a small to medium-sized spirits brand:

How many barrels of aged spirit would make the project commercially viable? 10, 20 40 barrels?

What is the cost of wharehousing for four years?

Cost of wharehousing maintenance?

What are other costs associated with aging spirits?

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20 hours ago, Leisips said:

I'm looking to understand the costs of barrel aging a product so I can project a financial model for a small to medium-sized spirits brand:

How many barrels of aged spirit would make the project commercially viable? 10, 20 40 barrels?

What is the cost of wharehousing for four years?

Cost of wharehousing maintenance?

What are other costs associated with aging spirits?

You are asking questions that are very broad in scope, making it difficult for anyone to be able to provide much of helpful response. 

Where are you located, do you own a building, are you renting a building, are you building a building, are you getting free space from your brother in law, will you have sprinklers, how much risk are you willing to accept, what does your location jurisdiction require code wise, does the building have a loading dock, does it have a garage door, is it accessible by truck, does it have heating/cooling, what is the leas term required -- these are just a few of the question that might determine the cost of barrel aging.

I would also be inclined to say that the cost of barrel aging is probably (or at least should be) one of the smaller costs to be factored in when starting a small to medium sized spirits brand.

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Thanks for your response, yes broad topic, you detailed break down is helpful. Not accounting for real estate, constructing or coding here. Looking to understand what renting wharehouse space for 20 barrel for four years would approximately cost. Any ballpark idea?

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Look up a 1000-2000 sqft warehouse space near you. That's what it might cost. But how much it costs depends all the factors that Hedgebird supplied. He nor anyone else can give you even ballpark figures because it is all based on local factors. What is costs will vary wildly - urban, suburban, rural. Local government, fire inspectors etc can change that. There's very few easy questions when it comes to distilling and what you are asking isn't one of them. 

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24 minutes ago, Leisips said:

Thanks for your response, yes broad topic, you detailed break down is helpful. Not accounting for real estate, constructing or coding here. Looking to understand what renting wharehouse space for 20 barrel for four years would approximately cost. Any ballpark idea?

Ballpark $200 to $2,000 per month. 

You hardly need any space in order to store 20 barrels, but if your leasing secured commercial warehouse space with fire suppression and dock access, safe to assume they are going to want to rent you more than the 300 Sq/Ft you probably need.  So thats my high end.  Low end you rent/lease a shipping container for something like $200 a month..

Probably the easiest option would be to get an already existing DSP to store your barrels for you.  I will happily store your 20 barrels for $500 per month.  $25 per barrel, per month.  Loading/unloading, insurance, TIB paperwork assistance, negotiable.  Im sure others would do it for less. :)

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20 hours ago, HedgeBird said:

Ballpark $200 to $2,000 per month. 

You hardly need any space in order to store 20 barrels, but if your leasing secured commercial warehouse space with fire suppression and dock access, safe to assume they are going to want to rent you more than the 300 Sq/Ft you probably need.  So thats my high end.  Low end you rent/lease a shipping container for something like $200 a month..

Probably the easiest option would be to get an already existing DSP to store your barrels for you.  I will happily store your 20 barrels for $500 per month.  $25 per barrel, per month.  Loading/unloading, insurance, TIB paperwork assistance, negotiable.  Im sure others would do it for less. :)

didn't think of a shipping container.  anyone using one to store barrels?  what do the authorities say about it?  Does it just need an approved lock? 

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Don’t bother renting a shipping container. You can buy one for under $1800. We store in a 40 ft and I know of At least 5 others that do the same.

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In my opinion the best whiskey is created in rack houses that are on the sides of mountains or hills and built so that the morning and evening breezes pass through the walls then through the racked barrels.  Putting barrels in environmentally controlled buildings where the humidity and temp remains the same year round with little to no air movement is the worst case scenario.

Being in a rural area where there is a sawmill  is the best case scenario.    Rack houses can be built from air dried; rough sawn, oak  lumber really cheaply here in the Ozarks.

  If you are in a rural area in the southeast you can rent space in a farmers barn for 40 barrels for as little as $50.00 per month.  Old fashioned wood sided barns are the next best thing to a rack house.

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We store our contract clients' barrels for $5 per barrel per month. Discounts on larger quantities down to $2 per barrel per month.

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Thanks for the info and offer Hedgebird. I'll let you know if we move out to PA:) Cheers.

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21 hours ago, Airman700 said:

Don’t bother renting a shipping container. You can buy one for under $1800. We store in a 40 ft and I know of At least 5 others that do the same.

You site no regulations that you needed to comply with to make your local AHJ happy.  Is the point that you are "just doing it" because you are in a rural area or is there part of the building code that we are not aware of that would allow such storage?  Please share with us how you are making this happen.

 

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Cargo containers are not buildings and building codes differ from one place to another here in the US.    What is allowed in one municipality may not be allowed in another.  Many municipalities with building codes have no issues with cargo containers being used at businesses or residences for storage. 

  Businesses use cargo containers in West Plains MO,  Poplar Bluff MO, Alton MO and thousands of cities and towns all over the US, so it is not just rural areas.  I own 10 cargo containers.  8 of them are 40 ft high cubes.  One of the great things about cargo containers is that they are not buildings, they are equipment.  Which means that since I buy used ones, I get to completely depreciate them the 1st year.  If I build warehouse space, it takes 39.5 years to completely depreciate it.  If I need to move a container, I just pick it up with my biggest front end loader and move it to wherever I like on my property.  I don't know of any rules that say you can't store barrels of whiskey in Conex boxes.

 

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@Southernhighlander I hope you don't disagree that the OP should check with his AHJ before developing a business plan around the fact that this will be okay.

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3 minutes ago, Thatch said:

@Southernhighlander I hope you don't disagree that the OP should check with his AHJ before developing a business plan around the fact that this will be okay.

One should always check all rules and codes before moving forward with any project.  If it is beyond your capabilities to do so then you should hire someone.  This is not an area where you want to screw up, as it could completely destroy you.

  If you are not concerned about making money from a tasting room then setting up a distillery in a place with few or no building codes has huge advantages as does setting up in a rural area.  There is a reason that most of the large distilleries are not in the city.  

To me business is a big fun strategy game that I get to play the rest of my life.  Having advantages over my competitors is a key component for advancing in the game.  Being able to build without paying for permits and dealing with inspectors is just one of the advantages that my business has,  Another is that I have figured out a way to get free shipping on all of my sanitary parts and components which means I can sell them at a lower cost than my competitors with better quality.  I have a way to see what my competitors are importing and exactly who they are purchasing from.  All import records are in the public domain, you just need to know how to access them.   These advantages and many others allow me to charge less for my equipment and take more market share.   

If you are starting a distillery, research, research, research, plan and look at all possibilities.  Figure out ways to give yourself advantages so that you can make better products with lower overhead.  I'm a veteran and I believe the US military should never enter into a fair fight.  They should have as many advantages as possible over our enemies. 

I will always do my best to have as many advantages as possible.  If I can store barrels in cargo containers and my competitors can't and must pay more for storage then I have gained a very valuable advantage that may make the difference between having a thriving business or struggling along working like a slave day in and day out for little return.

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9 minutes ago, Southernhighlander said:

Another is that I have figured out a way to get free shipping on all of my sanitary parts and components which means I can sell them at a lower cost than my competitors with better quality.

 

Nice to know that there is better quality around ……………. :D:P:P:o

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16 minutes ago, richard1 said:

 

Nice to know that there is better quality around ……………. :D:P:P:o

Thanks Richard, I appreciate that.  Quality and price are very important as is depth of catalog.  Currently we have one of the deepest sanitary parts catalogs in the industry and we are adding more parts every month. We have lots of great reviews from customers all over the US on our web sites concerning quality and service.  https://shop.distillery-equipment.com/collections/parts-and-replacement-parts

 

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For those that are barrel aging in containers, how are you adding those to your bonded premise on your DSP? Would be nice stop-gap solution while waiting for a barrel warehouse if TTB is good with it.

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19 hours ago, Stumpy's said:

For those that are barrel aging in containers, how are you adding those to your bonded premise on your DSP? Would be nice stop-gap solution while waiting for a barrel warehouse if TTB is good with it.

It's easy to circulate air through them as well.  They are vented.  A small fan connected to a little solar panel will do a good job of moving air through the barrels nice and slowly.  Temp and humidity changes throughout the year and from day to night take place naturally.  Sounds like a good way to set up a rick house.  A person might sell a few containers set up with barrel racks and solar powered ventilation, if they were priced decently and as long as they are acceptable to all of the powers that be.  Some would only need the 20 footers.  Or selling a kit for converting containers into rick houses.  Short on space, no problem.  Stack em.

I'm not sure how someone would bond them.  Maybe it would be a matter of bonding the whole distillery property and the containers are covered by the bond, once they are in place.  I really don't know anything about it, so that may be a completely faulty assumption on my part, so make sure that you check with the TTB.

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Stumpy,

I have looked into container storage and am making the assumption that it is the same as a warehouse. I don't think it could be added to the bonded premise because it would have a separate entrance. We all know what happens when we assume something from TTB, but it makes sense that it is treated like a rick house on your property. 

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3 hours ago, Naked Spirits Distillery said:

Stumpy,

I have looked into container storage and am making the assumption that it is the same as a warehouse. I don't think it could be added to the bonded premise because it would have a separate entrance. We all know what happens when we assume something from TTB, but it makes sense that it is treated like a rick house on your property. 

Yeah, my that was thought since they aren't a "building" then it wouldn't work. They are not fixed to the ground and could technically be moved...though not easy. When amending the DSP and describing the bonded premise in the application, I don't think the TTB would be too thrilled about it. May be worth a call though...

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58 minutes ago, Stumpy's said:

Yeah, my that was thought since they aren't a "building" then it wouldn't work. They are not fixed to the ground and could technically be moved...though not easy. When amending the DSP and describing the bonded premise in the application, I don't think the TTB would be too thrilled about it. May be worth a call though...

There is no reason why you couldn't attach them to the earth by using concrete piers so that they could be considered buildings.  I just sit mine on railroad ties because I do not want them to be considered buildings, for tax purposes, however conex boxes are being used to build houses and commercial buildings all over. As long as you set them up so that they can be considered a building, I would say that you are good to go.  Of course I would call the TTB and ask first.  I paid between $1400.00 and $1800 for mine. I am having 2 more delivered tomorrow.    Except for a traditional rick house built from green sawmill oak timbers and lumber. They are the most inexpensive way to go, that I can think of.  

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Put a cage around them with an approved lock, and add them to your DSP. That's what we do with our SS Totes.

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On 7/29/2019 at 4:29 PM, Roger said:

Put a cage around them with an approved lock, and add them to your DSP. That's what we do with our SS Totes.

 The Conex box could be looked at as the cage and the barrels like the tote.  As you and I both know, many times, how things are presented to the powers that be makes all of the difference.   

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On 7/24/2019 at 10:26 AM, HedgeBird said:

I would also be inclined to say that the cost of barrel aging is probably (or at least should be) one of the smaller costs to be factored in when starting a small to medium sized spirits brand.

This last point is the most important, so you can guestimate this number with pretty large error bars (the barrels you can get an accurate cost from your chosen cooper). Real problem is finding any place to warehouse other than your DSP, depending on your state. In our state, there are no warehouses, so you would have to probably rent from an existing DSP. So how to find out? Call them and ask.

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This can't be a new problem, extending Bonded Area to warehouse/rick house.

How do the Big Boys Bond those big barn rick houses in KY?

In fact we're allowed to have locked high volume tanks outside with only a fence around them.

I'd stack my conex's outside with a fence around them and add it to Bonded area.

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