How Much Money Do I Need, & What Would Be My ROI ?

[mccartjt]

Hi Folks

Thanks for taking the time to read this post. Now I'll grant you I've not read every post on this website but I 've registered and I am interested. I 've seen and read from afar if you will, the success stories, of a few distilleries. What I've not seen is how much one can make in terms of an ROI with creating a new distillery.

It strikes me that a great deal of folks here come into the idea of starting a distillery but have little liquid cash. I can see that there's a great deal of money involved. Strathans in Denver just sold out for a small Kings ransom by the look of things. Either that or the money needed to expand production over the next 3 years required a commitment that George Strathan didn't want to commit to. There's one thing in buying a toy farm with 12 acre vineyard in Central California & then producing some Californian brandy. Its a completely different ball of wax to get bought out by Proximo. So typically what does one need in terms of soft folding bills $$ to get going?

I have come to investigate this field as, in my business I have become tired of having to scrounge for my inventory that I typically sell. Reselling someone else's product is akin to living as a flea on a dog. I am trying to determine of my destiny & control my own future. To achieve that it would be handy to have my own inventory.

This is an open discussion & I'd love to hear everyone's view points.

[daveflintstone]

I'd say you need between 15,000 and 1.5 million dollars.

A suitably vague figure for a vague question.

[Curtis McMillan]

Dave is right, you need to look at the big picture. If your going to make Vodka you need less then Whiskey due to age and barrels and so on. The amount your looking to make will change that number.

[bluestar]

Presuming you want to create and market a brand, and produce in quantities to support yourself rather than a hobby, put the bottom end at $150,000.

[John McKee]

An honest first glance will need to answer the following:

1. Buy or Lease the space for your facility?

2. Annual production targets? This will greatly influence your CAPEX and OPEX numbers.

3. Distillation equipment and style? Batch distillation vs. Continuous Flow? If Whiskey and other low proof spirits the CAPEX cost for equipment will be lower than Vodka, but the OPEX for vodka is less due to not having to age whiskey (cost of carrying inventory). Larger the production targets the more expensive CAPEX for Batch vs Continuous Flow.

There are a multitude of other questions, but ultimately the 3 questions above are a good start to assist with flushing out the other questions and their subsequent answers.

Short answer....if you are doing this on your own without assistance in wash preparation, facilities/siting, or other factors you should look for a project budget starting at about $500,000 and then ranging up to as far as your production targets deem you'll need to spend.

Good luck.

[Kristian]

I have a few thoughts on this one.

1 - Most of us get into this because we love it. Some of us are better/worse at the business aspect than others.

2 - The startup cash depends on what you want to make, as does the ROI. I think Stranahan's is an exception as there are hundreds of craft distilleries and few have an opportunity to sell like they did.

3 - It sounds like you want to make an investment and have sales experience. Many of the brands out there are actually made by someone else. You might want to research private label or contract distilling.

Hope this helps.

[mccartjt]

Thanks you folks for your prompt responses

For me it appears that there are milliard of ways to skin a cat. There's a long lead in time with TTB permits /corporation forming, there's the capital outlay, decisions on products etc.ad nauseum. There's also the concept that one can't do it all, so that begs the question, does it make sense to partner up with someone who is already in production (that maybe cash poor and then aid them to get to a higher level) ?

Its just tough all the way round. I don't even know what I don't know, which is scary! Have any (or all) of you that have responded so far, any prior drinks industry experience? If so how was that acquired? On the sales side of business or the brewing /distilling side?

I am trying to transition to a new field, but don't have many answers.

I do appreciate the responses here.. Thanks for your time.

JM

[PeteB]

I have a few thoughts on this one. 1 -................................

........................ 3 - It sounds like you want to make an investment and have sales experience. Many of the brands out there are actually made by someone else. You might want to research private label or contract distilling. Hope this helps.

Kristian has a good option, especially since you are already in sales.

A friend dropped by my distillery last week. He has just started production himself, but to get some cash flow he purchased a mature barrel of whisky and is bottling it under an independent label. When he calculated the potential profit from the barrel he wondered why he built the distillery.

The biggest prifit was in the marketing.

But this distillery does attract the customers.