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Location decision: NJ vs PA


KC2014

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I am in the planning stage for a Distillery to be located either in Eastern PA or Western NJ.

What has been your experience, given the choice between the two states, where would it be more practical to establish and grow, in NJ or in PA?

Thank you for your help.

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I haven't spent a whole lot of time reviewing the PA laws, but I suspect it would be easier for us to have setup just north of the border in NY state than in NJ.

Most of NJ municipalities have been known to be sticklers when it comes to building, construction, commercial codes. I've toured many distilleries across the US, and based on what I've experienced here, and known from other ventures, they would have never been approved in that manner here. NJ is made up of 565 municipalities, each one run like it's own little political kingdom, with it's own officials and inspectors looking to protect their turf. If you do set up on this side of the river, I suggest you spend time groveling before these kings until you find one sympathetic to your cause, because fighting them afterwards will be costly and time consuming. Sounds a bit harsh, but NJ is just not welcoming to small business, these guys would fall all over themselves to help a billion dollar company set up shop, because it means advancing their careers. Little guy? You are a bother. I've lived in NJ nearly 40 years.

Other issue on this side of the river are property taxes, which are going to impact you whether you buy or lease, this is especially the case if you are looking at a triple net lease here in Jersey, be sure to fully burden that rate when comparing to PA. Comparing gross to gross, it's going to be more expensive out here.

PA is a control state, NJ is not, understand what it means to do business in both.

Not sure if you are planning on being around the 78 or 80 corridors, but I believe there is someone setting up shop in Philipsburg (Nick Piperata). Also, Teton Vodka posted some news about another new startup in the Rockaway area (80 corridor).

There are a number of new startups coming to the table. At this pace, NJ is going to lead the country in distilleries per capita in the next 3 years, no foolin.

I've also been trying to organize those who I know of into a NJ distillers guild of sorts, but everyone is too busy trying to build a business to do anything about that. :lol:

Shoot me a message, seems you are close enough to meet up for a beer or two.

I am in the planning stage for a Distillery to be located either in Eastern PA or Western NJ.

What has been your experience, given the choice between the two states, where would it be more practical to establish and grow, in NJ or in PA?

Thank you for your help.

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Hey! I'm never too busy for a beer. :)

Finding sympathy, or even empathy, among the tangle of New Jersey Home Rule isn't impossible, but it does take work.

My initial direction, when I was concept-building, was to start up in either the town in which I currently live or an adjacent municipality, where a friend of mine is an influential attorney. There were still challenges, even with those relationships.

Eventually I decided to return to the town where I grew up, about 12 miles away. I have a long history there and now, 30+ years later, most of the government and administrative officials are guys that I went to school with and have known most of my life. I won't go so far as to say, "That's what it takes", but it certainly helps. New Jersey is, I believe, a very solid example of the old saying, "It's not what you know, but who you know."

Even with all that, I've spent a lot of time educating and advocating in Sayreville. My first meeting with the zoning officer several months ago consisted primarily of me explaining to him (for about an hour) that we weren't trying to open a bar. I literally had to go all "Alice's Restaurant" on him - 8x10 color glossy pictures with the circles and the arrows and a paragraph on the back of each one, explainin' what each one was about - before he caught on and said, "Oh. Okay. Yeah, you can do that, that's perfectly fine."

Regardless of where you wind up in terms of your location focus, be prepared to do a lot of talking to a lot of people. You're going to have to become an evangelist. The more you're able to evangelize, the better off you'll be.

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Thanks James. How many Craft Distillers do you expect in PA in the next 3-5 years?

That would give a fair comparison between NJ & PA on a 3-5 year time span vs # of expected distillers.

Well, only insomuch as you do the math which takes into account population, consumption, etc.

You have to assume that in Y1 to maybe Y5 your distribution is going to be essentially local. New Jersey's population density being several times higher than Pennsylvania's means that it supports a greater degree of market penetration.

Have you done any marketing studies?

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The Population density for NJ is "apparently" higher due to it's relatively smaller area as compared to PA; however the spend capability is about 07% higher in NJ per capita (2013 numbers):


NJ
Population (M) 8.9

PA Population (M) 12.77

NJ Persons per Sq Mile 87.4

PA Persons per Sq Mile 283.9

NJ Retail Sales ($,M) 124,814.
PA Retail Sales ($,M) 166,842.

Retail $ Spend per Capita NJ: 14,024
Retail $ Spend per Capita PA: 13,065

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The Population density for NJ is "apparently" higher due to it's relatively smaller area as compared to PA; however the spend capability is about 07% higher in NJ per capita (2013 numbers):

NJ Population (M) 8.9

PA Population (M) 12.77

NJ Persons per Sq Mile 87.4

PA Persons per Sq Mile 283.9

NJ Retail Sales ($,M) 124,814.PA Retail Sales ($,M) 166,842.

Retail $ Spend per Capita NJ: 14,024 Retail $ Spend per Capita PA: 13,065

Your population density for NJ is a bit off... It's more like 1,210 persons/ sq mile

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Population density of NJ is 1210. Population density of PA is 285. And it's not an "apparent" number based on size, that's what population density is.

That's a good start, but then you have to do some additional breakdown to arrive at any sort of reasonable data set that will support a conclusion (which by definition will be speculative).

What's the percentage of adults vs. minors in either state? Since the U.S. Census break is +/- 18, you have to use those numbers and accept that there's going to be a little slop.

What's the household per capita income? We know (from the research as well as from a field of general knowledge) that NJ has roughly the 2nd highest per capita income in the country. That's a meaningful number when you compare it to per capita spend on distilled spirits because it a) establishes trends and 2) tells you, roughly, how much potential growth there is in the market.

We had a team from Rutgers-Newark (Graduate School of Business) put all this together for us - and more - comparing NJ to neighboring states and to the U.S. market as a whole. We sampled current and prospective buying habits and methods. We sampled product preferences. We researched historical market growth and projected market growth.

Probably not many people go to this sort of trouble. And, truth be told, the only reason we did it is because we had the opportunity to do it basically for free, using some pretty high-level pro bono talent. The market research, however, serves to inform a number of key decisions in a very quantitative manner. Qualitatively, it simply enhances one's comfort level - and, going back to my previous point about evangelizing your concept, having some amount of supporting research enables you to better articulate your business case, your overall concept and story.

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Thanks James. How many Craft Distillers do you expect in PA in the next 3-5 years?

That would give a fair comparison between NJ & PA on a 3-5 year time span vs # of expected distillers.

I have not looked into the PA laws or market at all.

The primary reason I am involved in NJ is because that is where the primary investor lives and where he wants to build his distillery. So that is where we are going. :D No other reason.

The new craft distillery law in NJ is what got him investigating this business and calling me.

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Not to make public what shouldn't be public, but on my radar are the following:

Jersey Artisan - Operating

Cooper River - Operating

Cape May - Soon to be Operating (Operating already?)

Silk City - Soon to be Operating

Olde Spye - Soon to be Operating

Teton/Rockaway - TBD

Nick/Philipsburg - TBD

Red Bank Area - TBD

Asbury Park Area - TBD (not sure if you are still around dude, ping me)

Mid-shore Area - TBD

2 Micro Brewery Expansions into Distilling - TBD

and I know of 3 other guys looking to set up very micro operations.

Not including the micro guys, we're talking about 11 that I know of, 6 months into the new law.

And you've got the new slew of distillers opening in the Hudson Valley and Brooklyn.

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Looks like PA has issued 20 Limited Distillery Licenses at this point and I think about half of these actually have a product out

https://www.lcbapps.lcb.state.pa.us/webapp/PublicLicenseeSearch/PublicLicenseeDisplay.aspx

ALLEGHENY DISTILLING LLC
CJ SPIRITS LLC
DAVID W BLACK JR & JENNIFER M BLACK
DISOBEDIENT SPIRITS LLC
GETTYSBURG BATTLEFIELD BREWWORKS LP
HEWN SPIRITS LLC
LA COLOMBE DISTILLING LLC
MIDNIGHT MADNESS DISTILLING LLC
MOUNTAIN LAUREL SPIRITS LLC
MOUNTAIN VIEW VINEYARD INC
NAOJ & MOT INC
NITTANY VALLEY DISTILLING LLC
NOAH SPIRITS LLC
OLD REPUBLIC DISTILLERY INC
PENNSYLVANIA PURE DISTILLERIES LLC
PITTSBURGH DISTILLING COMPANY LLC
SHAWN ZIMMERMAN
STAY TUNED DISTILLERY LLC
THIS LIFE FOREVER INC
THISTLE FINCH DISTILLING LLC
Not sure what the new NJ law allows for, but the recent PA law gives you just about everything you could ask for..
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I think you mean self distribution is nice?

Back in November the PLCB clarified that holders of Limited Distillery License are allowed to sell and ship their products directly to licensed bars and restaurants.

http://www.lcbapps.lcb.state.pa.us/webapp/legal/PublicAdvOpnDisplay.asp?opinion_year=2013&opinion_sequence=498

And as of a few weeks ago we are now allowed to sell and ship direct to consumers as well.

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  • 2 weeks later...

Not to make public what shouldn't be public, but on my radar are the following:

Jersey Artisan - Operating

Cooper River - Operating

Cape May - Soon to be Operating (Operating already?)

Silk City - Soon to be Operating

Olde Spye - Soon to be Operating

Teton/Rockaway - TBD

Nick/Philipsburg - TBD

Red Bank Area - TBD

Asbury Park Area - TBD (not sure if you are still around dude, ping me)

Mid-shore Area - TBD

2 Micro Brewery Expansions into Distilling - TBD

and I know of 3 other guys looking to set up very micro operations.

Not including the micro guys, we're talking about 11 that I know of, 6 months into the new law.

And you've got the new slew of distillers opening in the Hudson Valley and Brooklyn.

The operation I am working with is Claremont Distillery.

We just got our website up and looks like Roxbury Township is the location, not Rockaway as I said before.

http://www.claremontdistillery.com/

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Guess I meant distribution in the literal sense Hedge...Like I could load up my truck and go peddlin my goods from bar to bar.

I know other PA distilleries that have done exactly that, but it seems its a gray area. I just called and spoke with the PLCB asking if we can deliver or if we can apply for a licensed Transporter for Hire in order to deliver. The lady I spoke with read from the sheet she has that lists the "rights" of a limited distillery holder, and her sheet specifically states that we are allowed to "remove and deliver" product. She did not think I would need to apply for a licensed Transporter for Hire, but had no specific ruling or code section to back that up and suggested I submit for a legal advisory before trying to apply for the licensed Transporter for Hire..

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  • 2 years later...

Hello,

I am in the planning stage for a small craft blended spirits/ liquors facility and am debating between PA, NJ, and NY. Our number one choice is Pennsylvania as this is where we would prefer to live. Did anything change in terms of the distribution laws since this last post? I did inquire with the PLCB but the response was not overly specific and focused on their listing program. I also have a hard time understanding the "up to 5 tasting rooms" rule which seems to be great for direct sales as long as you have the funds to lease 5 different retail establishments and pay the supporting sales force. Any advice?

Lastly, how is going out of state working for you in terms of getting attention of distributors? I would like to sell limited in NJ and perhaps NY.

 

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22 minutes ago, makami said:

Did anything change in terms of the distribution laws since this last post?

I dont think anything changed specifically in relation to distribution.  Since this 2014 post there have been a few changes that have added more benefits to PA limited distilleries.  Number of off-site retail locations have gone up from two to five to match the limited winery licences.  (sounds like you are aware of that)  Additionally PA distilleries may now serve any beer or wine made in PA, and vice-versa for wineries and breweries.  There is a limit to how much of other alcohol (not your own product) you can serve, but its a nice addition.

Expect getting distribution in NJ/NY to be somewhere between hard and impossible. Expect getting product unto PLCB store shelves to be somewhere between hard to impossible as well.  My advice to all potential PA distilleries is to build a smaller distillery and a larger tasting room.  If your just looking to blend and bottle and not actually distill then my advice is to not bother at all as no one wants that crap anyways.

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Thank you for your replay and advice!

Just to clarify our product is not crap, we are using proprietary process of macerating natural fruit and spices with GNS and letting them age to develop quite exquisite flavors. So we are not a direct competition to any distilleries as it is a quite specific product, more like an elegant sipping liquor, and with that, a different market positioning and I am aware I cannot draw direct parallels with you Distillery guys. However in the eyes of PLCB I am to apply for a limited distillery license and follow the same rules.

We could be a nice addition to your tasting room drinks! :)

Thanks anyway!

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Hedgebird said "If your just looking to blend and bottle and not actually distill then my advice is to not bother at all as no one wants that crap anyways."

 

As far as blending and bottling, you are incorrect.  Canadian blended whiskey sales are absolutely huge and certain Canadian blended whiskeys are considered very high end.  Flavored Vodka sales are huge as well.  Creating a good blended Whiskey and or other blended spirits, utilizing GNS is an art all to itself.  What Makami is creating sounds delicious. If you have a distillery, then blending is just another tool in your tool box.  I'm not saying that a distillery must blend, I am saying that no one should look down on another person in this industry, because they are blending using GNS.  I think what Makami is doing sounds wonderful, well thought out and very artistic

I think that the most important thing, is that you make a good product for your customers.  Just because you do not make mash and run it through a still does not mean that you are making a crappy product, on the contrary millions of dollars and some great spirits have been made by people who have never made a drop of mash. 

  

 

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