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Eud

Considering starting small, what am I too naive about?

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On 6/27/2018 at 12:01 PM, Eud said:

I haven't done distilling as a hobbyist.  I've brewed beer as a hobbyist and can predict that I would enjoy distilling because the hobbies I enjoy also involved lots of learning, experimenting, and cool gear to acquire, build, and learn how to use.  If it was legal to distill small amounts for personal consumption I'd likely just do that and be satisfied.

If you can relocate to MO. It is legal to home distill up to 100 gallons per year per individual and up to 200 gallons per year per family here in MO under state law.  The MO state alcohol tobacco control enforces state law concerning home distilling as do most if not all of the county sheriffs in MO. However, it is still illegal under federal law to home distill.  I would never home distill, because I sell distillery equipment and I follow all federal laws concerning distilling. 

As far as starting a nano distillery, you can start as small as you like as long as you have another income that you can use to support yourself.  In fact with no bond and a free federal permit you can start a nano distillery with very little up front cost as long as you think outside the box and do everything with cost in mind and use your imagination.

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8 hours ago, Southernhighlander said:

As far as starting a nano distillery, you can start as small as you like as long as you have another income that you can use to support yourself.  In fact with no bond and a free federal permit you can start a nano distillery with very little up front cost as long as you think outside the box and do everything with cost in mind and use your imagination.

If you have the time, can you elaborate on this a bit?  It's basically what I would want to do, and would enjoy getting set up, but I'm not sure where I should point my outside the box thinking.  I guess I wouldn't need the bond because of the small quantities I'd be making, and I could get a federal DSP if I met the other requirements and had a legit commercial location with a lease?  Is that right?  If that's the case you may be getting an order from me sooner rather than later. ? 

I've made a distiller friend here locally and am going up this weekend to talk about the business.  I took up her time at a farmers market a month ago, and I've done so much reading on this forum and others that I was able to talk shop with her a bit even though I haven't done it.  They are starting to see some success on equipment about the size that I first posted about in the original post, but exactly what some predicted would happen to me has happened to them.  Her husband's entire life, like 20 hours per day, is running that 100L spirit still in order to keep up with production on their 6 products.  Victims of their success. 

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I run what you might call a 'nano distillery'. I run the smallest distillery in Canada with a footprint of 950sf including the tasting room, a mechanical room and a tiny bathroom. I have one of Paul's 45G still/mash tuns, 2 Genios, a Redboot continuous (currently dormant) and a variety of other unholy stillage contraptions. I have a closed loop cooling system and about 500 G of fermentation tanks in various sizes.

I operate seven days a week, even though I'm only open to the public for the weekends and I attend a select few local farmer's markets.

It cost me close to $500k in cash and probably another $150k in my time to open my doors. I produce a basic vodka and a gin which evolves in mysterious ways every sixty bottles or so. (Damn, were did I put that recipe?) My only help is my wife, an equal partner and my daughter, part time.

No matter how much I toil, I can only put out so much product. Not very much, I can tell you. So, being too nano is a careful decision - you really need to be clear on your goals and your growth projections.

We thought we'd have a hard time getting any market, so we opened slowly with no advertising. Good thing we did, as now only a few months in, we're barely able to keep up with the demand and I turn green as I contemplate the impending Christmas season.

Of course, the upside of all of the work - every time week look at the weekly take we smile. Our social standing is outta sight. We meet all kinds of great people - who are rich and think nothing of spending not only on the booze but a variety of other associated products we're selling. We can't wait to introduce new spirits, but they take time to develop, find the ingredients and then the paperwork etc. Right now it's eight o'clock and I'm tired and I need to create advertising for tomorrows newspaper deadline.

Beats working for a living...

 

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On 9/17/2018 at 1:00 AM, Alaskan Spirits LLC said:


Fun and exciting times.  I have my Groupon set to start immediately upon opening, news story lined up, and Kickstarter around the corner.  Im anxious to see outcomes and how everything falls together.  In the end, I fell in love with our bottle.  Glad I spent the money and created a custom mold.  It allowed me to know the bottle was going to be unique, and have a custom feel.  We have ALASKA PR%F embossed on the back, and BATCH907 on the bottom (which will be the name of a future spirit).

Anyone have much experience with Facebook marketing?  What worked/didnt work?

 

Glad you are tasting your product, I bet it is exciting. I am in the beginning stages of the written plan, talking to vendors, etc. The way I am leaning is also to hire a distiller if I cannot bring on one of my very good friends (who I think will fit perfectly as a distiller - even better than I could see myself...)  into the business with a salary and some equity to makeup for what he will lose by leaving his current employer. I currently have a career that pays well and if I work it out correctly give me half the year off in a rotation so I can be hands on as much as possible. 

I would love to hear about your groupon marketing and specifically what/how you plan to implement kickstarter. I do not know much about facebook, but from what I understand Instagram and Snapchat are the big ones with kids younger than me (31) these days so don't leave those out as well.

Another idea I had whether I build new construction or upgrade a rental is how I could use the space to bring in some money or at least good marketing before I can start making products. That way the space doesn't feel just a big money pit.

Good luck on your ventures from South Louisiana

-Seth C.

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On 9/17/2018 at 11:18 PM, Glenlyon said:

I run what you might call a 'nano distillery'. I run the smallest distillery in Canada with a footprint of 950sf including the tasting room, a mechanical room and a tiny bathroom. I have one of Paul's 45G still/mash tuns, 2 Genios, a Redboot continuous (currently dormant) and a variety of other unholy stillage contraptions. I have a closed loop cooling system and about 500 G of fermentation tanks in various sizes.

I operate seven days a week, even though I'm only open to the public for the weekends and I attend a select few local farmer's markets.

It cost me close to $500k in cash and probably another $150k in my time to open my doors. I produce a basic vodka and a gin which evolves in mysterious ways every sixty bottles or so. (Damn, were did I put that recipe?) My only help is my wife, an equal partner and my daughter, part time.

No matter how much I toil, I can only put out so much product. Not very much, I can tell you. So, being too nano is a careful decision - you really need to be clear on your goals and your growth projections.

We thought we'd have a hard time getting any market, so we opened slowly with no advertising. Good thing we did, as now only a few months in, we're barely able to keep up with the demand and I turn green as I contemplate the impending Christmas season.

Of course, the upside of all of the work - every time week look at the weekly take we smile. Our social standing is outta sight. We meet all kinds of great people - who are rich and think nothing of spending not only on the booze but a variety of other associated products we're selling. We can't wait to introduce new spirits, but they take time to develop, find the ingredients and then the paperwork etc. Right now it's eight o'clock and I'm tired and I need to create advertising for tomorrows newspaper deadline.

Beats working for a living...

 

I would be interested in  the closed loop system you describe. I have something I am about to put together for my 53 gal still using a tote and pump but am concerned about method to try and keep the temp of the water consistent.

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I run a recirculated cooling system with 2 300 gal totes feeding a 125 gal still.  It works fine if you only want to run every 3rd day.  I have considered adding a radiator on the return line to help dump heat prior to going back into the totes.   So far that has not been needed to meet demand.  It does not keep a constant water temp, but I run a VM style still head so it's not all that critical.  If running a CM, I think a radiator and then probably a small chiller would work better.  Radiator to dump the majority of the heat and the chiller to keep a constant temp in the reservoir.  

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On 9/17/2018 at 11:18 PM, Glenlyon said:

I run what you might call a 'nano distillery'. I run the smallest distillery in Canada with a footprint of 950sf including the tasting room, a mechanical room and a tiny bathroom. I have one of Paul's 45G still/mash tuns, 2 Genios, a Redboot continuous (currently dormant) and a variety of other unholy stillage contraptions. I have a closed loop cooling system and about 500 G of fermentation tanks in various sizes.

I operate seven days a week, even though I'm only open to the public for the weekends and I attend a select few local farmer's markets.

It cost me close to $500k in cash and probably another $150k in my time to open my doors. I produce a basic vodka and a gin which evolves in mysterious ways every sixty bottles or so. (Damn, were did I put that recipe?) My only help is my wife, an equal partner and my daughter, part time.

No matter how much I toil, I can only put out so much product. Not very much, I can tell you. So, being too nano is a careful decision - you really need to be clear on your goals and your growth projections.

We thought we'd have a hard time getting any market, so we opened slowly with no advertising. Good thing we did, as now only a few months in, we're barely able to keep up with the demand and I turn green as I contemplate the impending Christmas season.

Of course, the upside of all of the work - every time week look at the weekly take we smile. Our social standing is outta sight. We meet all kinds of great people - who are rich and think nothing of spending not only on the booze but a variety of other associated products we're selling. We can't wait to introduce new spirits, but they take time to develop, find the ingredients and then the paperwork etc. Right now it's eight o'clock and I'm tired and I need to create advertising for tomorrows newspaper deadline.

Beats working for a living...

 

I would be interested in  the closed loop system you describe. I have something I am about to put together for my 53 gal still using a tote and pump but am concerned about method to try and keep the temp of the water consistent.

 

 

I was thinking about a radiator and even possibly a water cooler of some type in line. Glad to see I'm on the right track. Need to double my tote, lol. Thanks a lot!

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The way my closed loop system works is the coolant (a mix of water and 20% denatured ethanol) pumps continuously through all of my stills and my heat exchange. Once the hot water leaves the condenser or dephlugmator or exchange, it is sent through the tasting room floor to provide radiant heat before continuing under the distillery on the journey of hope out to a pond behind the distillery. The pond is roughly the dimensions of a normal household swimming pool. The water travels through 400' of 1" water pipe before returning to the distillery as cold water ready to repeat the trip. The water travels through the system at about four gallons a minute so the hot water leaving the stills really doesn't stand much of a chance staying warm for long. In fact, the system is so efficient, I can have everything running full tilt in the middle of summer with the pond half empty and it doesn't break a sweat. So, there is loads of room to grow. I can turn on or off any part of the system or re-route as required using a series of preset valves. The pump is automatic and will deliver less or more water depending on the demand created by the mix of open and closed valves. Close all the valves and the pump will stop. Open them all and the system runs full out. All the cooling pipe is neatly exposed on the wall feeding each part of the system and looks deceptively simple over all. I designed the system on paper and my plumber figured out the technical and functional aspects. Total cost about $5K CND. I do not use this system for cooling fermenters.

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More of what to expect...

After seven months of operation our little distillery has just come through our first Christmas season. After so many busy days, today seems very very quiet. For those considering the small distillery experience here are a few random thoughts that have been rummaging around my mind.

Time flies...
One of the things that has turned out to be very important for us is the ability to frequent the local farmer’s and crafter’s markets. So, way back in October all the markets we were booking seemed so far away, we didn’t give them a second thought. I couldn’t believe how fast they were on us. We worked flat out from early November through to Christmas eve and were behind all the way. We sold out several times and crawled across the finish line. Lesson - Pre-stock your Christmas season! You don’t want to be trying to produce last minute in the heat of battle!

Ancillary products are important...
While the beverages are selling well, we quickly discovered you want other things to sell as well. In our case we have honey from our bees. I’ve never sold so much honey! Now we have some other carefully curated products and they are starting to sell rather well. Lesson - give people things to buy and they will! But, make sure your products fit your story - and - your ability to consistently supply them. Once people get a taste for something, they expect it to be available .

Quality matters...
Even though my place is really out of the way, I have local competitors - I even find myself competing against distilleries in the nearby city of Vancouver. Our guests who have visited other distilleries during their travels, think nothing of discussing their experiences in front of you. You can bet when they are somewhere else, they are talking about you in return. What do they talk about? The quality of the comparable beverages and experiences hands down. So, its very important to deliver so that inevitable conversation reflects well on your products and experiences. Lesson - Quality over quantity is the way, especially, if you are a small operation.

The customer’s experience is very important...
I popped into one of my competitors and the servers seemed kinda morose, even though the general vibe seemed OK. But, I could clearly see the server’s weren't 100% in the game. Outside of buying their drinks, there was no way to meet the distiller or arrange a backstage tour. So, in the end there was nothing really special about their establishment. Lesson - You and your staff and your collective presentation matters at lot! Make sure everyone can answer the basic questions if the distiller isn’t around.

Spirit drinkers/buyers are not the same as other consumers...
When the beer drinkers show up, it only takes a moment before they are gone. Spirit drinkers on the other hand, want to know. Your story, history, art, the experience, cocktail ideas, they are keen. Lesson - Building a loyal audience and getting the juicy sales takes time and you have to relax into the moment, all the while knowing in the back of your mind you have to get that damn mash moving!

Running a distillery is a lot of work...
This has been said so many times! Why say it again? A lot of idealism comes through the door! I love the work and I wouldn’t trade it for another job. But, I’m also working 10 - 12 hours a day, everyday and it does wear. Lesson - Expect to work hard but strive to find a better work / life balance as soon as possible into the lifestyle. If possible.

Happy new year.

Cheers,
Glen

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Regarding the ancillary products.  We did a collaboration with a local farmer, we aged his maple syrup in our bourbon barrels.  We sold it under our brand/label.  While it was a great seller, selling hundreds of bottles over the course of two weeks, the biggest benefit was the draw and exposure from via social media, we immediately attracted a customer base who wouldn't have normally walked in the door, and it didn't cannibalize other product sales. 

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Glen,

Thanks for coming back here with updates.  I am really enjoying reading them.  I'm helping out a local small distiller here from time to time to get a feel for the work involved. I'm asking him to have me do the grunt work (cleaning and moving heavy stuff around) and peppering him with questions about what his hard parts are.

One thing that struck me as I was standing there waiting for the mash to heat was looking at his stacks of filled barrels and doing the math in my head for how much resources he had tied up in material cost, utilities, and time in those barrels.  I was also struck by how valuable it would be to have the cash up front to spend to make things run efficiently so you're not killing yourself to keep the production going or spending lots of time every day waiting around for things to happen.  

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Thank you.

Yes, your observations are correct - as the barrels stack up quickly and so does the investment within. Each barrel is worth a considerable sum in its realizable value and in its cost to produce. That cost is even higher than you think, because it also includes the mistakes made along the way. You can't plan for those mistakes in the business plan other than defining them vaguely as 'contingency' because you never know what's going to bite you.

It is great to have all the cash up front to pay for all that and the infrastructure, etc., thus making the journey easier. However, there are some (as I've discovered) unseen challenges to that. We went that route and paid for everything up front so our business would have a low overhead. Ha! Lesson here - operating capital is as important upfront as the cost of buying the still or whatever. Predictably, by the time we opened, we were forced to get a line of credit and with the operating expenses being what they are, we are quickly gobbling it up at an alarming rate. In the winter, nobody buys craft booze, so expect very low cash flow from January to April. Thank goodness we do have a low overhead though. I would not want to be covering big equipment loans right now.

Before you leave the confines of the distillery you are lending a hand at, make sure you spend more time with the official paperwork than you do with the distilling. Although, seemingly innocent at the beginning, paperwork quickly snowballs into a blizzard of unhappiness. (He says bleakly looking at spending the day resolving seven months of paperwork for year end requirements. OMG!!!!) It gets harder when all those barrels start to stack up - did I mention the mistakes? I'll bet every single distiller here has paid more in taxes then intended somewhere along the way. Most of the time, you just have to eat it and hope you don't make that mistake again.

Well, I can procrastinate no longer, where is that snow shovel? Must...keep...going....

 

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Like the snow shovel comment.

There is a lot of heavy snow In Europe right now. 

Lucky to be in Hawaii. 

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Just had a heat wave this side .... Almost 40 deg C. :D

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Competition is really tight for small guys, you're gonna need to really be a craftsman to be competitive with this business model because people just down swoon over the small guys with not a pretty space as much as they do the real polished and aesthetically designed places. Im not trying to talk shit, it's just a fact. Look at who is selling equipment because they're offline. Its all smaller sized equipment in unpolished places. I want you to do well, but you gotta understand there's much more to this business then just making good products. You need to make stellar products, and make people want to buy them while at the same time making it available for them in the market place while protecting your margins to continue production. This industry is not a side hustle industry. You have to commit and fucking flourish or you will fail. Good luck. Reach out for advice wherever you can. Be a sponge. A lot of newbies around here spend time telling people what they're going to do.......... it's wise to ask what you should.

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