Max Action

Just curious how everyone is hanging in there, and if the quarantine is causing any distilleries to go out of business? I imagine it's got to be tough for those that are really dependent on tasting room sales and/or on-premise accounts.

I'm acquainted with some folks that started a vodka brand in NYC as a part-time side project. They've had some decent placements in high visibility New York City on-premise accounts, and a few in the Los Angeles area as well. However a lack of available time has them questioning how much longer they want to manage it, and curious if anyone else is interested in taking it over. PM me if this might be something you'd be interested in.

I've received a number of spam emails from buyers wanting to purchase our excess/damaged/closeout inventory, which I usually deleted without giving any thought. Now I've got some inventory I'd like to liquidate and can't find any of those emails. Anyone here have suggestions on closeout buyers or brokers?

I got that $350M figure from one of the prospectuses I mentioned. I don't have any insider info myself, but perhaps they did. I don't think the High West deal was that surprising, and not the only headline grabbing acquisition. I'd be curious to know what prices were had for Aviation Gin and Westland Whiskey. Take a look at the valuations of the deals mentioned above and other past and future deals. Don't forget Ballast Point sold for $1 Billion, or 20x revenue. Obviously the vast majority of small producers are not going to achieve such success, and many will fail completely, but there's no harm in trying and aiming high. That's what an investor will be looking for when paying 6X revenue in an early stage company.

I've seen a couple investor prospectuses recently that claimed $1000 per annual case sold is one industry standard valuation (i.e. Deep Eddy selling for $350M with 350K cases sold annually). I've also seen successful equity raises by smaller distilleries that are comparable with that valuation multiple. Of course I believe High West just sold for $160M with 75K in case volume, which is more than double that "standard" valuation. So if you're selling 5,000 cases annually with ambitions to become a national brand, a value over $5 Million value does not seem unreasonable. You might also consider a multiple of gross revenue rather than case volume. Something like 6X gross revenue might be worth considering as a starting point for negotiations, i.e. $1M in sales translating to a $6M valuation. Of course if your only ambition is to run a successful distillery-giftshop-cocktail lounge in your hometown, your valuation will likely be less dependent on your case volume and growth potential, and more dependent on your profitability and potential to generate dividends in a limited size market. It would probably be valued more closely with that of a successful local restaurant or bar.

I'm curious what kind of language are people seeing in their contracts with distributors in franchise states? I understand the extra burden of the state's requirement that the distributor release a brand before switching to another distributor, but are there any challenges that prevent specifying conditions in advance which will cause distributor to release their rights? I'm thinking along the lines of minimum sales targets and buy-out clauses.

There doesn't seem to be a good "in between" option with automated systems. It seems like a choice between a $5K manual operation or $100K+ automated. I think a packaging supplier could do well with an entry level system in the $30-60K price range. Of course there is always used equipment, if you're willing to be patient for one with the right specs.

Cool. How many gallons of cooling water does it go through now? Another option to control flow would be getting a flow meter with needle valve, although that still requires manual adjustment throughout your run.

I agree with this. It seems a disservice to remove the ad completely. I can't imagine it would take anymore work to lock a thread than delete it completely.

Anyone know what the deal is with the semi-monthly tax period ending Sept 26th, and then another ending Sept 30th?

Do these have a sloped bottom or otherwise drain completely, or do they leave a puddle after emptying?

Just curious, do these ship in the barrel itself?

Ah, it's just a fanciful name. Clever. Not too surprising about the age statement however, as I also see it lacking on numerous labels.

With no new charred oak barrels, how can they call it Malt Whiskey? I also didn't notice an age statement on the label. Have they found some loophole by spelling it "whisky"?

We started reasearching the industry long ago, and have equipment quotes from a lot of the still manufacturers from over many years. Prices for new stills have doubled in some cases, even after factoring the price swings of copper/steel and euro/dollar inflation. Same with leadtimes. Ten years ago you could by a 200L German still off the shelf from GW Kent for less than $20K. I think the current high prices are simply a factor of supply and demand. It's a good time to be a still manufacturer, but a not so great for a purchaser. For anyone buying a still today I wouldn't absolutely count on getting yout monry back when it comes time to resell your own equipment. With so many new distilleries opening in recent (and upcoming) years there is likely to be a serious increase in the availability of new equipment as companies scale up or go out of business. Plus I see a lot of new supply companies starting to offer distillation equipment and competing with the established ones. Not that it helps anyone today, but I expect to see a price correction in the near future.

We had a distributor return some product. We already reported it as withdrawn on a past monthly report and paid excise tax on it. How should that inventory return be reflected on the current monthly reports and excise tax return?

oops I meant to post this to Packaging, not Equipment

I think the title sums it up. It seems all the flask style bottles I've found are tamper-evident screw caps. But I would really be interested in an option for a 375ml flask with bartop. Anyone know of a supplier?

Good comments regarding the safety and durability. I will check with the hose manufacturer regarding ratings for daily use.

We're doing a low pressure boiler upgrade, and it appears the cost of 2" rubber steam hose is in the ballpark of 2" steel steam pipe. Any negative opinions on using hose instead of pipe? The hose would certainly be faster to install and with smooth interiors it seems there could be less pressure drop from bends compared to the hard 90 degree elbows with pipe.

I've had some good conversations with the assistants to the executives in charge of negotiating the terms, and they've been a bit more candid and said that generally if a brand is unhappy or isn't performing to everyone's satisfaction they'll generally release them from the contract without much hassle. The main benefit for them of the big buy-out is if the brand does really well and gets bought out by a big company, it then ensures the distributor gets to retain the business or at least get a piece of the buy-out. Of course with such a large penalty, that would obviously negatively impact the price a big company would be willing to offer us, assuming we even wanted to sell. Then there's the issue were the brand just does ok, maybe meeting their expectations but not ours, in which case we wouldn't have many options.

It's not a franchise state, and not beer distributor. It's one of the top 20 spirits distributors in the country. We turned down an offer a couple years ago from a big competitor (who only wanted to carry one of our products) and their contract called for just a 6 month buy-out. I do believe the current distributor when they say their position is non-negotiable and that their other new clients are agreeing to the same terms. I also believe them when they tell us we should feel lucky they're willing to take our product, as they constantly turn down other brands they say would love a chance to work with them at any cost. I think it's unfortunately the result of so many new brands coming on the market in the last couple years competing for the attention of so few distributors that dominate the market. We're still undecided, but might have no other choice if we really want to make a big expansion (at the price point we want).

No, there is no provision for minimum sales. Although they've verbally reassured us they'll immediately double or triple our sales. On the positive side, they are willing to work with a much lower margin than other distributors.

We're currently talking to a big distributor and they want a contract with no expiration or renewal date, with our only option of getting out by having to pay a buy-out of 36 months of gross profits. With the state of the industry, they obviously have the advantage in negotiating, and insist they won't budge on the issue and everyone else is agreeing to these same terms. Is that really the case, is anyone else here signing up for a lifetime commitment with a 3 year buy-out? Does anyone else have an opinion on the matter?

Thanks for the tip, that does look interesting. It says it's a highly refined mineral oil, but I wonder how the performance of it performs compared to regular USP grade mineral oil.