Sales expectations?

[Bolverk]

Howdy all,

For those of you that started out with a tasting room what is realistic volume to expect to sell in your year with a good marketing effort and high foot traffic?

I know I'll need to sell 230 750ml bottles at $30 a month to break even, but I don't know if that's realistic... Ideally I'd sell more than just breaking even, but at first breaking even would be great.

Any real life examples of your first years sales figures would be greatly appreciated.

Thanks is advance.

[adamOVD]

Year one, in a small town, with no foot traffic, no marketing, no established brand, but with some food, and cocktails, and free tastings. We sold 2,200 bottles year one out of the tasting room. 2,700 year two.

[Bolverk]

11 minutes ago, adamOVD said:

Year one, in a small town, with no foot traffic, no marketing, no established brand, but with some food, and cocktails, and free tastings. We sold 2,200 bottles year one out of the tasting room. 2,700 year two.

Thank you so much!

Can I ask what percentage of that is the total you produced?

[adamOVD]

Not sure. I'm making about 1,000 proof gallons a year these days. It was less then. Another thing to keep in mind, was year 1 was all unaged products.

[Bolverk]

Thanks, that makes sense.

My conservative plan has me doing 2700-2800 proof gallons the first year (basically a 53g barrel a week), this seems too aggressive but it gets me off to a pretty good start in year 2 and 3 if I'm doing a mix of 30/53 barrels.

The problem I keep running into is that the business plan falls apart in year 3-4 if I don't start with at least a barrel a week.

I'm worried that I'll over extend myself that first year selling only unaged/sourced and not make it to year 3-4 if I put too much away in barrels. 

Got any recommendations? 

[adamOVD]

What are the laws on serving cocktails in your state? Shipping bottles DTC? How comfortable are you with risk? At a certain point you just have to go for it, and be ready to pivot hard it it all goes to crap.

If your product is good-great, and your tasting room experience is enjoyable, and you have good location in a metropolitan area, I don't think you will have a problem meeting your goals. There are too many variables to say for sure though, which is probably why not many people are chiming in, or they're not comfortable disclosing their sales numbers.

[Bolverk]

AZ is actually pretty good as far as I can tell, we can serve/sell on premises and DTC via phone, mail, and internet. 

Not as comfortable with high risk as I once thought lol. But, I'll be pretty flexible and willing to change things as needed. 

I think your right as far as just going for it, I'm just trying to iron things out in my BP so it's as realistic as possible. 

That makes sense thanks. The location I'm shooting for is honestly pretty good lots of foot traffic, its a hotspot for food trucks every Friday night and popup farmers market once a month .

Yeah it's a hard one to answer because there are so many variables... I don't blame anyone for not commenting, I appreciate that you did though. 

[TheLostState]

There are indeed a lot of variables at play and the spirit landscape has changed post-covid.

Our tasting room opened in August of 2019 and we sold a little over 1000 bottles in those first 4 months.

2020 was starting out on track then covid shut everything down, but we ended up with around 2500 bottles sold for the year.

2021 overcorrected because of everybody finally getting out and we doubled to a little less than 5000 bottles for the year.

2022 seemed to correct backwards to where 2021 probably should have been for us with around 2600 bottles sold again. 

2023 we are at around 3000 bottles sold thus far. 

The above is just bottle sales in our tasting room, we also pivoted into canned RTD cocktails in 2022 but I didn't count those in the numbers because I don't have the Distro vs Tasting Room numbers on hand.

Post-Covid we have seen less people coming in but they are spending more on average. We don't currently operate a cocktail bar, though we are going to open one hopefully in 2024, and Tennessee doesn't allow DTC, but we use an out of state third party for shipping. Our tasting room currently keeps the lights on but not much else, everything else is driven through distribution and quite a bit of private label/contract distilling. 

It's pretty much been said elsewhere, unless you are in a really high traffic area the tasting room can maybe keep the lights on but the main focus should always be distribution and growing your footprint while not over-extending. It's not a fun situation to run out of a popular bourbon when it takes literal years to gain back the inventory. 

[Bolverk]

Thanks, I appreciate that.

What would you say is a healthy mix of retail bottle sales, cocktails, and wholesale?

I'm currently forecasting using: 25% retail bottle sales, 50% wholesale, and 10% cocktails. I foresee having more than 10% in cocktails and less than 50% wholesale but I'm trying to play things out in a realistic but conservative scenario.

[TheLostState]

I would say that's dependent on what you goals are. We have a few distilleries around us that strictly focus on their retail and cocktail sales and don't push distribution. They are relatively small in comparison to the others but their goal is primarily operating as a self stocked bar with the bonus of bottle sales. Initially I would say start about 50/50 with distribution and retail but start working on growing out your volume on the distribution to get into the 70/30 realm. The wider your distribution the more volume you can potentially move and the more growth potential you will have. It is definitely easier to sell in your distillery vs in a bottle shop just because you have a captive audience, but distribution is where the volume is and in the end pays off the best.

[Bolverk]

Thanks that make sense 

[SlickFloss]

You need to sell that many bottles to break even but one thing you will learn is a lot of people who come aren't going to purchase something for $30. It was really beneficial for us to develop merch that people WANTED to purchase, and making sure we had things for people to buy in the $10 and $20 price range too. 

One thing to realize is what you think is fun or cool often won't resonate widely. Creating merch that is "vanilla", fits and feels well, and you can sell for 15-20 at great margin will bankroll a lot of ferments. If you're clever funny and have great taste creative shirts can make you a lot of cash too, but you'd be surprised how much vanilla ice cream you will still sell even when you have your favorite cotton candy, chocolate balsamic, and strawberry mint milkshakes on the table. The same applies to your products and labels too to a point. 

While there of course will be people who won't buy anything over 10/20 bucks, there's also going to be a shit ton of people (if your doing a good job) who will buy ANYTHING to support your business. So merch, of various value, is very valuable.

Cocktails should drive a lot of your revenue. People on here probably won't be honest, but most facilities at what I imagine your size is going to be from your break even number and aforementioned production goals are doing 75-90% of their revenue through their tasting room. Make sure yours is on point, and you're ready to work weekends. Welcome to your money's burn barrel.

[jocko]

@SlickFloss well stated.

On the brewery side, I always think of everything in terms of pints.  "How many pints do I have to sell to pay for this?"  Informs a lot of decisions when you think of things like this.  The number of pints to break even is depressingly large. 

 

[Bolverk]

Thanks Slick, solid advice.  Merch/swag was definitely on my list but I guess I didn't realize it could make that much of a contribution.  

I think I'll have much more retail drink sales than im accounting for considering the location, but id rather plan conservatively and be happy I was wrong. I'm currently running under the assumption ill sell 25% to retail bottles sales, 40% wholesale,  and 10% drinks. But honestly I think my drinks and wholesale will likely be switched... which would be awesome if it works out that way

[Pofarmer]

On 12/5/2023 at 10:36 AM, adamOVD said:

Year one, in a small town, with no foot traffic, no marketing, no established brand, but with some food, and cocktails, and free tastings. We sold 2,200 bottles year one out of the tasting room. 2,700 year two.

Can you define "Small town?"

[adamOVD]

7 hours ago, Pofarmer said:

Can you define "Small town?"

Population 4,000

[Pofarmer]

3 hours ago, adamOVD said:

Population 4,000

Holy crap. How many in the county?

 

[adamOVD]

1 hour ago, Pofarmer said:

Holy crap. How many in the county?

 

19,000. Bishop, CA. Not the best location if making a ton a money is the main goal, but it's a great place to live.

[RyeWater]

This would heavily depend on location, could you share with us your target town, and within that town a target location.  These numbers are really hard to pin down without knowing the area you will be operating out of.  We operate in frederick, maryland and sell out of our tasting room around 25,000 bottles a year and an additional 60,000 in distrobution (we are in year 7).  Year one we sold around 7,500 out of the tasting room and 12,000 in distro, we were early to the game and we reinvest all profits into growth. 

We consult for disilleries all over and the sales numbers will vary widly depending on location and business plan.  We always advise on building multiple income streams into your plan when starting.  For example private events (weddings) have been an incredible tool we and others have used to be profittble right out of the gate (we have sold hundreds of weddings at $8,000 a piece) which allows you to focus your income streams on growing your brand.  

Once you have a location in mind if you want to reach out to me I'd be happy to share with you my thoughts of the location, projections as well as revenue streams that may suit the location well.

My advice is usually scary, go big or stay home, that doesnt mean you need to spend a million dollars on equipment alone but it does mean dont bother opening if you cant afford/produce quality everything (Equipment, Furnishings, Packaging, Marketing).  If you look at all the distilleries going bankrupt and trying to sell their "turnkey" operations they typically all have some common denomenators of budget equipment manufacturers, budget location, and budget packaing.  As unfortune as it is the truth of the matter is anyone starting now is a little late to the game and cant afford to come out of the gate slow and learn as they go.  Most towns suitable for a profitable distillery already have one and you will be competing with right out of the gate and if your location/equipment/branding isnt clearly superior to guests walking through your door you will really struggle to keep turn a profit. 

Final piece of advice...dont skimp on the still.  Dont buy chinese and dont by from a manufacter that opened in the last decade (que the new manufactuers disagreeing), dont buy a mainly stainless system packed with copper BS.  Your guests will judge the quality of your spirits long before they actually taste them based on the qulaity of your production floor.  This is especially true if you are opening in a town with an established disitllery.

[Bolverk]

Thanks for that, it makes a lot of sense 

I'm working on a new place, and I'll reach out when I'm closer to getting it nailed down. The perfect spot I working on was leased as I'm still trying to secure funds.

I see what you're saying about dont skimp on the still. But man, if I were to go with the big well known Kentucky still builder, my equipment costs would be 5 times higher. As it is getting funding for the $400k I think I need using SD gear is already challenging enough, if I bump that up to $650k I'll never get the distillery off the ground. In the back of my head it was always to plan to get up and going with good affordable gear, then upgrade once the business could pay for the expansion. 

 

[RyeWater]

Vendomes prices are pretty outragous, I was in the process of buying a still from them 8 or 9 years ago when they did a 30-40% price increase on all products because demand was so hot and their lead times were over 12 months....prices have only gone up from there.  I dont usually  reccomend them unless you have deep pockets and focusing primarily on whiskey.  I would at least consider a Kothe out of Germany, they broke off of CARL 40 some years ago and CARL has been making stills since the 1800s.  It is what we operate, flawless manufactuing and competetive prices.  You could get a 1000L Kothe Pot, four 2450L Zottel Ferms, a 2000L Kothe Mash tank for around $200-225k delivered and that would leave you around 200K for boiler,chiller,pumps,buildout, etc.   If you want,  I'd be happy to take a look over your projected equipment list / startup expences and let you know if there are any areas you are over/under estimating.

I will say that once you're operational, its very hard to save the money up to expand operations for one reason or another... Even with success its difficult to squirrl away the hundreds of thousands of dollars needed without something coming up that demands those funds!

 We are actually upsizing from our 1000L Kothe system to a 2000L right now and it is a pricey endevour for sure...I dont think it will meet your timeframe but we are selling our current system (1000L Kothe Pot, 3x 2450L Zottel Ferms, and 2000L Mash tank) for $160,000.  Goes to show you what you can get on the used market and I wouldnt shy away from used equipment from quality manufactuers, it will outlast us both!

I would consider finding a business partner who can help share the work load and help increase starting capital to around 500k.  

 

[Castaway Fiji]

On 3/7/2024 at 3:18 AM, RyeWater said:

This would heavily depend on location, could you share with us your target town, and within that town a target location.  These numbers are really hard to pin down without knowing the area you will be operating out of.  We operate in frederick, maryland and sell out of our tasting room around 25,000 bottles a year and an additional 60,000 in distrobution (we are in year 7).  Year one we sold around 7,500 out of the tasting room and 12,000 in distro, we were early to the game and we reinvest all profits into growth. 

We consult for disilleries all over and the sales numbers will vary widly depending on location and business plan.  We always advise on building multiple income streams into your plan when starting.  For example private events (weddings) have been an incredible tool we and others have used to be profittble right out of the gate (we have sold hundreds of weddings at $8,000 a piece) which allows you to focus your income streams on growing your brand.  

Once you have a location in mind if you want to reach out to me I'd be happy to share with you my thoughts of the location, projections as well as revenue streams that may suit the location well.

My advice is usually scary, go big or stay home, that doesnt mean you need to spend a million dollars on equipment alone but it does mean dont bother opening if you cant afford/produce quality everything (Equipment, Furnishings, Packaging, Marketing).  If you look at all the distilleries going bankrupt and trying to sell their "turnkey" operations they typically all have some common denomenators of budget equipment manufacturers, budget location, and budget packaing.  As unfortune as it is the truth of the matter is anyone starting now is a little late to the game and cant afford to come out of the gate slow and learn as they go.  Most towns suitable for a profitable distillery already have one and you will be competing with right out of the gate and if your location/equipment/branding isnt clearly superior to guests walking through your door you will really struggle to keep turn a profit. 

Final piece of advice...dont skimp on the still.  Dont buy chinese and dont by from a manufacter that opened in the last decade (que the new manufactuers disagreeing), dont buy a mainly stainless system packed with copper BS.  Your guests will judge the quality of your spirits long before they actually taste them based on the qulaity of your production floor.  This is especially true if you are opening in a town with an established disitllery.

We are in a very different market but and we run 4 stills now 2 from a well known Chinese manufacturer, one euro and one American. I would disagree about the Chinese products we run them flat out 5 days a week and have done for over 3 years and they havent missed a beat and have always been very helpful with parts/ gaskets etc. The best advice I was given before we got in the game was that the still is the least important part of the equation, its what goes into the still thats important.....just my  2 cents:)

[Kindred Spirits]

For equipment it really depends on the quality of the design and build. 

Some stuff coming out of China is poorly designed and built out of junk materials. Other places make great pieces of equipment like @Castaway Fiji I have clients using Chinese made equipment that is well made and works phenomenally. 

The quality of the product comes down to the skill and knowledge of the one running the distillery, as long as the ferments are good and the distillation has decent cuts, the product will be good.

No matter how nice or expensive the equipment is, it won't make good product unless the operator knows how to do things right.

[Castaway Fiji]

Absolutely, the support on operation out of China is zip, and we flew up there twice to inspect the machines before they were shipped- I still think I know nothing and always learning:)

[BuffaloBink]

You mean you don’t become a Master Distiller by simply buying the equipment and opening????🙄