Diversifying Your Brewery: Distilling Spirits
Our “Expansion Series” addresses tips for managing the multiple production processes involved with diversifying your business into Cider, Spirits & Craft Cocktails, and Coffee or Cold Brew.
We previously addressed the World of Cider: knowing your audience, selling on premise, possible legal hurdles, and how to report production to TTB via WRO
Now, we examine the process of distilling spirits and Ready to Drink Cocktails.
Ready to Drink Cocktails: Fun in a Can
One of the hottest trends over the past few years has been the rise of ready-to drink cocktails. From hard seltzer, to wine spritzers or even traditional cocktail blends, expanding into this market makes a lot of sense, especially if you already operate a distillery. A 2016 Mintel report on “’RTD Cocktails’ predicted that sales of RTD spirits-based cocktails in the U.S. would rise by 9 percent in volume by 2021.”
The growing popularity of flavored sparkling water and the growth of canned packaging make pre-mixed canned cocktails extremely popular with the Millennial generation. “Based on the consumer—the millennial wanting unique and fresh . . . they want it now . . . this can phenomenon,” says Kevin Roberts, VP of supplier engagement for Breakthru Beverage Group. “I don’t see a lot of downside on where the trend is going.”
“It was a natural progression to look at ready-to-drink cocktails once we got our beer into cans, since canned cocktails can go anywhere beer can go,” says New Holland’s President and Founder, Brett VanderKamp. “RTD packaging allows our consumers to conveniently and easily bring delicious cocktails on boats, to beaches, on the golf course, and to social events without having to pre-mix by hand.
If you’re already canning your beer and have a successful line of distilled products, canned cocktails are a great way to diversify as a business. Creating a new line of distilled spirits is a complex endeavor. There’s new equipment to consider, more space than you’re currently occupying, a high likelihood of more barrels, as well as new branding.
That’s even before you consider the maze that is the Distillers Report of Operations. The BRO equivalent in the spirits world is a behemoth of complicated proportions. There are also state and local regulations to be aware of, as well as creating your own narrative for your new brands. So where do you start?
Getting Spirited – Becoming a “Distillery in Planning”
If you have a desire to distill spirits, start by joining the American Distilling Institute to become a “Distillery in Planning.” ADI provides access to “multiple business plans and spreadsheets that were used to start distilleries currently in business.” Having your raw material suppliers, equipment, and an outline of costs must be determined so a budget can be created, and funding secured.
An ADI membership also includes access to the Distiller’s Resource Directory. Learning from those already in the business, understanding the brands in your area, and creating connections to further ensure your success is critical.
Next, do your research. According to Inc. Magazine, “there are three levels of red tape craft distillers have to get past–federal, state, and local, which can entail cities and/or counties–and many rules are time-consuming, and often non-existent.” Ensure you understand the expectations at every level – from background checks, to building regulations, licensing and taproom regulations.
Once you know the landscape, determine your brand identity. According to Distillery Trail,
“distillers, distributors and retailers […] consistently mentioned the importance of a well-expressed, authentic story. People seek an emotional connection to the brands they purchase, and this drives their willingness to pay a premium for a distilled spirit.”
Lastly, determine a game plan for selling your finished product:
- Will you be packaging solely in bottles?
- Do you plan to serve onsite at your current location?
- Will you be setting up a separate location?
- Address state and local laws for all these contingencies.
Having a software platform that can track those accounts specific to your spirits division, sort out production, and generate reports by location should be a top priority as well.
Managing the Business of Beer and Spirits
Taking on all these specialty products sounds great on paper, though getting to that point requires having the internal infrastructure to manage all these custom processes. Tracking all your costing, sales, production, financials and reports in one place, as you grow, can become difficult.
If you’re going to take the leap, will your current system of production be able to handle the increased complexity of these new projects? Having a flexible, customizable craft beverage software will enable you to reach your goals by organizing these new processes, avoiding tougher growing pains in the long term.
Orchestrated can be customized to handle Spirits, ready-to-drink cocktails, and other craft beverage production types. It enables craft beverage manufacturers to expand into new segments without having to change systems.
Have more questions about producing new beverages? Download Managing Multiple Beverages in OBeer tips sheet to discover how OBeer can help you manage the complexities of managing multiple beverage categories through using one software platform by filling out the form below:
Continue your reading with our other blogs in our Expansion series: Expanding your Brewery Through New Markets, Diversifying your Brewery: Adding Coffee to your Brewery and Diversifying your Brewery: Adding Cider to your Brewery.