Put your new craft distillery on the path to success by choosing the right location.
Select the right facility for your new craft distillery.
The craft distillery industry is on an explosive upward trajectory right now. New distilleries are opening, on average, once a day. However, opening your own distillery is no easy feat (thanks to heavy government regulations and high startup costs). During the process, there will be plenty of mistakes you’ll make (as with starting any new business), but selecting the wrong facility is a mistake that there’s just no coming back from. In order to select the right facility and set your craft distillery on the path to profitability, you’ll need to consider these 5 important factors: local regulations, space requirements, aesthetics, utilities, and facility design.
Understand Local Regulations
When thinking about where you want to buy or build your distillery, the first thing you’ll need to understand are zoning laws for your county. Each county has its own set of zoning laws and regulations that determine what parcels of land can and can’t be used for. Zoning laws will quickly tell you what parts of town you can put your distillery and, more importantly, what parts of town are off-limits. While zoning laws do vary from county to county, most of these off-limit areas are within close proximity to schools and churches. Once place to start your search is you county’s website as this is usually publicly listed information.
Another big part of local regulations are the smaller ordinances that control things like signage, fences, and building height. Depending on the county you are in, these can be very lengthy and stringent (particularly if you’re in certain parts of California). You’ll also need to thoroughly understand fire codes and building codes as these impact distilleries very differently than breweries. And don’t forget to apply for a zoning permit. You’ll need one so that you can legally distill on the land you choose.
When conducting research on zoning laws and local regulations, it’s important to get out and meet local government officials in your area. There’s an unmerited misconception around people in the alcoholic beverage industry, and meeting local officials to let them know who you are and that you are here to play by their rules will pave the way for a more positive approach to distillery owners in the future.
Estimate Your Utilities
Rent is typically a primary consideration for ongoing facility expenses, but utilities are going to account for a sizable portion of monthly expenses for your distillery, so you’ll need to carefully estimate the cost of utilities. The first major utility to get estimates for will be energy. Running a distillery means you’ll be using a lot of energy to keep your facility cool during the distillation process—from mashing and fermentation to bottling. If you’re looking at a previously-occupied building, get last year’s usage reports from the utility company. If it’s a brand new building, get estimates and rates so that you can work with your engineers to make calculated estimates.
Another major utility expense will be water. Water is one of the most important ingredients for any spirit, so you’ll be using a lot of it. In addition to usage reports and rates, you’ll need to understand the quality of your water supply and the different types of treatment it might need. Chlorine or chloramine is added by most municipalities and will need to be removed from your distillery water. If you’re using well water for your distillery, there’s usually additional treatment that’s needed. As you begin to do your research on the water you’ll be using, check your local government’s website as most cities publish information online about water quality and the different forms of treatment they use.
Know Your Space Requirements
Arguably the biggest consideration you’ll need to make in selecting the right facility is square footage. The larger the building, the more expensive it’ll be (generally speaking), so we need to carefully examine how much space we really need. Craft distilleries produce less than 100,000 gallons a year, but even small batches require some not-so-small equipment. The best place to begin is by conducting a break even analysis. How much will you need to make/sell in order to break even?
Once we have our break even analysis done, we can begin to work on capacity and production requirements. This will be a good time to seek out the help of a distillery engineer. They can easily determine whether or not you’ll need three 500-gallon stills or eight 2,500 gallon stills and whether you’ll need to store 100 barrels at a time or 10,000. Another important thing to keep in mind as you gauge distilling equipment is building height. Fermenters are usually anywhere from 5 to 9 feet tall and stills can be an upwards of 12 feet tall. If you are restricted on building height, you’ll need to make it up with wider equipment, which will mean more total square footage.
And what about a tasting room? If you don’t want to rely solely on distribution as your revenue stream, you’ll need plenty of space for a tasting room to showcase and sell your spirit.
Sketch Out Your Facility
As you begin to narrow down your search for the right facility, you’ll need to judge whether or not each building is conducive to distilling spirits. Now that you have an approximation of how much square footage you need, you can create a simple blueprint for each building to determine whether it will work. This is another great time to involve a distillery engineer as CAD drawing are much more professional than a drawing on the back of a napkin. First, let’s take a look at the production floor. We’ll use the process of distilling whiskey as a demonstration. The whiskey distillation process looks like this:
Step 1 - Fermentables go into mash tun and become mash.
Step 2 - Mash goes into fermenter and becomes distiller’s beer.
Step 3 - Distiller’s beer goes into stripping still and becomes low wines.
Step 4 - Low wines go into finishing still and become heads, hearts, and tails.
Step 5 - Hearts get stored in barrels for aging.
Step 6 - Aged spirit gets bottled & labeled.
Since you already know production and capacity requirements, start placing your equipment out on your blueprint. Your mash tun, fermenter and stills will need to be within close proximity of one another to allow for seamless integration. And you’ll also need space for your barrels to be filled before being taken to be aged.
Next, we’ll design our barrel storage. If you’re going to be storing smaller amounts of barrels, building an on-site facility is best. If you’re planning on storing large amounts of barrels, having a separate barrel house makes life easier. You also need to consider the fact that you won’t just be storing barrels of spirits; you’ll be storing raw goods, finished goods, and consumables. At this stage, a distillery engineer should also begin to plan out all other distillery systems, including sewage, plumbing, HVAC, electrical, steam/hot water and cooling.
Design The Aesthetics
One of the driving factors behind the growth in the distillery industry is premiumization: the concept that consumers are willing to pay more for a product that they perceive is unique and one-of-a-kind. Successful craft distilleries aren’t just selling a product, they’re selling a story. As you begin to make your final selection, look for a building that resembles your brand. Think about the words someone would use to describe your product and then look for a building that can be described by those same words. If you’re having trouble finding a building that matches your brand or spirit, a distillery architect can take your vision and design a handsome distillery.
With these 5 considerations, you’ll be able to find the perfect facility for your craft distillery. Remember, this is going to be a huge undertaking and you don’t want any wrong move—especially when it’s regarding your facility—to jeopardize the success of your distillery.
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