How to start a small distillery: Insights from owners

To start a small distillery, you don’t need a degree in chemistry or a sophisticated palate. However, you do need a brand that people can understand and identify with, a quality product, and — in Robert Hagerman’s case — a love of dogs.

Robert is the owner and founder of New Jersey-based Corgi Spirits, an independent, small-batch distillery that produces gin and vodka. He named his company after his favorite breed of dogs, which he believes symbolize the perfect combination of rich heritage, pedigree, charm and charismatic personality. This is fitting for a local business that prides itself on offering top-quality products in a friendly, fun environment.

Small, local distilleries are popping up everywhere, and consumers are lapping up the opportunity to enjoy craft spirits made in their own communities, often by friends and neighbors. Fifteen years ago, there were maybe 50 craft distilleries in the US. Today, there are more than 1,300 craft distilleries in the United States, and the industry is growing rapidly.

From MBA to GIN

Like many small distillery owners, Robert didn’t start his career in the field. In fact, he has an MBA from Harvard Business School and spent several years in the corporate world before he heard the siren song of the still. Nonetheless, his business background has been helpful in activities such as strategic/financial planning and marketing.

Edgardo Zuniga, owner of Twin Valley Distillers in Rockville, Md., which makes bourbon, whiskey, rum and vodka, also had a different career before starting his company. He was a chef who wanted a change. He was tired of restaurants and started by making a limoncello, and was pleased with the quality of what he produced.

“I felt like it was superior to much of what I found in the liquor stores,” he says. “To me, making alcohol is cooking. Opening the distillery was just the logical next step.”

He found a warehouse is a growing suburb of Washington, D.C., and dove in head-first. “We wanted a warehouse so we would have more space and adequate parking, so our location is perfect,” he says. “We buy grain from local farmers, and recycle grain back to them.”

A barrel of fun … and work

Expect to work hard if you’re going to have a distillery. “We work seven days a week,” says Edgardo. Robert agrees that this is a more-than-full-time job.

“Finding balance in terms of where you put your energies and resources is a big issue. When I started, it was just me and one bartender,” he says. Robert was handling management, sales, bartending, and production operations at the same time.

“I needed to figure out how to add more employees to the payroll. This can be stressful and challenging if you have limited resources,” he says. “Ensure you can grow the business strategically and get the right people on board to help your vision come to life and continue to grow.”

Even as you get up and running, the owner/manager still has to wear many hats, nurturing ongoing relationships with different accounts and customers and ensuring new ones grow. Robert is also his own sales rep, and that can be a challenge. He notes that when he visited one account, he found their Corgi Spirits shelf empty. “They were waiting for me to come back in,” he says.

Large distilleries have the luxury of working with distributors who make the rounds regularly, so, to compete, you need to get orders coming in constantly. As your business grows and sales pick up, hiring a sales force — or at least a sales representative — should be a priority, Robert says.

From enthusiasm to education

Getting into a business that can be a 24/7 proposition requires a real passion for the industry. “You need to have realistic expectations and a vision that motivates you on a regular basis,” Robert says. “Even though it’s fun, it gets exhausting.” He might work all weekend, but he still has to come in early on Monday to run production batches and handle the business end of the distillery.

And even if you’re not technically focused, there are some elements of safety you also have to consider. “You are working with highly flammable materials. You should be reasonably well-training in the art and science of distilling,” Robert says.

There are numerous online and in-person educational courses and programs. For example, Robert attended the prestigious “Moonshine University” in Kentucky, which offers a six-day distiller course that provides a complete overview of distillate production and the beverage alcohol industry. Such programs are invaluable, according to Edgardo:

“You learn the how-tos of distilling, as well as issues related to the operation of a distillery, such as what insurance you need.”

Once they gain their own knowledge and experience, some small distilleries offer their own programs and workshops as an additional income source and another way to connect with the public.

Rules and regs to start a small distillery

Photo: Micaela Parente on Unsplash

It is essential to understand both federal and state regulations providing oversight of the industry. Among the federal issues you’ll need to address:

  • Your facility must be secured from fire and theft.
  • You will be required to pass a background check and have a clean record.
  • Depending on how involved they are, questions may be asked of your spouse, partners, investors, and financiers.

It can take months to get approval for new products, so you need to consider this in your business planning. It’s also wise to get your accountant and lawyers involved to set up accounts and review all documents and paperwork.

State regulations vary, so it’s essential to know the rules in your state before you get started. For example, in Maryland, Edgardo can only do tastings. People can bring in snacks such as cheese and crackers, but the distillery serves no food. Find your state authority here.

The American Distilling Institute offers a craft certification for distilled spirits and craft-blended spirits to assure you are producing an original product. This isn’t required by law and is strictly voluntarily.

Even if you start a small distillery and find success, don’t expect to relax and rest on your laurels. “There are new distilleries opening every week. As more places pop up, it will be more difficult to stay competitive,” Robert says. “Unless you have a quality, solid product, a strong brand, and a clear mission, you won’t stand out and you’ll get lost in the waves.”

The post How to start a small distillery: Insights from owners appeared first on Garage.


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