The micro-distillery movement is an expanding opportunity for entrepreneurs who want to follow in the footsteps of the microbrewers that gained ground during the 1980s and 1990s. Operating your own micro-distillery takes more than enthusiasm for distilled spirits; it takes money and some serious savvy.
But successful micro-distillers take a number of different paths. Some focus on honing a single specialty product, while others offer a breathtaking variety; some market themselves as destinations, while others focus solely on the craft with no attention to marketing.
There's no one right way to run your distillery once you set up shop.
- Write a business plan, detailing anticipated financial expenses and projected income, as well as how you plan to operate the micro-distillery. You will need this plan to show to your bank or possible investors before they'll commit to giving you a loan. Figure out your business strategy and how you hope to make money: by focusing on a single type of spirits, or a variety; by extensive marketing, or a focus on the quality of the alcohol you distill.
- Obtain a loan from your bank or seek donors or investors to fund the start-up costs of your micro-distillery. Like with any business, you'll need to invest a lot of cash upfront before you can open for business and begin to earn that money back. You can expect start-up costs to be at least $10,000.
- Obtain any state or local permits necessary for operating a distillery. You will need a permit from the U. S. Alcohol and Tobacco Tax Board as well, but their regulations require you to complete that step later on in the process, after your distillery is ready for business.
- Research the art of micro-distilling. Read books on the subject, but also visit distilleries and talk to distillers. Hands-on experience is invaluable in learning to operate your own micro-distillery. Observe the regulations, techniques, and strategies of each distillery.
- Obtain the site for your micro-distillery. Make sure it is zoned for the production of distilled alcohol and in accordance with all federal and local laws on the manufacture and sale of alcohol. The size of the property you purchase depends on the size of the micro-distillery you plan to operate. A small operation doesn't need much more than a single room to house the equipment, but the size of the equipment does require high ceilings of at least 16 feet.
- Purchase your distillery equipment. You can make your own alcohol still if you want to, but it may be simpler to buy the equipment. The amount and scale of the equipment you purchase depends on how ambitious your plans are. You will probably require an alcohol still with a capacity of at least 150 liters. Most units are steam-heated distillers equipped with a rectification column. You will also need roller mills, a masher, and pumps with feed screws to crush and process the fruit you are fermenting into alcohol, as well as tanks to hold the fermenting mixture.
- Send the necessary paperwork to the U. S. Alcohol and Tobacco Tax and Trade Bureau to apply for a distilled spirits plant permit. Depending on the exact nature of the micro-distillery you plan to open, and the location of the distillery, the forms you need will vary. You must have a federal license to operate your micro-distillery, and you must have the equipment in place prior to sending your paperwork. Be prepared to wait; the licensing process will take at least six weeks, and may stretch to several months.
- If you plan to personally manufacture, process, pack or hold your alcohol for consumption in the United States, you will also need to register with the Food and Drug Administration. If you need to have labels for your alcohol approved, you will need to file a separate labeling application with the Tax and Trade Bureau as well.
- Obtain any further permits necessary. If you plan to sell distilled spirits by the glass at your distillery or if you want to sell other manufacturers' spirits or malt beverages, you may need to apply for an on-premise sales license, depending on the laws in your state. If you want to sell your products to consumers at your distillery or at a tasting room, you may need to apply to become a retail outlet agent.
- Apply to have your products available for sale in liquor stores across the state. Contact your state liquor licensing board for specific information on how to apply. Promote and market your products as you wish--promoting to bars and restaurants, participating in seminars and tastings or participating in industry trade shows.