• Calla Norman

How Much Does it Cost to Start a Craft Distillery?

Updated: Jan 10


A bottle of agave spirit from Western Reserve Distillery in Cleveland

Sign up for the 2021 $5,000 Barrel Giveaway for a shot at a barrel shopping spree for your distillery!


Have you ever dreamed about distilling your own whiskey, or rum, or gin? How much do you think it’d cost to make that a reality?


Much like with any business, the exact start-up costs are going to vary based on your distillery’s positioning, scale, and location. Are you trying to be a high-end or a budget distillery? Are you looking to build out a taproom as well as the distillery? What kinds of taxes and fees does your state place on spirits?


At a minimum, you should expect to budget $30,000 to start up a small craft distillery. By that, we mean, very, very small. If you want to be scalable, $200,000 is the estimate given by Kellie Shevlin, executive director of the Craft Beverage Expo. She also says that if you’re looking to produce something that ages, like whiskey or tequila, expect to invest millions.


All these factors and more will depend on what you pay to start your distillery, but we can give you the foundational estimations of what these things might cost. Read on to learn more about the startup costs for a craft distillery, and how you might be able to pay for them!


Your best shot at financing a craft distillery - crowdfunding!


There are many reasons to consider starting a craft distillery. Love of the craft, entrepreneurial drive, desire to create community over a beloved product. There are also as many reasons to consider crowdfunding to help fund that dream into a reality.


Find out more about Honeycomb Credit crowdfunded small business loans at www.honeycombcredit.com/grow, and fill out the form below for more information!






One Time Costs


Distilling equipment


Obviously, the distilling equipment you need will be one of the major investments you take in building your distillery. At the most basic level, you’re going to need a cooker (or mash tun), a fermenter, and a still. A cooker can cost roughly $11,000, a fermenter $6,500, and a still anywhere from $3,000 to $12,000. These costs are really going to vary depending on the size of your equipment, the quality, and where you source them from.


And this is just the big stuff! There will be all other kinds of equipment you’ll need to get, from barrels to bottling equipment. It’s safe to say that in total, the startup equipment costs for your distillery will probably average out to around $100,000.


Distillery and Taproom buildout


Depending on your business model, if a taproom is something you’ve got your heart set on, be prepared to set aside another $200,000 for that. That would include build-out costs (although there are ways to cut down on those), furniture, serving equipment, and so on.


A taproom is a great idea for many distilleries because it’s a way of making revenue using the spirits you can make now (vodka, gin, unaged whiskey) when you might be sitting on aging spirits for a while.


Inspired by Spirits, a Pittsburgh-based distillery, raised $69,050 from 79 investors through Honeycomb credit to purchase furniture and pay for build-out costs of their steampunk-inspired Apothecary and Tasting Lounge. Soon, investors who’ve contributed to their crowdfunding campaign will get to taste their wares and relax in the space they helped fund!


Mike, co-owner of Inspired by Spirits distillery in Pittsburgh, next to one of the stills he designed himself.

Mike, co-owner of Inspired by Spirits, next to one of the stills he designed himself. Find out more about how Honeycomb Credit supports this kind of innovation with small business loans here.


Getting Legal


The absolute most important upfront cost for starting your craft distillery is getting all your legal requirements in order. It’s actually illegal to distill alcohol without a license - even at home!


Here’s a rundown of all the legal requirements you’ll need to take care of - and of course this will vary by state and what kind of zone you’re operating in. The actual cost will vary depending on your lawyer’s fees as well as the permit costs of the state you’re in, but this is a necessary investment for any craft distillery and not something you want to skimp on.


Recurring Costs


Bottles


A popular trend with craft distillers at the moment is to have their own bespoke bottles. This is smart from a marketing standpoint, since it’ll allow your bottle to stand out on the shelf, and is another way to assert your branding.


However, it’s pricey! A bottle mold can cost you from $20,000 to $70,000. But, Oregon State University has a hack they suggest to distillers - find a prototype another distiller was thinking of using for their bottles, and use that for a fraction of the cost.


With that upfront cost in mind, if you’re looking to just purchase bottles wholesale, keep in mind that the costs could vary from roughly $1.50 - $4.00 apiece, which adds up when you’re buying cases of bottles to sell. If you’re doing bespoke bottles, expect to pay up to 40% more per bottle.


In addition to this, you might want to consider shipping costs or other packaging, especially if you’re selling direct to consumers.


Ingredients


Ingredient costs will vary depending on what kind of spirits you’re making, the quality of ingredients, and where you’re sourcing them from.


In a cost-accounting exercise, David Chew, a CPA and distillery consultant estimates that for a batch of rum, raw ingredient costs will be roughly $900. So, using that as a baseline, estimate roughly $1000 per batch of raw ingredients for your spirits.


Western Reserve Distillery in Cleveland, Ohio, raised $100,000 with Honeycomb Credit in order to purchase raw materials for their agave spirits, as well as barrels of whiskey to expand their aged whiskey inventory. After having spent much of their resources in distilling hand sanitizer for coronavirus relief, they needed a bit of a boost in capital to continue their growth plans and get the necessary raw ingredients.


Spirits Taxes (and other taxes)