How Much Does It Cost to Start a Craft Distillery?

Starting a craft distillery is a complex and expensive venture with no set cost. However, estimates suggest that the minimum investment required to create a scalable distillery and brand ranges between $3 million and $5 million. Numerous factors contribute to this cost, including location, quality, and scale of operations. Below, we’ll break down the key areas where your money will be spent, helping you tailor this information to your particular scenario.

Legal Compliance Costs

The alcoholic beverage industry is heavily regulated, with craft distilleries subject to federal, state, and local policies and regulations. Navigating these regulations often requires the expertise of an attorney specializing in this field.Additionally, you must secure the necessary local or state permits and licenses for operating a distillery. This includes compliance with fire and building codes, as well as specific distillery operation codes.

Facility Costs

Securing and renovating a location is crucial to a distillery’s success. Whether you plan to custom-build or lease a site, factors such as desired layout, square footage, equipment size, and expected foot traffic must be considered. If you plan to serve cocktails and samples, a tasting room will be necessary. The construction cost for this should be estimated by an experienced contractor.Significant attention must be given to power and water sources, as distillery production requires substantial electricity and water. Ensure you have the right filtration equipment if needed.

Distilling Equipment

Distilling equipment is the heart of a distillery. Your business plan must include the costs for all the necessary equipment, which typically includes:
Mash tun
Fermenter
Still
In addition, you will need bottles, closures, and a means to fill them, whether manually or with bottling equipment. Labels approved by the TTB must also be printed and applied to the bottles, a process that can take several months, so it’s advisable to start early.

Marketing and Sales Costs

A strong marketing plan is essential to attract customers and turn a profit. Consider the following:
Methods to attract your target demographic
Strategies to make sales when guests visit your facility
Development of an internal sales culture
Costs to market and implement your sales culture
Various apps can help manage front-of-house (FOH) sales, tasting room operations, and overall distillery management.

These startup costs highlight the key areas that need attention and investment to launch and scale a successful distillery brand. Depending on your specific needs, location, and funding, there may be additional considerations when building your business plan and taking those initial steps.