By the 'Illuminated Distillers' at Pleasant Land Distillery
As specialists in the distilling industry, we believe in knowledge sharing and collaboration, and with a myriad of interesting questions thrown my way I will attempt to answer and shed light on each subject in this “Illuminated Distillers” blog.
About the author: with over 10 years' experience working in every aspect of the wine and spirits industries (including luxury spirits sales and Head Distilling roles) I now consult for start-up distillery projects alongside being the Founder and CEO of Pleasant Land Distillery - sustainable contract distilling specialists based in Kent, UK.
In this episode I will lead you through everything you need to know when working with a contract distilling company for your spirit or liqueur project.
What should you know before approaching a contract distillery?
There are a few general decisions that you need to make before speaking to a contract distillery. In our experience, these help us to help our clients as efficiently as possible, and provide accurate pricing quotes early on.
- Which Product(s) Do You Want to Make?
Focus is important for your initial conversations with a contract distillery. Decide which category / categories of spirits you want to create, and what you envision as the USP for your product or collection. This will help your contract distillery to understand your material needs and broad production requirements. -
Volume Estimates
Decide if you want to start with production for around 100 bottles, 1000 bottles, or 10,000 bottles. You should ask about price breaks on different bottle volumes during your first conversation with a contract distillery as these can be considerable, and understand general cost efficiencies such as pallet volumes, still capacities and efficient bottling run volumes.
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What Retail Price Point Are You Aiming For, and What is Your Product Cost Budget?
Essential to getting the best product for your budget is sharing your goal retail price with your contract distiller. Through market and competitor research, decide if you are targeting the luxury market that require a high quality bottle, label and liquid, or if you are creating a GP-friendly house pour product which needs to meet specific trade pricing needs. This will clearly guide your raw material, bottle, stopper and label selection.
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What is Your Goal Timeline?
A good way to start off on the same page as your contract distiller is to share your goal timelines from the start. For example, if you want your product to be ready for Christmas listings it needs to be ready for release in August. Ask your contract distillery for general timeframes for Recipe Development, Production and Bottling.
Once you have your basic information ready, you can start the process of choosing the right contract distillery for you. Different distilleries specialise in different areas, some produce small batch runs of up to 250 bottles, and some can't produce any less than 5000L at a time. These capacities are determined by their kit and set-up, and ideally you want to find a distillery that can help you not just for now, but also in the long-term as you grow.
Secondary Considerations
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Who is Responsible for Sourcing Bottles and Labels?
Every contract distillery works differently, so it is essential to understand who is responsible for sourcing each element of your product. Bottles, stoppers, labels, ingredients etc are all considerations, and it is a good idea to ask your contract distiller to recommend sources for each of these items if you need to source them yourself.
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Understand When and What You Will be Charged For
It is important to understand when you will be invoiced for production services, payment terms, and the predicted timeframe for the whole process. Prompt payment is an excellent way to stay on track and keep things moving smoothly.
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Sample Tasting, Recipe Development & Quality Control
If your contract distillery is developing a new recipe for you, make sure you understand how many iterations you can request, and how the feedback process is conducted. Understand how many rounds and what volume of samples you will be given, and make sure you use specific, clear language when giving feedback. Once your recipe is finalised, understand how your contract distillery quality controls production of your product.
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Intellectual Property - Your Recipe
When working with a distillery to develop a spirit or liqueur recipe, it is common for them to retain ownership of the recipe. Check early on how your distillery works, and be aware that if you don't retain ownership over the recipe it makes it challenging to move to another distillery, as you can't take the recipe with you.
With us, our clients' recipes remain their intellectual property, and you retain access to and ownership over the recipe at all times.
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Check the Terms & Conditions
Carefully check your contract distillery's terms and conditions, and make sure you understand and are happy with the payment terms, production terms, privacy terms (NDA's etc), and quality control processes.
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Storage & Fulfilment
Contract distilleries will hold your products under bond until they are finished, and you need to understand where they will be moved once your order is packed and complete. If they are moved to a non-bonded storage facility you will be required to pay Duty on the total alcohol, or you need to have an agreement in place with your contract distiller / bonded storage facility for storage of your stock.
Things to Watch Out For
Personal Licence, Premises Licence, AWRS - as the owner, you will need to apply for and hold a variety of licences through HMRC and your local council office in order to be regulation compliant. They are time consuming and detailed documents, so make sure you apply for these in good time.
Transparency and honest communication - the key to any good relationship, and I highly recommend finding a contract distillery who are responsive and open in discussions, who you feel comfortable asking questions and discussing ideas with.
Hidden costs - while there can be variable costs such as raw materials and energy, you want to have a clear understanding of what you will be charged for. For example, we have extra charges for tooling and bottling costs when processing unusual or awkward bottles, so we offer guidance on bottle selection and clearly itemise and explain extra costs ahead of time.
Check who owns the recipe / intellectual property - do you retain ownership over the recipe, or does the distillery? Every distillery is different and many have terms where they retain ownership of the recipe they create for you. However, our clients always retain ownership over their recipes.
Does your product already exist - seems obvious, but we are often asked about niche products which are already on the market. Make sure your product has a unique USP which fills a gap in the market, rather than duplicates one.
Storage and fulfilment options - some contract distilleries, like us, offer well-priced bonded storage and fulfilment services for their clients, and others don't offer any storage. Check pricing and terms, and make a plan before production begins.
Working with over 40 contract clients a year on a multitude of different projects, the advice I could offer on this is endless, but I hope this distilled checklist offers effective guidance and advice on the basics. There will be many more questions to answer and decisions to make along the contract distilling process, which you will discover and overcome as you go.
As with anything in the spirits industry, we recommend truly loving what you do and the product you create, as this will make selling it that much easier! More on that to come, as I will offer my two cents on the subject of selling your product - once it is finally in your hands! - in the next episode.
I am always happy to offer my advice and thoughts on your projects, and if you are interested in working with us on your spirits or liqueur project please do send us a message.
Yours Aye,
Seb
