Insights & Trends
Our Tips for Starting a Spirits Business
Take a look at our top tips for starting up a drinks business and how you can secure funding for alcohol projects. Build your brand with Distill Ventures.
Our Tips for Starting a Spirits Business
At Distill Ventures, we're lucky to be able to grow small ideas into successful beverage companies with strong brand identities. The way we have managed this is no secret, we have a tried and tested formula for how to guide startups on their journey to profitability.
In this blog, we're going to share with you some of our top tips for starting up a drinks business successfully. We'll go into detail about how traditional business techniques can be used to support the foundations of your brand and also touch on how recent market trends have influenced the path to success.
The Five Bricks to Starting Your Spirits Business and Brand
The potential to build a strong brand is just as important as a strong business when securing investment with us. We like to use our five bricks framework of principles that are essential to success. Learn more on how to start a spirits business.
The Business Basics
Getting the basics right is paramount to any new business becoming viable. Ensuring you have easy access to all of your data means you can keep track of how things are progressing and remain informed should you have to make any key decisions.
The cost of goods, your sale prices, profit margins, total sales and production forecasts are all vital information that needs to be readily available.
You'll also need to surround yourself with a solid support network. This can be made up of any number of professional services but the key ones to focus on are; lawyers, accountants and technical support.
Monitoring your cash flow is also important. Make sure you know how much you have currently and forecast for the next 6, 12 and 18 weeks. Once you have these figures, ensure your supply chain is scalable. Look out for any supply issues, be it sourcing or quantity, that are integral to your spirit, such as grain or botanicals, and plan for alternative solutions. Also, slow cash flow is the norm in this industry when starting out. Don't spend all your budget on building a beautiful distillery without making sure that you have savings on the side for the unexpected surprises.
Being a Great Entrepreneur
Having a strong entrepreneurial spirit is a great foundation, but continued self development is the key to success.
Identifying your own strengths and weaknesses will only benefit your business. This allows you to work with the right people and gain support in the right areas. Whilst utilising consultancies can make good business sense, investing in solid long-term team members pays higher dividends.
The spirits industry is full of talented distillers and producers, so connect with them and take every opportunity to network with fellow entrepreneurs as you'll be able to receive support and advice from sourcing ingredients to learn more about the regulations around your business.
It's also important to bear mentorship in mind. Not just for when junior members of staff come on board, but also when looking at investors. Those that bring experience and knowledge, as well as funding, are infinitely more valuable.
Fostering great relationships with stockists, bars and retailers in your local area is the best place to begin seeding your brand and maintaining these relationships, even as you expand, is just as important.
The same can be said for your distributors. They are ultimately the ones who make sure your product hits the shelves - making them want to do so is valuable. Engage with their sales team early-on withyour product's journey and why you’re exciting to talk about. If needed, you can look at hiring a brand ambassador or a sales manager to help.
As well as looking after these relationships, ask yourself what the margins look like for other supply chain stakeholders. Being generous and ensuring others are turning a good profit will help to reward your hard work.
Price yourself appropriately too. The market will look different depending on which spirit you're producing. For example, 73% of vodka in the US is priced at $25 per bottle compared to just 64% of Gin. Make sure you fully understand what your volume-to-price ratio should be.
Make sure your products are available online. E-Commerce is a must for all brands now, especially in the wake of the pandemic. According to the IWSR’s drinks market analysis, online sales for alcohol businesses have seen a 50% increase and show very little sign of slowing down. Making sure your business is ready to take advantage and sell D2C is key.
It's not over for traditional sales methods though. The same report outline's that despite nearly 40% of the UK drinks market being shut off due to lockdowns and restrictions, off-trade grew by nearly 20% in 2020. With a return to normality and the lifting of restrictions around the corner, a return to pre-pandemic alcohol consumption is expected.
Having a Great Product
This may seem obvious, but having a great product is key to your success. There are plenty of great spirits out there, yours has to stand out from that crowd.
That being said, with so many varieties of alcoholic and non-alcoholic beverages on the market, you need a great-tasting product and effective marketing to successfully propel your product. Sometimes the best spirits in the world do not sell themselves without consumers understanding they’re exciting and how to find them. You could also spend most of your budget on marketing and launching your new spirit drinks business but fail to meet consumer needs. Stand out from the crowd by investing in your marketing and business plan, in your distillery and in perfecting your recipe.
Ensure that your brand's story is conveyed well on the bottle itself. Death's Door gin is a good example of this. Despite being produced on Washington Island, the founder decided on the name 'Death's Door' after taking inspiration from a local landmark. Whilst not clear at first, this is communicated when the consumer reads the bottle. This is a perfect example of how brand story and branding can come to life on the packaging.
As well as having a solid brand story and identity, increasingly customers are valuing sustainability and transparent supply chains. Companies that ethically source their ingredients and are environmentally conscious in their distribution stand to gain huge amounts of customers. Working this into your branding and messaging is a must for the modern market.
Keeping your brand interesting is more important than ever. Gone are the days of relying on advertising to get your message out there. Now, brands have to have an active presence on social media, as well as having a solid PR strategy in place.
Social media has become even more important in the aftermath of COVID-19. As the hospitality business was placed in a stranglehold, communications for many brands were limited solely to their social channels.
The successful companies are the ones that kept their customers engaged during this time by remaining interesting and relevant. It's this customer interaction that can elevate a drinks brand to the next level.
How Distill Ventures Helps Drinks Businesses
Distill Ventures looks for rapidly growing businesses with the foundations of a great idea or brand behind them.
We then provide funding and mentorship to these early-stage businesses with ambitious founding teams to help their product become more widely available.
If you think you’re in a position where Distill could help your business grow then apply for funding today.