How Much Does it Cost to Start a Craft Distillery?

The gin industry is booming. Sales reached a record high last year, with Brits purchasing 83 million bottles totalling over £2.6bn, figures shared by Beverage Daily show. Sales of gin in the UK have almost doubled in value over the past two years, with the tipple proving to be the best-selling spirit across online platforms during the lockdown. 

Suffice to say, the gin industry is a lucrative one. The beverage has shaken off its ‘Mother’s ruin’ reputation and is appealing to an increasingly wider audience. Coloured and flavoured gins are helping to diversify the product and further drive sales. 

A booming market means now could be a great time to start a craft gin distillery business. But you need to be committed and certain that you’ll create a product that will stand out from the crowd. After all, you’ll be competing with hundreds of other gin brands in the UK. 

Micro distillery startup costs 

If you’re serious about setting up a distillery, one of the first things you’ll need to consider is the costs involved. 

Now, there’s no set cost to start a distillery. It depends on so many factors, from the type and size of equipment, to the space you use for your business. But here’s some information to give you a general idea of the main craft distillery startup costs:

Equipment 

As Gin Foundry notes, proper gin stills from manufacturers like Holstein or Carl can cost anywhere between £50,000 and £250,000. That’s a significant outlay already, hence why many craft gin brands source finance through crowdfunding or private investors. You also need to purchase things like a boiler, cooling system, pumps and tanks, and cover installation costs. 

The building

Where will your distillery be located? If you need to secure premises then you’ll need to factor in rental costs and overheads. These are guaranteed to account for a significant chunk of your monthly outgoings.

Bespoke moulds 

You’ll want a custom bottle mould made up to help your gin stand out when it’s on the shelves (our labelling solutions will help, too). This alone can cost thousands of pounds, with most manufacturers asking you to commit to a minimum order in the thousands or tens of thousands of bottles. 

Branding and marketing 

As well as all the practical considerations, effectively marketing your new gin brand could mean the difference between success and failure. It’s suggested that new companies allocate 12-20% of gross revenue on marketing in their initial years. As you’ll be busy with recipe development, branding and creating your product, you might need to hire or outsource help for developing and maintaining your website and social channels. 

Company registration, licences and taxes

There’s a good deal of admin involved in setting up a craft distillery business. As Distilling UK notes, you’ll need to set up a limited company, which can be done online from as little as £20. You’ll also need a distiller’s licence and to get approval for your plant and process before you can begin creating gin to sell to the public. 

It’s important to note that you’ll have to pay a high alcohol duty on gin. Currently the duty charged on spirits is £28.74 per litre of pure alcohol.

Case study – Cuckoo Gin

Cuckoo Gin launched several years ago and is a brand we’re incredibly proud to have worked with. An article on Farmers Weekly notes how the company allocated £500,000 to getting up and running, with funding a mix of their own cash plus Leader grant funding. 

It’s enjoyed lots of success so far, with the brand pitching at the higher end of the market. Its 70cl bottles are around £38 to purchase. 

How we can help 

Knowing all of the costs associated with setting up a craft distillery is key to assessing whether or not it’s a viable business venture. If you’ve decided it is, and you’ve done plenty of research, then you could enjoy huge success from setting up your own craft distillery. 

Where we come in, is helping you create labels that will make your product ‘pop’ off the shelves. We are leading the way in the wine and spirits labelling sector, working closely with brands to understand their goals and requirements, before developing a tailored solution to match.

If you've got any questions, or would like to chat with a specialist member of our team, get in touch today. We're on hand to discuss how high-quality labels can make a difference to your unique brand.

Alternatively, give us a call on 01483 423424, or email us at sales@premierlabels.uk.com.