How Much Does it Cost to Start a Micro Distillery?

The gin industry is booming. Sales of gin 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.

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

Proper gin stills from manufacturers like DEGONG can cost anywhere between 5,000USD and 200,000USD. 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. You’ll need to set up a limited company. 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.