Startup Distilleries: Advance Planning and Expert Guidance Make for a Smooth Ride

By: Cheryl Gray

Building out a new distillery evokes the same excitement as driving a brand-new car. Think gleaming exterior, masterful engineering, unique design and an owner’s manual – the latter being a solid strategic plan. These are the pistons of a powerful engine for distillery startups moving toward the on-ramp of the spirits industry.

VITOK Engineers

There are experts whose business it is to prevent distillery startups from stalling. VITOK Engineers is one. Headquartered in Louisville, Kentucky, VITOK boasts more than 400 completed distillery projects across the globe, both new and refurbished.

Founded in 1967, VITOK combines the expertise of about 40 multi-disciplined engineers and designers. CJ Archer is Vice President of Marketing and is also a credentialed engineer certified to investigate fires and explosions. Archer says that startup distilleries can avoid surprises – and hits to their bank account – with careful planning.

“The first consideration in starting a distillery project is to determine the products you can sell, how to sell them and how much you can sell. How will you set your product apart from the crowd? Will you be selling purely onsite in your gift shop, selling regionally, nationally, internationally? This step usually requires some expertise from someone who has knowledge of distribution and marketing,” Archer says.

“Second, you’ll need to establish a business model. A distillery project generally requires very deep pockets. The design phase could last as much as a year, construction two years, and then maturation time for whiskeys can take several more years. How will you provide both construction and operating capital until you’re in the black? Some startups choose to distill white spirits initially to create an income stream. Others choose to purchase aged whiskeys and package them under their label. One can also distill products for others at bulk rates. Regardless, the business plan is your road map to financial success, but it has to be based on solid data.”

A good business plan won’t cut corners on reliable engineering and design, Archer says. “One critical feature of the business plan is the to determine the project capital costs. For this step, you’ll need an experienced process engineer, like VITOK. If the distillery is desired to attract tourists, you will also need a good architect.

“If so, both should be hired simultaneously, as they’ll need to work together to combine the most efficient operation with the desired visitor features. Experience allows the process engineer to quickly and accurately estimate the costs for distillation equipment, installation, piping, electrical and controls. Likewise, an experienced architect can estimate the building costs, including construction, HVAC, grounds/landscaping, fire safety, etc. Thus, the more experience with your project team, the less cost and more accuracy you’ll receive in your capital cost estimate. Once your costs are known, then it’s time to secure funding.”

Archer stresses that any project budget must include a line item for contingencies. “One important piece of advice from my two decades in this industry – never underestimate your budget contingency. Whenever you put a shovel into the ground, you never know what you’ll dig up. At project initiation, there are many unknowns, and these should be considered in the budget.”

He adds that startup distilleries cannot ignore safety costs. “Beverage distillation is an industrial process. As such, it has hazards that must be considered. Grain dust is explosive, and alcohol is flammable. There is also steam, compressed air, cleaning chemicals and OSHA considerations. With a good, experienced process engineer, the owner doesn’t have to worry about these items. The process engineer ensures that there are no surprises. Similarly, a good architect will design the facility to be both interesting and safe for visitors and distillery personnel alike.

“Another often overlooked factor is the need for quality project management. Your project will need a champion, and the best champions are certified by the Project Management Institute as Project Management Professionals.”

A well-rounded team includes mechanical, electrical and plumbing (MEP) engineers to design the building systems. “You may also want specialists to design event spaces, artistic elements, or unique features,” says Archer. “The design phase is a very collaborative effort between the owner, architect and process engineer, so make sure that you’re comfortable with the team you choose. There are many who claim distillery experience, few who truly have it.”

Symbiont Science, Engineering and
Construction, Inc.

SYMBIONT SCIENCE, ENGINEERING AND CONSTRUCTION, INC., helps both start-up and high-capacity distilleries across North America and the Caribbean. Headquartered in Milwaukee, Wisconsin, the company is celebrating its fourth decade as a leading full-service engineering, design-build, and construction firm. SYMBIONT’s team and their innovative engineering technologies for the spirits and beverage industry help distilleries achieve their environmental and sustainability goals. They prepare start-ups for potential expansion and scalability.

SYMBIONT tends to work with growing operations and larger facilities that typically have a bottleneck: waste stream pitfalls, planning, and other concerns that are necessary but not in the distillery’s realm of expertise. SYMBIONT provides a diverse team of engineering experts from virtually all fields to address those concerns. Start-up distilleries can benefit from SYMBIONT’S guidance with a broad range of services, such as facility planning, construction and fabrication, regulatory requirements, water conservation/reuse/reduction, waste byproduct management, waste-to-energy alternatives, utilities engineering for equipment integration and process design and controls systems.

SYMBIONT started working with distilleries due to the firm’s experience with very-unique, high-strength waste services as a qualified engineering consulting firm. High strength waste is a challenge throughout the spirits and beverage industry.

Joe Kolodzinski, Director, and Jeff VanVoorhis, Vice President, for SYMBIONT help distillery start-ups and other beverage manufacturers steer clear of expensive mistakes by guiding them to focus in on the big picture: long-term growth.

Many start-ups, Kolodzinski says, do not always consider the impact of non-equipment aspects to the bottom line. This includes a checklist involving environmental issues, space constraints, utility capacity as well as potential utility and building modifications. Kolodzinski says that with a little foresight, start-ups can avoid many missteps.

“A major misstep,” he says, “is in facility planning: either planning for a new facility or an addition to an existing facility. We understand the start-up process intimately and can help you identify the utilities you need. As a full-service engineering and construction firm, SYMBIONT works closely with you to take a project from concept to production and advises you on how decisions made at the front end of the project can have a significant impact on your facility’s operations.”

“Are you selecting your site based on distribution and foot traffic, or are you looking at available utilities? We have seen issues where the city in which the client was planning to put their plant did not have an infrastructure of sufficient size and capacity to handle their waste stream. This results in lots of costs upgrading city sewer lines and a low allowable limit of waste stream constituents. Find out if you are in a location that has a municipal treatment plant; understand the location of the site and whether the infrastructure is already in place or there would be costs associated with it. Sure, you need a certain amount of acreage, but you really need to understand all of the true costs.”

As raw ingredients enter the facility and go through the process from milling and cooking through fermenting and distillation, waste byproducts are a result. SYMBIONT knows how to address the challenges waste byproducts and stillage present. During the conceptual phases of a project, SYMBIONT evaluates site and location-specific alternatives to provide an optimized solution to handling waste byproducts.

“Not knowing how to handle waste byproducts and wastewater,” notes VanVoorhis, “is literally like pouring money down the drain.” He continues, “What are you going to do with them? Do the municipal utilities have capacity to accept your waste byproducts and wastewater? In some cases, they do not, which means you have to truck waste and that’s a significant, often unanticipated cost. Plan for your distillery’s wastewater/water management. Understand what’s required, the costs and the alternatives. Look at everything upfront and understand the big picture. We help you do this. We know common, and not-so-common mistakes, and advise you on how to avoid them. If your goals are set at zero waste, you can be a leader in water use. We’ve done work for facilities to go to zero liquid discharge (ZLD) and can efficiently develop that pathway for you.”

Additionally, having worked across North America and the Caribbean, SYMBIONT professionals understand and can explain how codes and regulations vary from location to location. Their compliance experts get involved during the planning stages to provide distilleries with an understanding of the local regulatory and compliance agencies that will govern the project. Kolodzinski says, “Our clients know early on what may drive design decisions and the related costs. SYMBIONT’S regulatory experts help you understand the applicable code requirements based on site and what agencies to work with for local regulatory and compliance agencies.”

From a destination standpoint, the location of the distillery may also be such that there are limitations in local qualified contractors to support the specialized installation needs. Kolodzinski explains, “Project costs will be impacted if a higher level of engineering support is required to oversee the installation and verify installation aligns with the design. Additionally, if qualified contractors are coming from outside the local area, the installation costs may increase due to additional travel and living costs.

When it comes to implementation of the project, start-up distilleries should look at the availability of qualified contractors in their locations. A higher level of oversight from the project engineering team may be needed if the contractors available do not have experience installing distillery systems.”

SYMBIONT has construction capabilities and construction leaders who have worked nationwide, in Canada, and in the Caribbean. They can assemble a pool of qualified contractors with whom the firm has experience. Contractors you can trust to provide the installation quality your project requires and deserves.

Müller Pot Stills

Among the most important expenses of a startup distillery is, of course, the still. Choosing the right one is about research and the reliability of information from someone who knows the industry.

Few know more about beginning a startup distillery than Frank Deiter, a master distiller who founded Okanagan Spirit in 2004, which is among the first craft distilleries established in British Columbia, Canada. These days, Deiter is a consultant for Müller Pot Stills and represents the company in North America.

Müller Pot Stills has clients spread across six continents in 51 countries. In business since 1929 with its manufacturing headquarters in Germany, the fourth-generation, family-owned company creates custom-made stills. Many consider the stills to be engineering marvels, formed by a combination of traditional craftsmanship and state-of-the-art technology. One thing that hasn’t changed is the company’s practice of fashioning stills using hammered copper. Deiter explains why this process distinguishes Müller Pot Stills from its competitors.

“The hammering of the copper increases the hardness of the copper; thus, the catalytic properties of the copper stay active way longer. Thus it will render nice smooth distilled products for a longer period of time between cleaning cycles.”

The stills feature patented design elements, including unique, advanced column technology. That, combined with a well-recognized aroma hat, distinguishes the brand from its competitors. The workmanship, Deiter says, is like no other.

“If it comes to distilling equipment, I want to sell only the best. And, there is no equivalent production facility to be found that is as good or better than the equipment coming from Müller in Germany.”

Aside from acquiring equipment and a physical plant, startup distilleries need legal advice to help navigate through numerous regulations, permits and other government requirements. There are state regulations and federal agencies to consider, including the Food and Drug Administration and Occupational Health and Safety Administration. CJ Archer may have said it best: “You cannot put a label on a bottle until the TTB has given its blessing.”

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