How to fast track your new spirits brand
By Kris Bohm, Distillery Now Consulting
The spirits industry is growing and this growth has enticed newcomers to enter the industry and start unique brands. Starting a new beverage alcohol business and entering the industry is challenging, to say the least. There are regulatory, financial, and technical hurdles that make starting a new alcohol beverage brand complex and challenging. Starting a new business takes an immense amount of time and more money than most people expect. Even if you spend many hours budgeting and planning to build a distillery it will likely take longer, and cost more than you thought. An aspect of a successful brand that is overlooked and underappreciated is that high-quality brands spend a great deal of energy on marketing their products. There is a faster and cheaper way to start a new brand you may not be aware of. The path to a quick start up is called co-packing. Co-packing puts the strain, stress and capital expense of production equipment on someone else and lets a new brand focus time and money on marketing and promoting the brand.This article will cover how co-packing works and weigh the pros and cons of launching with a co-packer.
The common path we see taken to starting a new spirits company is by building a business that manages all aspects of manufacturing and sales. While managing everything from start to finish is a noble goal, it is also expensive. When you manage production, packaging, warehousing, marketing, sales, and even distribution it is easy to flounder in the complexity of such a business. For a new entrant to the industry, learning all these aspects of business and succeeding at them is a huge challenge. The faster and cheaper way to launch a new beverage alcohol business is with a co-packer. This is done by working with an existing manufacturer who will make your product for you. By outsourcing the production of your product, you can focus on the two critical aspects of a beverage alcohol business which are sales and marketing.
Co-packing in simplified terms is outsourcing the manufacturing of your product. In a broad sense a co-packer is a group or facility that produces beverages and offers services to manufacture products for other brands that are not their own. A co-packer can be contracted to manufacture and produce your product for you. Whether you want to make bottled whiskey or canned vodka soda, any sort of beverage alcohol can be produced by a co-packer. Co-packers can package distilled spirits, ready to drink cocktails, liqueurs or nearly anything else you can imagine.
Why spend years building a distillery when a co-packer can produce a product in months?
There is far less capital outlay needed when working with a co-packer as you do not need to buy specialized equipment for bottling and then also learn how to operate it. By removing the capital-intensive aspects of manufacturing a product, the owners of a new brand will have more time to focus on selling their product. You can create a product and bring it to market quickly when the co-packer does the manufacturing for you. A good co-packer will help you avoid mistakes and manufacture your product ready to sell. Let’s explore the process step by step you take to bring a new brand of whiskey to the market with help from a co-packer.
12 simple steps to creating your own bottles of whiskey
• The first step toward creating a product is to decide what you want to make.
• Find yourself a company (co-packer) who will make the product for you
• Talk with the co-packer to understand the constraints and limitations of their equipment
• Select packaging that works and fits your brand and your copacker’s equipment
• Sign a contract with your co-packer and start putting the pieces together.
• Design the brand, logos, names, artwork, labels, and bottle selection. (have a pro help you)
• Take a break and enjoy a tasty cocktail
• While you are stopping for a refreshment, select the whiskey that will go in your bottle
• Navigate federal and state approval process (your co-packer should handle this)
• Order and secure raw materials so your co-packer can manufacture the product.
• Co-packer will bottle and package the whiskey
• Launch your brand.
Just like that you have created your very own brand of whiskey that is ready for its debut. A co-packer usually has a minimum order quantity and will likely produce at least a few hundred cases of bottled spirits. When the copacker is done packaging the product you will now have several pallets of whiskey that are ready to sell. While the simple 12 steps all sound straight forward, there are many critical aspects of work underneath this list. Behind every step there are decisions, details, licenses and permits that are required prior to the product being produced. Let’s dive a bit deeper into these critical decisions and how best to work through them.
The liquid in the bottle must taste good but more important than the whiskey is the brand itself. Creating a professional looking package takes experience and extensive design. There is much more to design than just selecting a bottle shape. You will need to create a brand with logos, label artwork, and many other design elements. Unless you have experience in branding and marketing beverage alcohol, the creation of a new brand is best managed by experienced professionals. Your product must have a polished look and feel for it to succeed. The way your product looks is the biggest opportunity you’ll get to sway consumers to consider tasting the product. If you take a moment the next time you are in your local liquor store you will likely find a few bottles that do not look professional or polished. These not-so-great looking bottles are often created when someone starts a new spirits company without design professionals on their team with alcohol branding and design experience. Hiring a professional designer is a worthwhile investment to help your brand put its best foot forward.
There are an abundance of distilleries that will sell you their spirits in bulk that can be packaged up into your own brand. Whether it’s Tequila, Vodka, or Bourbon Whiskey, all types of spirits can be bought in bulk. There are a few licenses and permits needed to buy barrels of whiskey, but those are easy to secure with the guidance of an industry professional. Taking the time to taste a variety of spirits will guide you to find the right whiskey for your brand. It is also important to look closely at the cost of the whiskey you are considering purchasing. The whiskey cost will impact what you will charge for your bottle and how much profit you will see.
While I believe that co-packing your first products is the smart path to launch a brand, some folks would argue that co-packing is not the best choice. Let’s weigh the pros and cons of co-packing to consider it from both angles.
What is the good side of collaborating with a co-packer? It takes extensive time and financial resources to launch a brand. A generous amount of time and money needed for a brand to launch successfully must be allocated to marketing and sales. This is essential to get a product onto store shelves and people buying the product. Co-packing affords a new brand the chance to conserve money, time and energy that would otherwise be put into manufacturing and direct that energy into selling the product. Co-packing affords a new entrant into beverage alcohol the space and time to learn the nuances of the business with much less overhead cost. Mistakes are not cheap to make and having a co-packer oversee the production work of your product ensures that you will make less mistakes when it comes to making and packaging the product. The largest advantage of not producing your own product is that you do not have to carry the high overhead of funding and operating a manufacturing facility.
Now it’s time to talk about the bad part of Co-packing. Plain and simple.It is expensive. Co-packers mark up the cost of their service to cover their costs of overhead, labor to, of course, make a profit. When working with a co-packing company, you pay a premium for them to manufacture your product. It will cost more per unit to produce a product with a co-packer than it would if you manufactured the product yourself. Some folks do not like working with co-packers as they find there is a lack of control. When a co-packer is making your product, you will not have direct control over every aspect of the manufacturing process. A key step to reducing the risk of quality control issues is collaborating with your co-packer to define their production standards. A good co-packer will define their quality standards in their manufacturing process and track it to make a product cleanly and correctly. One other potential downside to co-packing is the lack of a store front. Most brands launched via a co-packer do not have a tasting room or cocktail lounge to serve drinks and sell bottles. Selling products made via a co-packer will require wide distribution which has smaller margins when compared to direct-to-consumer sales.
It can be hard to decide what is the right way to create and launch a new product. Many factors must be taken into consideration to make an informed decision. While co-packing is perfect and cost effective for some it can be a bad fit for others. A distillery consultant or person with extensive industry experience is the best way to make an informed decision on how to launch your brand. Creating a new product and selling it can be a challenging and rewarding business endeavor. Launching a product the right way and finding success will make the creation of your product much more rewarding.
Kris Bohm is from Distillery Now Consulting. When Bohm is not helping new distilleries launch you can find him defending his beer mile record and exploring the world by bicycle.
