How to start a distillery

Setting up your own distillery in the UK can be one of the biggest challenges you’ll ever face. It requires technical precision, and a stack of regulations to comply with, and the liquid you produce will compete in a crowded market.

These challenges haven't deterred the hundreds of entrepreneurs and innovators who’ve started their own distillery in the last few years. In 2010 there were just 90 businesses making spirits. By 2021 that number had jumped to nearly 900.

Most are gin distilleries, but others include vodka, whisky and other spirits. Many craft producers start in a domestic kitchen before progressing to larger facilities.

The UK market for spirits is predicted to grow from £12.4 billion in 2023 to over £17 billion in 2027, over half of which is gin and vodka.

If you’ve got the determination, the energy and the commitment to bottle and share your own spirits, you can start a distillery. Here’s our guide on how to do it.

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Starting a distillery begins with research

There’s a lot to consider before you buy that first copper still.

How to distil spirits. Fermenting cereals into alcohol and adding in botanicals is a technical process. While the basics are relatively simple, it takes considerable experimentation to get the result you want. Crafting a gin with a flavour that stands out against the thousands of others on offer will take some time.

Legal requirements of a distiller. You can’t distil at home without a licence, even for personal consumption. Setting up a distillery demands getting familiar with licensing and taxation rules around the production and sale of alcohol.

Financial implications. When starting any business, you need to look into the costs of setting up. Many craft producers have stories of how they got going on a shoestring, but what that means is different to each of us.

Market research. However good it is, your brilliant liquid won’t sell itself. Take time to understand how and when people enjoy drinks like yours, and consider how you can persuade them to try your brand.

Legal form of your business. You could operate as a sole trader, in a partnership or through a limited company. It’s important to be aware of the implications and requirements of each.

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Ask about the difficulties of getting started with a distillery

Talk to independent distillers, people who drink what you want to make, and potential retailers and distributors. Learn how the trade works and what the market wants. Try to uncover as many difficulties as possible - potential problems that could slow or deter you.

The more you know about the problems ahead, the better equipped you can be to face them.

Setting up a distillery and selling your own spirits can be hugely rewarding. It’s exciting to see people enjoying a drink that wouldn’t exist without your creativity and commitment. But be prepared for the hard work and hurdles you’ll need to overcome.

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Prepare a business plan for your distillery

You have ideas about setting up and developing your drinks brand, and expectations of what the future could look like. A business plan turns these thoughts and hopes into a document others can understand and ask questions about.

A well-prepared business plan demonstrates that you’ve thought through all aspects of establishing and running a drinks business based around distilled liquids. It can help persuade potential investors and other stakeholders to get involved.

Your unique selling proposition. What’s the hook that will appeal to your future customers? Your brand will be just one of many they can choose from - there needs to be a reason they’ll select yours.

Competitor analysis. The plan should include information on competitor brands, and show how yours will compare with theirs.

Your marketing strategy. No matter how great your drink tastes, future customers must hear about it and be persuaded to swap it for their current choice. Your marketing strategy covers branding, PR, advertising, social media, partnerships and other promotional channels.

Operational strategy. This describes how your drinks business will be run. It covers premises, logistics, staffing and leadership.

Your financial strategy. How you’ll raise the cash to set up, and ongoing cashflows - costs and revenues. A robust cashflow budget is vital. It’s easy to be over-optimistic about how fast, and how much, revenue will start flowing in.

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Setting up your distillery and your brand

Having researched, planned and organised your finance, it’s time to set up your distillery.

It could be a small-scale affair at first, to prove the concept and to establish whether the brand connects with your target customers. It’s not unusual for a craft distiller to begin at home. Expansion to commercial property comes with sales and growth.

Strong branding is crucial to the success of your drink. It needs to be distinctive to send a clear, consistent message to the people you want to buy and consume it. While taste is important, it’s only one factor influencing people’s drink choices. The most effective branding appeals to their emotions as much, perhaps even more, than to their tastebuds.

Setting up and running your distillery should be reasonably straightforward if you've planned and prepared well. Where your business goes from there depends on your ambitions, determination, and budget.

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How Distill Ventures helps founder-led founder-led distillers

As a distiller, you do what you do because of your love for the process and the product. It gives you a deep satisfaction that many people don’t understand.

We do understand it. That’s why we founded Distill Ventures, to help more innovative and entrepreneurial drinks makers achieve their dream of seeing their creations in bars and on tables nationwide, even internationally.

We support drinks founders by providing access to funding, business guidance and industry expertise. Our programme of finance and mentoring has helped over a dozen drinks brands to win very visible placement on bar and supermarket shelves, where they compete with global players.

If you believe your drink has the appeal, the compelling story and the brand edge that allows it to stand out, we can help your business grow. Find out more by getting in touch with us today.