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New Business Models Worth Considering for Craft Distilleries

We came across this interesting article at Seven Fifty Daily on ways to build your business through unique partnerships.ARTICLE

There are distilleries hitting the ground running with immense scale and the intention to contract out a large percentage of their output, while others are seeking the efficiency and synergy of sharing space within an existing facility. There’s room for all manners of distillers, carving numerous, unique paths towards success.

Distillers are exploring a broader range of strategies than ever, with a number of emerging business models showing there’s not a single, one-size-fits-all blueprint to distillery success.

Collaborating at its Core

Bardstown Bourbon Company (BBC) in Bardstown, Kentucky, may be relatively new to the scene, beginning production only in 2016, but nobody is calling them “craft.” That’s not a slight—rather, it’s because they’re churning out more than seven million proof gallons per year, or about 330 barrels per day. To support this massive operation, the intention from the start was to serve as not only a contract producer, but as a true collaborative partner for brands, allowing for bespoke spirits production, including 50 mashbills and 500 production points of control.

This is far more customization and hands-on control than is typical of contract spirits production, offering brands the opportunity to forgo massive investments into standalone distilleries while still being able to fine-tune a product, or even an entire product line. More than 30 premium brands on store shelves right now are being produced in conjunction with Bardstown Bourbon.

Between 80 to 90 percent of Bardstown’s production is allotted to brand clients, and availability for production is sold out through 2025. From BBC’s perspective, this provides the distillery with a massive revenue stream that isn’t tied to selling its own products, and has enabled them to rapidly expand, increasing production and building new warehouses on an almost continual basis since its founding. The strategy proved lucrative and enticing enough that in a surprising turn, the distillery was acquired by Pritzker Private Capital for undisclosed financial terms in March.

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