Since every Distilled Spirits Plant is unique in some way, the question of when to expand operations ultimately depends on the proprietor and their business model. With that said, there are some clear indicators that you should consider expansion:
- If you start your day by moving a bunch of tanks and equipment outside, and finish your day by returning them, the efficiency gains from a larger location or better storage arrangements will likely pay for themselves in a short amount of time.
- It sounds obvious, but if you are running your stills or fermenters at capacity and having trouble keeping up with demand, you probably need to expand your production capacity. Sometimes that means adding more equipment, and sometimes it means replacing equipment.
- If you’re looking to diversify into RTDs / Canned Cocktails, you may find that the equipment needed (brite tank, carbonation, cooling) takes up a lot of space. Once you consider that you have to store empty cans, and accommodate a canning line (whether mobile or on-site), it becomes clear that extra space is called-for.
- Do you have a product line that is selling well? You might want to increase production and/or begin bottling in multiple formats, both of which can increase your profit margin. But those steps require additional storage space for both dry goods and finished product.
- Have you maximized your profitability from your existing lines of business? It might be time to consider becoming a co-packer or performing contract distilling/bottling. Those expansions typically require additional equipment and space to accommodate customers’ varying needs.
Tyler Derheim is Fx5’s in-house consultant, using his expertise to help distilleries of all sizes make it easier to make great things. Tyler first entered the regulated beverage industry in 2010, when he started working harvest and crush at a midsize winery in Slovenia. After returning to California in 2017 he joined a startup DSP, with responsibilities for formulation, production, compliance, lab services, and more. In 18 months, he led the DSP from mason jars and buckets to tankers and trailers, then moved into a freelance consulting role, helping distilleries of all sizes with every aspect of production, operations, and compliance. A long-time Fx5 user, Tyler brings a wealth of experience unmatched in the industry.