Keeping Up Cash Flow

Dreams of aged whiskey may dance in their heads, but what does an entrepreneur do to make some money while their spirits mature?


Every person interested in opening their own distillery eventually comes up against the same roadblock. The business plan is nearly complete—numbers have been poured over for hours, the candle very much burnt at both ends. Dreams of aged whiskey may dance in their heads, but what does an entrepreneur do to make some money while their spirits mature? They need a shot of fiscal adrenaline to make it through the early years. 

In a case like this, the typical go-to’s are either, A) a spirit sourced from a large manufacturer, perhaps one in Indiana, or B) a clear spirit that doesn’t need time to become drinkable. There are, of course, positives and negatives to either choice. Sourcing a spirit requires good branding and a plan of action for when the time comes to switch over to the product made in-house. The Chattanooga Whiskey Company started by sourcing whiskey from MGP before distilling their own product in a compact space in the town that is their namesake, Chattanooga, Tennessee. Initially, they sold their 1816 line, which is a reference to the year that John Ross established a trading post on the banks of the Tennessee River. This post was known as Ross’s Landing, and it was eventually incorporated as the city of Chattanooga. But the 1816 does more for the brand than simply tie it to its historical roots — it marks a distinct line that can be discontinued once the Chattanooga Whiskey Co’s own product comes of age, therefore avoiding much of the confusion of crossing over. 

This kind of transparent approach is certainly admirable, but evidence may show that it isn’t entirely necessary. Industry people tend to be aware of the provenance of nearly every bottle of bourbon and rye whiskey on the shelf, but the specifics of which whiskeys are sourced and which aren’t still don’t seem entirely meaningful to the layperson. What matters most is devoting the appropriate amount of time, energy, and funding necessary to launch a brand.

Which brings me to option two. Clear spirits can be good, great even, but may not be the reason that a person entered into the industry in the first place and thus are often neglected. There are also multiple other contending products to deal with. Gin has been steadily increasing in popularity since it kicked off in the craft sector years ago, and many producers have been more than willing to fill in any residual gaps in the market. 

Distillers might view the vodka or gin they’re hawking as a stopgap while they wait for the real product to mature, but that isn’t a very healthy or successful mindset to adopt, especially in a competitive market. When the distillery owners and employees view a product as lesser-than, consumers inevitably come to view it that way too. This is particularly detrimental since the vodkas and gins launched by craft brands tend to be more expensive than most of their macro counterparts. Much like the situation with sourced whiskey, appropriate funds should be set aside to adequately market a clear spirit if the desire is for that spirit to really sell. 

What of clear spirits being used as the base of something else, like a liqueur or vermouth? Maggie’s Farm (Full disclosure: The author, Devon Trevathan, is a Nashville, Tennessee-based brand ambassador for Maggie’s Farm Rum), a Pittsburgh, Pennsylvania-based rum company, has gotten more than a little creative with their unaged spirit. Not only do they sell their white rum as a solo product, but they also feature it in their 50/50 Dark Rum, Spiced Rum, Falernum, and Coffee Liqueur. “We actually started making the liqueurs just for use in cocktails at the distillery’s bar because we were limited by law to only use alcohols that we produced,” said Tim Russell, founder of Maggie’s Farm. “They proved successful enough that we decided to launch them as retail products. But, regardless, it’s been an excellent revenue stream since we aren’t limited on aging them.” This approach guarantees that product is being made and sold consistently but doesn’t bore consumers or bartenders. 

Recently, however, the market has branched out. For over a decade, we saw craft startups largely following one of the two paths mentioned above, but now there are an entirely new set of options, one of which is RTDs. Ready-to-drink beverages have exploded into the alcohol beverage scene, making a real splash with younger consumers more inclined to take their drinking into the great outdoors (or even down to the pool). I hesitate to use Cutwater as an example since the company began as an offshoot of Ballast Point Brewing, which was not exactly lacking for cash, but they used their canned cocktails to expand their market share to a broader audience. Perhaps more importantly, they were one of the first companies to create a real buzz around canned cocktails. Since Cutwater launched, craft brewers and distillers have begun to incorporate RTDs into their product lineup, some with great success. Cardinal Spirits canned cocktails are a hit, landing them a spot in a Wall Street Journal round-up of the most sippable summer RTD cocktails this year. 

Another option is to expand production into different alcohol types, such as beer or wine. Triple Eight Distillery on Nantucket Island off the coast of Massachusetts began as a winery, which then evolved into a brewery and that in turn bore a distillery. Each operation is a separate business housed under one roof. This has given the producers the ability to utilize the equipment in different ways and entertain visitors with varying types of beverages when they stop by. 

Whether the approach used to improve cash flow is a sourced whiskey, an unaged spirit, an RTD, or otherwise, making something with integrity that fits into the established brand is always crucial. There are plenty of ways to augment cash flow and bring that red number steadily closer to the black, but each requires its own individual investment to work out. Seriously considering each new undertaking should be of primary importance, because at the end of the day each product launched into the market deserves a similar amount of attention and encouragement.

2 Comments

  1. Devon

    Great article! At our distillery we’ve diversified
    Into the restaurant, wedding/events, lodging, and we even have a 30,000 sq ft putting green that is real grass. These things helped us build our business and brand while the whiskey aged!

    Thanks

    Bill Welter
    Journeyman Distillery

    • Devon Trevathan on said:

      Thank you so much, Bill! I considered adding that aspect to the piece but then figured it really deserves an article all its own. Maybe I could chat with you about your experiences for it?

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