Are you curious about craft distilleries? Maybe you’ve heard of them but are wondering what exactly is involved in this new industry? Craft distilling has become increasingly popular over the past decade as more and more people are looking for unique spirits with a premium twist. From vodka to whiskey, craft distilleries offer a distinctive product made with local ingredients and production styles that separate them from traditional distillers. 

In this blog post, we’ll explore what defines a craft distilled spirit in-depth—what it means when something is marked “craft”, plus all the great things that come along with consuming something produced at this kind of establishment. So grab your favourite beverage and get ready to learn about what makes these special places so incredible!

Let’s get started!

Australian Distillery

When compared to other countries around the world, the artisan distilling business in Australia is still in its infant stages. It wasn’t until 1992 that Bill Lark, founding member of Lark Distillery and often referred to as the “Godfather of Australian Whisky,” was successful in persuading legislators to amend the Distillation Act of 1901 so that licenced distillers could start operating relatively small stills. This amendment allowed for the operation of relatively small stills. And so the craft distilling industry in Australia was founded.

The recent surge in the popularity of Australian alcohol has led to the establishment of everything from one-person operations and tiny distilleries manufacturing spirits in limited quantities to bigger distilleries that produce a variety of popular drinks, liqueurs, and eaux-de-vie. It is rumoured that Australia is home to more than 80 operational distilleries, with a nearly equal amount of others waiting for clearance. These statistics fluctuate often, and there is no doubt that the local artisan spirits business is in for some interesting times in the near future.

When I first started working in the craft spirit sector in Australia ten years ago, there were only a few producers, and their primary concentration was on the manufacturing of whisky. There are currently more than 300 distilleries operating in Australia, with gin manufacturing being the dominant category.

Craft gins that are distilled in the United States make up a relatively insignificant portion of overall gin intake when compared to gins that are imported from other countries.

The growth of Australian artisan spirits has been enthusiastically received by buyers, who have also demonstrated a heightened level of discrimination in their purchasing decisions. A growing number of people are expressing a curiosity about touring Australian distilleries and interacting with the distillers and other people who are responsible for the craft. Customers may slake their desire for information while simultaneously contributing to the growth of the local alcohol industry due to the excellent calibre of bartenders working in establishments across the nation.

What is Distillation?

The method of taking an alcohol foundation that has been fermented and getting it “harder” is called distillation. This is because yeast consumes sugar and converts it into alcohol and carbon dioxide throughout fermentation. Still, beyond a specific threshold, yeast can no longer live in environments with very high concentrations of alcohol. 

Therefore, there is a requirement for a second phase in the production of a spirit or other type of hard liquor. Distillation is the process that elevates things to a higher level, isolating off more alcohol by evaporation and condensation.

What Is Craft Distilling?

So, what are the characteristics of a craft distillery? In most contexts, “artisanal” refers to the production of a food or drink by a relatively modest business or even an individual, using methods that do not involve the use of machinery.

Overall, alcohol must possess at least a handful of the following features to qualify as a craft liquor: a tiny sample size; production by a small indie business; high-quality items; association with genuine values; and production through fairly conventional methods.

Because there is no official standard for the manufacturing restrictions that must be met for a distilled alcohol to be designated craft, the state in which a certain distillery is situated is primarily responsible for determining the rules. In addition, the circulation of any particular craft alcohol is typically restricted to a specific region of the country or the world.

Is There a Difference Between Craft Distilleries and Micro Distilleries?

The word “micro-distillery” does not have a specifically established meaning in the distilling field. However, the phrase is frequently utilised to refer to distilleries that are on the smaller side, often in the style of a shop, and that were founded to manufacture only limited amounts of alcohol that is suitable for consumption.

The most important distinction is that a craft distillery makes use of genuine components and is privately owned and operated. Even though it is much smaller than the bigger brands, a micro-distillery is nonetheless capable of producing significant quantities of their products. Unlike artisan distilleries, micro-distilleries aren’t always privately held in every instance.

What Kind Of Profits Can Be Expected From A Craft Distillery?

When taking into account applicable licencing regulations and fees, as well as the price of equipment, such as leasing or buying stills, fermenters, and mash tuns, the actual opening expenses of a small craft distillery may necessitate a commitment of somewhere from $30,000 to $500,000 in order to get the business up and running. 

It is impossible to establish an accurate forecast of the annual revenue that a craft distillery might anticipate earning without taking into account important elements like the company’s size, position, business strategy, and management philosophy.

Craft distilleries are required to provide a spirit of an excellent calibre that satisfies the needs of consumers and a product that can be easily differentiated from the offerings of other competitive craft distilleries. 

Packaging has a significant impact on the profits of a craft distillery due to the fact that it not only differentiates one handmade alcohol from another but also drives demand by playing a role in the decision-making process of consumers. Ninety per cent of customers look at the product’s packaging before settling on a transaction, and the majority of sales choices in the beverage business are determined at the point of sale (75 per cent).

It is realistic to anticipate that alcohol distilling will be more lucrative than craft brewing given that profit margins for craft beverages range anywhere from 20 to 40 per cent and that spirit distilling will require fewer resources than craft brewing will. For example, not taking into account the production of barrel-aged spirits, which include letting the spirit sit for a number of years before it is consumed and, consequently, sold.

Local Spirits Challenging Imports In Australia

Nevertheless, this preference for imported goods is gradually shifting, as evidenced by the increase in sales of domestic alcohol from well below 5 per cent just five years ago to well over 15 per cent nowadays. 

This trend is projected to continue as the quantity of domestically produced spirits surpasses the increase of imports in 2020, and the development of local producers, along with the shifting aspirations of a younger generation of consumers, is anticipated to maintain this trend.

Regardless of the fact that Australian gins, whiskies, and rums have won awards all over the world for the excellence of their products, the current export rate of alcohol from Australia is only $4 per capita. 

The tax on spirits in Australia is the third most expensive in the world and is increased twice a year in addition to being adjusted to inflation. This places craft distillers in Australia at a competitive disadvantage. Taxes on spirits in Australia are typically several times greater than those placed on alcoholic beverages like beer or wine.

What Is the History of Craft Distilleries?

A lot more time has passed than you probably realise since distillation became both an art and a science. At the early beginning, there was documentation for the production of extremely rudimentary distilled liquors in Asia from ingredients such as rice and milk. After some time, the information of early distillation began to spread to Greece, and it wasn’t until it entered Persia that things really started to pick up speed.

1. Alembic Distilling 

The alembic is the earliest proven mechanism of distillation in its modern form, and it gets its name from the pot that is utilised in this sort of distillation. It is generally believed that the Arabic alchemist Jabir ibn Hayyan was the one who developed this method, which goes back to around the eighth century.

The already fermented foundation fluid is heated in the alembic distillation apparatus until the alcohol contained within that liquid evaporates, at which point it is directed into a separate tank.

2. Column Distilling

The need for a faster process eventually led to the development of column distillation in the nineteenth century. During this step of the process, the fermented foundation is pumped into a tall column in a manner that causes it to come into contact with increasing vapour.

The temperature of the vapour is brought down to an exact level in order to extract the ethanol and the chemicals that should be avoided. In column distillation, there is no need for sanitation between batches, and the system’s ongoing nature enables continuous distilling, both of which contribute to the overall increased efficiency of the operation.

3. Craft Distilling Today

The introduction of column distillation paved the way for the growth of the industrial distilling industry and, subsequently, the resurrection of the craft of alcohol distillation on a smaller scale. However, this development has not been very similar to the boom in the craft brewing industry. It remains prohibited to produce liquor at home, which is one of the primary reasons for this, as well as the fact that the initial costs for distilleries are substantially greater than those for breweries.

Nowadays, craft distilling is a dynamic industry that is seeing rapid expansion, and new craft distilleries are springing up all over the world. However, despite the fact that many businesses are keen to capitalise on the trend, certain businesses remain more committed to the principles of craft production than others.

For example, some businesses sell their goods as though they were made from grain to glass, although their goods may be better defined as “blended.” In these businesses’ cases, the spirit is manufactured commercially and is then infused and otherwise changed before it is sold. A significant number of more established distilleries have also established “craft” organisations and branches.

Requirements for Distillery Equipment Spaces

It is my hope that before you begin to look for distillery premises, you already possess a good idea of the amount of alcohol you would like to create as well as the size of the machinery you will require in order to achieve your production goals

It is essential that you are aware of this information because you do not want to locate a structure that will reduce the amount of goods that you produce. Therefore, before you leave to visit any structures, the following are a few factors you should be aware of:

1. How Much Space Will My Equipment Require?

This is a significant factor to consider, and you should spend a significant amount of time determining the appropriate construction size for this. For example, suppose you have machinery with a footprint of 500 square feet. In that case, you will likely need to build on a respectable amount of extra space to accommodate for the piping and electrical arrangements that will be required. 

When you try to fit all of the machinery into an area that is too tiny, you can end up having to place it so near to one another that it is nearly touching. If this happens, you will need to figure out a way to sanitise it, as well as how to get plumbing and electricity to it.

When calculating the actual square footage that you will require for your apparatus, it is recommended that you space the apparatus out so that, at the very least, a human can pass between the components without contacting the apparatus. This will help ensure that your apparatus is not damaged. 

Because of this, the apparatus will be able to be easily attached and sanitised. Consider the height of the ceiling as well; will there be room for a vodka column? If such is the case, what minimum ceiling height is required?

2. What Sort Of Power Requirements Does My Apparatus Have?

If you are able to figure out the precise amount of power that your machinery will require in order to function, you will be able to eliminate some of the potential locations. For example, suppose the structure only has a single phase of power, and your gear needs three-phase power. In that case, you will be required to replace the structure’s electrical system, which might be quite expensive unless you wish to purchase a converter.

3. How Much Room Do I Need for Storing Things?

There is a good possibility that you’ll not receive a shipment of grains or molasses; the whole quantity will go directly into a mash tun or fermenter, therefore, you will require a place to store it. You will also require a location to store the completed product and the containers used in the production process. 

If you have a rough idea of the manufacturing schedule, it will be easier to figure out how much raw material storage you will require, as well as the quantity of finished goods. It is preferable to have a little bit of excess room for anticipated storage rather than not sufficient room at all.

4. I Have a Tasting Room—Am I Allowed To Sell Cocktails There?

Craft distilleries are sitting on a gold mine when it comes to cocktail culture. Confirm with the regulations of your state whether or not you are permitted to serve alcoholic beverages from your tasting room. If you are able to, choose a structure in a highly populated neighbourhood, one that sees a lot of foot traffic and is situated in a location that is not difficult for individuals to reach. 

You do not desire a structure located in an unsafe area or so far away that individuals are discouraged from going there. You should reserve a sufficient amount of space in your structure so that you may establish a sampling area that is warm and inviting. 

You desire guests to remain and spend some time mingling while sipping cocktails. A sampling room that is of a size that is reasonable enough and also provides space for other activities that might generate additional streams of revenue, such as event rooms and distilling courses.

5. What Kind Of Zoning Requirements Does A Local Government Have For A Distillery?

If you want to locate the finest site for your distillery gear, you will need to be familiar with the zoning restrictions in the local area. Ensure that you consult with the office of zoning in your area to find out the criteria for a distillery. Also, research to see if the zoning permits the selling of drinks in that particular location. 

You do not wish to put a lot of effort into finding the ideal location to discover that it’s prohibitively close to a religious institution or a school. Worse yet, you do not wish to be ten months into the construction of your distillery and sampling room when you discover that the neighbourhood is crowded with bars and that you won’t be able to serve drinks from your tasting room because of the competition. 

When investigating a structure, it is imperative to perform thorough research with the office of zoning and development.

6. How Much Money Do I Have?

Be practical about this, and try as hard as you can to adhere to your plan because there is a good risk that the build-out may cost more than you anticipated. To properly establish a budget for the structure, you might need to conduct some market analysis to find the prevailing rate for real estate in your region. 

Once you have this information, you can figure out how much you are prepared to invest towards the project. If you are not ready to invest the cash required for your perfect setting, you may be forced to look for a property that is situated even farther away.

Craft Distillery Software

The procedure of operating a craft distillery can be made more effective through the introduction of new technology, software systems, and services. When expanding distillery activities, having the appropriate technology is essential.

  • Tools for distillery administration ensure that distilleries continue to operate efficiently during the entire distillation process. It is possible to personalise product flows, batch sizes, and monitoring with the appropriate tools.
  • CRM software can monitor and organise all of the data relating to leads, prospective customers, and current customers.
  • The use of sales automation software provides tracking of sales activity as well as results.
  • Craft distilleries may better manage their stock of raw materials, work-in-process, and final goods with the use of inventory management software. These systems maintain an inventory at every stage of ageing and storage, as well as during the whole product lifetime.

In today’s marketplace, the utilisation of technology is required in order to boost the productivity and effectiveness of a craft distillery. This is especially the case when tiny operators compete with multinational spirits businesses. Therefore, utilising cutting-edge technology in conjunction with time-honoured distilling expertise and savvy business practices is becoming an extremely significant factor in achieving success in the artisan distilling industry.