Choosing the Right Location for Your Distillery

The dream of crafting your own spirits is exhilarating—but building a successful distillery goes far beyond perfecting your recipe(s). One of the most critical decisions you'll make is choosing the right location for your operation. The site of your distillery impacts everything from your ability to meet regulatory requirements to your operational efficiency and long-term profitability.

Whether you're setting up a boutique craft operation or planning a larger-scale facility, this guide will help you weigh key factors like legal compliance, logistics, and cost considerations. By the end of this post, you'll have a clear understanding of how to choose a location that ensures the success of your distillery for years to come.

Legal and Regulatory Considerations

Before falling in love with a location, you need to carefully assess the legal and regulatory framework governing distilleries in that area. Each country, state, and municipality has its own set of laws that regulate the production, storage, and sale of alcohol. These regulations can significantly influence your location choice.

Zoning Laws

Check whether the location is zoned for industrial or commercial use, as distilleries often require specific zoning permits. Some areas may have restrictions on alcohol production within certain distances of schools, residences, or religious institutions.

Permits and Licensing

Obtaining both federal and local permits is a time-intensive and rigorous process. Make sure the location you choose aligns with regulatory requirements to avoid costly delays. In the United States, for example, the Alcohol and Tobacco Tax and Trade Bureau (TTB) oversees distillery permits, while additional requirements may vary by state.

📖 Read more about Permits and Licensing here

Environmental Impact

Pay attention to requirements related to wastewater management and emissions control. Many jurisdictions have strict environmental policies that can affect how your distillery operates and where it can be located.

💡Pro Tip: Always do your research on the history of an area and engage with locals and other business owners. Even the Bourbon Capital of the World has had some challenges in recent years with emergency water shortages. Bardstown, KY, home to some of the biggest names in bourbon, faced a water crisis that affected production and daily operations. Understanding local infrastructure challenges before choosing your site can save you major headaches later. Read more about Bardstown’s water shortage.

Accessibility and Logistics

Logistics play a huge role in the day-to-day operations of your distillery, and your location needs to support efficient production and distribution.

Proximity to Transportation

Choose a location with easy access to highways, rail lines, or major ports, depending on how you plan to distribute your products. Efficient transportation options can lead to lower freight costs and faster delivery.

Storage and Supply Chain

Consider how close your location is to suppliers for raw materials like grains, barrels, or glassware. Look for areas with ample storage space for aging barrels, ingredients, and finished products.

Delivery and Local Traffic

Make sure that delivery vehicles can easily access your facility. Truck routes and parking restrictions can create logistical headaches for your operations if not carefully planned.

Target Market and Demographics

Your relationship with your target market is crucial. Whether you're trying to attract tourists, offer a tasting room experience, or distribute to retail outlets, the local demographic can heavily influence your success.

Tourism Potential

Distilleries in tourist-heavy areas often benefit from high foot traffic and additional revenue through guided tours, tastings, and events. Research whether your location could tap into local or regional tourism markets, especially if you plan on creating a destination experience.

Local Competition

Evaluate the competitive landscape in your chosen location. Are there other distilleries nearby? While healthy competition can foster customer interest in a particular region (such as established wine trails or brewing districts), oversaturation could limit your ability to stand out.

Retail and On-Premise Opportunities

If your focus is on local sales, research nearby bars, restaurants, and retailers to gauge market demand. Building relationships with local business owners can provide valuable retail channels for your spirits.

Local Resources and Community

The resources and community available in your chosen location can significantly affect your distillery’s efficiency and brand identity.

Water Quality

Water is a crucial ingredient in spirits production. Conduct a detailed analysis of the local water source to ensure it meets the quality standards required for your products. Many successful distilleries use local water as part of their branding—whether it’s from a pristine mountain spring or an urban artisan well.

Skilled Workforce

You’ll need employees with technical skills for distilling, packaging, and quality assurance. Is your chosen location home to a workforce with these skills—or near training programs to develop them?

Community Support

Successful distilleries often integrate into their local communities. Look for areas with open-minded leadership and a supportive environment for small businesses. Collaborating with local farmers, breweries, or tourism boards can further enhance your brand’s presence.

💡Bonus Tip: Connecting with the local community is invaluable. Networking with nearby distilleries, local businesses, and tourism boards can uncover opportunities you wouldn’t find on your own. For example, some smaller distilleries in Kentucky have partnered with local farmers to use regionally grown grains, boosting both the local economy and their brand story.

Cost Analysis and Budgeting

While passion drives many distillery owners, financial prudence is essential to sustainability.

Real Estate Costs

Commercial and industrial rental or purchase prices vary greatly by region. Urban settings may offer better access to customers but often come with higher property costs. Rural or smaller cities might provide more affordable options but could increase logistics expenses.

Utility Expenses

Distilleries require significant amounts of water and energy for production. Investigate utility costs in your prospective location to ensure they align with your budget. Incentives or subsidies for industrial operations may be available in certain areas.

Ongoing Expenses

Include other operational costs like waste disposal, taxes, and maintenance in your calculations. Developing a detailed cost analysis will allow you to forecast your monthly and yearly expenses more accurately.

💡Pro Tip: Evaluate potential locations through a lens of long-term growth rather than short-term affordability to make a smart investment. A lower-cost location may seem appealing now, but if it limits your scalability, you could end up paying more in the long run to relocate or expand.

Making the Right Choice for Long-Term Success

Choosing the right location for your distillery is a complex process—but one that can pay dividends for years to come. It requires balancing legal compliance, logistical convenience, cost management, and the needs of your target market.

By evaluating these factors carefully and partnering with industry experts, you can create a facility that not only meets operational needs but also builds a strong connection to your brand.

For more detailed guidance on starting or expanding your distillery, connect with our team of industry specialists. With years of experience in helping distilleries thrive, we are ready to guide you toward long-term success with confidence and clarity.