Key Essentials for Starting, Owning, or Investing in a Liquor Brand

As bourbon has grown into a national and global phenomenon in recent years, the number of distilleries, brands, and investors has grown exponentially, as well. Kentucky’s bourbon success alone currently totals more than $285 million in local and state tax revenue, so it’s no wonder 10 states now outnumber the Commonwealth’s distillery operations to try and catch the momentum some are calling “the amber wave.”

Entering the bourbon world – or liquor business in general – as a new brand, distillery, owner, or investor may pose some challenges. With laws and regulations governing the alcohol industry, along with significant costs and risks, it's important to approach this venture with careful consideration and determination.

So, what exactly do you need to jump in or buy into the industry? Here are three things you must have if you want to start, own, or invest in a brand: 

1. Realistic Expectations
2. Knowledge of the Three-Tier System
3. A Network Within the Industry

From start-ups to seasoned spirit brands, Brindiamo Group works hard to secure successful outcomes for your business. Contact us today.

Realistic Expectations

First and foremost, entering the liquor industry requires having realistic expectations. This can range from realistic expectations about costs to the time it takes to see a return on investment.

In Australia, for example, a fraudulent deal – the biggest in the country’s history – promised small investors who purchased barrels of whiskey a considerable return on their investment within as little as four years. (A promise, of course, that was too good to be true.) This also highlights the importance of considering the risks and potential losses within this industry. Not every investment yields a return.

In summary, starting a new liquor brand or distillery requires significant initial investment, time, and perseverance. Having realistic expectations is key to avoiding disappointment along the way.

Knowledge of the Three-Tier System

Another reality of this business is this: Anyone entering the liquor business without a solid understanding of the three-tier system will feel as if they are drinking from a firehose. 

The three-tier system involves regulations around three separate entities: producers, wholesalers, and retailers. It's important to note that each entity in the three-tier system must be licensed separately, as most state laws dictate. While this system aims to offer consumers a variety of options, promote healthy competition among brands, and simplify tax tracking, navigating it can be quite complex.

Brindiamo Group has a deep understanding and knowledge of the three-tier system. Serving manufacturers, wholesalers, and retailers alike, the Brindiamo team not only understands the ins-and-outs of the system, we also have a good grasp on what sells (and what doesn’t). This is why we offer consulting for everything from designing a bottle and crafting a new brand story to making introductions with the right investors.

A Network Within the Industry

Now, let's talk about one last important aspect. While a background in bourbon isn't necessary to enter the business, building strong relationships is key. With the liquor industry’s high stakes, as well as its scams, the business plan that will serve you best is this: Building trust with others in the industry.

Consider the following questions concerning relationships and partnerships that could cost you dearly if you don’t have trust:

• Have you considered whom you will source your product from?
• Who will you trust with the valuation of your brand or product?
• Do you have an effective exit strategy in place when you sell/merge/buy a company?
• Are you looking for an investor/investment that is a good fit?

At Brindiamo Group, we are constantly cultivating and maintaining our relationships within the industry, and with proven success. We also work on both sides of the fence for brands and manufacturers as well as buyers and investors.

Contact our expert team today and benefit from our decades of founding, building, buying, and selling spirit companies.