Page 110 - Bord Bia

CONTENTS
(i) BUILD - Consider the total cost of
your operation
There are many details to capture when assessing
your operational costs. Here are some reminders of
critical areas to capture upfront:
By-products and waste handling in the brewing
and distilling process will have to be addressed.
Many inexperienced and new to sector business
leaders overlook this key cost area. The brewing &
distilling processes yield quite considerable levels
of by-products, many of whch can be re-used,
recycled or indeed sold on as animal feed. For every
barrel of whiskey produced there are at least 10
barrels of by-product produced. Please refer to the
Origin Green (link to topic C Product development)
programme for guidance in developing your own
sustainability plan.
Maintenance and minor upgrades to your plant
need to be provided for in your operation costs
and you should consider costs of maintaining a
Revenue Bond as well.
Whiskey’s maturation time in cask will have a
critical efect on cashlow. By law, Irish whiskey
must be laid down for a minimum of 3 years. In
the start-up phase, this is obviously a signiicant
period no incoming revenue. You will need to be
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STAGE 1
f) Business Model
Continued
in a position to cover the cost of maturation for at
least the irst 3 years (ref Tech File link on whiskey
making requirements and description) while you
wait for liquid to mature and generate revenue.
This means that you need not only signiicant
capital expenditure funding to build the distillery,
but also access to a further 3 years operational
costs to keep things aloat. Distillery owners are
on record as saying this lay-down cost can be as
signiicant as the distillery build itself in certain
cases depending on your planned stock levels.
It is also important to take into account the fact
that you will require a percentage of the maturing
stock set aside for a varied vintage range, delaying
income from that percentage even further. Some
distilleries use visitor experiences and tours to
generate revenue in this start up maturation stage.
For breweries selling kegged beer, the cost of kegs
can represent a considerable investment, but the
margins are higher on draught beer compared to
bottled which can help ofset this incremental cost.
You should also explore the option of leasing kegs
from suppliers which can take the pressure of your
capital expenditures in the start up stage.
There are experts in each of the ields of brewing &
distilling who can help with these considerations in
your plans as well as help scope the costs of your
initiative. Please refer to Industry associations as
outlined in this Guide.