With constantly increasing prices on beer and spirits, many operators are expanding upwards into their supply chains to keep their costs in check, and profits high. This strategy is largely dependent on the rules local governments have over the production, control and sale of products produced in house. In Alberta, the province I reside, recent changes in the laws regarding minimum brewing requirements have opened the door for producers to become producers for very little start up costs from what they were in the past.
While the biggest obvious benefit from doing this is being able to produce products for cheaper than your liquor suppliers, recent cultural changes have been it easier than ever to get in-house produced brews and spirits consumed at rates that were not possible just a few short years ago. If you are looking for a new way to create more margin in your business, here are three reasons why you may want to consider applying for liquor manufacturing license.
- Controlling Costs – While the initial investments in brewing equipment, real estate, and a knowledgeable brew master and distiller may seem high, the long term benefits of having production in house can mean major savings. In Canada, some producers have reported brewing a bottle of beer for as little as $0.75 per unit. Compare that to a store bought beer that can cost as much as $1.75 - $3.00 per unit. That $1-2 savings per unit adds up quick, especially if you are moving 200-500 units per week. There are some distilleries, now offering courses on how to distill their own spirits like Vodka and Gin, for a unit cost of less than $0.70 per ounce. Considering brand name Vodkas can be as expensive as $0.90 to as high as $1.90 per ounce, the cost savings can be tremendous for bars that sell a lot of ounces on a week to week basis. Producing your own products is a great way to cut your costs.
- The Craft Beer and Spirits Movement Has Primed the Market – As little as 4-5 years ago, craft beer and spirits would probably not have been well received by the market. But now, with the craft beer movement now becoming mainstream, customers are now much more receptive to trying out new beers, new spirits and drinks with names they may not have recognized in the past. In fact, it is very common now for consumers to ask bartenders to recommend “what is good” compared to a few years ago when guests would naturally just come in and only ask for what is familiar. The market is now perfect for operators to introduce products that have unique qualities they can produce in house, make a higher margin on, and encounter little to no resistance during the sale.
- Liquor Manufacturing Gives Guests Something New to Experience – Having a portfolio of unique products to offer your guests keeps your bar fresh in the eyes of your guests. Also from a promotional viewpoint, if your bar is constantly creating new beers and spirits, that gives you an opportunity to throw a party every time you launch a new product. Furthermore, the fact that the products are of your own creation, gives you exclusivity in the supply of the product. If your guests develop a taste for your own craft creations, this increases the probability that they will choose your venue over the competition simply due to the fact that they cannot get your products in any other bar.
It may not be quick or easy to brew a new beer, distill a new spirit, or apply for an alcohol producers and manufacturers license, but those things that result in great success are rarely simple.
*Article originally posted on nightclub.com by Sculpture Hospitality Expert, Kevin Tam.