Overview

A company that provides a storage center for the aging of whiskey barrels for craft distilleries.  With more and more small distilleries starting up (similar to craft breweries 20 years ago), this company would provide a place for them to store their barrels past their own facilities capacity.  As the facility would not be in active use most of the time, it could also double as an event space for weddings and parties looking for a unique backdrop.

In Practice

The whiskey industry has been evolving significantly in the past few years, largely due to increased demand for aged whiskey in the US and China; along with a growing renaissance of Craft Distilleries.  With the increased demand for whiskey, and the premium put on well-aged whiskey; there is an opportunity available for Craft Distillers to grow and make their mark in this arena.  The problem for Craft Distillers is the difficult and prohibitive costs associated with waiting for the whiskey to age.

This company would be able to save distillers money by:

  • Not having to invest in infrastructure costs
  • Opportunity costs of utilizing the space
    • Many Craft Distillers have bars/tasting rooms that can expand into those areas and increase their revenues
    • They could also operate in a smaller space without the need for storage
    • The could invest in increased operating efficiency
  • Not having to pay someone to monitor their products
  • Decreased Property Insurance costs

Whiskey Barrel Aging Pricing

The pricing should be designed based on a scaled price structure that reduces each year the barrel is stored.  This will allow the Craft Distilleries incentives to keep their barrels aging and maturing longer at a cost sensitive rate.  As well as a tiered pricing structure that reduces the costs based on the total number of barrels being stored with this company.

barrel-pricing-chart

This pricing structure (shown above) is an example of the monthly storage pricing per barrel.  Depending on the area and market conditions, these numbers can be adjusted accordingly.

The total cost listed is an example of a barrel that would be stored with us for a 3 year period.  It takes the monthly price over the 3 years at the sliding scale.  The price per bottle is based off the number of bottles that come from each barrel.  A barrel of whiskey produces 114 bottles; taking out the angles share (lost liquid from evaporation and absorption) we assumed 110 bottles after 3 years.  Using this assumption; we use the total cost for the barrel, divided by the 110 bottles that come from each barrel, to get the price per bottle.  This gives us a dollarized amount that our customers expense for each bottle, to show how they could eliminate costs and expenses by offloading these tasks to this company.

Entertainment and Event Pricing

The entertainment and event division will provide the space/facility for functions such as Weddings, Fundraisers, Company Outings, and Birthdays to name a few.  This company would provide the space and clients will bring in their own vendors, or use recommended vendors.  The cost for the venue could be approximately $4,000 for a 5 hour event.  Along with additional discounts as incentives to increase the use of the space.

  • The first 10 events booked will receive a 50% Discount
  • The next 10 events booked will receive a 25% Discount

These discounts will be implemented both to bring in new clients, as well as build up a portfolio and reputation.  Additional discounts could be given for off nights in order to generate business.

  • 10% Discount on Fridays
  • 15% Discount on Sundays
  • 20% Discount on Monday thru Thursday

Additional Thoughts

The growth of the craft distillation market is booming.  Following the trends of craft beer industry throughout the 80’s and 90’s and into today; this industry has the same potential.  By providing a valuable support service, this company would allow these distillers to invest capital in increased growth and marketing instead of facilities concerns.

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