Thinking about starting a craft distillery can be chock full of emotion. Think about it – you…your own business…a gleaming Copper still…you making alcohol….
But, in my opinion, the emotion should be checked at the door. It is critical to keep your head screwed on while your fully contemplate a craft distillery.
As I pen these words, I am in Kona, Hawaii and yes the thought of a craft distillery here has got my mind racing. So, over the past couple days, I checked my emotion at the door. I screwed my head on and decided to take a trip to the local grocery store. There are some 2 million tourists that come to the Big Island every year. Surely the grocery store must be a treasure trove of valuable data, not to mention unique spirits?
But here is the reality that slapped me in the face.
Rum – surely the tourists must be drinking gallons of Rum? Maybe not. Sailor Jerry Rum (not made by a Sailor at all…but rather made by proofing down industrial Rum distillate in Edison, New Jersey) was on sale for $16 (all prices quoted herein are 750 mls), marked down from its regular $30. A Hawaiian craft distilled Rum was slashed to $11 from its regular $23. At a regular price of $23, I fail to see how the distiller is making money. Captain Morgan ($18), Don Cristal from Puerto Rico ($15),Whaler’s (made in Bardstown, Kentucky $18), Kraken ($20), Mt. Gay (Barbados $23) and Myers ($20).
Vodka – ahh yes that mixture of ethanol and water that is so highly over-rated. A craft Vodka made from pineapple slashed to $20 from its regular $26. At $26 – again after stripping out Federal Excise taxes, cost of bottles, labels, corks, boxes, materials, labor, debt payments, rent payments, profit margin for the distributor, profit for the grocery store – the poor craft distiller is sucking wind. Other Vodkas I saw were Stoli ($22), Tito’s ($22), Absolute ($26), Smirnoff ($18) New Amsterdam ($18), Grey Goose (slashed from $45 to $26). Not a pretty picture at all…
Whisky – maybe the tourists are drinking Whisky? At these prices, there should have been riots in the store as customers fought each other to get a bottle. Crown Royal (the pride of Canada $19.88), Dickel Whisky ($20), Jack Daniels ($20), Jim Beam ($17), Maker’s Mark ($34), Wild Turkey ($27). How would a craft distiller making whisky even compete at these price levels?
Gin – maybe that’s the answer? Ohhh here we go again….Bombay Dry ($23), Bombay Sapphire ($19), Sapphire East ($19), Tanqueray $33. How would a craft distiller making good Gin compete with prices at these levels?
But, then I noticed something. Beer….lots of it…lots of people buying it….and a typical 6-pak was $13-$15. Hawaii is a hot climate. People in hot climates drink beer. People might drink a mixed cocktail, but beer goes down cold and is refreshing.
Next, on my due diligence trip is to meet with the Hawaii Alcohol Commission next week. I plan to fully review with them the entire craft distilling landscape state-wide. I will post another blog next week with my findings.
Meantime, my emotion remains tucked away and my head remains screwed on.