Monthly Archives: February 2017

Craft Distilling on the Big Island – final thoughts

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Finally at last I managed to track down one of the Liquor Distributors here on the Big Island. Now, I can piece together some rough numbers. Let’s suppose that with freight costs factored in, a 1000 L tote of NGS could be landed in Hilo for $6.60 per Liter. Let’s suppose that such a tote will generate 3100 bottles (750 ml size) of 40% Gin. Botanicals will cost $0.25 per bottle. Bottles, labels, caps will be a landed cost of $4 per bottle. Federal excise tax in America will be $2.15 per bottle. Summing up we have NGS at $2 per bottle, Botanicals at $0.25 per bottle, Bottles etc… at $4 per bottle, Excise Tax at $2.15. This gives $8.40 per bottle. Now add in fixed costs of Utilities, Rent, Insurance and possible bank loan payments all together totaling $3 per bottle. Let’s suppose I want a profit per bottle of $5. Now we are at $16.50. The Liquor Distributor will take a 30% cut so he will place bottles into grocery stores etc at $21.45. The store owner will add his margin of 30% which makes a bottle worth $28 to the retail consumer. More expensive than a lot of big commercial products on the shelf – but not at all unreasonable.

So, if my goal is to keep myself occupied (and having fun) while in Hawaii for several months each year, I would certainly make an economic argument for producing several thousand bottles of unique Gin in Hilo.

Craft Distilling on the Big Island – the research continues…

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Today I made the trip over to Hilo. The entire Big Island is one County and Hilo is the seat of Government for what is called Hawaii County. I took a new way across to Hilo – the Saddleback they call it. Instead of the scenic route around through Waimea, the Saddleback cuts 52 miles across the island. And for the record – I thought it was pretty scenic. I could see way off in the distance the observatory buildings way up on Mauna Kea. Once in Hilo I met with the Liquor Commission folks who were very friendly. I explained my idea of bringing in bulk grain alcohol from the mainland and re-distilling it with a “secret” recipe of botanicals (including some that grow on the Big Island) to make a craft Gin that it uniquely Hawaiian. They were grateful to learn how Gin is distilled and I was happy to explain it to them. Next, I stopped in at the Liquor Distributor in Hilo, but the people I needed to see were out. No worries – I will get in touch with them later. Next I found my way to Mehaha (Hawaii N’ui) Brewing. Loved the Double Red Belgian Style Ale. And as someone who is always on the hunt for unique growlers, I just had to have a stainless steel 64 ounce unit to take home to Canada.

So, the research continues. I am still a wee bit worried when I see grocery stores reducing the shelf space for distilled spirits – but I still think a uniquely Hawaiian Gin will be accepted by the marketplace.

I will give another update in my next blog….In the meanwhile, if this idea of a craft distillery on the Big Island intrigues you – we need to talk….

Do Your Due Diligence…First…

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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.