Craft distillery is a booming business sector, estimated to be worth in excess of £1.2 billion. It is therefore hardly surprising that so many businesses in this sector are looking to fulfil growth plans for the new financial year.
The demand for craft beer has grown rapidly over recent years. Initially developed for the festival season running through the spring and summer months, it is now a favourite beverage for many across all seasons. The thirst for new flavours and styles is ever changing, meaning that craft brewers are having to constantly adapt and grow their range.
However, growth of any distillery is not just about introducing new products, it is about location expansion, increasing distribution networks and updating operating equipment.
Location expansion – business growth can only be achieved if space allows. The 2 most common routes are either through the purchase of a new facility or an extension to existing commercial premises. Increasing the footprint to accommodate new staff, new machinery and stock helps to fulfil growth plans.
Increasing distribution – reaching more customers through both a national and international network will quickly realise growth plans. This will involve an increase in stock and a logistics plan that will enable the stock to be safely transported to its end destination.
Equipment – clearly one of the most important areas of the distillery will be its equipment. It is crucial that machinery is kept in optimum condition and is continually updated to maintain efficiency. Also, if more products are needed to be produced then it is likely that additional equipment will need to be sourced. Distillery equipment is not cheap though, for example the investment in new stills (barrels) could require an outlay in excess of £100K.
The key element underpinning any expansion plans is cash. Most businesses will understandably not have the substantial cash reserve needed to fulfil these growth initiatives. This is where the use of business finance is so important and three of the most popular options are:
Asset Finance – with the options of either hire purchase or leasing, new equipment and machinery can be purchased with flexible repayment terms.
Business Loan – a diverse option which gives access to funding that can be used for purchasing equipment, investing in new commercial vehicles and property renovation.
Commercial Mortgages – enabling the purchase of a new commercial building or the extension to existing facilities.
If you have any questions or would like to discuss any aspect of distillery finance, please call us on 01993 706403 or e-mail enquiries@ngifinance.co.uk.
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