7 Steps to Write a Distillery Business Plan (3-Year Forecast);

How to Write a Business Plan for Distillery

Follow 7 practical steps to create a Distillery business plan in 10–15 pages, covering the required $600,000 initial CAPEX Forecast shows breakeven in 14 months (Feb-27) and positive EBITDA of $124,000 by Year 2 (2027)

How to Write a Business Plan for Distillery in 7 Steps

#	Step Name	Plan Section	Key Focus	Main Output/Deliverable
1	Concept & Product Mix	Concept	Define product line and initial mix.	2026 production volume plan
2	Operations & CAPEX	Operations	Detail $600k CAPEX spend.	Facility build-out timeline
3	Unit Economics & Pricing	Unit Economics	Calculate variable costs and set prices.	Contribution margin model
4	Market Strategy & Sales Channels	Marketing/Sales	Outline distribution and direct sales plan.	Wholesale commission structure
5	Team & Organization	Team	Identify launch personnel and forecast hiring.	FTE scaling plan (2026-2028)
6	Financial Forecasts	Financials	Project path to positive EBITDA.	5-year EBITDA projection
7	Risk Assessment & Funding Request	Risks	Identify risks and state funding need.	Total funding requirement defined

What is the specific market opportunity for craft spirits in my region?

The specific market opportunity for your Distillery centers on serving premium local demand that mass producers ignore, but success hinges on mastering distribution bottlenecks inherent in the three-tier system. You're targeting affluent consumers and high-end hospitality venues that pay a premium for local authenticity, so your initial focus must be defining exactly where those dollars are spent versus where operational friction exists.

Target Customer Profile

Focus on discerning consumers aged 25–55 who seek flavor over volume.
Secure placement in high-end restaurants and craft cocktail bars valuing local sourcing.
Capture tourist revenue seeking unique local experiences via the on-site tasting room.
Sell to specialty liquor retailers willing to carry small-batch, premium items.

Competition and Roadblocks

Competition is established, large-scale producers lacking your 'grain-to-glass' transparency.
The three-tier system creates mandatory distribution hurdles for wholesale growth.
Direct-to-consumer sales via the tasting room offer higher margins but limited volume reach.
You must understand compliance; Have You Considered The Necessary Licenses And Permits To Open Your Distillery Business?

How much working capital is needed to cover the 14-month breakeven period?

Covering the 14-month path to profitability for your Distillery requires securing capital for both setup and operational deficits. Before diving into the specific cash burn, you should review What Is The Estimated Cost To Open And Launch Your Distillery Business?, because the initial $600,000 Capital Expenditure (CAPEX) sets the baseline for your total need, which is defintely higher.

Total Initial Investment

Total upfront Capital Expenditure (CAPEX) is calculated at $600,000.
This covers machinery, facility build-out, and initial ingredient purchasing.
This fixed investment is the absolute floor for your total financing ask.
It does not yet include the cash needed to cover initial operating losses.

Bridging the Burn Rate

You must secure $494,000 minimum cash on hand by December 2027.
This amount is critical to manage negative cash flow during the startup phase.
The goal is surviving until Year 2 when the business achieves positive EBITDA (earnings before interest, taxes, depreciation, and amortization).
This working capital covers the lag between spending on production and realizing sales revenue.

What is the true unit economics of each spirit after excise taxes and distribution fees?

The Distillery sees massive gross profit margins, like 940% for Vodka, but variable costs like commissions and processing fees will consume nearly half of that revenue base. You must factor in the 45% combined drag from sales and payment processing before calculating true operational leverage; are defintely looking at a significant reduction in net margin, so review how your direct sales channel compares to wholesale costs in Are Your Operational Costs For Whiskey Distillery Within Budget?. This calculation ignores excise taxes, which adds another layer of complexity to the final cost structure.

Gross Margin Reality Check

Vodka shows a 940% Gross Profit Margin (GPM).
Whiskey GPM hits 922% before operating expenses.
Sales Commissions are projected at 30% in 2026.
Payment Processing adds another 15% expense.

Controlling Variable Drag

Excise taxes must be calculated post-production.
Direct-to-consumer sales cut distribution fees.
Focus on high-margin spirit sales mix.
If onboarding takes 14+ days, churn risk rises.

How will the three-tier system impact our sales strategy and pricing?

Hitting 58,000 units sold by 2030 means the Distillery cannot rely solely on tasting room traffic, forcing a wholesale strategy despite the margin compression imposed by the three-tier system; you defintely need both channels working hard.

Wholesale Volume Requirements

Tasting room sales offer top margin but are volume capped by foot traffic.
Reaching 11,500 units by 2026 requires selling capacity beyond local tours.
Wholesale distribution is the only way to reliably scale toward 58,000 units.
Understand that moving through distributors cuts your net realization significantly.

Pricing Levers Under Regulation

DTC pricing captures 100% of the retail value for the Distillery.
Wholesale pricing must account for distributor markups (often 25% to 35%).
If your cost of goods sold (COGS) is $8 per bottle, DTC nets $25+ per unit.
Wholesale requires a lower net realization, pushing the need for premium pricing tiers.

Key Takeaways

Securing $600,000 in initial CAPEX is essential, with the plan projecting a 14-month path to breakeven by February 2027.
Successful distillery planning hinges on validating extremely high gross margins against significant fixed operating costs and distribution fees.
Beyond capital expenditure, the business requires a minimum cash buffer of $494,000 to manage negative cash flow until positive EBITDA is achieved in Year 2.
The operational strategy must detail the initial production volume of 11,500 units in 2026 while strategically balancing wholesale distribution with higher-margin direct-to-consumer sales.

Step 1 : Concept & Product Mix

Product Allocation Strategy

Defining your initial product mix is where you balance immediate sales against future asset building. If you focus too heavily on spirits needing long maturation, like Whiskey, you starve the business of early cash flow needed to cover operating expenses. The core lineup includes Whiskey, Gin, Vodka, Rum, and Brandy. The challenge is deciding how much capacity goes to quick-turn products versus those that need years in a barrel before they can be sold. This decision directly impacts your 2026 financial runway, so getting the ratio right is defintely critical.

Setting Initial Production Ratios

To execute this, you must map production volume against time to revenue. Spirits like Vodka and Gin offer near-immediate sales velocity, funding operations faster. You should allocate significant capacity here initially. Conversely, Whiskey and Brandy require three to five years of aging before they hit the market at full price. Therefore, your 2026 plan must mandate setting aside a specific percentage of total capacity—say, 30% to 40%—solely for these aging barrels, even if that means lower initial sales volume. That inventory is your 2029 revenue stream.

Step 2 : Operations & CAPEX

Facility Buildout Timing

Planning your fixed asset deployment is where the rubber meets the road for capacity planning. You need to know exactly when that $600,000 in capital expenditure hits the books and when operations can start. If the facility build-out drags past October 2026, your ability to hit 2027 volume targets is compromised. This isn't just about spending money; it’s about securing the physical means to generate future revenue. Honestly, delays here defintely kill momentum fast.

Key Asset Allocation

Focus your initial procurement on the long-lead items that define output. The Main Still and Condenser, costing $250,000, is the heart of your process. Next, secure the Fermentation Tanks for $120,000. That leaves about $230,000 for supporting infrastructure, utility upgrades, and initial inventory staging. Make sure your contracts lock in the January 2026 start date for site prep to ensure the whole system is ready to bottle by Q4 2026.

Step 3 : Unit Economics & Pricing

Unit Economics Foundation

This step locks down profitability. You must know your Cost of Goods Sold (COGS) for every spirit. This cost includes raw materials and direct labor. If you misjudge the cost of grain or bottling, every sale loses money. Pricing strategy defintely dictates if you are a premium brand or just another commodity player.

Establishing the baseline margin is non-negotiable before scaling production. We need to know the contribution margin—the revenue left after covering direct costs. This number drives all future investment decisions.

Model Margin Per Spirit

Calculate contribution margin (Price minus COGS) for every stock-keeping unit (SKU). For Brandy, selling at $5,000 with a COGS of $400 yields a contribution of $4,600. That’s a 92% margin.

Whiskey has a COGS of $350; you must price it higher than that to see positive returns. Vodka starts at $2,500. If your Whiskey COGS is $350 and you price it at $4,000, your contribution is $3,650.

Step 4 : Market Strategy & Sales Channels

Channel Margin Split

You need two paths to market, but they don't profit equally. Wholesale distribution starts with a heavy lift: commissions begin at 30%. This means nearly a third of your potential revenue is gone before you even cover your production costs, like the $35.00 variable cost for Whiskey. The Tasting Room build-out, costing $75,000 in capital expenditure (CAPEX), is your margin defense mechanism. It funds the direct-to-consumer (DTC) channel, where you capture the full retail price.

The goal is simple: use the physical space to shift sales mix away from high-commission wholesale. If you sell a $100 bottle wholesale, you immediately lose $30 to the distributor or retailer. If that same bottle sells on-site, you retain that margin, which directly impacts your break-even speed and overall profitability.

Prioritize Direct Conversion

Your immediate focus must be maximizing sales velocity within the Tasting Room. That $75,000 build-out is a fixed cost that needs rapid payback through high-margin sales. You must defintely map out the expected conversion rate from a tour attendee to a paying customer. This DTC channel is where you realize the full potential of your premium pricing.

Structure your pricing to make the direct experience compelling. While wholesale customers need a discount for volume, the on-site buyer should see significant savings or added value compared to buying through a retailer later. Every bottle sold DTC avoids that initial 30% wholesale fee, accelerating your path to positive EBITDA, which you forecast for 2027.

Step 5 : Team & Organization

Launch Personnel

Getting the right people in place at launch sets the quality standard for your premium spirits. You need specialized expertise immediately. For Artisan Stillworks, this means securing a Head Distiller at $90,000 annually to manage production quality and consistency from day one.

You also need someone running the customer interface. Hire a Tasting Room Manager for $60,000 per year. This role directly impacts crucial direct-to-consumer revenue, so don't skimp on experience here. These two salaries form your essential operational base.

Scaling Sales Capacity

Sales capacity planning is about matching headcount to projected volume growth, not just current needs. You start lean, using only 0.5 FTE for the Sales Manager role in 2026. This assumes initial sales rely heavily on the tasting room experience and limited wholesale penetration.

If your 5-year forecast holds, you must plan for aggressive scaling. The plan requires doubling that capacity to 1.0 FTE by 2028. If wholesale growth stalls, this hiring might defintely slip, but the budget must account for the salary increase when volume demands it.

Step 6 : Financial Forecasts

The Profit Path

Your 5-year forecast must clearly show when the distillery crosses into profitability using production growth as the lever. This projection bridges the initial investment phase to sustainable operations. We forecast a loss of -$116,000 in 2026, primarily due to startup costs and initial low volume. The model shows a sharp turn to a $124,000 EBITDA gain in 2027 as production ramps up. Honestly, this turnaround hinges entirely on hitting volume targets early.

Volume Levers

Hitting that 2027 EBITDA target requires managing costs against volume. The initial $600,000 capital expenditure (CAPEX) for the main still and tanks must be absorbed by sales quicky. Focus on the product mix defined in Step 1; higher-margin items, like whiskey, improve the EBITDA timeline faster than lower-margin vodka sales. If your variable cost for whiskey is $350 versus a $5,000 price point, maximizing whiskey output drives cash flow imediately.

Step 7 : Risk Assessment & Funding Request

Funding Certainty

You must quantify downside risk before asking for money. Investors need to see you planned for inevitable setbacks. For this distillery, regulatory changes are a major hurdle. Also, aging inventory costs can quickly drain working capital if sales lag the 2027 EBITDA target. This planning shows operational maturity.

Funding Call

The total raise must cover all hard costs and provide a safety net. Your request needs to explicitly cover the $600,000 in capital expenditure, which includes the $250,000 Main Still and Condenser. Crucially, you need $494,000 as a minimum cash buffer to manage the initial negative EBITDA projected for 2026. The total ask is $1,094,000, defintely.