Craft Distilleries: How to Set Up Your Space for Success

01/30/2024

The distillery industry is experiencing unprecedented growth, with the market reaching a staggering $196.55 billion worth in 2022. This is fueled by a surge in demand for premium and super-premium spirits, coupled with the rising popularity of local food and cocktail culture. Craft spirits, holding a 7% value share of the total US spirits market, are anticipated to nearly double their market share by 2025. Notably, North America emerged as the craft spirits market leader in 2021, while the Asia Pacific region is projected to be the fastest-growing.

As the industry thrives, small distilleries are emerging as key players, benefitting from trends like premiumization and innovations such as cocktails-to-go, delivery, and e-commerce. The shift in consumer preferences has become a catalyst for growth, emphasizing the importance of producing high-quality, locally sourced liquor. This kind of growth fuels a need for construction companies to be available to complete necessary upgrades and expansions. In this article, we’ll discuss what the construction process looks like and how to make it feasible for growing businesses.


Expanding Your Spirits Business

If you’re one of these many small craft distillers looking to expand into a bigger industrial space, it can feel like a daunting task. Getting the proper licenses, permits, zoning, equipment, and location can take time and a lot of effort. Your local, state, and federal government will have a variety of fire, safety, occupancy, and manufacturing codes and laws. As a distiller, you probably already have a manufacturing license; however, requirements can change based on volume and capacity.

Working with a broker, designer and a general contractor is a great way to make sure you’re meeting all the qualifications. Finding local guilds, chambers of commerce, entrepreneur committees, specialized university programs, and national industry organizations can open up a world of opportunities and information.

Want to learn more about how to take your business to the next level? Check out our recent blog on moving out of the garage and into a bigger space.

Industrial Distillery Construction

For companies venturing into the construction of distilleries, it’s essential to consider various factors to ensure the facility aligns with industry standards and regulatory requirements. There are many unique features that play a pivotal role in creating a functional and compliant distillery. Some examples include:

  • Trench drainage systems,
  • FDA-mandated, easily washable walls and surfaces
  • Explosion-proof electrical switches
  • Thermally protected electrical systems

Here are a few requirements and features you and your general contractor (GC) should consider when developing your space:

Ensuring Safety in a High-Heat Environment

Since spirit distilling uses and produces dangerous and highly flammable products, it’s essential to ensure your facility meets the unique industry standards. Your product, materials, and equipment need to be clean and safe. Unless you are entering a space that previously manufactured beer, wine, or spirits, your new space is going to require some modifications.

These can include:

  • Trench drainage systems for efficient liquid management.
  • FDA-compliant equipment and facilities.
  • Thermally protected electrical systems and fire barriers.
  • Extensive ventilation and powerful HVAC for safety.
  • Boiler foundations and safety systems.
  • Easy access to boilers for maintenance.
Operational Efficiency and Safety Compliance

Make sure the space can run smoothly and safely and can handle potential future growth. You may need to incorporate fire suppression for flammable liquids and meet hazardous material safety codes. These will affect the kind of building materials your contractor uses as well as the ventilation systems you will need to install. If your distillery will also include a tasting room or restaurant, you will need to consider multi-use classification and zoning. Many buildings don’t come with this and are classified as only industrial or only mercantile.

Your contractor and design team can help you with designing and constructing an efficient space and specialty systems, including:

  • Clean-in-place process piping and steam lines.
  • Multi-classified/multi-zoned spaces for versatility.
  • Spill management for safety and cleanliness.
  • Separate spaces for product manufacturing, material storage, and final product storage.
  • Hazardous material occupancy requirements compliance.
Storage, Logistics and Utilities

Your product is your business; keep it clean, safe, and organized with proper storage. In industrial manufacturing, racking system are often used. There are several ways to organize and build out this system, and your contractor can help you choose one and make sure it’s safe for your employees. Also consider the energy and water requirements for production. Will you need a special connection to city water or power? Does the city require unique disposal plans? Design a space that also allows for growth. Make sure you have the right amount of square footage and clear space to accommodate future tanks, bottle processing, or new product lines.

In your design, you will need to consider, among other things:

  • Flammable liquid fire protection for safety.
  • Ample clear space for tanks and rack storage for organization and access.
  • Proper power solutions and energy growth plans for sustainability.
  • Water lines and wastewater disposal considerations.

All of these items can be determined with the help of consultants like specialty contractors, architects and engineers.

Oregon Craft Distilleries

Oregon’s foodie culture and bountiful agriculture make it a powerhouse in this industry. Innovation and special touches are what set apart craft distillers in a market shadowed by more prominent companies like Jack Daniels, Bombay Sapphire, Smirnoff, and more. The culture of different thinkers and scrappy entrepreneurs makes Oregon the perfect environment for new stars to make their debut.

For those looking to start their own craft distilleries here, you will have to work with the Oregon Liquor and Cannabis Commission. They have strict guidelines on how alcohol is produced, sold, and stored. Working with a legal counsel and an experienced contractor can help streamline the process of getting approval and permitting. The Oregon Distillers Guild is also an excellent resource for finding relevant legislation, representation, and community support. 

As the distillery landscape evolves, with Oregon leading the pack in distilleries per capita, contractors have a unique opportunity to contribute to the success of this vibrant industry. By incorporating all these considerations into the construction process, you can ensure your space is not only compliant but also well-equipped to thrive in a market driven by innovation and consumer preferences.

Spirit Industry Construction Experts

The Perlo team has experience working not only with federal requirements but also with hazardous material manufacturing. We’ve helped several Pacific Northwest industry icons find their new homes. From new builds to tenant improvements, our teams have partnered with big hitters like Stoller Winery, Breakside Brewery, Vinovate Custom Wine Services, Straightaway Cocktails, and Westward Whiskey.

Our work in the tech industry and chemical manufacturing also allows us to build and install cutting-edge equipment and facilities. With the incorporation of more AI and digitized fermentation equipment in most modern distilleries, you’ll need someone familiar with these products. 

Final Thoughts

The craft distillery industry is witnessing significant growth, and craft spirits are forecasted to double market share by 2025. Small distilleries, especially, are thriving through innovative measures and premiumization.

If your business is looking to expand, you’ll need to consider a larger location, navigating federal and local requirements, and how to design a functional space. Finding an experienced contractor and design team can help ensure you’re meeting safety measures for high-heat environments, operational efficiency, compliance with safety codes, and proper storage and logistics. Need help getting started? Reach out to our teams today.