Requirements for starting a compound gin brand

[Talkstick]

So I'm looking into starting a compound gin production business. For anyone not aware this means creating gin from NGS (neutral grain spirit) by infusing the NGS with botanicals. No distillation would take place as the NGS would be sourced from a distillery before being compounded.

I would buy the neutral grain spirit with the duty already paid on it. And the finished gin would be retailed online and shipped through a courier across the UK.

I've done a fair amount of research but not everything makes complete sense. From what i can gather i would require two licenses, a personal alcohol license and a compounders license.

My main questions are:
1. Accept for the personal alcohol license and compounders license, do i need any other licenses or approvals?
2. Regarding the compounders license, can someone explain the process for me? As in does it require any inspection? And if so how to adequately prepare for such inspection.
3. Do i have to register for duty stamps if I'm buying the NGS duty paid from the distillery?

From what i understand the entire process should in theory be relatively simple considering the NGS will be purchased with the duty already paid on it and because no distillation will actually take place.

Thanks in advance, really appreciate any advice that can be offered!

 

[WaveJumper]

Have you checked here:
Find out how to become licensed as a spirits producer, submit production returns and make Spirits Duty payments
https://www.gov.uk/guidance/spirits-duty

 

[Ian J]

From what i understand the entire process should in theory be relatively simple

It could be even simpler if you get the distiller to do the whole thing for you which is what most of the craft gin "manufacturers" do

 

[Interestedobserver]

It's a saturated market IMO and not only that when someone does buy a bottle of gin it's a while before they buy another one

We went to the good food show at Birmingham a couple of years ago

Every other stall was selling gin of some kind. They all looked great. But everybody seems to be making their own brands of gin nowadays

I like gin myself but I just can't see a viable business for new brands of gin. Too competitive

IMO

 

[Ian J]

It's a saturated market IMO and not only that when someone does buy a bottle of gin it's a while before they buy another one

I agree with you that it's a saturated market but not that "when someone does buy a bottle of gin it's a while before they buy another one" as that may apply to people that drink supermarket gin but that's not the OP's target market. I have probably a dozen different bottles on the go at any one time

 

[Interestedobserver]

I agree with you that it's a saturated market but not that "when someone does buy a bottle of gin it's a while before they buy another one" as that may apply to people that drink supermarket gin but that's not the OP's target market. I have probably a dozen different bottles on the go at any one time

So you have 12 different bottles of gin?

That makes sense

I probably have about 6 or 7 I think

They look great etc and taste great

So how long before you buy a second bottle of the same gin or brand?

I guess that's the point I'm trying to make. Where do the new gin makers get repeat sales from in any quantity?

Will take a while to drink each bottle even if you have lots of friends to help (when you are spreading it over 12 bottles)

And I bet you whilst you drink them another 250 plus brands will have been created! Lol

I don't think many people buy more than one of any bottle at a time. Not only that - in a short space of time each brand itself ends up with 3 to 5 plus different bottles each!

I think the mixers you have with them have more potential growth. Or the dried fruits or extras you can add maybe.

However, they too will probably be a saturated market before too long. If not already. I've not really followed that as much. There are probably more barriers to entry with those.

I just know that every man and his dog have jumped on the Gin bandwagon. I have three friends who have zero experience of anything involving retail alcohol who have all created their own brands of gin. Two of them have even gone as far as making it themselves as well.

And I don't have many friends!!

With zero knowledge or experience of the alcohol industry at all. Like a side hobby alongside businesses they actually know something about! I've been tempted to create my own brand myself. I wouldn't make it but I've checked out how easy it is to just create a brand with a distiller.

These guys have early success selling to friends and at local shows/markets etc and then I assume most of them realise it's harder to keep selling in any quantity than they thought

It's so easy and cheap to create your own brand

And I guess it's fun and sexy etc

And every bottle I see - I love! So the people doing it end up with a nice result. I'm not doubting that

I would imagine less than 1 per cent are actually making any worthwhile money from it though?

I would almost liken what they are doing to selling stuff on eBay. Lots of effort and time for little reward. And if they worked out the cost of their time gone into it they aren't actually making a profit. For 99 per cent of them.

There are just so many of them doing it now it's untrue!

Are there any taste combinations left for them to create?

It's more about how nice the bottle itself looks in many ways now.

 

[Interestedobserver]

To the OP

Every bottle I have bought has been a spur of a moment purchase when at a food show or farmers market/shop etc

Even better if they are offering free tastings

If you are going to focus on selling online not sure how many people would go looking for your gin online?

And how would they find you amongst the tens of thousands of competitors?

I kind of think it's a touchy feely type of purchase. From my own experience.

My initial reaction remains the same. Making and creating a brand however you do it won't be hard or expensive and I'm sure you will create something great

Selling it in any worthwhile and repeat quantities will be the hard bit

You will need to work hard to find new customers every week as it's not a repeat purchase product IMO in any quantity even for the people who will love what you make and no matter how well you make it

There's a limit to how quickly people drink gin

 

[Interestedobserver]

83 million bottles of Gin were sold in 2019 in UK

There are 28 million households

If you ignored entirely how many of the 83 million bottles were sold to pubs and restaurants

Then it's an average of approx 3 bottles of gin per household per year

There were over 400 gin distillers registered in 2019 in the UK

More than treble the number from 5 years earlier!

And I know many of them produce gins for many different brands as I've talked to some of those distillers myself

 

[Mark T Jones]

Crowded markets are for people who don't know their customer.

Some established brands will disappear. Many new ones will emerge - some will succeed, some will fail.

The key differentiator won't be the product, but the marketing (in its broadest sense ie knowing who your customer is and what they like)

To the OP; unfortunately I don't know the answer, but I do know that several smaller brands with distilleries but a twice-distilled product & undertake the third themselves, which may (or may not) be relevant.

 

[Ian J]

So you have 12 different bottles of gin?

That makes sense

I probably have about 6 or 7 I think

They look great etc and taste great

So how long before you buy a second bottle of the same gin or brand?

I said to wifey that it's stupid having so many different bottles of gin and that we probably had £700 tied up in the stuff so we started to run down the stocks but sometimes I can't help myself.

There is a small gin distiller near to me in Lichfield whom I have got to know quite well and their gin called Fifth Spire is my favourite and I keep saying that I shouldn't bother with any of the others but then I forget.

Current stock:-

Fifth Spire
Fifth Spire Navy Strength
Fifth Spire Pink Peppercorn and Grapefruit
Fifth Spire Mothers Day Gin
Caorunn
Pickering 1947
Gin Mare
Macronesian Gin
Forty Spotted
Whitley Neill several for non gin lovers

In addition I have just finished a bottle of Lakes Gin which I really like and will replace soon plus a bottle of Little Bird but that's difficult to find.

The only one in my collection that you won't be able to find is my bottle of Tor Ridge Gin which you won't be able to find as I made it.

The Fifth Spire lads have a gin bar in Lichfield and on Sunday afternoons they hold gin making sessions where you can make your own gin. It's a great fun afternoon for any gin lovers living close enough

 

[Interestedobserver]

Fifth Spire sounds good.

Those guys putting some time and effort in to market that kind of stuff will give them a chance of making it work better than some others as well. And they should make decent money from the tastings.

Some of the more established brands (we have Burleighs Gin near us) who were well ahead of the game must despair at all the new brands coming in to compete with them each month?

They used to be in all the local shops - but now every month there seems to be a different "local" gin they are selling

I have a non alcoholic one as well (Seedlip) There's more of the non alcohol ones coming onto the market each month as well. They taste very good.

I reckon I have barely drank a quarter of any of the different bottles I have bought so far. The bottles look good though!

Ps I think Lichfield is a great place. We nearly moved there last year. Near the Cathedral.

 

[IanSuth]

So you have 12 different bottles of gin?

That makes sense

I probably have about 6 or 7 I think

They look great etc and taste great

So how long before you buy a second bottle of the same gin or brand?

I guess that's the point I'm trying to make. Where do the new gin makers get repeat sales from in any quantity?

Will take a while to drink each bottle even if you have lots of friends to help (when you are spreading it over 12 bottles)

And I bet you whilst you drink them another 250 plus brands will have been created! Lol

I don't think many people buy more than one of any bottle at a time. Not only that - in a short space of time each brand itself ends up with 3 to 5 plus different bottles each!

I think the mixers you have with them have more potential growth. Or the dried fruits or extras you can add maybe.

However, they too will probably be a saturated market before too long. If not already. I've not really followed that as much. There are probably more barriers to entry with those.

I just know that every man and his dog have jumped on the Gin bandwagon. I have three friends who have zero experience of anything involving retail alcohol who have all created their own brands of gin. Two of them have even gone as far as making it themselves as well.

And I don't have many friends!!

With zero knowledge or experience of the alcohol industry at all. Like a side hobby alongside businesses they actually know something about! I've been tempted to create my own brand myself. I wouldn't make it but I've checked out how easy it is to just create a brand with a distiller.

These guys have early success selling to friends and at local shows/markets etc and then I assume most of them realise it's harder to keep selling in any quantity than they thought

It's so easy and cheap to create your own brand

And I guess it's fun and sexy etc

And every bottle I see - I love! So the people doing it end up with a nice result. I'm not doubting that

I would imagine less than 1 per cent are actually making any worthwhile money from it though?

I would almost liken what they are doing to selling stuff on eBay. Lots of effort and time for little reward. And if they worked out the cost of their time gone into it they aren't actually making a profit. For 99 per cent of them.

There are just so many of them doing it now it's untrue!

Are there any taste combinations left for them to create?

It's more about how nice the bottle itself looks in many ways now.

My wife and her mate have i would think about 60 between them currently and regularly buy new ones that look interesting - HOWEVER they will only buy ones that are 40% alcohol and above and wont pay over £22 for a 70cl unless it is one they have had before and really like. Plus they dont like the newer really sweet ones - tend to go more for the chilli and lime etc with subtle flavouring.

 

[Interestedobserver]

Just checked. I have 6 bottles. A couple of them are only half bottle size.

2 of the 6 bottles I've not opened yet.

Like I say purely impulse buys because they look great when out shopping

I reckon I've bought all 6 bottles over 12 months (maybe longer)

I'm not a big drinker and only have a gin and tonic at home about 2 or 3 times a month

But I would still class myself a good gin target customer for any brands

It's just they won't ever get rich from people like me!

I guess it's different from wine, champagne and prosecco as well in that you can open a bottle and don't need to finish it

 

[Ian J]

Some of the more established brands (we have Burleighs Gin near us)

Burleighs also run gin distilling classes

 

[Interestedobserver]

Burleighs also run gin distilling classes

Yes. Not cheap either for those classes. To them Gin is a proper first business rather than a hobby/side business like it is for many

Hence why they must despair at the low barriers to entry for others

 

[Ian J]

Like I say purely impulse buys because they look great when out shopping

You won't like Sainsbury then as their gins all look boring. I do look at their gins though to see what's on special offer as I like Caorunn and buy it when it's reduced to £22

If you have a Waitrose near you Heston Lazy Sunshine Gin has an appealing looking bottle

 

[Interestedobserver]

My wife and her mate have i would think about 60 between them currently and regularly buy new ones that look interesting - HOWEVER they will only buy ones that are 40% alcohol and above and wont pay over £22 for a 70cl unless it is one they have had before and really like. Plus they dont like the newer really sweet ones - tend to go more for the chilli and lime etc with subtle flavouring.

This won't sound good - but I'm a male but like the pink gins best !

Loads of ice and lots of tonic - although I've started drinking with lemonade recently

Prior to gin. I used to just drink lager or mojitos

 

[Ian J]

Loads of ice and lots of tonic

Loads of ice and very little tonic

And make sure that you use a premium tonic like Fever Tree and not Schhh or worse

 

[Interestedobserver]

Back to the OP again. I found a distiller in Northampton who for low quantities would either let you brand one of their own range of gins

Or for still reasonably low quantities let you go and create a new one with them

I'm sure there's many more out there who will let you piggy back on what they do

The prices were very reasonable

 

[Interestedobserver]

Loads of ice and very little tonic

And make sure that you use a premium tonic like Fever Tree and not Schhh or worse

I've never been a big spirit drinker so I need the mixers to make the taste milder for me

 

[Interestedobserver]

I also like the rhubarb flavored gins mixed with ginger ale. Can't go wrong with them

No doubt that's a woman's drink. That's what my friends and wife tell me at least

Need loads of ice though for any of them IMO

 

[Ian J]

Need loads of ice though for any of them IMO

We stayed in a villa in Spain last year that had a wonderful outdoor kitchen complete with commercial ice maker so as soon as we returned I bought my own ice maker which is great for summer when we use loads.

It wasn't a commercial sized ice maker and probably isn't very cost effective when you can buy a big bag of ice from supermarkets for £1

 

[IanSuth]

This won't sound good - but I'm a male but like the pink gins best !

Loads of ice and lots of tonic - although I've started drinking with lemonade recently

Prior to gin. I used to just drink lager or mojitos

Strangely enough of all her Gins the 2 i like most are Whitley Neill Quince and the Ophir (not sure on spelling of either of those), the thing i hate most was a small bottle of Gingerbread flavoured Gin Liqueur from Aldi someone gave me 18 mths ago - it is not a Gin and is not even worth cooking with, not sure i dare pour it down the sink for what it would do to the drains

 

[Interestedobserver]

We stayed in a villa in Spain last year that had a wonderful outdoor kitchen complete with commercial ice maker so as soon as we returned I bought my own ice maker which is great for summer when we use loads.

It wasn't a commercial sized ice maker and probably isn't very cost effective when you can buy a big bag of ice from supermarkets for £1

Next fridge freezer we buy we are going to have one of the built in ice makers with it. You can get built in coffee makers as well now on the latest fridge freezers we looked at.

 

[IanSuth]

Next fridge freezer we buy we are going to have one of the built in ice makers with it. You can get built in coffee makers as well now on the latest fridge freezers we looked at.

If you live in a hard water area I hope you have a built in softener or you will be limiting the life of your fridge/freezer, you don't want to be regularly stripping it for a descale. Around here without mitigation a kettle only lasts 18 months

 

[Ian J]

Next fridge freezer we buy we are going to have one of the built in ice makers with it.

I have a so called American fridge / freezer and I looked at those with built in chilled water and ice makers and decided against them as they take up too much room at the expense of freezer space

 

[Mitch3473]

I live out in the sticks in Welsh Wales and I pass 2 Gin distillers every week.
One's in a unit on a touristy retail park and the other one is in the middle of a field. Both in the middle of nowhere. Whiskey is the next fashion.

 

[Ian J]

Whiskey is the next fashion.

I'm not so sure. Gin was dying out in this country as people were getting bored with cheap gin with a slice of lemon and equally cheap tonic to top it up with and we have the Spanish to thank for sexing it up with far better gin, lovely bowl shaped glasses and all sorts of garnishes so that a gin tonic was nice to look at as well as drink.

Whisky will never become as fashionable as it doesn't appeal to women as much as gin does and that's just for starters

 

[Interestedobserver]

If you live in a hard water area I hope you have a built in softener or you will be limiting the life of your fridge/freezer, you don't want to be regularly stripping it for a descale. Around here without mitigation a kettle only lasts 18 months

Ok I'll bear that in mind and get a separate ice maker

 

[Interestedobserver]

I think non alcoholic quality spirits might be the next big thing

Young people aren't drinking as much as in the past and some of the gins they've made non alcoholic taste perfect

I'm sure they can do similar with other alcohols

 

[swankypants69]

It’s a massive market, but yes there is quite literally 100s of brands out there

To stand out in the gin game you need a story, a quirky bottle/label and some kind of unique twist in terms of botanicals

Yes it’s got to taste good too obviously

But branding and standing out from the crowd is incredibly important

Have a look at Harris, Mermaid, Lind and Lime, Seven Crofts, Kings Hill, Brooklyn, Lakes, Glaswegin, Forest etc

For small batch have a look at Shed 1 Gin

Where are you based? What’s your planned route to market other than selling online yourself?

Fairs, markets, country shows and events, all graft and ground work but essential

 

[swankypants69]

I live out in the sticks in Welsh Wales and I pass 2 Gin distillers every week.
One's in a unit on a touristy retail park and the other one is in the middle of a field. Both in the middle of nowhere. Whiskey is the next fashion.

I don’t think whisky will ever be a “fashion” as such

It is however a huge industry in its own right

There is lots of interest in investing in whisky at the moment, I have dabbled a bit myself which makes it interesting to see what happens having a bit of skin in the game as they say

 

[alan1302]

I don’t think whisky will ever be a “fashion” as such

It is however a huge industry in its own right

There is lots of interest in investing in whisky at the moment, I have dabbled a bit myself which makes it interesting to see what happens having a bit of skin in the game as they say

I would guess the Whisky industry is much larger than the gin one especially when you take the Whiskey and Bourbon markets into as well.

 

[alan1302]

I'm not so sure. Gin was dying out in this country as people were getting bored with cheap gin with a slice of lemon and equally cheap tonic to top it up with and we have the Spanish to thank for sexing it up with far better gin, lovely bowl shaped glasses and all sorts of garnishes so that a gin tonic was nice to look at as well as drink.

Think makers like Sipsmith & Bombay Sapphire may disagree with you - they have had a big influence on the marketing of gin - pushing for quality like Sipsmith or having a spicier taste like Bombay Sapphire.

 

[Ian J]

Think makers like Sipsmith & Bombay Sapphire may disagree with you - they have had a big influence on the marketing of gin - pushing for quality like Sipsmith or having a spicier taste like Bombay Sapphire.

Sipsmith only started 11 years ago and was in the vanguard of the resurgence of gin distilling in the UK but it was mainly holidaymakers returning from Spain where they had been tempted into gin with the far sexier product that the Spanish were serving up that opened up the market for similar products back home.

Sipsmith may be a small producer (compared with supermarket gins) but they are owned by a huge corporation in Beam Suntory

 

[conorm]

To the OP (@Talkstick), as well as a Compounder's Licence and a Personal Licence, you will need 'Licence L110 to carry on an excise trade' (also from HMRC) plus a Premises Licence for the premises from which you intend to sell the gin.

 

[patientlady]

Hi Talkstick, may I say before going any further with this, I hope you have funds available for a marketing and advertising budget? Your product will join a very flooded market.

Have you thought about your route to market, which is critical and costly. I wish you luck with this...