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Investing in New Distillery - What sort of return?

edited August 2013 in General

Hi guys!

Looking to invest in a new distillery. What type of return should the owner offer or I should expect to get?

Comments

  • Question... is this Bold, the President of Poop Balls that I know from somewhere else? (I have a different name here, so I doubt you'll recognize me).

    If not, I apologize for the completely random question!

  • I don't think so. No worries!

  • @Bold. That really depends on a lot of factors. Depending on what country you live in as well as what state. What the Go to Market Strategy is, Overhead cost for the building... Packaging Cost can vary alot depending on what bottle and label you chose to go with.... Ect....

    Profit Margins are very slim for me. Between the US Federal Taxes on Alcohol $13.50 a proof gallon and the State Taxes plus production and bottling costs on a $30 out the door bottle of vodka my profit is only about $5 a bottle.

    You need to really look over a completed business plan before you make any decisions about investing. Also figure it will take 18-24months from the start before you will have all the permits and equipment in place and be able to sell your 1st bottle.

  • RedDoor thank you very much for your reply. With all that being said could you give me a minimum maximum APR as a return? Just need some idea.

    Thanks again 

  • Are you looking to "Buy In" and be a partial owner? Or just an investor with a return on your investment? Repayment of the Principal over X period of time with Interest?

    Personally if I was just going to be an Investor in any Start-up I would expect between 7-15% APR on my investment. I typically am able to get this type of return from my stock investments so I would not be willing to move the investments unless the return would be the same or better. The structure of the loan repayment period would also be a factor and also how much you are investing. I could even go higher on the APR depending on the risk factor involved and the credit worthiness of the people I am investing in.

    Now if you are buying a % of ownership then what you are looking at is the potential down the road. APR is not important as you are buying the future value. I have an investor who is a 30% owner in my distillery. Silent partner. 2 years in and they have not revived a single payment. But what they are investing in is the future value of the company. Ultimately in 3-5 years the value of their share of the business could be 10x+ what they invested.

    So it really depends on what direction you are taking and how much you are investing.

  • great information

  • RedDoor thank you very much!

  • Red Door's way is pretty much venture capital... I might do that for an expansion after I get started and prove my product on a small scale.. another way might be to call up the folks that do the lease-to-own equipment for places like vendome, find out exactly what it costs to do it that way (pretend you want to have them finance you, or have the distiller call), and use their price or undercut their price a bit ... ;-) (this is assuming that you, the investor can tie your money to the equipment as collateral, and the distiller uses his own capital for things other than equipment.. best to get a lawyer to write it up, obviously)

  • After you get a price from Vendome, make sure you get one from Smaug here. You'll be amazed at the value we can deliver.

    StillDragon Australia & New Zealand - Your StillDragon® Distributor for Australia & New Zealand

  • Punkin......done!

  • @punkin said: After you get a price from Vendome, make sure you get one from Smaug here. You'll be amazed at the value we can deliver.

    no, not the price from Vendome for the equipment, the cost of 'lease to own' folks they deal with... for example, you pay a 10% per year upcharge for 4 years over buying the equipment straight out...

  • Aaaahhhh, praps we should look into that, although our equipment is already a quarter of the price =))

    StillDragon Australia & New Zealand - Your StillDragon® Distributor for Australia & New Zealand

  • @punkin said:

    Aaaahhhh, praps we should look into that, although our equipment is already a quarter of the price =))

    :)

    StillDragon North America - Your StillDragon® Distributor for North America

  • Yea Yea :-c

    It is what you make it!

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