Starting your own gin brand can be exciting, but it comes with numerous cost considerations. Here’s a comprehensive Q&A to guide you through the cost of crafting gin through a contract distiller.
1. How much does duty cost when producing gin?
Duty is a significant, non-negotiable expense determined by HMRC. As of 2025, the duty for pure alcohol is £32.79 per litre plus VAT. For a 700ml bottle of gin at 40% ABV, the duty is calculated as:
0.7 (L) x 0.4 (40%) x £32.79 = £9.18 (plus VAT)
This cost applies before considering any other production expenses.
2. What affects the cost of raw materials and botanicals?
Botanical costs vary based on origin and quality. Exotic or organic ingredients, like Japanese yuzu or cherry blossom, are more expensive due to import fees and limited supply. Environmental factors, such as crop yields, also influence prices. The general economy can also affect the cost of crafting gin, such as cost of living crises or unrest abroad, which can lead to increases in energy prices, availability of crops and so forth.
3. How much do bottles and packaging cost?
Bottles typically cost between £1.50 and £2 each when bought in smaller bulk quantities (1,000+ units). Cheaper options exist from countries like China, but consider additional transport costs and ethical practices, in addition to very large Minimum Order Quantities. Custom bottle designs will increase costs due to specific moulds and production requirements. You can also avoid labels by having the bottle printed with your desired design however the minimum order for this is likely to be on the larger side.
4. Are custom labels expensive?
Yes, label costs can vary greatly. Standard shapes (rectangles, circles) are more affordable, while custom designs with features like foil, embossing, or special papers are pricier. Bulk orders reduce costs significantly — for example, 100 labels may be around £150 versus 500 labels for £160.
5. What are the costs related to packaging for shipping and retail?
Secondary packaging, such as boxes for retail or shipping, adds to your expenses. Requirements differ depending on whether your gin will be on supermarket shelves, sold online, or distributed via specific couriers who may have packaging standards.
6. Does batch size impact production costs?
Absolutely. Smaller batches (24-27 bottles) have higher per-bottle costs because fixed setup and labour expenses are spread over fewer units. Larger runs (100+ bottles) reduce these costs and large runs (1080+ bottles) do this significantly, offering economies of scale.
7. How do labour and operational costs affect pricing?
Labour costs remain relatively stable, whether producing small or large batches, as setup, distillation, bottling, labelling and packing require similar time. This makes larger batches more cost-effective per unit. The more embellishment you have on the bottle the more the labour is likely to be. Are you looking for a wax dip top or similar premium finish.
8. Do I need any licences, and do they add to the cost?
Yes, depending on your business model, you might need additional licences from HMRC, especially if handling alcohol storage or distribution. These licences can involve administrative fees and compliance costs.
9. Are there additional services offered by contract distillers that affect costs?
Many contract distillers offer services like recipe development, branding consultancy, and storage solutions and drop shipping. These value-added services can streamline your process but will add to your overall costs depending on the level of customisation required.
10. How can I manage and reduce production costs effectively?
- Bulk Purchasing: Reduces unit costs for bottles, labels, and ingredients.
- Simplified Design: Keeps label and packaging expenses manageable.
- Efficient Planning: Minimises delays and associated costs.
- Monitoring Duty Rates: Stay updated on tax changes to avoid surprises.
By understanding these key factors, you can make informed decisions to manage costs effectively while maintaining a high-quality gin product.
