So, you’re in market and your bottles are selling. You may even have savoured the initial fanfare around your arrival, been the toast of the town and felt the pride and the momentum drive you forward.
It’s possible you got a few things wrong in the first 6 months. It’s likely that you’ve tweaked a few plans, changed strategy a little and refined your pitch.
Good! It’s a rare thing when a plan is so spot on it ignites exactly as expected from the launch. Moreover, 18 months in you should have a lot more to add to your brand world, story and vision – so evolution is a positive sign you are paying attention and listening to feedback.
But 18 months to two years in, most face the same challenge despite having grown over the initial ramp up – how to scale further. Where can new growth come from? How can we build better rate of sale? And can we stop the churn of customers?
In this guide, we dive into the journey of scaling a distillery, focusing on identifying the most frequent scale constraints that can throttle growth.
A lack of CLARITY prevents scale
Clarity is the ultimate restrictor when it comes to growth. It’s one of the most universal ones too. A lack of clarity comes in many forms, but can usually be summed up in an unclear vision, mission, and strategic anchors.
Do I have clarity on where we’re going and why we’re going there?
Does everybody on the team know that and their role in helping us getting there?
Are we all in absolute agreement about we’re good at and what the distillery’s USP is (and do we understand it fully)?
If any of these are unclear, you often see misdirected efforts, poor decision-making, and an incoherent brand image. Scaling up becomes impossible.
Solutions:
Start by creating a precise roadmap that illuminates the path toward achieving these goals.
Did you make a Business Plan? If so, revisit it and use it as it’s intended – a guide.
If you didn’t, then this is a major contributor to why you are struggling to scale up. Simply existing isn’t inspiring enough to grow beyond a certain stage. Simply surviving isn’t a strategy that gets you past the first six months. A hunch only gets you so far. You are at that point now – time to change your modus operandum if you want to unlock further growth.
Can you state your company purpose in a single sentence? Is it enacted all around you? If not, fix it.
Can you state your three most important core values? Are they part of everyone’s day to day behaviour and their decision-making process? If not fix it.
You need a clear plan, clear messages and clear ways to inform strategy. Maintaining clarity over values and purpose is integral to scaling and growth.
Insufficient DEMAND kills growth
Sufficient market demand is essential to scale. Despite having an exceptional product, without adequate demand, sustaining growth becomes an uphill battle.
What did your market research tell you? What did you scope out in your business plan? If you did it right, then category headroom isn’t the issue, it’s demand for your product specifically.
Let’s put that another way. If you’ve sold your bottles in the past and have got to this point, you can be confident that there is a space for it on shelves out there. If it’s part of one of the major categories, you know that while trending interests come and go, categories like Gin, Whisky, Vodka, Brandy, Rum and Tequila are not going anywhere. So, it comes down to fixing your market share and being part of the selection on shelf.
While that stings to accept, it’s actually much easier to break down into actionable strategies.
Assuming it’s not a liquid quality issue – the growth constraint is often due to business owners not understanding how to structure their marketing and sales in a way that way can scale without them. Which leads to plateauing volumes.
How to increase demand:
Strengthening brand presence and expanding marketing efforts are crucial. Leveraging digital marketing, collaborating with influencers, or forging partnerships with bars and restaurants can amplify brand awareness and stimulate demand.
Look at making a Marketing Funnel and focus on all the ways you are going to add prospects into it.
Most of all – find a way for others to replicate your success. If it all relies on one person, it’s not scalable. Beyond being the founder and having a passion for your product – What do you do that converts? Is it a specific funnel or targeting a type of account? Build a strategy that allows for others to do the same.
Take a moment to be introspective, then empower them to go and do it!
Inefficient OPERATIONS limiting scale
Inefficiency in production, distribution, and overall operations can bottleneck growth and erode profitability. It’s a simple practical constraint that limits your scale, but it can get forgotten about in the chase for more. Time to clean up your act!
Implement lean manufacturing principles:
- Waste identification: Regularly analyse production processes to identify and eliminate waste (non-value-adding activities).
- Continuous improvement: Adopt a Kaizen approach to continuously improve processes by involving all employees.
- Adopt an ERP system: Employ an Enterprise Resource Planning (ERP) system to integrate and manage main business processes, providing real-time visibility and data analytics.
By being leaner, you can save on costs, and then use those savings to invest in awareness building and creating sales leads.
Strengthen supply chain & processes:
- Vendor management: Build more robust relationships with suppliers and establish backup vendors to safeguard against disruptions.
- Inventory management: Implement just-in-time (JIT) inventory practices to reduce carrying costs and enhance cash flow without jeopardizing production capabilities.
- Standardise processes: Develop Standard Operating Procedures (SOPs) to ensure consistency and high quality across all products.
Strategic partnerships:
- Collaborations: Establish partnerships with entities that can augment your operational capacities, such as logistics companies, co-packers, or marketing agencies.
- Joint ventures: Explore joint ventures that might allow you to share operational costs and expertise with other entities.
There are dozens more ways to improve efficiency. Just by embedding these practical strategies within your operational frameworks, your distillery can significantly enhance its operational efficacy, paving the way for scalable, sustainable, and profitable growth.
We can’t stress it enough either – it’s not just about savings. Active supply is a huge anchor for growth and the single biggest issue when operating at scale. Simply fixing disruptions to supply often accounts for good volume upticks.
While it might not seem like much at the time, a delay making and dispatching here, or having to limit lead generation and in-market hustle due to supply concerns there, or because you are chained to the still rather than supporting accounts with tastings… It can easily add up to 5-10% volume drops in a year.
The wrong STRATEGY (or having no strategy)
A misaligned strategy not only impedes growth but can also steer the company towards being unsustainable. Going with your gut may have got you this far, but it’s now holding you back.
Consider employing a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) or hiring a business consultant who specializes in the spirits industry.
Have a look at these articles to help. Business Plan, Marketing Plan, Route To Market, Newsletter and CRM, Marketing Tick Lists, Delivering Marketing Campaigns.
Once you’ve come up with an idea – build in a two year plan and break that down into actionable metrics per half year. Then set about actively implementing it and ensuring its kept on track via meetings, campaigns and feedback loops.
Pin it up on the wall so it’s an active reminder on what needs to be done every day!
Not having the right people on the TEAM
Talent mismanagement or having an inadequate team can hinder growth and dilute the company’s vision and culture.
Typically for distilleries coming into the end of year two, the “wrong” team looks more like having the right people in the wrong roles.
Maybe they were great to begin with when everything was bootstrapped and ad hoc, but now, not so much. It’s hardly surprising either, as most distilleries are completely different places at the start vs two years in. The business has grown, the brand has changed a bit, maybe the market has too – and the employees don’t fully understand the role being asked of them.
How to assess your team
Regular training and skill enhancement programs is be a worthwhile investment to avoid this issue. However, for those in the midst of it, have you ever got someone to present back to you the role they deliver for the distillery, list the responsibilities they have, the KPI’s set against them and how they dovetail into the rest of the team?
You should. It’s amazing to see what people say they do vs what you think they do and / or employ them for.
Sometimes it’s for the better, sometimes it’s concerning. Everyone learns and through doing the process – you can see who’s overloaded, who’s misaligned, who is underperforming and where you need to support to facilitate growth.
It may also be true that you may just have the wrong people altogether. It happens.
Assess what you want to do, but sometimes, the best thing is to accept that it was the wrong hire, be candid and honest about it. Take it on your shoulders and accept the blame is on you, not them and be fair and kind with how you deliver severance. Then start over with a new person.
Consider employing a human resources specialist or working with a recruiting firm that understands the industry to get it right next time.
Not enough CAPITAL to sustain or scale growth
Many start-ups misinterpret the root causes of their capital constraints, attributing all financial issues to a lack of funds. “If only I had more money i could…”
Often, that’s just not the issue stifling growth. Unless you are in a steep incline now doing huge volumes (or are in a market with insane cashflow demands) and need help continuing, plateauing is due to the other limitations mentioned above. If you take care of all those constraints, capital starts to take care of itself.
Businesses that do this effectively start to realise they become self-funding at a better rate once more. It’s no secret that if you can get your team to a point where every member has a direct 2 or 3 to 1 ROI that can be attached to their name – you have a good business model.
If funding really is the issue, when investors look at the books your numbers will make for an attractive proposition to back.
Other solutions:
Enhance financial literacy among leadership. Engage a financial advisor or CFO who can streamline budgets, optimise costs, and guide investment in growth areas.
Exploring alternative funding solutions like grants, competitions, or strategic partnerships can also alleviate capital issues without diluting ownership.
There you have it – five areas to focus on to stimulate new growth. Clarity. Demand. Operations. Strategy. Team. (And capital, which shouldn’t really be an issue).
By addressing these constraints proactively, start-up distilleries can navigate through the intricacies of scaling up past that two-year plateau phase, ensuring sustainable and strategic growth in the competitive spirits market.
