Want to build a wine or spirit business from scratch? Great idea! With new creative concepts, the British drinks industry is thriving. It may take a while before you start; however, like any other investment, it needs proper understanding.

All the necessary steps are covered in this ultimate handbook for launching a wine or spirit brand in the UK by 2024. Legalities and regulations can be boring sometimes but very essential therefore we shall deal with them alongside strategy development, fundraising, brand creation as well as sales and distribution aspects of your business plan. It is not easy but don’t worry – I promise that if you stay focused on this journey, success will be yours!

Understanding the UK Alcohol Market in 2024

Before we get into that, let’s take a moment to understand where the UK alcohol industry is right now and where it’s going. It’s always helpful to have some context when you’re trying to figure out how things work and what might be possible.

Wine Trends and Forecasts

In recent years, the UK wine market has had its fair share of difficulties. For example, still wine volumes overall declined by approximately 4% during H1 2023 compared with the same period last year (2022). However, premium and luxury segments have remained robust as people continue trading up in line with long-term premiumisation trend driven by desire for better quality rather than just quantity.

Sparkling wine is projected to outperform still wines over the coming years; it could achieve volume growth rates of around 1% p.a. between 2022-2027 across key markets. This includes “other sparkling” apart from Champagne and Prosecco specifically which presents an opportunity worth considering.

The French and Italian markets may have been declining for decades but they remain among some of our most lucrative global partners when it comes down to value generated overall within this sector worldwide – even though there are pockets within those regions showing signs for potential growth such as Asia Pacific markets like China, Thailand, Malaysia and Vietnam which are becoming increasingly attractive destinations for higher-end imported wines.

Younger consumers are moderating their drinking habits more than ever before; therefore this means that sustainability remains vital moving forward but should not ignore alternative packaging methods like bag-in-box containers either since these too can serve as important drivers during upcoming years.

Spirits Outlook

The global spirits market is set to grow “significantly” between 2024 and 2031, with the rise driven by premiumisation in categories such as mezcal, tequila, bourbon, cognac and Irish whiskey.

Premium and super-premium spirits will outperform in H1 2024 as consumers see them as an “affordable luxury”, despite a persistently tough economic environment. Optimism surrounds agave-based spirits like tequila which are growing from a small base.

Europe still lags behind the US in terms of premium spirits penetration; therefore there is plenty of room for growth across the continent. However, UK spirit makers face significant inflationary cost pressures that could impact short-term pricing and margins.

From a consumer perspective, the pandemic accelerated interest in premium cocktails and spirit-forward drinks for at-home consumption. This has opened up innovation opportunities within ready-to-drink (RTD) cocktails category while rare editions offering unique tasting experiences remains another area of focus.

On-Trade Challenges and Opportunities

No overview of the UK drinks market would be complete without examining the on-trade sector – pubs, bars restaurants hospitality businesses etc – that was devastated by ongoing closures during Covid19 lockdowns last year but continues to be challenged by surging costs and staffing shortages this summer.

Amid these challenges however lie major opportunities particularly around premium w ine and spirits within this channel where customers maybe drinking less overall but willing to spend more when they do go out; offering rare editions unique tasting experiences cocktail programs can help drive higher spend per head amongst other things.

Additionally, it’s worth noting that on-trade also serves as a crucial testing ground for new wine brands seeking awareness through partnerships sponsored events visibility on drink menus etc, thus developing these relationships early may pay dividends further down the line.

Laying the Foundations

Alright, so now that we’ve wrapped up that short tour of the market, let’s dive into setting up your wine or spirits business. I hope you brought a notebook – there’s a lot to cover!

Developing Your Concept and Business Plan

All successful businesses start with a good plan and vision. You should know exactly what type of wine or spirits you want to make, what sets it apart from others on the market, and who will buy it.

Don’t rush your brand concept and story – take time to perfect them. What inspired your product? Which trends does it take advantage of? How can it stand out among other brands in the same category? Define your mission statement, vision statement and core values; these will serve as the basis for everything from marketing materials to operational strategies.

Once you’re clear about what direction you want to go in, start putting together an actual business plan. Here are some things that should be included:

  • Analysis of Market (Size, Trends, Opportunities)
  • Competitor analysis
  • Product Range & Unique Selling Points
  • Brand Positioning & Go-To-Market Strategy
  • Operational Requirements (Staffing, Equipment, Facilities etc.)
  • Projected Costs & Financial Forecasts

There are plenty of free templates online if you need help structuring this part. Just keep in mind that stakeholder buy-in is more likely if they see all relevant data laid out clearly; same goes for potential investors down the line.

Choosing the Right Business Structure

Before we begin trading legally there are certain decisions one must make regarding how their company is structured according law; here are options available:

  • Sole Trader: This is where an individual takes full responsibility for running their own business under his/her name only, i.e., no partners involved whatsoever.
  • Partnership: Where two or more people join hands together, sharing profits equally among themselves while still being jointly responsible for any debts incurred during normal course of trade activities undertaken collectively.
  • Limited Company: Here more than one shareholder is involved each having limited liability i.e., they’re only responsible up to the amount unpaid shares owned; company has separate legal entity status from its owners

Each option comes with its advantages as well disadvantages such personal liabilities, tax implications, ownership structures and statutory requirements so take into consideration what suits your situation best keeping in mind anticipated growth.

Additionally you will require to open business bank account, register for self-assessment tax and register the name of your company at companies house also do not neglect taking out necessary insurances like public liability insurance or professional indemnity insurance which may cover against risks such as product liability claims arising from use or loss/damage to equipment used during normal trading operations etc.

Developing Your Brand Identity

Now that we’ve got our basic building blocks down pat, let’s move onto the fun part – creating a brand! Collaborate with professionals in the field of branding and design to come up with:

  • An unforgettable brand name (protected by trademark)
  • A logo & visual identity system unique only unto itself
  • Packaging designs guaranteed catch customer’s eye off shelves everywhere
  • Brand messaging guidelines including tone of voice recommendations

Think about every single customer touchpoint and how you can create a consistent, compelling brand experience across digital platforms, events, merchandise and more.

The UK is a mature, competitive market, so investing in world-class branding and packaging is non-negotiable. You need to create something that feels premium, authentic and desirable right from the outset.

Operations and Compliance

With your brand ready to go, the next major step is getting operational. This is where things start getting a bit more complex in the world of alcohol production!

Securing Facilities and Equipment

You’ll need to find suitable premises for actually making and storing your wine or spirit. This could involve:

  • Leasing a production facility or distillery
  • Installing specialised equipment such as stills, tanks and bottling lines etc.
  • Setting up bonded warehouses which are secure enough for storing duty-suspended goods

The costs involved in doing this are typically high; a good quality still can cost anything from £50k to over £200k – not including bottle moulds, cooling systems, labelling machines etc.

Careful financial planning is essential but if you can produce realistic forecasts showing your payback period then there may be investors who appreciate these front-loaded costs.

Licensing and Compliance Requirements

Alcohol production, storage and distribution in the UK is heavily regulated by strict laws so it’s important that you know what they are before you start; otherwise you might have to pay some fines further down the line.

The first thing you need do is apply for an HMRC distiller’s licence which allows legal spirits manufacture; form DLA1 has to be downloaded with approval of your premises and processes after inspection proving public safety standards have been met.

If products will also be stored on-site then there should also be a storage license obtained while separate licensing requirements exist for those importing wines and spirits.

On the product side; spirits must follow the Spirits Drinks Regulations concerning ingredients used during their production as well sales descriptions among others e.g., certain things cannot use “gin” or “whisky” labels unless they meet specific criteria set out by law.

For wines; vineyard registration rules need adhering to alongside oenological practices (winemaking standards), labelling etcetera where much of these areas have already adopted existing EU legislation.

With all these rules surrounding our business we would strongly advise seeking professional help in terms of legal advice especially during early years so that you don’t find yourself falling foul and getting fined or having to do product recalls.

Funding Your Business

Unfortunately, the world’s finest gin or cabernet sauvignon doesn’t pay for itself. A wine or spirit business requires serious start-up capital and cash reserves to get off the ground.

Start-Up Costs

Exactly how much you’ll need depends on factors like:

  • The scale of your production ambitions (large commercial winery vs. small craft distillery)
  • Whether you need to acquire premises or can initiate in an existing facility
  • The type and volume of equipment required
  • Costs for ingredients, labour, marketing, professional services and more

As a rough guide, even a modest micro-distillery setup with a single still could require £100,000+ in upfront investment. For a larger winery operation, you could be looking at millions before you bottle your first vintage.

Funding Sources

Given these high initial expenses it is extremely rare for any entrepreneur to fully self-finance their alcohol business therefore invariably some outside funding will be required; this may take the form of:

  • Bank loans and credit lines
  • Private investors (angel investors, venture capital etc.)
  • Crowdfunding campaigns
  • Grants or loans from regional/national agencies

Each option comes with its own set of criteria, equity stakes if applicable plus interest rates and repayment terms so it’s important that when presenting your case for financial backing through any particular route within your overall plan – potential backers can clearly see how they will get their money back.

To help small businesses who are struggling to access finance there are Government schemes available in the UK. For instance under The Small Business Enterprise And Employment Act 2015 banks have a duty if they reject an application then refer applicants onto alternative lenders.

Sales, Distribution and Partnerships

With your product ready and finances in order, the next challenge is getting your wine or spirit into customers’ hands (and mouths!). There are multiple routes to market to consider.

Direct Sales

One option is to sell directly to consumers yourself through:

  • An online retail store
  • Your own physical premises with a cellar door/tasting room
  • Market stalls, pop-ups and events

This allows you to own the entire customer experience and keep a greater share of the profits. However, you also have to invest heavily in e-commerce, marketing and sales capabilities to build an audience from scratch.

Wholesale and Distribution

For broader retail and on-trade distribution, you’ll need to go through third-party wholesalers, importers and distributors. This could involve:

  • Partnering with national distributors to get nationwide retail/on-trade listings
  • Working with regional/specialist importers focused on independent retailers and the on-trade
  • Selling directly to retailers, restaurants, pubs etc. in your local area

The advantage is instant access to established customer bases and sales channels. The downside is giving up more margin to your distribution partners and having less control over brand marketing.

Expect plenty of competition for listings, especially when you’re first starting out. You’ll need a killer sales and marketing strategy to convince buyers to take a chance on your unknown brand.

Exporting and International Expansion

While getting a handle on your domestic market is hard enough work don’t forget about exporting too. Premium imported wines & spirits are in high demand across Asia particularly China.

Do thorough research into export opportunities, understand international compliance requirements – and think about partnering with a distributor who specialises in your target markets. Government bodies such as Department for International Trade can provide further advice here.

Partnerships and Collaborations

Finally look out for strategic partnership opportunities which could help raise awareness of your brand among new audiences. For example:

  • Sponsoring or co-hosting events and tastings
  • Partnering with restaurants/bars on special bottle releases or cocktail menus
  • Collaborating with complementary brands on co-marketed product lines or experiences

These sorts of collaborations can be immensely valuable for getting your name out there – especially during those crucial first few years of operation.

Bringing it All Together

Phew, I told you there was a lot to cover! Starting a wine or spirit business is one of the more complex endeavours in the world of food and drink. But that’s not to say it can’t be done with careful planning, compliance and a stellar brand proposition.

To quickly recap the key steps:

  1. Develop a clear, differentiated brand concept and business plan
  2. Choose the right legal structure and register your company
  3. Invest in world-class branding, packaging and marketing
  4. Secure production facilities, equipment and licensing
  5. Raise sufficient start-up capital from investors/lenders
  6. Build sales channels through direct, wholesale and export routes
  7. Explore strategic partnerships to raise brand awareness

It’s a long checklist, but each step is vital if you want your wine or spirit brand to have any chance at all of standing out in the UK’s crowded market – let alone succeed!

The opportunities are there for the taking – especially within fast-growing categories like craft spirits; low-alcohol wines; organic/biodynamic etc. And also emerging markets such as South East Asia; Latin America; Africa etc. But it will require patience, passion plus an unwavering commitment to quality & innovation from top to bottom throughout everything you do – from grape growing right through bottling up finished goods ready for sale… 

So what are you waiting for? Get that entrepreneurial spirit working overtime & start making things happen with those wine or spirit plans today! Here’s to success… Cheers!