Wisconsin-based Minhas Distillery is the second oldest brewery in the U.S. It was established in 1845 and now has a production capacity of 7 million cases per year, with 1.5 million allocated to distilled spirits. Minhas uses this scale to help beverage alcohol entrepreneurs outsource production. In the latest edition of our Co-Packing Spotlight, Park Street University sat down with Alex Kotlyar, Business Development Manager at Minhas, to learn more about the services it provides and his advice to suppliers on how to work with a contract producer.
Our Interview with Minhas Distillery
What are the primary benefits of co-packing from your perspective?
It’s the fastest way to get your product into the market. You will definitely have an easier time growing your brand if you’re not worrying about investing capital and time into packaging equipment.
We scale with your demand, so, say you have a buyer that wants your product “Can we double our volume?” With us, the answer is always yes. We haven’t gotten to that point where we’re constrained by our capacity. That’s definitely the biggest advantage to co-packing, someone with a relatively small investment can get a brand started and they can focus on what they’re good at, which should be marketing and brand building. Leave the manufacturing to us. And while we take care of all the production, we work with just about every major distributor in the country.
If you combine our co-packing services with the back office and distribution support from Park Street, you have a turnkey solution for making a brand and getting it to market. All the back office, distribution, and storage, are taken care of and that is key to making a successful brand. Our customers can just focus on marketing and building your brand instead of getting caught up in hiring employees, doing repairs, and all those unexpected things that come with owning your own production facility.
What services does Minhas offer for suppliers?
We’re a full-service manufacturer – where we provide our customers with our recipes, bottling (our existing bottles or new ones), liquids that we make for our brands, we can also make for a client. We also help our clients to develop their own recipes. It really just depends on what each customer needs.
In the liquor industry, in order to get a new recipe approved by the TTB, it has to be made using approved flavors. If that’s been done before, that’s a very easy process to get approved, but if you’re trying to introduce a new flavor, you have to give yourself a bit more time for the TTB to approve it. There’s always an opportunity to do something new. It just takes a bit longer.
What information do suppliers need to have ready when approaching your company?
Having the product in mind and knowing what you want. It’s good to know what packaging you want, what bottle sizes, what kind of labels you’ll need, and what kind of liquids because a lot of times we’ll get contacted by entrepreneurs that just want an alcohol brand because they like alcohol but they’ve done no research and they really have no idea what they’re doing.
Other times, there’ll be clients that have done their homework, and that makes it much easier to work with someone who knows, “Hey, I want this liquid in this bottle, here’s my artwork. When can you get me to market?” and that’s usually all we need to get started.
Is there a minimum order quantity (MOQ)?
Our customers get to benefit from our economies of scale. We buy millions and millions of cans, millions of bottles. So if you’re using something that we’re already buying, you’re going to get much lower costs than you would by sourcing directly (which isn’t always an option) So on the spirit side, the MOQ is typically 800 12-pack cases of 750 ml equivalent.
We can be a bit flexible with the MOQ if the liquid you’re using is something we are already currently bottling. We can easily add 400 or 500 cases to the end of the run vs. having to set up production for something unique. But ideally, a new brand would plan to start with at least 800 cases for an initial run.
On the canning side, if you’re going to make an RTD or a beer, seltzer, or FMB product with us, typically the minimum runs are at least 40 pallets. Our can suppliers have increased the minimum requirement to preorder decorated cans to 204,000 cans per SKU. In order to match that and match up barrel size, we brew 10,000 gallons, which is 300 barrels at a time. So you would typically produce about 20-40 pallets at a time.
Does your team take care of the delivery?
All of our product is FOB Brewery, meaning we don’t pay for any shipping. We usually ask our co-packers to have a distributor pick up their order once its ready or ship it to a licensed warehouse. We prefer not to store our co-packers products as space is limited.
How does Minhas determine pricing for its services?
It helps when the customer has the recipe ready when they get started because if we know what the recipe is, we can calculate the cost of ingredients, bottles, labels, and packaging and then we add our labor and overhead. It helps to know expected volumes.
What is the average lead time from agreement to completion?
It depends on which product type you’re talking about. If you’re talking about something that requires a preprinted can, right now it is now taking somewhere between 2 to 4 months just to get the cans produced from the time they get approved artwork. And before you do that, you need to get all the labels and TTB approval so it really depends. I’d say the average would probably be about 3 to 6 months.
If it’s a liquor product that can be done much quicker. TTB approval times are sometimes less than 15 days and if we have all the supplies and everything ready, we can typically get started within six to eight weeks. It just depends if they need to come up with their own unique approved flavors and those kinds of things that could extend that timeline.
What are the most common mistakes you around contract production?
I always tell new suppliers to send us the bottle before they purchase it if they’re going to use an outside bottle because we want to make sure it fits our line. Not something we see often but that is definitely something you want to avoid.
Do you have any suggestions on how to get a successful outcome?
I think to be successful in this business: know who you’re selling to and ideally have those orders in place before you ever order production at scale because, and this goes back to the previous question about avoiding major mistakes, over-ordering, and producing more product than you can sell right away quickly leads to large storage charges and aging product that you might have to discount for pennies on the dollar.
For something like vodka or whiskey, that doesn’t matter too much because, even though you’re paying storage fees, the product doesn’t go bad. But if you produce a beer or a cream liqueur, the clock starts running the second you produce it, our beer has a 1 year guaranteed shelf life because it is pasteurized. Even though a year is a good shelf life, if you still have the product in a warehouse six months after production, you’re now left with a product that needs to be sold and ideally consumed within six months. You could end up in a position where you have to liquidate your product and that’s something you want to avoid at all costs.