Reduce your Operating Costs with 75%!

Management summary

The direct operating costs of producing a liter of new make whiskey or rum on an iStill, ready to barrel at 65%, are EUR 0,49 versus EUR 1,99 on a traditional copper potstill. Producing whiskey or rum on an iStill reduces operating costs with as much as 75%, when compared to a traditional copper potstill. The lower operating costs of running an iStill translate into higher margins and a more sustainable, future-proof business model.

Introduction

This iStill Blog post presents an operating cost comparison for new make whiskey or rum production. iStills versus traditional set-ups. Why operating costs are important? Well, the lower they are, the higher your profit margin – given a certain selling price. Higher margins allow you to make more money or use part of that extra margin to weather through tough times. Also, lower operating costs signal a more eco-friendly, more environmental and sustainable business model. Less energy consumption equals a lower carbon footprint.

Of course we know the iStill numbers through-and through. The numbers of traditional stills, that we present in this iStill Blog, are based on feedback we got from customers experienced in running traditional equipment before switching to iStills. If the manufacturers of more traditional, copper stills feel that the examples underneath do not do their distilling solutions total justice, please reach out to us directly, so we can discuss and – where needed – amend.

Operating costs

Operating costs are the expenses associated with the maintenance and administration of a business on a day-to-day basis. Rent of the building, power to run the stills, the costs of buying in grains or other substrates, staffing costs, equipment depreciation costs, etc.

In order to keep this post relatively simple and to the point, we’ll focus on the variable costs of running the still, depreciation costs of your distilling machine, and the staffing needed to keep on distilling. Costs like the rent of the building or substrate purchase costs won’t be investigated, since they are (in the context of this iStill Blog post) considered a given. Meaning they don’t necessarily vary a lot between different still options.

Calculating energy costs for whiskey or rum

The efficiency number of a traditional potstill is around 35%. A traditional potstill needs two distillation cycles to bring an 8% whiskey beer or rum wine to the barrel aging strength of 60 – 65%. The iStill can turn an 8% base beer or wine into 60 – 65% new make in one go. So you save the manpower and energy of at least one run.

The iStill 2000 uses around 280 kWh to make rum or whiskey new make spirit. The associated costs are per run are well under EUR 50,-. Given the inefficiencies of the traditional set-up, a total energy usage of 800 to 1000 kWh is expected per run. This translates into direct energy usage costs, for a double distillation, of around EUR 190,-.

The amount of 2000 liters of base beer translates into about 220 liters of 65% strong new make spirit. When we divide the energy usage per still type by the number of liters of new make produced, we can learn the energy costs per liter. For the iStill the energy costs per liter are EUR 0,22. For the traditional copper potstill the energy costs per liter are EUR 0,87.

Calculating depreciation costs for whiskey or rum stills

A traditional 2000 liter copper still, made by a reputable manufacturer costs at least EUR 200.000,-. The iStill 2000, with some options, is around EUR 80.000,-. Because the iStills are made from chemically resistant stainless steel, instead of copper, the unit has an expected longevity of around 20 years.

The copper or stainless steel boiler of a traditional set-up may have the same longevity or slightly less. The copper column or riser oxidizes and suffers from the continuous need for (acid) cleaning. It is usually eaten away in around 10 to 15 years. Adding up boiler and column life expectancy for traditional potstills and averaging them out, leads to an overall total system longevity of 15 years for a traditional copper potstill.

Following a lineair depreciation curve, the 80k iStill 2000 has an annual depreciation of EUR 4.000,-. Based on 200 runs per year, the depreciation costs per run are EUR 20,-. When one run produces 220 liters, the depreciation costs per liter are EUR 0,09.

Following the same lineair depreciation curve, the EUR 200.000,- traditional copper potstill has an annual depreciation of EUR 13.300,-. At 200 runs per year, this translates into EUR 66,50 of depreciation per run or EUR 0,30 per liter of new make spirit produced.

Calculating staffing costs for whiskey or rum

Manning the still costs time, and time is money. Managing a traditional still asks for constant supervision. Cleaning can take 2 to 3 hours. Often the boiler design and column/riser design are not optimized for 8 hour shifts. How much manpower does it take to run a traditional still? At least 1 FTE. How much manpower does it take to run the iStill, which is automated and needs much less cleaning down-time? Around 0.2 FTE.

Say that hiring a distiller costs EUR 36.000,- per year. Running a traditional set-up then adds EUR 36.000,- to your overall costs. The iStill – by comparison – costs less than EUR 8.000,- to staff. A stunning difference of EUR 28.000,- per year.

In the above example, where we use a 2000 liter still to make 220 liters of 60-65% new make spirit per run, doing 200 runs per year translates into 44.000 liters of new make. The staffing costs of a traditional system are EUR 36.000,-, which translates into additional variable costs per liter of EUR 0,82. The much lower effort needed to run the iStill 2000 translates into only EUR 0,18 of staffing costs per liter.

iStill: reduce your operating costs by 75% …

a0aa560a-4c69-44bd-9dc6-3696e358df27

http://www.iStill.com

 

 

 

 

 

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s