Diversification can bring success – but ensure you are compliant

In an increasingly competitive marketplace, leisure operators are turning to diversification to stand out from the crowd.

The addition of a distillery or microbrewery to the existing ‘traditional’ offering is a formula that is proving successful for many operators, and extends their reputation as a pub, bar or restaurant into a new domain.

Through creating your own product, you can create something bespoke backed by an innovative brand, which can often appeal to a whole new clientele and can lead to an increase in footfall – and therefore trade – for premises.

There are numerous very successful examples within Newcastle alone – Vaulkhard Group’s Newcastle Gin, distilled in Bealim House, has gained such a reputation it is now served in venues beyond the group’s own portfolio. Wylam Brewery’s array of much-loved ales, all brewed on site, are a huge factor in the success of its move into The Palace of Arts.

While this form of diversification can work very well, it is important that any operators considering opening their own distillery or microbrewery are fully aware of their obligations before progressing any plans. Some points to consider include:

• Does your property permit the addition of such a facility? If you are not the owner of your premises, check your lease carefully and be sure to consult your landlord
• Do the terms of your license allow you to carry this out? You must establish this at the outset, and look to secure a variation to your existing license if necessary
• Are you aware of your regulatory obligations and the due legal process you will need to follow in opening such a facility?
• Have you properly considered the financial implications? As well as the very significant investment that will be required in equipment and renovation work, your facilities must be properly insured, and it is wise to establish from the outset what additional obligations will be from HMRC
• In creating a distillery or brewery, you will be creating your own product and brand, the identity of which should be protected. Have you considered a trade mark application for your brand, and checked you are not infringing any existing marks?

There is a lot to consider before going ahead with the idea of creating such an addition to your existing business, but through proper planning and consulting with specialist advisors, opening your own distillery or brewery can certainly be achievable. The benefits can be many, and can certainly help you gain a competitive edge in the bustling North East leisure scene.

Christopher Welch is Partner in the Corporate and Commercial team at Sintons. Contact him on 0191 226 7831 or christopher.welch@sintons.co.uk.