Insight Into the NDP Business

[cowdery]

Thinking about buying some new make, putting it to bed, and becoming an NDP in a few years? Here's what it will cost you. This is obviously MGP liquid, but these prices are from an intermediary (not the distiller) who is willing to sell it in one-tote (i.e., 500 gallon) lots.

Rye Distillate (95% Rye, 5% Malted Barley): 135 Proof, $14.25/gallon

100% Corn Distillate: 150 Proof, $13.79/gallon

Bourbon Distillate (75% Corn, 21% Rye and 4% Malted Barley): 135 Proof, $11.68/gallon

You'll also need a license, barrels, and someplace to put them. And if you intend to make a business of it, you'll need to do it again next year, and the year after that, and the year after that, etc.

You can bypass the license, etc., by contracting with a DSP like KBD to barrel and age it for you. Given the willingness to kick in enough dough, this is something a SB group could do, just like a group buy of a mature barrel. If, however, you at any point want to sell anything to anybody, you'll have get a license.

Edited July 2, 2014 by cowdery

[mbroo5880i]

This is interesting! I really don't know the answer so I will ask. How many 750 ml bottles could I expect to have from the initial 500 gallons after 4 years, accounting for evaporative losses? I also don't know much about taxation. Say I am in Kentucky, do I have to pay annual taxes on my unfinished product?

[cowdery]

I can't readily answer all of your questions without more work than I'm willing to do, but your evaporation loss after five years will be about 20%. You have to adjust for proof, of course, and the taxes are complicated. Kentucky still has the ad valorem, but it can be offset by investments in new capacity.

[Harry in WashDC]

This is interesting! I really don't know the answer so I will ask. How many 750 ml bottles could I expect to have from the initial 500 gallons after 4 years, accounting for evaporative losses? I also don't know much about taxation. Say I am in Kentucky, do I have to pay annual taxes on my unfinished product?

[cowdery]

Some more information that has come my way. This is obviously MGP's whiskey, but the offering came from a broker, Ultra Pure. The pricing is in gallons, but there's a 500-gallon (one tote) minimum.

Rye Distillate (95% Rye, 5% Malted Barley): 135 Proof, $14.25/gallon

100% Corn Distillate: 150 Proof, $13.79/gallon

Bourbon Distillate (75% Corn, 21% Rye and 4% Malted Barley): 135 Proof, $11.68/gallon

Why pay Ultra Pure's mark-up when MGP will sell to you directly? Quantity. MGP's minimum quantity for new make is much higher than one tote. I was told (not by MGP) that their minimum for 3-year-old whiskey was 16 barrels, or about 800 gallons.

[SmoothAmbler]

3 year old whiskey? they have 3 year old whiskey for sale?

[wadewood]

I heard recently from one NDP that they bought more MGP 95% rye then they actually are using. They bought this 3 years ago and are considering selling to others because broker market price would now be triple what they paid for it.

[cowdery]

3 year old whiskey? they have 3 year old whiskey for sale?

It may have been old information.

[VT Mike]

Interesting info, Chuck. Do you know if 135 is the standard proof off the still for the MGPI 95% rye, or are they (or the broker) adding some water to it before they sell it. If it comes off the still above 140 proof, I could see why they would want to bring it down to 135 proof, so they don't have to deal with the issues involved with transporting a hazardous material. But I guess if that was the case, they'd do the same with the corn whiskey, which is listed at 150 proof.

[cowdery]

The maximum proof of distillation for bourbon and rye is 160° and while some do bring it off that high, 135° to 140° is much more common. Lowest of the majors is probably 115° at Wild Turkey. I don't know about MGP, but it's unlikely that a broker, who generally never actually handles the product, would add water or request that water be added. I assume these are all at distillation proof as I can't think of any good reason for them to be anything else.