Starward has revealed how it kept the price so accesible on its new Two-Fold whisky.
Two-Fold retails for $65 a bottle, which is highly competitive compared to many Australian craft spirits on the market. It's made from a blend of 60% wheat spirit and 40% malted barley spirit and has 40% alcohol by volume.
Starward founder David Vitale chose the lower ABV to minimise the effect of excise tax on alcohol. He pays $24 in excise tax on every $95 bottle of single malt whisky he produces and didn't want to juggle the same financial pain on Two-Fold.
“Staward’s revenue is split between wholesale and direct sales, but the tax office always gets their $24 either way,” he explained to Fairfax Media earlier this year.
The use of wheat spirit was also a budget-friendly move, with Vitale buying it ready-made in bulk from ethanol producer Manildra Group.
"Wheat distillation requires substantial investment," Vitale told the Australian Financial Review. "So, we've partnered with Manildra [Group, an industrial distiller in southern NSW] and they've effectively created a custom distillation stream for Starward that we mature in our barrels here. We're able to leverage their scale of production and meet the market [with Two-Fold] at a price point that is far more attractive from a sales perspective."
Vitale proudly added to Business Insider: "They supply pretty much every well-credentialed gin distillery in Australia.
"They were kind of confounded by the fact that we didn't want grain neutral spirit, what we wanted was something that still had flavour in it.
"From their perspective they'd view that as impure, but for us it's exactly what we're looking for. We partnered with them to get the flavour profile just right and then started to lay it into barrels."
Jason Davis, Manildra Group – Head of Ethanol Sales (Victoria), said the company is thrilled with the collaboration.
“It’s terrific to support and work with like-minded Australian-owned businesses such as Starward Whisky. David and Andrew’s approach is to revolutionise the whisky industry in Australia – creating products that are world-class in quality and craftmanship, but accessible to every-day Australians. We’re proud to partner and supply Starward with our premium wheat-based alcohol to create a flavour-full distinctly Australian whisky.”
Vitale also scaled up production in 2016 to bring costs down, expanding into new premises in Port Melbourne. The move was partially funded by Distilled Ventures, a venture capital business backed by Diageo.
The distillery is now on track to produce 500,000 litres of alcohol a year, with half that volume destined for the Two-Fold brand.
While Two-Fold may not appeal to hardcore single malt enthusiasts, they're not the customer Starward is targeting. Vitale says his aim is to provide a local alternative to the imported blended whiskies that are usually used as mixers.
"Ultimately we're here to serve a customer, and give them perhaps their first ever opportunity to try an Australian whisky because they can afford it for once," Vitale concluded.