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updated 3/31/2013 12:16:49 PM ET 2013-03-31T16:16:49

With the growing consumer focus on localism, craftsmanship and sustainability, small-scale manufacturing is having a renaissance. Increasingly, small companies that create goods in limited runs are weaving their design philosophies throughout the entire production process--even inventing their own manufacturing equipment.

Such is the case at Industry City Distillery (ICD), started in 2011 by five twentysomethings who operate out of a 12,000-square-foot Brooklyn warehouse. Not content with simply creating a better vodka, the team has built its own distillery, putting its signature brand of form and function into every element, down to the custom-built glass continuous fermentation system (as opposed to the commonly used stainless-steel tanks).

ICD is the first commercial venture out of The City Foundry research and design group, which is dedicated to improving small-scale manufacturing processes by acting like an agile software startup. Building the machinery from scratch and fermenting and distilling in-house means lower initial capital investment. "There are practical constraints in doing things ourselves on a lower budget, but I always consider how limitations can be utilized as assets," says co-founder Rich Watts.

The company's philosophy centers on quality design, transparency, conservation and efficient use of waste streams. Sustainability is at the very root of the business model--most notably in the product-development stage, as the company produces one batch at a time on its road to finalizing the recipe for a flagship sugar-beet vodka. Rather than going to waste, bottles from the experimental batches are available for purchase for about $21 through the ICD website and at New York-area liquor stores.

The bottle design was driven by the same principles. In a sector known for flashy labeling and party-lifestyle ad campaigns, the handsome black-and-white ICD labels are models of purity and utility. In addition to the requisite listing of alcohol content and volume, the clean letterpress labels highlight nothing more than the batch number (currently No. 3) and bottle number (batch No. 2 had a production run of about 2,000).

Watts notes that more established distilleries use eye-popping colors--a more expensive route that aims to make bottles stand out among crowded store shelves and in bars. Ironically, ICD's clean, monochromatic typography may actually have greater visual impact than the jazzy designs of competing brands. The insides of the labels, too--silk-screened in solid colors to reflect off the clear liquid within--were a "high-impact, low-cost gesture," Watts says.

The philosophy of transparency extends to the ICD website: Rather than the standard product and lifestyle shots, the elegant site is heavy on the making-of story, with video, blueprints and diagrams that invite engagement. Indeed, Watts says, "we get extensive feedback from bartenders and customers, and in less than a year, the fermentation process has changed more than 50 times."

ICD is a big fan of what it terms the "cross-pollination" of ideas as a way to design an efficient company and, ultimately, the perfect recipe. (Customers will know when that happens, as the final vodka will have a name, rather than a batch number.) If nothing else, it reminds us of one more advantage of process-driven design: the fact that getting there is half the fun.

Copyright © 2013 Entrepreneur.com, Inc.

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