VOL. 1, ISSUE 1 | AUGUST 2019
CRAFT SPIRITS THE ART, SCIENCE AND BUSINESS OF DISTILLING
premiere issue DISTILLING DESTINATIONS
WHAT’S POURING IN PORTLAND, OR SALES & MARKETING
ANATOMY OF A TASTING ROOM
SCALING THE HILL
THE FIGHT FOR PERMANENT FEDERAL EXCISE TAX RELIEF
A PUBLICATION OF THE AMERICAN CR AF T SPIRITS ASSOCIATION
W H O YO U C A L L I N ’
COPPER POT-DISTILLED. NON-CHILL FILTERED AMERICAN BRANDY. BARREL-AGED ALEMBIC COCKTAIL BITTERS.
BORDEAUX-STYLE MARASCHINO CHERRIES MARINATED IN OUR AMERICAN BRANDY.
COPPERANDKINGS.COM
CONTENTS 34
AUGUST 2019
FEATURES 34
Cover Story: A Capitol-Intensive Effort Inside the fight for permanent FET relief BY JEFF CIOLETTI
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Tastemakers Tips and insights on how to run a tasting room. BY JON PAGE
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World Whisk(e)y Welcomes Newbies
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The rise of craft whisky in England and Wales BY JENNIFER CIRILLO
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Driven to Innovate St. George Spirits continues to push boundaries. BY JON PAGE
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Craft Crossovers A growing number of breweries are opening distilleries. BY JEFF CIOLETTI
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A Defining Moment for American Single Malt Whiskey Distillers seek legal definition for spirit BY JASON HORN
Cover photo by Louise Krafft
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DEPARTMENTS
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8
Editor’s Note
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Contributors
NEW SPIRITS 12
Recent releases from Copper & Kings American Brandy Co., Distillery 291 and more
IMBIBER’S BOOKSHELF 16
Cocktails with a Twist & Drink Like a Geek
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INDUSTRY UPDATE 17
Whiskey Rebel Trail celebrates the past, present and future of Mid-Atlantic distilling.
Lew’s bottom shelf 26 Gung Ho!
A charge to work together BY LEW BRYSON
what’s stirring 28
Cocktail recipes from Backwards Distilling Co., Sagamore Spirit and Tattersall Distilling
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ACSA AFFAIRS 30 Snapshots
Bar Convent Brooklyn and Tales of the Cocktail in pictures
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Alumni Member Q&A A conversation with John Little of Smooth Ambler Spirits
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An Update on TTB Rulemaking How the ACSA responded BY NICOLE AUSTIN AND MARK SHILLING
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66
70
DISTILLING DESTINATIONS 56
PACKAGING 66
A closer look at distilleries in Portland, Oregon
Production challenges of canned cocktails
BY JEFF CIOLETTI
BY ANDREW KAPLAN
The Great PDXperiment
Testing Your Metal
Retail: OFF-PREMISE 74 Only in L.A.
Bar Keeper is the go-to spot for cocktail consumers, pros and pro-sumers. BY JEFF CIOLETTI
RAW MATERIALS 60
LEGAL CORNER 69
Grain and Malt Buyers Guide
Cracking Down
A supplier’s showcase
The latest from the TTB enforcement front BY RYAN MALKIN AND ASHLEY HANKE
TECHNICAL 62
A Fresh Perspective Formulating liqueurs with fresh ingredients BY GARY SPEDDING
Bottleneck
The complicated distribution landscape BY ANDREW KAPLAN
SAFETY 70
A Fortified Foundation Avoiding common safety mistakes BY JON PAGE
BUSINESS SENSE 64
DISTRIBUTION 76
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Distribution for All LibDib opens markets for distillers. BY JON PAGE
Your Vision: Early Stage Decisions
Retail: ON-PREMISE 72
CLOSING TIME 83
Critical decision-making in your first few years of operation
Hotel bars growing faster than other venues
Growth trajectories of the major spirits categories, courtesy of the IWSR
BY DAVID LARGE
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Boom at the Inn
U.S. & Global Spirits Stats
BY JEFF CIOLETTI
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CRAFT SPIRITS MAGAZINE C EO, A M E R I C A N C R A F T S P I R I T S A S S O C I AT I O N | Margie A.S. Lehrman, margie@americancraftspirits.org E D I TO R I N C H I E F | Jeff Cioletti, jeff@americancraftspirits.org AS S I S TA N T E D I TO R | Jon Page, jon@americancraftspirits.org ACCO U N T M A N AG E R | Todd Cusumano, todd@americancraftspirits.org A RT D I R EC TO R | Michelle Villas CO N T R I B U TO R S | Nicole Austin, Lew Bryson, Jennifer Cirillo, Ashley Hanke, Jason Horn, Andrew Kaplan, David Large, Ryan Malkin, Mark Shilling and Gary Spedding, Ph.D, AMERICAN CRAFT SPIRITS ASSOCIATION O P E R AT I O N S A D M I N I S T R ATO R | Teresa McDaniel, teresa@americancraftspirits.org E D U C AT I O N CO O R D I N ATO R | Kirstin Brooks, kirstin@americancraftspirits.org M E M BE R S E RV I C E S A N D S O C I A L M E D I A CO O R D I N ATO R | Carason Lehmann, carason@americancraftspirits.org ACSA ADVISORS M E E T I N G S A N D LO G I S T I C S | Stephanie Sadri, HelmsBriscoe S T R AT EG I C CO M M U N I C AT I O N S | Alexandra S. Clough, GATHER PR L EG A L | Ryan Malkin, Malkin Law, P.A. P U B L I C P O L I C Y | Jim Hyland, The Pennsylvania Avenue Group ACSA BOARD OF DIRECTORS, 2019-2020 P R E S I D E N T | Chris Montana, Du Nord Craft Spirits (MN) V I C E P R E S I D E N T | Maggie Campbell, Privateer Rum (MA) S EC R E TA RY/ T R E A S U R E R | Colin Keegan, Santa Fe Spirits (NM) EAST Maggie Campbell, Privateer Rum (MA) Ryan Christiansen, Caledonia Spirits (VT) James Montero, Dogfish Head Distilling (DE) Becky Harris, Catoctin Creek (VA)
CENTRAL & MOUNTAIN Colin Keegan, Santa Fe Spirits (NM) Courtney McKee, Headframe Spirits (MT) Chris Montana, Du Nord Craft Spirits (MN) P.T. Wood, Wood’s High Mountain Distillery (CO) Amber Pollock, Backwards Distilling Company (WY) Colton Weinstein, Corsair Artisan Distillery (TN) Thomas Mote, Balcones Distillery (TX)
PACIFIC Jeff Kanof, Copperworks Distilling Company (WA) Molly Troupe, Freeland Spirits (OR) Dan Farber, Osocalis Distillery (CA) Jake Holshue, Old Trestle Distillery (CA)
EX OFFICIO Thomas Jensen, New Liberty Distillery (PA) ACSA PAST PRESIDENTS 2 0 1 7-2 0 1 8 | Mark Shilling, Treaty Oak Brewing and Distilling Co. 2 0 1 6 -2 0 1 7 | Paul Hletko, FEW Spirits 2 0 1 4 -2 0 1 6 | Tom Mooney, House Spirits CRAFT SPIRITS MAGAZINE EDITORIAL BOARD Eli Aguilera, Lew Bryson, Alexandra Clough, Sly Cosmopoulos, Dan Gasper, Dr. Dawn Maskell For advertising inquiries, please contact Todd Cusumano at todd@americancraftspirits.org. For editorial inquiries or to send a news release, e-mail news@americancraftspirits.org P.O. Box 701414, Louisville, KY 40270 • 502.807.4249 © 2019 Craft Spirits Magazine is a publication of the American Craft Spirits Association.
Editor’s Note
CHEERS TO NEW BEGINNINGS! The hardest part for me as a writer has always been the beginning. When I’m writing an article or a book, I almost always start in the middle. So you probably can imagine my hesitation in kicking off the inaugural issue of Craft Spirits Magazine. Where do I begin? Do I mention it’s the official digital magazine of the only trade association exclusively representing America’s small, spirits producers, featuring editorial specifically tailored for distillers who work within the expansive craft spirits eco-system? Do I talk about the magazine’s variety of departments, each focusing on a different facet of the craft spirits business—technical/production, packaging, distribution, legal issues, on- and off-premise retail and human resources/safety? Or, do I note how we showcase the latest releases from small distillers—including a few international offerings—in our New Spirits section? Or, perhaps, I touch on the wealth of features, offering a deep dive into some of the most pressing issues facing craft spirits producers—particularly, our first cover story on our top legislative priority, permanent Federal Excise Tax relief? That, probably more than anything, deserves some sort of shout-out, considering the fact that it’s set to expire in a little more than four months from now, right? (Call your senators and representatives NOW! I mean it. I don’t care if you stop reading my editor’s note midway. While you’re at it, please donate to the ACSA PAC. Your action is critical!) Maybe I should do all of those things, but they would be meaningless if I didn’t acknowledge all of the people who are making this massive undertaking possible. First, there’s Jon Page, assistant editor and the glue who holds the whole thing together. This is a much better publication because of him and I look forward to seeing how much more he brings to the table as we build this media property. I’m so glad I was able to convince him to be a total turncoat to the beer community and show him that craft spirits is where it’s at! Jon and I are filling many of these pages with our writing, but we’re also thrilled to include significant contributions from some of the best writers and graphic artists in the business. Lew Bryson, who needs no introduction within the whiskey world, was able to carve out some time to craft a regular column for us. I’m also stoked to be working with a couple of long-time colleagues from my past life at Beverage World: Craft Spirits Magazine art director Michelle Villas, who designed the whole book you see before you,
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and Andrew Kaplan and Jennifer Cirillo. And noted cocktail writer Jason Horn also is on hand to offer his expertise. Also, a nod to Todd Cusumano, who’s heading up the ad program here. He’s the guy you want to talk to if you’re interested in advertising and supporting Craft Spirits Magazine (please do!) None of this would have happened without the faith and support of the ACSA Board of Directors, led by President Chris Montana, Vice President Maggie Campbell and Treasurer Colin Keegan—and all of the magazine’s champions on the Board, past and present (looking at you, Paul Hletko). And, of course, I must enthusiastically raise my glass to the hardest-working CEO in Association management, Margie A.S. Lehrman, who’s always believed in this project—and in my ability to run it. A hearty “cheers,” as well, to ACSA team members Teresa McDaniel, Carason Lehmann, Kirstin Brooks and Stephanie Sadri, who’ve all been critical in making this Association, and this publication, work. But, perhaps, most importantly, I am grateful to all of you in this incredible market we call craft distilling. Long before I was an employee of ACSA, I was an enormous fan of the products its members make. I’ve been covering the beverage alcohol market for nearly 17 years and serving you all at the helm of Craft Spirits Magazine is a dream come true. Okay, this is starting to sound like a valedictory speech and not a launch letter. (See, I told you I’m not good with beginnings!) Jon and I are eager to help tell your stories here, as well as on our new website, CraftSpiritsMag.com. Please, don’t hesitate to reach out to us to let us know what’s going on with you. E-mail your news releases to news@americancraftspirits.org. I’ve rambled enough. Let’s get this party started!
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Thank You, Sponsors! The American Craft Spirits Association would like to thank all of our annual sponsors and our key supporters of education. We are grateful for all of your support throughout the year. Cheers!
Contributors
Lew Bryson has been writing about beer and spirits full-time since 1995. He was the managing editor of Whisky Advocate from 1996 through 2015, where he also wrote the American Spirits column, and reviewed whiskeys. He is currently a Senior Drinks Writer for the Daily Beast, and also writes for WhiskeyWash.com, American Whiskey and Bourbon+. He is the author of Tasting Whiskey (Storey Publishing, 2014), a broad survey of the whiskeys of the world, their history and manufacture. He has also written four regional brewery guidebooks.
Andrew Kaplan is a freelance writer based in New York City. He was Managing Editor of Beverage World magazine for 14 years and has worked for a variety of other food and beverage-related publications, and also newspapers. Follow him on Twitter @andrewkap.
Jennifer Cirillo is a drinks trade expert with more than a decade of experience. As a former journalist/editor covering the global drinks arena for leading magazine, Beverage World, she has a firm understanding of the industry. Her journalism background has led her to become a B2B drinks PR specialist working on accounts including Maxxium UK (Jim Beam, Maker’s Mark, Courvoisier, Harveys, Bols, etc), Zamora International (Licor 43 and Villa Massa) as well as Global Travel Retail (Tito’s Handmade Vodka, Beam Suntory and Jägermeister).
Jason Horn has been writing about food, drinks and travel for more than a decade, for publications including Playboy, Robb Report, PUNCH, Travel Channel, Thrillist, The Daily Beast and Garden & Gun. He was previously on staff at Cooking Light and Liquor.com, and holds a master’s degree from the Medill School of Journalism at Northwestern University. It was a dram of single malt (Scotch, not American, but still) that drew him into writing about drinks during his very first internship. Follow him on Twitter @messyepicure.
Louise Krafft is a photographer whose work has appeared in numerous publications, including The Washington Post, The New York Times, Time Magazine, Town & Country Magazine and more. She captured the cover image for this issue on a beautiful summer day at the U.S. Capitol in what she called “a marvelous conclusion to a brief request.”
David Large is the director of Thoroughbred Spirits Group. Having been in the spirits business for more than a decade, David has been involved with dynamic startups as well as large Wall Street firms. David has been a partner in a successful spirits company and currently works with client brands at Thoroughbred Spirits focusing on increasing shareholder value by launching new offerings, opening new channels, enhancing brand equity, and providing guidance for capital raises and exit strategies.
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Gary Spedding, Ph.D., is the owner of Brewing & Distilling Analytical Services. A biochemist, analytical chemist and sensory specialist, he’s here to educate us all. Gary knows so many people in the industry and is very enthusiastic about sharing ideas with fellows in the business. Some people complain that they don’t like walking across a tradeshow hall with him as they really would like to make it to the other side before the show ends. Learn more at bdastesting.com.
Michelle Villas is an art director with more than 20 years experience in publication design. After spending 16 years working on magazines in New York for a variety of titles, incuding Beverage World, Michelle headed out to California where she now calls the South Bay home. She is the Senior Art Director on a range of lifestyle publications for The Golden State Company. A true typophile, she carries her obsession with fonts into every project.
Ryan Malkin is an attorney focusing on alcohol beverage and cannabis law. He has extensive experience providing guidance to suppliers, wholesalers, retailers, agencies, and third parties within these regulated industries. Ryan’s passion for the alcohol industry began as a staff writer for SmartMoney, and his articles have also appeared in Artisan Spirit magazine, Beverage Media, Liquor.com, The Wall Street Journal, New York Post, DJTimes, and Esquire to name a few. Ryan is also counsel to the American Craft Spirits Association.
Ashley Hanke is an attorney at Malkin Law P.A. practicing alcohol beverage and cannabis law. Her practice includes state and federal alcohol beverage licensing, TTB formula and label approvals, trademark registration and maintenance, Craft Beverage Modernization Act excise tax assistance for suppliers and importers, non-beverage formula assistance, and other matters affecting the alcohol beverage industry. Her desire to pursue a career in the alcohol industry was solidified after working on a vineyard in Tuscany.
Mark Shilling is the managing principal of Shilling/Crafted. After spending 20 years as a government and regulatory affairs professional, he founded Revolution Spirits Distilling Co. in 2013. He helped establish the Texas Distilled Spirits Association in 2012 and served as president of The Wine and Food Foundation of Texas. In 2016, Mark was elected to the board of directors for ACSA, served as president the organization from 2017-2018 and currently chairs the association’s government affairs committee.
Nicole Austin is general manager and distiller of Cascade Hollow Distilling Co. Nicole graduated from Manhattan College with a major in Chemical Engineering in 2006, before landing her position as a Master Blender for Kings County Distillery in 2010. She then joined late distilling industry icon Dave Pickerell’s Oak View Spirits consulting firm where she handled everything from raw material sourcing to contract negotiations. Most recently, Nicole served as Project Commissioning Engineer for William Grant & Sons.
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New Spirits
Tattersall Distilling of Minneapolis unveiled an almost-ready-to-drink bottled cocktail in May. At 70 proof, Bootlegger is a blend of lemon, lime, mint and Tattersall Vodka, which the distillery recommends mixing with sparkling water to desired strength. The recipe is based on the Bootleg, an iconic Midwestern cocktail consisting of citrus and mint.
Seattle’s Copperworks Distilling Co. recently released a whiskey and gin, each finished in oak barrels that first held Copperworks spirits and most recently held Amaro Amorino from Letterpress Distilling. The 100-proof American Single Malt Whiskey, Release 17 (Amaro Cask Finished) features aromas of orange, menthol and peppermint, with flavors of sarsaparilla and cedar. It rested in the amaro cask for more than seven months. The 100-proof Amaro Cask Finished Gin, which rested in the cask for 10 months, has aromas of menthol and peppermint with flavors of sarsaparilla and star anise.
Copper & Kings American Brandy Co. of Louisville, Kentucky, released two 90-proof additions to its growing lineup of cordials. Destillaré Intense Café is a coffee liqueur crafted with a cold brew made from Arabica coffee beans and aged with vanilla beans and cardamom pods. Destillaré Intense Chocolat is a chocolate liqueur made with Caribbean cocoa nibs which is diluted with a custom steeping of cocoa nibs in reverse osmosis filtered water. Both liqueurs use an aged Copper & Kings American Brandy base, are sweetened with honey, and have no added artificial colors or flavors.
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Reservoir Distillery of Richmond, Virginia, released Hunter & Scott Rye Whiskey, a 90-proof spirit comprised of 67% rye and 33% wheat. This is the second release in the distillery’s Hunter & Scott lineup, which includes Hunter & Scott Bourbon. Black tea, light honey and a hint of cinnnamon dominate the nose while herbal tea and pepper playing prominently on the palate.
Founded in Melbourne, Australia, in 2007, Starward whisky is now available in the U.S. The first offering is Starward Nova, a single-malt whisky aged in un-charred Australian red wine barrels. Starward sources barrels from local wineries producing Shiraz, Cabernet Sauvignon, and Pinot Noir. At 82 proof, the whisky features bright red berries, orchard fruits, and soft oak spice on the nose, with vanilla, berries, caramel, and spice on the palate.
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New Spirits
Black Eyed Distilling Co. of Fort Worth, Texas, unveiled BLK EYE Spirit Number 5, a three-barrel release of a 92 proof spirit made with black-eyed peas and corn. The spirit was barreled in February of 2017 and was aged in heavy-charred new American oak for just over 24 months. While the spirit is not technically a whiskey (since black-eyed peas are not a grain), according to the distillery it looks, smells and tastes like whiskey.
Distillery 291 of Colorado Springs, Colorado, released two new whiskies this summer. At 130.6 proof, 291 Colorado Straight Bourbon Whiskey is the distillery’s first straight whiskey. It features notes of dried fruits, honey, vanilla, oak, green tea, cinnamon, coriander and pepper. 291 E Colorado Whiskey Batch #6 is the distillery’s latest experimental release, which delivers notes of cherry cola, shortcake, peach skins, cinnamon, sugar, aspen and pine.
In July, Manifest Distilling of Jacksonville, Florida, released Rabbit Eye Blueberry Brandy. Through a partnership with Congaree and Penn farm, Manifest used whole and pressed Rabbit Eye blueberries, unique to southern Georgia and northern Florida, cultivated from the same harvests that supply Congaree and Penn’s shrubs and cider. This first batch of this 86 proof spirit was barrel-aged for a little less than one year in a previously used white oak cask.
Kentucky Peerless Distilling Co., which was founded in the 1880s and resurrected in 2014, released its first bourbon in more than a century. The Louisville-based distillery began barreling Peerless Kentucky Straight Bourbon Whiskey in 2015. The 107 proof product sold out at the distillery on its release date in June.
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StilL 630 of St. Louis concluded the second year of its Experimental Spirits Program with the release of X-24, a 100 percent peated single malt whiskey. This summer the distillery also released Bottled-inBond, Single Barrel S.S. Sorghum Whiskey, Moon Walker Whiskey and Bee’s Knees, a canned cocktail made with the distillery’s Volstead’s Folly American Gin, honey, lemon, ginger and seltzer.
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New Spirits
Freeland Spirits of Portland, Oregon, has entered the ready-to-drink cocktails segment with the launch of its canned Gin & Rose Tonic, combining Freeland Gin and Portland Syrups Freeland Rose Tonic. In addition to juniper, Freeland Gin features 13 botanicals, while the tonic is hand-crafted in Oregon with genuine cinchona bark. Four-packs of 8.5-ounce cans are initially available in Oregon, Washington and California, with a suggested retail price of $16.95.
Baltimore Distilling Co.’s Baltamaro line of American amari features a Szechuan Amaro, capturing the subtle, unmistakable essence of Szechuan peppercorns. It’s approachably light-bodied and fruity, with some of the numbing nuances for which the signature ingredient of many a dish from the Chinese province is famous. But it’s a mild sensation, unlike the anesthetic burst one gets from biting into the actual peppercorn.
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Produced in Greece, Grace Gin draws its inspiration from the three graces of Greek mythology: the goddesses of charm, beauty and creativity. Created by the “three proud Greek women” who founded Three Graces Distilling and distilled at Avantes Distillery on the Greek island of Evia, Grace Gin’s juniper-forward profile is balanced with Greece-grown botanicals like kritamos, myrtle and skinos.
Hopewell, New Jersey’s Sourland Mountain Spirits released its limited-edition Gold Rum, a version of its signature silver rum that’s been aged for a year in ex-bourbon barrels, giving the crème brûlée nose and caramelized fruit on the palate some additional vanilla dimensions. The final product is 84 proof and packaged in 375-mL bottles. Sourland Mountain made a limited number of bottles available at its distillery for its initial release.
Leopold Bros. of Denver recently announced the release of Leopold Bros. Straight Bourbon Whiskey. The distillery used open fermentation in wooden tanks with house-cultured and indigenous yeast strains, and the 90 proof whiskey was aged four years in new, American, white oak charred barrels.
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Where Science Meets Art Yeasts, Nutrients, and Process Aids
At Lallemand Craft Distilling, our single source philosophy provides the highest quality ingredients, tailored technical service and education, and industry leading experience to support your needs. Your spirits are our passion, your needs are our motivation. Contact us to learn more today. www.lallemandcraftdistilling.com
Š 2019
Imbiber’s Bookshelf
Cocktails with a Twist: 21 Classic Recipes. 141 Great Cocktails. Author: Kara Newman Publisher: Chronicle Books Release Date: Aug. 27 For anyone looking to expand their palate and discover a new favorite go-to drink, this inventive cocktail book is just the thing. Each chapter is based on a classic (like the Manhattan), but inside the unique gatefolds, readers will discover numerous riffs (like swapping Irish whiskey for rye to make a Blackthorn, or substituting amaro for vermouth to make a Black Manhattan). More than 100 variations on 21 modern classic cocktail recipes are accompanied by helpful tips on keeping a well-stocked bar, garnishing drinks, and throwing a party. With bold coloring and a foil cover, Cocktails with a Twist is a handsome addition to any home bar. And with 21 gatefolds, with classic recipes and intriguing variants, this is a cocktail book unlike any other.
Drink Like a Geek: Cocktails, Brews, and Spirits for the Nerd in All of Us Author: Jeff Cioletti Publisher: Mango Release Date: Sept. 15 Sci-fi and fantasy worlds are full of characters who know that sometimes magic happens at the bar. Drink Like a Geek, the fifth book by Craft Spirits Magazine Editor in Chief, Jeff Cioletti, is a look at iconic drinks and the roles they play in our favorite movies, shows, books and comics. It’s also a toast to the geeks, nerds and gamers who keep this culture alive. Drink Like a Geek is a fan encyclopedia and cocktail book. Because audience participation is strongly encouraged, dozens of recipes for otherworldly cocktails, brews and booze are included. Cioletti’s book includes boozy tidbits on beloved pop culture properties such as Star Wars, Star Trek, Doctor Who, the James Bond film series, The Walking Dead, Game of Thrones, Marvel, Breaking Bad and much more.
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Author Spotlight: Kara Newman Kara Newman is the Spirits Editor at Wine Enthusiast, and contributes to a wide range of other publications, including the Wall Street Journal, Punch and Bloomberg Pursuits. She is also the author of six books about cocktails, and we recently caught up with Newman to talk about her latest book. Craft Spirits Magazine: In your last book, you explored nightcaps. What was your inspiration for turning to variations on classic cocktails? Kara Newman: My opinion is that most people are already pretty savvy when it comes to cocktails. Most people already have a favorite drink, and it’s easy to search online for a recipe for a classic cocktail. So I didn’t see a need for a “cocktails 101” book—but possibly a “cocktails 102” would be useful for someone looking to take the next step or two. The “with a twist” angle is also an approachable way to work with what bartenders refer to as “cocktail families”—the idea that most drinks are riffs on a few staple classics. Was there a twist on a classic recipe that was most surprising to you? The Mojito chapter held some nice surprises for me. It was eye-opening for me to realize that the classic Mojito (rum, sugar, lime, mint, soda water) is just a few steps removed from so many drinks: a Southside Fizz? That’s a Mojito, but with gin. An Old Cuban? A Mojito topped with Champagne. A Queen’s Park Swizzle? A Mojito, but make it tiki. What is one of your favorite recipes from the book? The Don Lockwood! It’s a drink I wasn’t familiar with before I started researching the book, and now I can’t get enough of it, it’s an original from Abraham Hawkins of Dutch Kills, in Queens, New York. I placed it in the Old Fashioned chapter, because it’s essentially an Old Fashioned with a split base of bourbon and peaty Scotch, sweetened with a little maple syrup in place of sugar. Having gatefolds in the book seems like a fun way to make the book more interactive. Tell us more about the decision to use them. The gatefolds were the publisher’s idea, I can’t take credit for it. Honestly, I was skeptical about how the gatefolds would work out, but they’re eye-catching and colorful, and people do seem to be enjoying them. Do you hope that people will read this book and be inspired to try making their own spin on these recipes? Absolutely! That’s one reason I tried to explain how the variations are different from the classics—often, bartenders have made small but meaningful changes, sometimes creating new classics in the process. Why shouldn’t someone build their own variation on top of that?
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Industry Update
REBEL, REBEL Whiskey Rebellion Trail celebrates the past, present and future of Mid-Atlantic distilling. BY JEFF CIOLETTI
The number of spirit-themed visitors’ trails from coast to coast has risen rapidly, though few can claim to be as extensive as the Whiskey Rebellion Trail, which spans multiple major metropolitan areas across three states and the District of Columbia. The trail, which includes 75 craft distilleries and cultural institutions, celebrates the earliest days of American whiskey when the country was young and the Mid-Atlantic was the epicenter of rye whiskey distilling activity. It officially launched last month with a kickoff event in Pittsburgh and wrapped up in Philadelphia. Western Pennsylvania was the scene of the infamous Whiskey Rebellion in the late eighteenth century, the response to the new American government’s tax on distilleries. The American Revolution left the fledgling nation in debt and Alexander Hamilton proposed a tax on distilleries—the first excise tax in U.S. history. Distillers didn’t take too kindly to the tax and were known to tar and feather tax collectors when they came to claim their due. It culminated in a brief “rebellion” in Western Pennsylvania in the 1790s, which was quickly put down by President George Washington (who ultimately became a distiller himself after he finished his second term and retired to Mount Vernon). “Part one of American whiskey was a Pennsylvania and Maryland story and we wanted to reclaim that,” says Meredith Meyer Grelli (pictured, top right), founder and chair of the Whiskey Rebellion Trail and owner of Pittsburgh’s Wigle Whiskey. “We’re also one of the most prolific craft-producing regions in the country and we knew that we could create a really unique trail that’s cross-regional and that really didn’t exist before.” Initial plans for the trail began about three years ago, Grelli says, but the project really accelerated in the past 10 months. The Trail’s advisory board includes more than a dozen tourism and economic development agencies, the Commonwealth of Pennsylvania and craft distilleries across the
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Mid-Atlantic region. The curated itinerary across the multi-day Master Trail encompasses the greater Pittsburgh, Baltimore, Washington, D.C. and Philadelphia regions. Weekender and one-day passes are also available for each region. Passes range in price from free to $165 for an annual membership. Pass holders gain access to museums, including the Senator John Heinz History Center in Pittsburgh, George Washington’s Mount Vernon (site of the restored George Washington Distillery) and Philadelphia’s Museum of the American Revolution. The passes also cover cocktails, tasting flights and tours at the 70 participating distilleries. The final day of the four-day kickoff event began with a mini spirits festival of sorts at The Bourse Market Philadelphia, a sprawling food hall in the historic Bourse building in Philadelphia’s Old City. “It’s amazing to see how fast [the trail] came together,” says Arthur Etchells, Philadelphia manager of Manatawny Still Works, a key southeastern Pennsylvania component of the trail and one of the distilleries pouring at the launch event. “It’s a great way to trumpet out what we’ve all been doing. We have great, award-winning spirits of all kinds in this region and [the trail] really provides a way to frame them around local tourism.” It’s no secret that the Whiskey Rebellion Trail draws inspiration from another prominent spirits tourism partnership. “You can’t ignore the fact that the Kentucky Bourbon Trail is quite the economic driver and we’re looking for the same opportunity for people who travel for whiskey,” says Laura Burkhardt of Visit Philly, which represents the four counties in southeastern Pennsylvania that are involved in the trail. And although the impetus for the Whiskey Rebellion Trail is rooted in history, it’s also about celebrating today’s rebels. “The rebellious spirit really is the craft spirit,” Grelli says. “It means whiskey, it means gin, it means rum, it means amari—it’s all these sorts of spirits.”
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Industry Update
ACSA ANNOUNCES 2019 HEARTLAND SPIRITS COMPETITION WINNERS Middle West Spirits of Columbus, Ohio, captured Best of Show for its OYO SherryFinished Bourbon at the 2019 Heartland Whiskey Competition in June. The American Craft Spirits Association (ACSA) recently announced the complete list of winners for the competition, which was open to craft whiskeys from all 50 states that incorporate corn in their mash bill. In this second, biannual blind judging event, whiskeys from 13 “heartland” states also competed for Best of State, and all entries competed in their select whiskey sub-categories. The competition, which was generously sponsored by state corn marketing associations, took place June 4 at CH Distillery in Chicago. “We are deeply appreciative of the state corn marketing associations for their investment and continued commitment to help craft spirits producers promote and grow their products,” says Margie A.S. Lehrman, CEO of ACSA. ACSA facilitated the judging process with Board of Directors President Chris Montana—owner of Du Nord Craft Spirits, in Minneapolis—who served as the Judging Director. Judges were selected by ACSA for their knowledge and experience specific to craft spirits. The 2019 competition saw significant growth in the number of participating states and entries with tougher competition for medals. Only five whiskeys were awarded a gold medal, while 40 received silver, and 22 bronze. “Several of the craft distilleries are also working farms that use the grain they grow to make their spirits so they are deeply committed to their product,” says Don Duvall, chairman of the Illinois Corn Marketing Board. “On behalf of all the participating corn associations I want to express our great respect and admiration as well as our continued support. While this is a challenging year for farming, we are pleased to see an important customer group grow and prosper.” For purposes of this competition, all whiskey sub-categories required entries to include some amount of corn as an ingredient.
2019 Heartland Whiskey Competition Category Winners Blended: Crooked Furrow Harvest Blend, Proof Artisan Distillers Bottled in Bond: A.D Law’s Four Grain Straight Bourbon, Law’s Whisky House Bourbon (Tie): OYO Sherry-Finished Bourbon, Middle West Spirits; and Starlight Distillery Single Barrel Bourbon Whiskey, Huber’s Starlight Distillery Corn Whiskey: Boot Hill Distillery Moonshine, Boot Hill Distillery Four Grain: Middle West Spirits Straight Wheated Bourbon, Middle West Spirits Rye: Driftless Glen 51 Rye, Driftless Glen Distillery Straight: 100% Straight Bourbon Whiskey, Grand Traverse Distillery
2019 Heartland Whiskey Competition Best of State Colorado: A.D Law’s Four Grain Straight Bourbon, Law’s Whiskey House Illinois: Whiskey Acres Straight Rye, Whiskey Acres Distilling Indiana: Starlight Distillery Single Barrel Bourbon Whiskey, Huber’s Starlight Distillery Iowa: Steeple Ridge Bourbon, Lonely Oak Distillery Kansas: Boot Hill Distillery Moonshine, Boot Hill Distillery Kentucky: Linkumpinch Bourbon, Dueling Grounds Distillery Michigan: 100% Straight Bourbon Whiskey, Grand Traverse Distillery Minnesota: Bødalen Bourbon, Far North Spirits Missouri: Bourbon Rubenesque, Wood Hat Spirits North Dakota: Crooked Furrow, Proof Artisan Distillers Ohio: OYO Sherry-finished Bourbon, Middle West Spirits Texas: True Blue 100 Proof, Balcones Distilling Wisconsin: Driftless Glen 51 Rye, Driftless Glen Distillery
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C R AF T S PI R I T S MAG .CO M
Industry Update
MONTANYA, ALPINE WIN AT WOMEN’S WINE & SPIRITS AWARDS Montanya Distillers and Alpine Distilling earned honors at the Women’s Wine & Spirit Awards 2019 in May. Montanya, of Crested Butte, Colorado, received a total of three medals, including a double gold medal for Platino, a rum aged for one year in an American White Oak barrel that previously held Laws Colorado Whiskey and then aged in Montanya Oro rum. The distillery also won a gold medal for Montanya Exclusiva, a rum that is barrel aged for a total of three years—two and a half years in an American White Oak barrel that previously aged Colorado whiskey. The rum is then transferred for an additional 6 months to a French Oak barrel that previously aged Sutcliffe Vineyards Cabernet Sauvignon and Port. Montanya received its third medal, a bronze, for its Oro rum. In July, Montanya also announced that Constellation Brands acquired a minority stake in the distillery. Alpine Distilling of Park City, Utah, earned a gold medal for its Barrel Select Gin, created by Sara Sergent. The gin starts with a juniper-forward base and is layered with coriander, cardamom, angelica root, orris root, lemon peel and licorice root. It was aged in new American oak barrels.
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Industry Update
ODD BIRDS OPENS SECOND LOCATION
PHOTOGRAPH: SEAN KELLY CONWAY (FAR RIGHT)
Odd Birds Group announced in July the opening of a second, larger location in St. Augustine, Florida. Located upstairs at 12 Avenida Menendez, Odd Birds Loft shares the same mission as Odd Birds Bar. “Odd Birds Loft offers the same great cocktail experience as Odd Birds Bar, but in a sizable and sophisticated space,” explains co-owner and bartender Cesar Diaz in a press release. “While we always welcome tourists, our passion is catering to locals and creating an eclectic experience for them. Our popular ‘Bartender’s Call’ tradition will continue where guests describe the flavors, spirits and sweetness level they prefer and our bartenders create personalized cocktails to please their palate.”
Cesar Diaz
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C R AF T S PI R I T S MAG .CO M
Industry Update
CALEDONIA SPIRITS OPENS NEW FACILITY Vermont-based Caledonia Spirits this summer opened the doors to a new distillery in Montpelier. The 27,000-square-foot, sustainablydesigned facility will help Caledonia Spirits meet demand of its Barr Hill spirits with a tenfold increase in capacity. Situated along the banks of the Winooski River and just a short walk or bike ride from downtown Montpelier, the solar-powered facility features custom-built stills, a cocktail bar, research and development center, retail shop and an event space. Tours of the distillery, as well as free tastings featuring limited-release spirits, will be available to visitors. “Our new home in Montpelier is a tremendous platform to share our passion for distillation, agriculture and cocktail culture,” says Ryan Christiansen, president and head distiller at Caledonia Spirits. “It gives us an opportunity to create a gathering place for the wonderful Vermont community that we so firmly believe in.” Ryan Christiansen
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Let’s talk strategy! TENTH WARD ANNOUNCES COCKTAIL LAB OPENING On the heels of a new Maryland law allowing distillers to sell mixed drinks, Tenth Ward Distilling Co. of Frederick recently opened its Tenth Ward Cocktail Lab. Tenth Ward will also continue to offer spirits samples, tours and bottle sales at the distillery. Tenth Ward founder Monica Pearce says that the opening follows years of tireless lobbying efforts on behalf of the Maryland Distillers Guild and many distilleries and their individual owners and staff. “We are thrilled to now be able to offer our spirits in the form of mixed drinks,” she says.
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Industry Update
MOUNT VERNON ANNOUNCES WHISKEY FESTIVAL George Washington’s Mount Vernon will host a whiskey festival later this year. The George Washington Whiskey Festival will take place on Nov. 9, offering festival goers a chance to taste George Washington’s Rye Whiskey and spirits from more than 11 distilleries in Virginia. The festival will also include curated food, discussions with distillers and 18th century coopering demonstrations. A small number of tickets are available for an exclusive, hands-on experience at George Washington’s Distillery prior to the festival.
NATIONAL HONEY BOARD ANNOUNCES SECOND ANNUAL HONEY SPIRITS COMPETITION After a successful inaugural Honey Spirits Competition in 2018 with 91 entries, the National Honey Board will once again recognize the best spirits made with honey at the Second Annual Honey Spirits Competition. The competition is free to enter and will judged in September in honor of National Honey Month, with registration due August 30, 2019. More information on the competition can be found at honeyspiritscompetition.com. The competition will feature 11 categories, including two categories for the growing segment of spirits that are distilled from honey. To be eligible, a spirit must be commercially available in the United States and either distilled from honey or use honey to enhance the flavor or aroma of a spirit. Categories include vodka, gin, bourbon/whiskey, rum, tequila/mezcal, liqueurs/specialty spirits, brandy, spirits distilled from honey, spirits distilled from honey and flavored, packaged cocktails and design/packaging. “We were surprised by the number of spirits that entered last year and the versatile ways distillers used honey,” says Catherine Barry, National Honey Board’s director of marketing. “As honey continues to rise in popularity as a sweetener or primary distillate, we expect this year’s competition to feature some world-class spirits from around the country.”
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C R AF T S PI R I T S MAG .CO M
Industry Update
NORTH CAROLINA DISTILLERS CELEBRATE NEW LAW A boon for craft distilleries, North Carolina’s new ABC Regulatory Reform Act has been signed into law. The new law, effective on Sept. 1, lifts the cap on on-site bottle sales at distilleries and also allows distilleries to sell beer, wine and cocktails, providing equity with the state’s breweries and wineries. “The new law supports the economic growth of our craft distilling industry, in turn, supporting local farmers, jobs and tourism,” says Pete Barger, co-owner of Southern Distilling Co. and president of the Distillers Association of North Carolina. “Our distillery members, our vendors and our communities are now looking forward to enjoying the growth that will result from the many dedicated years of lobbying for these exciting changes.” Tastings at North Carolina ABC stores and easier access to craft distillery products for mixed beverage permittees are also included in the law’s provisions. Scott Maitland, proprietor of Topo Distillery and past-president of the Distillers Association of North Carolina, is also pleased with the bill signing. “As one of the first licensed distillers in North Carolina since Prohibition, it is very satisfying to know that this hard-fought-for new law now positions our N.C. craft spirits industry, at over 80 distilleries strong, as a leader nationwide,” says Maitland. Before Prohibition, North Carolina’s rich agricultural resources bolstered spirits production across much of the state, with cities like
N.C. Gov. Roy Cooper
Statesville even being touted as the “Liquor Capital of the World” back in the late 1800s. The new law throws the door open for the industry to grow by leaps and bounds, to continue to revitalize its storied Carolina spirits heritage.
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If you attend only
one industry convention next year, take part in...
SAVE THE DATE
7TH ANNUAL ACSA DISTILLERS’ CONVENTION & VENDOR TRADE SHOW
MARCH 29-31, 2020 PORTLAND, OREGON
THIS IS THE ONLY TRADE SHOW CREATED BY AND FOR CRAFT DISTILLERS
Journey to Craftlandia with us March 29-31 at the Hyatt Regency in Portland, Oregon. • Network with fellow craft spirits producers, leading suppliers, and industry experts. • Accelerate growth with insights drawn from 30+ hours of education sessions. • Kick-start a new business concept by learning from peer best practices. • Participate and taste our industry’s best spirits at the Annual Spirits Awards dinner and tasting.
Walk away energized and inspired as we celebrate the craft spirits community. Stroll away with new knowledge on market access! Sprint away confident on how to grow your business!
For more information, visit
americancraftspirits.org/ programs/convention/
Lew’s bottom shelf
GUNG HO! BY LEW BRYSON
Gung ho! When we hear those words today, we think of someone who’s over-the-top enthusiastic about something, a hard-charger, a hustler. That kind of energy can drive a person to success, and in turn drive a business to success. That kind of energy also doesn’t always look where it’s going, doesn’t always care about who might be in the way, and certainly doesn’t look at who’s in the rear-view. There’s something to be said for that, especially in a business that rewards energy and boundless optimism. But it’s not the only way to succeed. The quiet genius, the introverted planner and the socially awkward salesperson are all present in the industry. The hard charging ball of fire is just not in every businessperson’s soul, and that’s a fact. We do all have in us the ability to work together, though, which is what gung ho meant, originally. It’s the anglicized name of the Chinese Industrial Cooperatives, set up in China in the 1930s by Western expatriates who wanted to help get China on its own feet, producing valuable manufactured goods that would let it take its rightful place in the world economy. Their Chinese designation, Gōngyè Hézuòshè, was commonly abbreviated to gōng hé, two Chinese characters that meant work and together. The term was picked up by a U.S. Marine Corps major, Evans Carlson, who took its ideal of people working in harmony toward a single goal and successfully applied it to his command of the 2nd Marine Raider Battalion in World War II. Gung ho spread throughout the Corps; the idea that every Marine’s efforts were dovetailed with every other Marine’s, with all efforts directed to the mission, to the goal. Working together is something that the craft spirits industry could use more of. While competition is inevitable, and undoubtedly healthy in the long run, it is best when the competition is clean, and moves the whole industry forward. That’s the spirit of gung ho, with everyone working toward the same
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goal, which is an expanding market for small producers selling high quality spirits. How does that work? I used to purchase computer products for a pharmaceutical company: computers, printers, network equipment, cabling and installation services. I would gather information, and when I’d selected two or more top candidates, I’d invite the representatives to visit and give me a presentation on their products: price, performance, reliability and potential for expansion. I had one rule for the presentations that I never divulged to the representatives. That may seem unfair, but it was intended to make the process more fair, and to keep things clean as well. The rule was that I did not buy from representatives and companies that ran down their competition, that slagged the other companies. I wanted to hear about their products, from them, not negative, possibly slanted statements about someone else’s. I’ve heard way too much of that from small spirits producers. Anyone who sources any product is “cheating.” A gin maker who doesn’t distill his or her own neutral spirit is “a fake.” Distilling on a column isn’t “real craft.” Only malting your own barley is “true craft,” until the farm producer comes along and is “truer,” I guess. If a distillery was sold to a larger company (or an individual, or an investment firm), they are no longer craft, even if nothing in their process, ingredients or staff has changed. You know what? Don’t really want to hear any of that. I have my own opinions on those issues, for one thing, and for another, who the hell died and made you the God of All Craft Spirits? Not to mention, why should I take your word for it, when your information might be out of date, or presented in a way that makes you look better? And if you’re telling customers all that when they may not know enough about the category to question it, well, you’re bamboozling them. Here’s another thing: that applies to established distilleries as well. Don’t sling me a load
of bull about “soulless big distillers” who use “commodity grains” and “huge column stills” that “make more in a day than we make in a year.” You sound like a whiny nerd saying that stuff, especially when they’re mostly making great spirits, in huge volumes, at prices that should scare you. Gung ho, my friends. Work together, even when you’re competing. Competition should focus on your own products, your own processes, your own ingredients. If you’re talking trash about someone else’s product, it kinda makes me wonder why you’re not talking more about yours. If you talk trash about your fellow distillers, it will get back to them. It will poison the well of consumers. It will destroy your credibility. It damages the reputation of the industry as a whole. There is more that unites you than divides you. There is more that unites you with the large distillers than divides you. Taxes and regulation, for one thing: spirits taxes are unfair at any level. Big distillers provide the funding and savvy, small distillers provide the numbers (and often the jobs numbers) needed to convince legislators. Work together on cultural issues like underage drinking, overserving in tasting rooms and bars, and the negative image of “hard” liquor. Work together to achieve together. Gung ho! It’s an idea that’s 85 years old, and right on time for the craft spirits business. ■
Lew Bryson has been writing about beer and spirits full-time since 1995. He is the author of Tasting Whiskey.
C R AF T S PI R I T S MAG .CO M
IMAGE TK POSSIBLE ILLUSTRATION
“If you’re talking trash about someone else’s product, it kinda makes me wonder why you’re not talking more about yours."
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WHAT’s Stirring
DRINKS TO SAVOR FROM ACSA MEMBERS
The Showman A popular summer drink from Backwards Distilling Co. in Mills, Wyoming. Ingredients 1 1/2 ounces Backwards Strongman Gin 1 1/2 ounces pineapple juice 1/2 ounce fresh lime juice 1/2 ounce passionfruit syrup 3/4 ounce coconut cream Instructions Shake vigorously with ice. Strain over ice. Garnish with mint sprig and pineapple wedge.
Photo by Tawni Moore
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Black-Eyed Rye A blackberry-focused drink from Sagamore Spirit in Baltimore. Ingredients 1 1/2 ounces Sagamore Spirit Rye Whiskey 1/2 ounce lime juice 3/4 ounce blackberry simple syrup* 3 ounces ginger beer mint leaves Instructions Shake the whiskey, lime juice, blackberry simple syrup and a few mint leaves with ice and strain into a Collins glass. Top with ginger beer. Garnish with mint sprigs and three skewered blackberries. * For the blackberry simple syrup: Mix equal parts water, sugar and blackberries in a pot. Bring to a boil and reduce to a simmer for 10 minutes. Chill overnight and strain.
Tattersall Rye Old Fashioned An Old Fashioned made exclusively with spirits from Tattersall Distilling. Ingredients 2 ounces Tattersall Rye 1/2 ounce Tattersall Orange Crema 1/4 ounce Tattersall Sour Cherry Liqueur Instructions Combine ingredients over ice, stir and top with four dashes of aromatic bitters.
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Snapshots
No Sleep in Brooklyn Craft spirits producers pour for bar-industry decision-makers at the sophomore edition of Bar Convent Brooklyn.
Nine member distilleries showcased their spirits on the ACSA Pavilion at Bar Convent Brooklyn.
Wiggly Bridge Distillery’s (York, Maine) founder/ distiller Dave Woods and Cardinal Spirits (Bloomington, Indiana) sales rep Austin Furnas
Kayla Veatch, speakeasy manager at Golden Moon Distillery (Golden, Colorado)
Steffen Rasile, co-founder of Gulch Distillers (Helena, Montana)
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Devon Roeshot, sales manager for Wigle Whiskey/Pittsburgh Distilling Co. (Pittsburgh)
Mimi Buttenheim, president, Mad River Distillers (Warren, Vermont)
Darren Case, owner/distiller of Round Turn Distilling (Biddeford, Maine)
Corinna Rozum, brand ambassador, Pennsylvania Pure Distilleries
Melissa Busto, regional sales manager, Copper & Kings American Brandy Co.
C R AF T S PI R I T S MAG .CO M
Snapshots
Cocktails & Congregation Tales of the Cocktail in New Orleans remains one of the world’s most spirited gatherings.
(L to R) Elayne Duff, CEO of consultancy Duff on the Rocks, moderates a panel on apple brandy, featuring Jillian Vose (NYC cocktail bar Dead Rabbit), Hervé Pellerin (France’s Calvados Christian Drouin), ACSA Board Member Dan Farber (Osocalis Distillery, California) and Lisa Laird Dunn (Laird & Co., New Jersey)
The Meet the Distillers Happy Hour featured, among many others, Sagamore Spirit, Laird & Co. and CH Distillery.
Tattersall Distilling (Minneapolis), FEW Spirits (Evanston, Ill.), Widow Jane and Philadelphia Distilling were among those pouring at the Indie Spirits that Rock tasting session.
Shochu makers have been busy educating the American public about the traditional Japanese spirit, using Tales as a platform to break into the U.S. bar scene.
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ACSA Affairs
A SORT OF HOMECOMING Smooth Ambler becomes ACSA’s first Alumni Member. ACSA recently created a new class of membership, the Alumni tier, open to DSPs that had been ACSA members for at least a year but are no longer eligible to be Voting Members due to having outgrown the 750,000 proof gallon production limit, or having merged with or been acquired by an ineligible entity. The charter Alumni Member is West Virginia’s Smooth Ambler, known for Smooth Ambler Contradiction, Big Level Bourbon and Old Scout American Whiskey. In late 2016, Pernod Ricard bought a majority stake in the distillery. Smooth Ambler co-founder and master distiller John Little shared some insights on the role of the Alumni Member within the broader spirits landscape.
“good, honest” part means that we’re open and transparent when we source (and in everything we do) and that we strive to make a difference in our community and with every customer that touches the Smooth Ambler brand. And we’ve taken every facet of our business, tried to improve that area, and to continue to improve our production practices and the final product. That’s the focus, every day.
Tell us about what you see as the importance of being a part of ACSA? John Little: It’s important to be a part of any industry in which you’re involved. ACSA has taken a leadership role in education and legislation, which in my opinion, are two of the most important categories in our segment of the industry. It’s time for Smooth Ambler, and for me, personally, to be involved.
What have been the advantages for you now being part of a much larger company? Are you still allowed the same level of autonomy? JL: The advantages are huge: access and assistance from legal, financial and production experts in their field. They also have a huge sales and distribution footprint and they are able to provide access to capital while we grow. Do I have the same level of autonomy? Not exactly. While I still make the decisions around here, our business is a little different. There’s more oversight and decisions take a little more planning. But that’s not necessarily a bad thing—we shot from the hip quite often in the past.
What do you see as the biggest issues confronting craft spirits producers today? JL: Education—safety, efficient/quality production, etc.—and legislative issues. I would hope that most folks are keen to get educated by themselves. But legislative issues require one collective voice, guided by the membership and its leadership, to be effective.
What do you see as the benefits of this new tier of ACSA membership, Alumni Membership? JL: For a few years, I’ve been so involved in our own business, that I haven’t done much to help the industry. It was important for me to get involved. I’ve known that for a while, but I didn’t know where I (Smooth Ambler) fit in, exactly, given our current structure.
What do you see as the key spirits market trends over the next five years? JL: Low proof—or no proof—is one that I’m watching.
What do you feel you bring to the table in that capacity and how would you encourage others that also fit the alumni criteria to become an ACSA alumni member? JL: I would certainly hope that the many wins and failures in every aspect of our business— everything from production, regulations, sales and marketing, HR, finance, etc.—might help someone else in our industry. ■
What’s your overall operational philosophy? JL: Our goal has always been to be good, honest, hard working people, making a worldclass product that’s available worldwide. That
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In addition to the Alumni level, ACSA offers memberships at the Voting, Candidate, Affiliate and Junior Affiliate levels. Voting Member fees are tailored to a distillery’s size. To find out which ACSA membership level is right for you, visit americancraftspirits.org/signup.
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ACSA Affairs
AN UPDATE ON TTB RULEMAKING BY NICOLE AUSTIN AND MARK SHILLING
For those who don’t follow the wonky minutiae of federal rulemaking processes (although we can’t imagine why you wouldn’t!) you could easily have missed the recent proposed rulemaking from the Alcohol and Tobacco Tax and Trade Bureau (TTB). If adopted, this gargantuan ‘modernization’ effort could transform the entire American spirits industry. In the proposal, TTB expressed a clear desire to simplify and modernize regulations that set the standards of identity for distilled spirits and generally control the information appearing on spirits labels (27 CFR Part 5), and therefore in a roundabout way greatly influence the types of spirits that will be produced in the U.S. This effort included some straightforward elements, like standardizing language, grouping things together in a sensible way, getting rid of antiquated rules, and utilizing more plain language. This is the most significant effort by the TTB in a generation to improve these complex and oftentimes confusing rules. This modernization effort also included some real bombshells, such as limiting barrel sizes to approximately 50 gallons, redefining what it means to age a spirit, and updates to the rules around mandatory statements such as “produced by” and “distilled by.” To be clear, proposed rulemaking is just that: proposed. The TTB released its suggested changes for public comment this past fall with a 90-day window (later extended to June 26. At the deadline for public input, TTB had received well over a thousand submissions. The American Craft Spirits Association recognized this as a key opportunity not only to comment on the specifics of the proposals, but also to express a clear position on the most effective structures for these regulations. As the only registered national non-profit trade group representing the U.S. craft spirits industry, our comments will strongly influence the final rulemaking. We took this effort seri-
C R AF TSPIR ITSMAG.COM
“If adopted, this gargantuan ‘modernization’ effort could transform the entire American spirits industry." ously, knowing it may shape the U.S. spirits industry for decades to come. ACSA’s comments were guided by general principles around labelling that we believe best drive our mission “To elevate and advocate for the community of craft spirits producers.” · Transparency is the best way to avoid misleading consumers • Make wide room for innovation, with clarity and disclosure to avoid confusion • Objective rules are more fair than subjective rules • Rules should be enforced equally across all categories, segments and regions of the U.S., with all receiving equal scrutiny • Regional identities should be controlled by the regions themselves • Truthful and accurate statements of processes and compositions should be allowed to be communicated to consumers These principles guided the positions taken on the numerous specific issues in the proposed rulemaking, all of which were agreed by the elected representatives on the ACSA Board of Directors. TTB has indicated that the volume of responses and the complexity of the proposals will most likely lead to a series of final rulemakings in the coming months and years before the effort is completed. Based on their general indications, we hope to see the first of these within the year. As nothing has been
issued publicly, TTB was not able to comment on the likelihood of any specific result, but it did comment that the proposed restriction on barrel sizes, noting that provision “went over like a lead balloon.” We are confident our voice was heard “loud and clear” on that one! The TTB also hinted at further consideration around issues of aging and maturation, so we can likely expect more proposed rulemakings and comment periods around those questions. We will continue to keep our members appraised of any updates. ■
Nicole Austin is a founding board member of the American Craft Spirits Association. Mark Shilling served as ACSA’s president from 2017-2018 and currently chairs the government affairs committee.
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Photo Krafft 34by| Louise AUGUST 201 9
C R AF T S PI R I T S MAG .CO M
A CapitolIntensive Effort Inside the fight for permanent Federal Excise Tax relief BY JEFF CIOLETTI
T
he notoriously muggy swampiness of Washington, D.C. probably puts the nation’s capital pretty low on many people’s lists of places to visit during the dog days of summer. So it’s a testament to the commitment and fortitude of America’s craft spirits producers and their industry allies when nearly 150 of them show up in the District of Columbia in late July to convince lawmakers to back the industry’s top legislative priority. Luckily, the oppressive, triple-digit heat wave that engulfed most of the MidAtlantic and Northeast eased at the start of the American Craft Spirits Association and Distilled Spirits Council (DISCUS) Public Policy Conference. But even as the heat and humidity dissipated, the air was still thick—thick with a sense of déjà vu, that is. Many of those in attendance were delivering a similar message last year—and the year before. And the fight rages on. It’s a critical moment for the craft spirits industry—one that could mean the difference between continuing the current robust growth trajectory or watching the momentum grind to a halt. At the end of 2017, Congress passed the Craft Beverage Modernization and Tax Reform Act (CBMTRA), as part of the broader Tax Cuts and Jobs Act of 2017. The CBMTRA was the first major legislation in modern history to directly support and grow America’s craft distillers by reducing the Federal Excise Tax (FET) from $13.50 to $2.70 per gallon for the first 100,000 proof gallons removed from bond. It also helped craft spirits producers achieve parity with small wineries and craft breweries. Small distillers previously paid 5.4 times more FET than craft brewers and 16.4 times more FET than small wineries for equal quantities of beverage alcohol. “This is the very first time since Prohibition that distilled spirits have enjoyed any kind of tax relief,” says ACSA CEO Margie A.S. Lehrman. But there’s always a catch. The FET cut came with an expiration date: December 31, 2019, a little over four months from the publication of this issue. ‘Very Concerned’ For much of the past year, ACSA has been gauging craft spirits producers’ concerns about the expiring FET cut through a series of interactive polls in the Monthly Mash
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The craft spirits industry on the steps of the Capitol
newsletter. Unsurprisingly, nearly three-quarters of distillers expressed concern about the prospect of those reductions going away at the end of this year. Nearly half said they were “very concerned.” Uncertainty is never good for business and poll results reflect that notion as well. Nearly two-thirds of respondents said that the big question mark over the fate of the FET reduction has made it difficult for them to form solid business plans. Three-quarters of those distillers say the impact on their business planning is significant. That’s an obvious concern, since the difference between paying $2.70 per gallon and $13.50 per gallon could translate to tens of thousands and even hundreds of thousands of dollars. That could mean putting off a necessary expansion, buying new equipment or hiring (and potentially having to lay off) staff. Companies also might be forced to cut employee benefits. “This is an extremely capital-intensive business, more so than beer or wine where you can sell your wares quite quickly after production,” says Joe Heron, founder and owner of Copper & Kings American Brandy Co. in
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Louisville, Kentucky. “We need to lay inventory down for a minimum of four years for our brandies. The reduction in FET is a significant cash flow enhancer in terms of capacity, staffing and enhancing the distillery experience in terms of event and community spaces.” Distilleries, Heron notes, would have to absorb all of those added costs, as passing them on to the market is not an option. “Consumers are not able to take an increase in cost at retail,” Heron asserts. “So it would result in less investment, immediately, in every way.” S.362 & HR 1175 The two U.S. senators behind the 2017 CMBTRA, Sen. Roy Blunt (R-MO) and Sen. Ron Wyden (D-OR), have reintroduced a version of the bill, S.362, which, as of this writing, had gained the support of 68 co-sponsors—twothirds of the entire chamber. Meanwhile, a similarly bipartisan 2019 bill, HR 1175, emerged in the House of Representatives, sponsored by Rep. Ron Kind (D-WI) and Rep. Mike Kelly (R-PA), has attracted more than 270 co-sponsors. When the 2017 bill went to the floor at the end of 2017, it did so with more than 300 co-sponsors. A key
objective of last month’s Public Policy Conference was getting many of those uncommitted legislators off the fence. “Reducing the tax burden on craft beverage makers has freed up more capital for them to grow and create jobs in communities across the United States,” says Sen. Blunt, who notes that distilled spirits overall are responsible for 26,000 jobs in his home state and $1.9 billion of economic contributions. Blunt points to the 26,000 jobs the overall spirits industry has created and $1.9 billion distilled spirits have contributed to the economy in his home state alone. “Permanently reducing excise taxes on distillers will make the industry even stronger,” adds Blunt. “I’m encouraged by the broad, bipartisan support we’ve seen for the Craft Beverage Modernization and Tax Reform Act.” Of course, Wyden’s home state has long been known as the epicenter of craft beverage production of all kinds, so it’s fitting that he’s been one of the biggest champions for the cause. “People around the world enjoy Oregon wine, craft beer, cider and spirits—providing not only a serious source of home-state pride
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but also a huge boon to our state’s economy,” Wyden says. “That’s why I’ve long fought to permanently modernize burdensome rules and establish fair taxes for craft beverage producers in Oregon and around the country. The Craft Beverage Modernization and Tax Reform Act would allow these innovators to further grow and thrive. Fortunately, the legislation enjoys bipartisan support and I’m looking for every opportunity to get the job done.” The saga of the CBMTRA has been fraught with obstacles. When the industry was working on getting the original version of the bill passed in 2017, the United States Congress, Joint Committee on Taxation, fairly late in the game, assessed that the legislation would result in about $1.6 billion in lost revenue from the U.S. Treasury. That was considerably higher than federal officials initially had indicated, which caught CBMTRA proponents off guard. “I would say they came up with a very high number,” offers Jim Hyland, ACSA Public Policy Adviser and president of the Pennsylvania Avenue Group. “We always thought it would be in the neighborhood of $300 million from the figures that have come out.” The joint tax committee’s overestimate
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may have contributed to the decision to slap the December 2019 expiration date on the 2017 bill, as many lawmakers may have concluded that federal coffers would take too big of a hit from permanent FET relief. “Originally, I think it was a bit overscored,” says Mark Shilling, past president of ACSA and current chair of the Association’s Legislative Affairs Committee. Since then the number has come in at just over $400 million, about a quarter of the late 2017 projection. “The loss in revenue over time is much less,” notes Steve Johnson, chair of the ACSA Political Action Committee (PAC) and president and CEO of Vermont Spirits Distilling (Quechee, Vermont). “If we had known that at the time, we could’ve gotten [a permanent reduction] through two years ago.” In the 20 months since CBMTRA’s passage, federal number crunchers have become a bit more familiar with how the spirits industry functions—thanks in no small part to efforts from groups like ACSA and its PAC. “From what I understand, the folks who play a role in doing the math have learned a lot more about the industry and how pricing
“This is the very first time since Prohibition that distilled spirits have enjoyed any kind of tax relief.” —ACSA CEO Margie A.S. Lehrman
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PHOTOGRAPH: LOUISE KRAFFT
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works, how taxes work,” Shilling points out. “You can’t look at beverage alcohol and just assume that the way it’s taxed works the same way it does for other consumer products. I think they’ve learned a little more about how to look at it and how to do the math.” One of the biggest challenges for the craft spirits industry, Shilling notes, is that federal officials often view beverage alcohol as one single, monolithic entity, which affects the way it’s taxed. “They look at everything—beer, wine and spirits—as one big number,” he says. “They don’t take the time to look at the individual categories and see what the impact is individually. If you break out distilled spirits, I think that our portion of that [impact] is not nearly as significant an impact as the other [alcohol beverages].” Behind the Numbers The lower figure should serve to bolster the craft spirits industry’s case for a permanent extension. In fact, much of that lower number can be offset further if the craft segment continues on its current growth trajectory. Last year at this time there were about 1,835 craft distilleries in the U.S., according to the Craft Spirits Data Project (CSDP), a joint economic impact study that ACSA annually conducts in partnership with Park Street and the IWSR. When the 2019 CSDP report is unveiled in September, that number is expected to be around 2,000—that’s a new distillery opening nearly every day, on average. And that means more companies paying taxes. “It’s incumbent upon us to go back and educate the people who do this for a living what the real impact is from tax collections,” Hyland says. “And that doesn’t even take into account new hires, new investments, new sales—all of which bring revenue back into government coffers.” And there’s been a great deal of all of those—new hires, new investments and new sales—thanks to the FET cut. Last year, after CBMTRA went into effect, ACSA polled craft distillers on the benefits they would derive from excise tax relief. While most respondents expected the $10.80 per gallon savings to help their businesses in multiple ways, ACSA asked them to identify their number one benefit. “Hire more staff,” was the top objective, with about 20% saying that’s what they’d be putting the money toward. Other priorities included moving to a larger facility or expanding the existing facility, buying new equipment, boosting the marketing budget and paying down debt.
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Some of the distillery representatives in D.C. last month were living examples of FET relief in action. Among those was Maureen Reed, corporate marketing manager at KO Distilling in Manassas, Virginia, who articulated to members of Congress and their staff how the tax reduction helped create jobs like hers. “FET reform gives distillers more parity with the rest of the alcohol industry,” she notes, “and has allowed KO Distilling to
“This is it for us, this is the only one. We’re trying to catch up to beer and wine.” —Mark Shilling, chair of ACSA’s Legislative Affairs Committee invest in a new still and a new rickhouse, continue to support Virginia agriculture and tourism and even hire four new employees— myself included.” While most agree that these are the sorts of stories lawmakers need to hear, permanent FET relief is going to require a lot more than words. They’ll also need visuals. “The best way for success for this legislation is to invite [representatives and senators] in to the distillery,” advises Johnson. “If they want a picture taken, great. [Show them] this is where we were a couple of years ago and this is where we are now, here’s what’s going on. See it all, see it work.” As you read this, Congress likely still is in summer recess. That means, in more cases than not, lawmakers are back home in their districts, available for more face time with their constituents than when they’re in Washington. “There’s nothing better than getting them on site at a distillery to discuss the issues,” Hyland offers.
But even if it’s not possible to get lawmakers to commit to a visit, ACSA has urged members to stay in contact with legislators in both Congressional chambers to convince them to co-sponsor S.362 and HR 1175 (if they aren’t already). And the Association encourages distillers to donate to the PAC, to ensure that ACSA has a seat at the table with some of Washington’s biggest decision makers. Getting legislators off the fence largely is about educating them—and not just on the merits of FET relief, but on some of the misconceptions that might be adversely influencing opinions. For instance, many members of Congress aren’t aware of the 100,000 proof gallon cap on the $10.80-per-gallon tax cut, leading them to believe that it will benefit large, multinational producers disproportionately. “The growth is in the small [producers] that still haven’t hit the cap,” Shilling explains. There’s also a bit of confusion on Capitol Hill regarding parity with other craft alcohol producers. Prior to CBMTRA, craft breweries and wineries each had some form of tiered tax structure separating them from the megaproducers within their respective industries and, if the 2017 relief expires, they’ll revert to those previous levels. Since the passage of CBMTRA was the first time craft distillers have received any sort of tax break, small spirits producers would revert to paying the same amount per gallon that large companies— whose resources are exponentially greater than those of craft producers—contribute. “This is it for us, this is the only one,” Shilling points out. “We’re trying to catch up to beer and wine.” Another common misconception is that the bill only benefits producers. While it’s true that distillers, brewers and wine makers are the ones getting the tax cut, the money they’re saving is supporting the farmers who grow the grain and fruit, packaging suppliers, equipment manufacturers, cooperages and other trading partners along the supply chain. More money to invest in one’s operation means more support for other entrepreneurs and artisans helping their own local economies. It also means more charitable giving. “That tax money is being reinvested not just in the distillery, but to the community,” Shilling says. “We’ve just got to keep hammering that home with [Congress].” What Lies Ahead With four months left before the 2017 FET reduction expires, there have been some positive signs that it will live beyond its expiration date. “I’m optimistic,” says ACSA President Chris
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Montana, owner of Du Nord Craft Spirits in Minneapolis. “I think we can get up to the same level of support we had last Congress— even better.” Montana adds that the quality of the meetings he’s had with Congress has been encouraging, but he cautions that there’s still a lengthy road ahead. “The challenge is that even though we have this bipartisan bill, it still has this process, it still has to make it through the sausagemaking,” he notes. It’s also a matter of finding the appropriate piece of legislation to attach the FET relief provisions, similar to how the CBMTRA was passed as part of the broader Tax Cut and Jobs Act of 2017. Early this summer, the House Ways and Means Committee revealed that it is considering legislation to extend the $2.70-per-gallon rate through 2020. While a one-year extension may not be the desired ultimate outcome, it does buy distillers a little more time to continue telling their stories and demonstrate why permanent relief makes the most sense. However, even the one-year extension is far from a done deal and distillers must continue pushing on all fronts for any outcome, whether that be a one-year extension, a threeyear extension or permanence. In May, the United States Senate Committee on Finance announced that it had set up a series of bi-partisan task forces to address more than 40 tax provisions that have expired or are set to expire. Among those was the Individual, Excise, and Other Temporary Tax Policy Task Force, charged with examining six of those temporary tax policies, including the FET reduction on beverage alcohol. In an encouraging development on Aug. 13, the Task Force—co-led by Sen. Pat Roberts (R-KS) and Sen. Robert Menendez (D-NJ) and including Sen. Steve Daines (R-MT) and Sen. Maggie Hassan (D-NH)—indicated that it not only would like to see the two-year FET cut extended, but ultimately made permanent. Further, Task Force members are all co-sponsors of the CBMTRA. Lehrman considers this a positive development and another step towards making the relief permanent. However, she cautioned that “until the provisions of the CBMTRA are on the floor for a vote and sent to the President’s desk for signature, ACSA will not rest. It’s a done deal WHEN it’s a done deal and not a moment before.” What further complicates matters is that 2020 is an election year—Presidential and Congressional—and campaigns could get in the way.
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Sen. Roy Blunt (R-MO)
Rep. Mike Kelly (R-PA)
Sen. Ron Wyden (D-OR)
Rep. Ron Kind (D-WI)
“Permanently reducing excise taxes on distillers will make the industry even stronger.” —Sen. Roy Blunt “I think the biggest danger in trying to do something during an election year is that all of these [lawmakers] might be distracted with re-election and not paying attention to the work that needs to be done in the Capitol,” Shilling cautions. “We need to be vigilant and active and remember that the squeaky wheel gets the grease.” Lehrman concurs. “The longer the fight drags on, industry members might also become immune to the necessity to remain
vocal,” she says. “ACSA will not give up until the relief becomes permanent.” ■
Time is running out! Call your senators and representatives today and urge them to co-sponsor S.362 and HR 1175!
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Napa Valley Distillery
Tastemakers With the right approach, running a tasting room can be an educational and profitable venture. BY JON PAGE
O
pening a tasting room was a key component of the business plan long before Backwards Distilling Co. started producing spirits. Six years after co-founding the distillery in Mills, Wyoming, with her brother and parents, Amber Pollock continues to see the benefits of that plan. “Most consumers don’t know what to do with straight spirits—it’s not a finished product for [them] where it is a finished product for a distiller,” says Pollock, who manages the Backwards tasting room in Casper and serves on the American Craft Spirits Association’s Board of Directors. “There’s a number of steps
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they have to take after that purchase to create something that they’re going to sit down and enjoy … Using your tasting room platform as a way to drive cocktail culture and drive consumers’ interest in cocktails is something that all distilleries should be focusing on.” For many distilleries, operating a tasting room not only helps drive interest in cocktails but it can also boost sales while increasing brand awareness and a better understanding of distilled spirits. Whether you are planning to open a distillery, are running an established distillery without a tasting room, or are looking to evolve your tasting experience, the following tips should prove helpful in
creating a welcoming, educational space for your customers. Be adaptable and know your customers. When Cardinal Spirits in Bloomington, Indiana, first opened its tasting room, the distillery partnered with food trucks with mixed results. “Food trucks are great except they have wheels and sometimes those wheels would take them away from our parking lot,” says co-founder Jeff Wuslich. “We didn’t have food when we needed to have food or maybe the food service experience wasn’t as ideal as we would have wanted it and the customers saw us as one and the same.”
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After listening to consumer feedback, Cardinal Spirits decided to add a kitchen. Today, Wuslich says the tasting room represents about one-third of the distillery’s revenue. “I think one of the fun things for us is figuring out what a distillery’s kitchen looks like,” says Wuslich. “In America we know what a brewpub looks like … but what does a distillery look like? Is it a little more elevated? What pairs well with cocktails? A core tenet of what Cardinal is trying to do is get more people to enjoy spirits in a fun way, so we couldn’t go too high class. We wanted to have an approachable menu like we have for our cocktails but still more refined than just bar food.”
Amber Pollock of Backwards Distilling Co.
“Using your tasting room platform as a way to drive cocktail culture and drive consumers’ interest in cocktails is something that all distilleries should be focusing on.” —Amber Pollock of Backwards Distilling Co.
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Invest in people. Turnover rates are high in the service industry, and while there may not be a surefire way to avoid this challenge altogether, Wuslich offers one piece of advice to lessen stress on distillers. “Overpay for management, because if you don’t have a lot of restaurant experience, it’s not something that you necessarily want to own,” says Wuslich. “If you want to be working your still all the time, then you want somebody managing your tasting room and your bar and your kitchen so that you don’t have to worry about it.” A 2013 state law paved the way for distilleries to operate tasting rooms in Indiana, and it wasn’t long after that Cardinal gravitated to making cocktails. Hiring creative bartenders led to an unexpected twist for the distillery. “Originally we thought we would be trying really interesting and different things in the production area and letting the bartenders try it out for us,” says Wuslich. “I think it works in the opposite way where sometimes bartenders are saying, ‘Oh man, you know what we really need is something like this,’ and then we in the back make something interesting that they would enjoy.” One example is Cardinal’s Tiki Rum, a light rum with a fruity profile that was crafted for the distillery’s Tiki Tuesday cocktail nights. “We had rum on the agenda to make, but it definitely got accelerated because we had some bartenders that really loved tiki drinks,” says Wuslich. Be hospitable. For distilleries located in or near urban areas, Arthur Hartunian of Napa Valley Distillery in Napa, California, recommends avoiding reservation policies. Although Napa Valley’s website says reservations are required, Hartunian says most visitors to the distillery’s
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Cardinal Spirits
grand tasting salon never visit the site, and instead learn about the distillery via Yelp or from walking by the front door. “We recommend reservations but we never turn anyone away if they walk in unannounced on a day that we’re closed,” says Hartunian. “If someone has made an effort to come here, we’re going to do our best to give them some sort of experience. The distillery is our home [and] if someone knocks on our door and wants to visit, the last thing you want to do is turn them away because they’re going to remember that. They’re going to forget your brand.” Visitors to Napa Valley Distillery will soon have the option of tasting the distillery’s straight spirits at its tasting salon and/or having a cocktail and food at The Hollywood Room, which Hartunian says will provide “a little nibble of Hollywood” meets Miami Beach. “It’s a small room so we’re going to be really creative with the colors and textures,” he continues. “It’s going to be mid-century Hollywood—the glamor era of Hollywood.” Carefully develop a creative but approachable cocktail menu. At Backwards Distilling’s new tasting room in Casper (prior to May, the company operated a tasting room at its distillery in nearby Mills), a circus esthetic is king, with spirits like Ringleader Vodka and Strong Man Gin playing starring roles in cocktails. Pollock creates a new menu for each season with roughly two dozen cocktails offered. One of her strongest pieces of advice for running a tasting room is
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to make sure that the cocktail menu isn’t an afterthought. She recommends taking “extra time to make sure that every cocktail is really good and if that’s the first cocktail somebody has tried, will they order more cocktails after that? Or are we going to scare them away and they’ll go back to their comfort zone which is beer or whatever they were drinking?” Understanding that all of her customers may not be cocktail savvy, Pollock aims to use plain English on the menu, which starts with approachable options like the Big Top—made with vodka, grapefruit juice, lime juice, tarragon syrup and bitters—and gets progressively more adventurous. “We don’t try to make it sound fancy,” says Pollock. “If you go to a place and can’t read any of the ingredients or don’t know what they are when you’re reading the menu, you’re going to be scared away. You’re not going to take that risk even if it had been something you really liked.” When a consumer is on the fence about ordering an old favorite versus making the leap to a more adventurous cocktail—such as a recent winter offering that promised “a savory take on butternut squash featuring a rich, brown butter washed vodka”—Pollock provides a safe landing. “I always tell them, ‘This is a very low risk situation. If you don’t like this I’ll make the one you had last time or make you something else,’” Pollock says. “It’s definitely about the bigger picture. If you have to eat a little bit of cost on that wasted cocktail, it’s pretty negligible in the end compared to the value of getting somebody excited about drinking cocktails over all.”
Use fresh ingredients. Pollock is also passionate about preparing cocktails with fresh-squeezed juices. Rather than buying bottled juice, she believes that distilleries have a responsibility to set a high bar for cocktails by using fresh citrus. “I think committing to that should be baseline for everybody that’s trying to promote and get consumers excited about tasting cocktails,” says Pollock. “You can do that without adding a whole lot of cost and a whole lot of time. That sets a good example that this is the standard for a cocktail.” Create eye-catching drinks. Finally, it doesn’t hurt to dress up the drinks. Pollock carefully considers the appearance of her cocktails, including glassware and garnishes. The more photogenic the drink, the more likely customers will be to take a photo of it and share it on social media. “Every drink has its own personality and own theme,” says Pollock. “That encourages people to take more pictures than if six Collins glasses come to the table.” And the appearance of some drinks may inspire consumers to try something they wouldn’t normally order. A recent example at Backwards is Augmented Aquarium, a blue-tinted gin and tonic. “People see it and they want it,” says Pollock “With drinks like that you can get people excited about being in your place and that makes it [unique]. Do something that plays into whatever personality you’re trying to evoke.” ■
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Global Craft
Bimber Distillery’s London Single Malt is nearly done aging.
WORLD WHISK(E)Y WELCOMES NEWBIES English and Welsh whisky makers come into their own. BY JENNIFER CIRILLO
make unique liquid. “It seems to be being produced with a great deal of care and attention, which is wonderful and this is showing through in the final product,” notes Joel Harrison, award-winning drinks writer specializing in whisky and fine spirits and man behind marketing consultancy, Caskstrength Creative. “What will be interesting is if we ever get to see a proper English Blended Whisky, but I think stock levels are too far off for that at the moment.”
W
hisky first, business second is a common consensus amongst the group of distilleries that have emerged across England and Wales in recent years. With an estimated 24 whisky distilleries now in operation and surely some in the pipeline, there are new craft whiskies on offer in the countries for the first time in over a century. As the craft movement continues—not just in spirits—there are cynics that may roll their eyes at the term, but these whisky-producing distilleries take their craft seriously. “There is a sense of responsibility,” says Alex Wolpert, founder of East London Liquor Co.
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“We are starting the category again from scratch.” It was 1903 when the Lea Valley Distillery closed in England and it wasn’t until 100 years later in 2003 when Hicks & Healey, who claim to be the kick starters of English whisky production, brought the spirit back to life. “There is such an appetite for whisky,” Wolpert says. “The category is wide open.” With craft comes provenance, transparency, sustainability and, of course, quality among other things of notability. Sitting in the growing category of World Whisky, English whiskies, although in their infancy, stand out because of the detail that is being taken by distillers who are setting out to
Age is just a number? Until consumers get used to the idea of World Whiskies not having an age statement, some distillers believe that this could be a barrier to entry, especially for those who are new to the whisky category altogether. Harrison reflects, “The Scottish have done a lot recently (in the past eight years or so) to try and talk more about flavor than age; however age is always a decent indicator, albeit not the only one, of flavor. English producers seem to be using good quality first-fill oak and therefore age is less of a focus.” Cotswolds Distillery, which receives about 30,000 visitors a year, released its first whisky in late 2017—Cotswolds Single Malt Whisky. Founder Daniel Szor says that visitors often remark, “‘I can’t believe how good it is for a young whisky.’ I don’t know how to react to that. On the one hand I feel proud because they are trying to pay me a compliment, but they are using Scottish marketing lingo to do that.” The distillers argue that the flavor is found in the craft—sourcing the finest ingredients, the best wood and applying authentic methods. No cutting corners at any cost to yield the best results. “Our main focus is on flavor,” says Chris Jaume, co-founder of Cooper King Distillery (North Yorkshire). “We are not concerned about mass producing whisky and getting it into the big supermarkets; we are purely focused on flavor.” Nigel Mills CBE, co-founder and CEO of The Lakes Distillery, echoes that saying, “We don’t believe in taking the easy option. If there is another way to make our whisky the best, even if it costs more, then we will do it.” The best is yet to come What makes this new segment of the category exciting is the freedom distillers have to innovate and truly make a whisky for everyone. With the only requirement being that the liquid must be aged for a minimum of three years, the options are limitless. Szor describes Cotswolds Single Malt
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Whisky as a “non-whisky drinker’s whisky.” “We wanted it to be this mellow spirit that would attract even borderline whisky drinkers,” he says. “Most of our spirit is unpeated, very sweet, very smooth. We wanted it to evoke the landscape of the Cotswolds, which is a gentle landscape.” The Cotswolds Whisky (92 proof) is made with local barley, with the variety and farm from which it came included on each label. The distillery is one of the few using 100% floor-malted barley from Britain’s oldest working maltings in nearby Warminster. (Bimber Distillery and Cooper King Distillery are also using Warminster Maltings.) Another highlight from the production process is four-day fermentation, which generates fruity flavor compounds alongside the alcohol produced. In the spirit run, the heart cut is taken unusually early in the distillation. This is to avoid the heavier, rougher elements that appear at the end of the run. The spirit is aged for just over three years in very active casks—“the best wood money can buy,” says Szor. The distillery uses premium first-fill Kentucky ex-bourbon 200-liter barrels and reconditioned American oak 225-liter red wine casks that have been shaved, toasted and recharred. Looking ahead, the distillery plans to have a core range of five whiskies, including the flagship brand. A second was recently released, a cask strength 100% red wine cask, which won World’s Best English Single Malt at the World Whiskies Awards and Double Gold at the San Francisco World Spirits Competition. In October, a peated cask will be released (it’s the unpeated spirit aged in Laphroaig quarter-casks) followed by a sherry cask whisky slated for release in April 2020 and a bourbon cask whisky in the fall of that year. In addition, The Cotswolds Distillery plans to offer small batch whiskies every six months (about 2,000 bottles). Aber Falls, one of four distilleries in Wales, has taken a similar approach with its inaugural whisky and rye whisky, set for release in 2020 or 2021, as its crafted to appeal to a younger consumer. “The reason I’m doing an un-aged release and a rye is to bring a younger consumer into the brand, which gives them more diversification on how they use the product, in a cocktail for example,” says James Wright, managing director of Aber Falls. “You want to bring those consumers into the brand so as they get older and their palate changes, they can move on to the complex brands.” Wright explains that Aber Falls has plans to release age statement whiskies—an eight- or
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10-year-old and a 12-year-old due for release between 2025 and 2028. He adds it’s important to have, “a diverse portfolio that not only works operationally, but engages with different consumers at different levels.” Using specialty casks and copper and steel condensing gives Aber Falls the flexibility to make different spirits. When the time comes to blend the whisky, the distillery will have a greater variety to work with, making the final product a more complex spirit, explains Wright.
“OUR MAIN FOCUS IS ON FLAVOR. WE ARE NOT CONCERNED ABOUT MASS PRODUCING WHISKY AND GETTING IT INTO THE BIG SUPERMARKETS; WE ARE PURELY FOCUSED ON FLAVOR.” — CHRIS JAUME, CO-FOUNDER OF COOPER KING DISTILLERY
Aber Falls prides itself on being 100% Welsh (even its employees) and is run sustainably. The ‘Field to Field’ approach includes utilizing waterpower from Aber Falls, using locally grown Welsh barley, recycling spent grain for cattle feed and giving waste pot ale to farms for fertilizer. “Our values are about authenticity,” says Wright. “It’s about community. It’s about consistent quality of our product and it’s about bringing something to a region of the country that hasn’t got a whisky distillery already. We have full traceability of what we are doing.” Cooper King Distillery also parades the open and honest approach, running on 100% green energy among other sustainable initiatives. Jaume, with his fiancé Abbie Neilson, co-founded the distillery after being inspired by a trip to Tasmania, Australia. Upon their return, the pair set out to build their own
distillery and make English whisky. Their inspiration led them to purchase a custom-made 900-liter copper pot still made in Tasmania that was shipped to the U.K. It’s the only still of its kind outside of Australia and New Zealand, notes Jaume. “Straight away the character of our spirit coming off that still is going to be very different to anyone else in the U.K.,” he says. The distillery is using Maris Otter barley from Yorkshire, traditionally malted at Warminster Maltings, and working with the county’s only independent master cooper, Alastair Simms. New-make spirit will be matured in small oak casks to produce a rich and fruity malt spirit. “We are going to have long ferments, five to seven days (distilleries in Scotland ferment for about two days) and that is going to give us a much richer spirit,” says Jaume. “What we are aiming for is a rich, robust character, full spirit.” Cooper King Distillery plans to release its first whisky in 2023 with an annual output of about 4,000 liters. At Bimber Distillery, it’s all about tradition. “We try and do things the old way,” says director Farid Shawish. “It’s really the craft story … small quantities and attention to detail.” Bimber London Single Malt will be available this year after aging in four different cask types, ex-Bourbon, ex- Port, ex-Pedro Ximenez sherry and virgin American oak. “We are trying to create a whisky, and a brand, for whisky lovers,” says Shawish. “Our releases will be a little bit different. They will be higher strength (127 proof) and small batch. We are not going to create some big supermarket blend. It’s not what we are about.” The Lakes Distillery takes a holistic approach to whisky making and whiskymaker Dhavall Gandhi is involved at every stage. “Our approach to blending has been inspired by perfumers who make new scents by first creating a pyramid of aromas with base, middle and top notes,” explains Mills. “That’s what lies behind the use of different yeasts. At the start of the week one type of yeast is used to give top notes in the new make and a different yeast is used at the end of the week to give the base. Then the two new makes are blended. No other whiskymaker does this.” Lakes has a variety of whiskies: The Lakes Single Malt Quaterfoil Whisky Collection (a limited edition collection of the distilleries sherry-led maturation style), Steel Bonnets (English and Scotch blended malt whisky), The One Blended Whisky (blended malt and grain whisky) and The One Sherry Expression (a limited edition finish of the classic blended whisky).
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“Already, we have blended a wide range of global award-winning whiskies and released The Lakes Single Malt in very limited bottling, but in September, we are excited to release The Lakes Single Malt Whiskymaker’s Reserve,” says Mills. “This marks a key moment in our journey to make one of the leading malt spirits in the world and a whisky, which expresses The Lakes through flavor.” East London Liquor Co., which considers itself an urban distillery, sold out of its London Rye Whisky in days last year (it had less than 300 bottles available). Bottled at 93.6 proof, it had a mash bill of 42% rye and 58% extra pale malt. It was aged in new French oak and ex-Bourbon casks and finished in an ex-Pedro Ximenez cask. Wolpert says there, no doubt, will be more to come, including more London rye, single malt whisky, a winter whisky and collaborations in the pipeline, one with Sonoma Distilling Co. (the company imports its brands to the U.K.). At the launch of the London Rye Whisky, Wolpert recounts: “Rather beautifully and rather quite accurately, one of the bartenders who came to the event said, ‘This is a beautiful whisky, but this is the worst whisky you’ve ever made,’” recalls Wolpert. “I said, ‘Well, yeah. You’re right. It’s just going to get better.’” Brexit and the unknown Brexit is a buzzword with which the world is very familiar. The recent extension to Oct. 31 for the U.K.’s exit from the European Union (EU) just adds more time to the unknown, leaving businesses (and everyone else) unsure about what the future holds. For the East London Liquor Co. it is “business as usual,” says Wolpert. “Let’s not get distracted by something we don’t know anything about until it happens.” He does however see Brexit having an impact on trade, consumer spending and the population’s ability to think “big picture,” and the same holds true for the distillery. “From our point of view, we operate in a space which is cautious and lacks the bullish, forward-thinking that we had a few years ago,” Wolpert says. According to Her Majesty’s Revenue and Customs as of January, there were 361 distilleries in the U.K., 166 of those in England and 160 in Scotland. This marks the first time since records began that the number of distilleries in England has exceeded Scotland. While the data doesn’t breakdown which spirits are being produced, the numbers suggest great potential for whisky and an uptick in new businesses. Miles Beale, chief executive of the Wine and
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East London Liquor Co.’s distillery team
Spirit Trade Association says in a statement: “It lifts the spirit to hear that distillery numbers continue to grow in the U.K. It’s not just our gins picking up awards, but we have also seen a growing number of excellent quality English and Welsh whiskies too. With all the uncertainty surrounding Brexit, it is extremely reassuring that our talented spirit makers are continuing to innovate, invest and grow.” Among the distilleries, there is a mixed bag of emotion, much like how people in the U.K. are feeling. Bimber’s Shawish says, “Brexit could affect tax, but it’s such a money winner for the government. I don’t think it’s going to be too much of an issue.” WSTA reports that since 2008, spirits taxation has increased by 41% and wine and spirits generated £17.7 billion in taxes. “For a genuinely global industry like wine and spirits, Brexit will bring both challenges and opportunities,” Beale says. “A lot of work is going on behind the scenes to ensure that the industry is on the front foot to help government to prepare the best possible case for uninterrupted trade with the EU and the best possible platform for bilateral trade deals with priority countries. “The size and the contribution made by the wine and spirit industry to the U.K. economy should not be ignored; and its influence with key trading partners should not be underestimated.” For now, it’s wait and wonder. ■
CHAMPIONING GOOD QUALITY SPIRITS East London Liquor Co. is also an importer. Among its portfolio are offerings from Sonoma Distilling Co. in California. The company is importing four expressions: Sonoma Rye Whiskey, Sonoma Cherrywood Rye Whiskey, Sonoma Bourbon and Sonoma Cherrywood Bourbon. “This was an organic process of us wanting to champion good booze and realizing there were some brands making some rather lovely liquid outside of the U.K.,” says founder Alex Wolpert. As Sonoma Distilling Co. also makes a rye, the partnership seemed natural to Wolpert and gave his sales team another element to talk about, particularly in the on-premise where there is an affinity for rye. While it makes up a very small part of the business, Wolpert sees it as an opportunity. “In the U.K. there certainly is a huge appetite [for American brands], particularly for the non-contract distilled liquid where there is real provenance,” he says. “It’s important for us to champion like-minded brands and be transparent about where the liquid is made.”
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ACSA Member Spotlight
Driven to Innovate St. George Spirits, the nation’s oldest craft distillery, continues to push boundaries BY JON PAGE
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wo decades into his career, Lance Winters is getting back to his roots. In the mid-1990s, Winters presented a bottle of homemade whiskey as his résumé to Jörg Rupf, the founder of St. George Spirits in Alameda, California. That bottle helped earn Winters his first distilling job, but in the following years many people would associate St. George with bottles of its flagship eau de vie, Hangar One series of vodka and the nation’s first legal absinthe in nearly a century. Now, as the master distiller and president of the nation’s oldest craft distillery, Winters hesitates to call that wandering a distraction from whiskey. “It was falling in love with all things distilled,” Winters says. “You go into something with this idea that you’re hellbent on, and then you start discovering all these other amazing things. I’ve really enjoyed all that, but right now getting back to whiskey ... is something that I’m really excited about here.” The fact that the 37-year-old distillery produces several acclaimed whiskey offerings is a testament to St. George’s drive to never stop innovating and experimenting. Its latest
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chapter started with the 2010 sale of Hangar One to Proximo Spirits, which allowed Rupf to retire and Winters to assume majority ownership of St. George. It was a pivotal point for the distillery, which Rupf—a father figure to Winters—started in 1982. Prior to the sale, Hangar One comprised 95 percent of St. George’s revenue, and Winters recalls an initial sense of excitement followed by anxiety. He took over the lease on an expansive piece of property in a place not known for affordable real estate, and he had 20 employees and no cash cow brand. “I got the keys to the kingdom, but once you have them you realize what an awesome responsibility you have,” Winters says. Head distiller Dave Smith gives credit to Winters for reinventing St. George in the ensuing years. “Lance and his wife, Ellie, made a decision that they wanted to carry St. George forward, and they wanted to redevelop this and frankly they didn’t want to break up the family,” says Smith. “They basically chose to hold the business and put it on their back and took risks to do that.” In this new era, the distillery’s first major success wasn’t a whiskey, vodka, or brandy—it
was an aromatic gin. First released in 2011 along with Botanivore and Dry Rye Gin, Terroir Gin was crafted to evoke a sense of California. Before the release, Smith recalls doubt from early tasters, who warned that the gin smelled and tasted like trees. “That’s what people don’t like in their gin,” Smith remembers hearing. “That’s sort of a gleeful place for Lance to start out with something. If he gets feedback [saying] that’s what people don’t want, and he feels like it’s what he wants in it, he’ll happily go show you what you might really enjoy or want.” Winters compares making Terroir to creating representational art. By setting out to craft a spirit that smelled like the parks and open spaces in the San Francisco Bay Area, he knew the brush strokes would require perfection. That’s why every batch of Terroir is made with locally harvested Douglas fir, coastal sage and California bay laurel. “There are plenty of people that even if they’re not familiar with those specific parks, they’ve had enough outdoor experiences going out into the woods that if [Terroir] missed the mark then it’s a failure,” Winters says. “So that
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PHOTOGRAPHS: BEN KRANTZ (OPPOSITE PAGE AND TOP) AND JON SANTER (BOTTOM)
was a really important thing to nail. From the perspective of pride in pure construction, that’s certainly the thing that I’m most proud of.” St. George’s whiskey program is more of an abstract art. There are three regular offerings, starting with Single Malt Whiskey, the first lot of which was released in 2000. Winters says the mission was “to create a whiskey that before it even hit the barrel had layers of flavor and complexity.” St. George used various levels of roasted barley to achieve that goal, and a variety of cooperage types contribute more depth to the whiskey. Baller Single Malt Whiskey was created as an ode to Japanese-style whiskey highballs. After distillation in eau de vie pot stills, the whiskey is aged in bourbon and French oak wine casks, and filtered through maple charcoal. It is finished in casks that previously held a Japanese-style plum liqueur. In 2011, St. George started a Breaking & Entering label, so named because it is a blend of whiskey from other distilleries. For the latest iteration, Smith combined bourbon, rye, and some of St. George’s own whiskey to create an elegant blend that justifies thievery. Winters credits Smith, who joined St. George in 2005 and now oversees the whiskey program, for blending the whiskey he is most proud of—St. George’s 35th Anniversary Single Malt Whiskey. Only 771 bottles were released of the whiskey that comprised eight of the distillery’s favorite barrels, ranging from 6-18 years old. Six Sauternes-style wine barrels were also used in the process. “There’s a part of my influence that I can taste in there from some of the early whiskies as well as my desire to utilize those [Sauternes-style barrels], but the construction on it is every bit Dave,” Winters says. “I told him when I tasted [it] the first time, ‘This is the best work that you’ve ever done.’ It’s really spectacular.” For his part, Smith feels like a sous chef working in a master chef’s kitchen. “I learned it all from Lance and Jörg,” Smith says. “Anything that comes out of the shop is our shared effort.” The creativity and innovation behind all of St. George’s products seem to be expected of America’s original craft distillery. Winters thrives under that pressure. “I think it keeps us true to our core philosophy,” he says. “I would hope that we’d remain that way regardless, but when people are watching you and you know that there are some of them who are waiting for you to screw up, it makes you work harder ... it makes us better.” ■
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“When people are watching you and you know that there are some of them who are waiting for you to screw up, it makes you work harder.” - Lance Winters
Master distiller and president Lance Winters and head distiller Dave Smith
An Old Fashioned crafted with St. George’s B&E American Whiskey
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Craft Crossovers Want to see the latest craft spirits startups? Look no further than your local brewery. BY JEFF CIOLETTI
Maui Brewing Co.’s Kupu Spirits
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A
brewery-centric trade event wouldn’t be the first place you’d think to gather intel on a key trend in craft spirits producing, but the most recent edition of the Brewers Association’s Craft Brewers Conference/BrewExpo America this past spring presented a detailed picture of just how much crossover appeal exists between the two craft beverage sectors. Not only did the education program feature a panel titled “Diversify Your Business Through Distillation,” but an attendee couldn’t walk down a single aisle of the trade show without nearly tripping over a still or two. It makes sense, given the fact that craft beer growth isn’t what it once was—the Brewers Association reported growth in the low single digits last year—while craft spirits volume grew nearly 24 percent during the same time period, according to the Craft Spirits Data Project (the craft spirits market remains significantly smaller, however, with craft spirits representing just over 3 percent of overall spirits market share and craft beer accounting for nearly 13 percent of brewers’ market share. There are currently more than 7,000 craft breweries in the U.S., versus about 2,100 craft distilleries). Oregon’s Rogue and Delaware’s Dogfish Head were among early members of the brewing/distilling double-threat club, having commenced their respective distilling operations in the early aughts. The movement has accelerated over the past few years with more breweries joining the ranks, including Sun King Brewing, 3 Floyds Brewing Co., New Glarus Brewing Co. and Maui Brewing Co. “For us it was just an extension of what we were already doing,” notes Garrett Marrero, co-founder of Hawaii’s Maui Brewing, which recently launched a line of canned cocktails through its new Kupu Spirits venture. “If you look at markets today and what drinkers are reaching for and you’re not evolving or servicing the needs of that market, you’re kind of standing still and getting passed by. Beer will always be our core but we always need to look
at opportunities beyond beer.” The ability to expand one’s product portfolio is, perhaps, the biggest driver for craft breweries wanting to dip their toe in distilling, says Colin Blake, director of spirits education at Moonshine University. And, if the brewery is set up for visitors, adding spirits to the mix gives consumers a new incentive to keep returning to the tasting room. “One thing I’ve also heard is that [distilling] gives [the brewers] something to do with their off-spec beer, allowing them to reduce that waste,” Blake reveals. “It could be [a batch] that doesn’t quite hit the standard, high diacetyl or whatever. They can turn it into a spirit and make it a great product.” Blake started seeing a marked increase in the number of brewers interested in distilling two to three years ago. “We’d been seeing more and more existing brewers coming through our big class, the six-day distiller class,” he recalls. “We noticed pretty much right away that they were at a different level and skillset than others in the class.” Those working in the brewing industry already have a detailed understanding of fermentation science, as well as the intricacies of working with the Alcohol and Tobacco Tax and Trade Bureau (TTB) and state compliance agencies—something that will serve them well once they make the leap into distilling. “What they were really coming to class for was to fill in the gap they had [in their education],” Blake notes. However, some brewers entered the class thinking that initiating a distilling operation was as simple as adding a still to their existing facility. “They started to realize over the course of the week that the fermentation vessels were going to be different, for instance,” Blake explains. That prompted Moonshine University to customize a course for those, like brewers, who come into the introductory curriculum with a higher knowledge level. The class takes three, rather than six days to complete
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“New distillers means more opportunities for consumers to be introduced to small-batch, better-quality spirits every day.”
—James Montero of Dogfish Head Distilling Co.
The core Dogfish Head Distilling Co. lineup
and addresses issues very specific to these participants’ needs. Blake notes that it’s a “deeper dive” into distilling operations, offering insight on, for instance, TTB relations as a distiller versus a brewer, as well as how adding a still will impact their existing facility in ways brewers hadn’t considered previously. “Is their existing boiler enough for the added demand, for example, as well as ‘are they sprinkled?’ and other safety concerns. Once they get into spirits, it’s a much more regulated space and they have way more safety concerns.” In fact, as any experienced distillery-withina-brewery can attest, there’s way more of just about everything. “Everything outside of fermentation is different: safety, quality, the P&L, the selling process, selling tools, price points, consumption occasions to name just a few,” says James Montero, general manager of Dogfish Head Distilling Co. and ACSA Board of Directors member. “Be ready to invest as much as your
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brewery, if not more.” Few have had the front-row seat that equipment manufacturers have had to witness the evolution of many craft brewers into brewery-distillery combos. Many watched it play out, year-after-year, on the trade show floor of BrewExpo America. “I remember when we were one of the first ones to have some kind of distilling equipment in our booth, and that was several years ago,” notes Dan Kahn of Minnetonka Brewing and Equipment Co., who exhibited at the brewers’ trade show. “People [at the time] asked, ‘Why do you have this here?’ but it’s clearly taken off since then. For us, it’s a natural combination because we deal with both the brewing equipment and the distilling equipment and we have a barrel-aging system that just makes it very, very easy to combine the two.” Loren Neufeld of Bridgetown Brew Systems reveals that he’d fielded as many questions about distilling equipment as he had about brewhouses during the brewers’ trade show.
Being that sort of double threat in equipment manufacturing has been advantageous for a company like Bridgetown. “When [brewers] decide to go in that kind of [distilling] direction, we generally end up being the first call,” Neufeld explains. Surging equipment sales is good news for the customers those manufacturers serve, as it’s a prime indicator of the long-term viability of the craft spirits sector, which, as Dogfish Head’s Montero points out, has a lot of room to grow its modest market share. “Craft spirits are still only a modest [less than] 4% of the total spirits pie, so I am excited to hear of any new entrants, whether tied to a brewery or not,” Montero says. “New distillers means more opportunities for consumers to be introduced to small-batch, better-quality spirits every day and, as they say, a rising tide lifts all boats. I am not surprised that more breweries are looking at this space, as it’s no secret craft beer trends are softening, so craft breweries are, no doubt, considering adjacent categories to grow their brands.” ■
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Marlene Steiner of Virginia Distillery Co.
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A Def ining Moment for American Single Malt Whiskey Despite a spirited movement, American single malt whiskey lacks a legal definition BY JASON HORN
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here are more than 100 distilleries in the United States currently making single malt whiskey, but according to U.S. law, there’s no such thing as American single malt whiskey. And it’s unclear whether that will change anytime soon. “We weren’t the first American distillery making single malt, but we were the first to really make single malt our ‘thing,’” says Steve Hawley, director of marketing for Seattle’s Westland Distillery, which has been distilling and selling only 100% malt whiskies since 2013 (and is now part of the Remy Cointreau portfolio). “And then we were faced with the stark reality that this category doesn’t exist.” So Hawley decided to start the American Single Malt Whiskey Commission (ASMWC) to change that. In 2016, a small group of American distilleries making malt whiskey met in Chicago to come up with a proposed definition and rules. “We booked the room for four hours thinking it would be a knock-down, drag-out fight over the definition. It took about 20 minutes,” Hawley says. Modeled mostly on the standards for Scotch, the definition calls for whiskey made from 100% malted barley, entirely at one distillery, entirely in the U.S. and aged in oak casks. Today, the commission has 128 member distilleries, all of which make at least some amount of whiskey fitting that definition. Last year, the ASMWC met with the Alcohol and Tobacco Tax & Trade Bureau (TTB) and submitted a formal petition—along with each of its members and several trade bod-
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ies—to add American single malt to the Beverage Alcohol Manual (BAM), TTB’s document explaining its regulations about everything from bottle shapes and sizes to what makes a whiskey a whiskey and a rum a rum. “We had talked to the guy who was tasked with rewriting [the liquor regulations], and he was like, ‘Great! That’s what our mandate is, which is to make labeling clear and transparent and informative. I’m gonna add it to the proposed changes,’” says Christian Krogstad, founder of House Spirits Distillery and its Westward Single Malt brand, and one of the founding members of the ASMWC. “We thought it was settled, and then when the changes came out, single malt wasn’t on there.” Last November, TTB published its long list of proposed changes to the Code of Federal Regulations (CFR) sections governing alcohol, and American single malt whiskey was nowhere to be found. What gives? “Something this big and comprehensive hasn’t happened before,” says TTB spokesman Tom Hogue. “This is really a very deep dive. It took a very long time. It took years and years of work to put this together. It was an attempt to address the whole playing field at the same time.” In fact, the BAM dates to 1998, and the CFR sections at issue were last amended in 2013. (That’s before the craft distillery boom really started to boom, and before mezcal was commonplace on every back bar, for example.) “It looks like the updates were written a long time ago,” Hawley says. “What was a telltale sign was one of the definitions they
included was for white whiskey, which is something that was popular a few years ago earlier on but which has kind of faded.” Krogstad is a bit more conspiracy-minded: “Somebody—whether it’s the Scots or the bourbon industry—doesn’t want a new category because it preserves their dominance,” he says. “What’s supposed to be an open and public process became a backroom power struggle and we kind of got shafted on it.” There are plenty of American single malts on shelves today (most are officially part of TTB’s generic “whiskey” category, with “American single malt” listed on a separate line on the label as the “fanciful name”). So why are producers fighting for this anyway? “A legally defined category for American single malt would assist with smaller producers being able to educate consumers on the category as a whole,” says Marlene Steiner, brand director for Virginia Distillery Co. “With more producers making American single malt, it will ensure we have the ability as an industry to educate consumers on what it is, and is not. The ability to start this conversation will be hugely advantageous to all producers, but particularly to smaller brands who may not have the marketing budgets of larger brands.” Virginia Distillery Co.’s Virginia-Highland Whiskey, a combination of spirits distilled in Scotland and the U.S., would not fit ASMWC’s proposed definition, and the Scotch Whisky Association recently filed a lawsuit against the distillery for using the term Highland. The brand, however, will be releasing a wholly
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Steve Hawley of Westland Distillery
American-made single malt next year, called Courage & Conviction, that does align with the definition. “A great opportunity, and one that is critical for smaller brands, is at the retailer level,” Steiner says. “For shelf placements, our products generally get grouped into a generic ‘other’ section or a category like bourbon. A designation for American single malt will legitimize the category by creating standards and communication pieces on the label. In
turn this will assist trade and encourage the creation of a dedicated shelf category in retail.” In essence, a rising tide raises all boats. Hawley puts things in more blunt terms: “When we first came on the market, it became apparent that where we really wanted to be was, frankly, in between Japanese whisky and Scotch whisky. Our raw materials are more expensive, and our price reflects that. We can’t have a $70 bottle of American malt whiskey next to a $40 bottle
of bourbon on the shelf.” He’s confident that American single malt will make it into the law books, and soon. “We’ve never once in the three years that we’ve been doing this had anybody challenge us. They’re looking for two things: industry consensus, which we have in spades, and consumer benefit and education.” In the meantime, those in the know can keep seeking out the fast-growing category of American single malt whiskey. ■
Christian Krogstad of House Spirits Distillery
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YOUR SHOT AT GLORY, GLAMOUR AND GOLD
2019 Judging of Craft Spirits Register for ACSA’s 7th Annual Judging of Craft Spirits competition October, 29-30, 2019, at Cardinal Spirits in Bloomington, Indiana. ACSA takes great pride in conducting a rigorously professional judging program that recognizes the best craft spirits in the categories of Vodka/Grain, Gin, Brandy, Rum, Whiskey, and Specialty Spirits. Now accepting international spirits. (502) 807-4249 judging@americancraftspirits.org SPONSORED BY
TM
ENTRY FEES
ACSA Members:
Non-Members:
Early Bird (now until 9/2/19):
$200 per spirit
$300 per spirit
Regular (9/3/19 to 10/4/19):
$250 per spirit
$350 per spirit
Late Riser (10/5/19 to 10/18/19):
$275 per spirit
$375 per spirit
Registration Deadline: Oct. 18, 2019 Receiving Deadline: Oct. 23, 2019
For more information on how to enter, visit americancraftspirits.org/programs/judging/.
distilling destinations
THE GREAT PDXPERIMENT As ACSA prepares for the 2020 Convention in Portland, we take a closer look at the complicated craft beverage cradle that is the Rose City.
On the craft beverage front, Portland’s claim to fame was as the pre-eminent beer city in the U.S.—many might even say the world. And that helped set the stage for craft spirits producers within the Rose City limits, now numbering in the double-digits. “I think it’s a natural progression,” observes ACSA Board member Molly Troupe, partner and master distiller at Freeland Spirits, which launched its namesake gin in late 2017 and opened its distillery and tasting room in northwest Portland about a year ago. “When you’ve seen the craft beer movement, people have really responded not just to the fact that they were making good beer, but that they had something to say. And I think that’s where a lot of craft spirits have gone as well.” Given the city’s pioneering pedigree, one might (naively) assume that launching a distillery and developing a full-fledged craft spirits scene is a walk in the park. But Portland is a far more complicated environment than the average “Portlandia” viewer might think—especially a decade after the heyday of its Distillery Row. “Portland’s been an interesting place,” says Christian Krogstad, co-founder of House Spirits Distillery, which opened there 15 years ago. “I think it is a good bellwether for the national distilling scene just as it was for the national brewing scene.” Krogstad moved to Oregon’s largest city nearly three decades ago to work in the thenburgeoning brewing scene. “When I moved to Portland in ’91 there were
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like 14 breweries—there were more breweries there than anywhere else in the country,” he recalls. “That’s why I moved there. Now there are 90 breweries.” When House opened 13 years later, there were only about 35 distilleries in the entire country. “Seven or eight of them were in Oregon,” he remembers. “Now we have 15 or so in Portland.” House Spirits had the advantage of being one of the early movers in the city. For the most part, the local government’s only frame of reference was the craft beer movement, of which Portland was the undisputed epicenter. “In the early days in Portland, we were treated very much like a brewery,” Krogstad explains. “Starting a distillery in Portland at first was probably easier than it should have been and probably had less regulatory oversight than it should have. Fast-forward 15 years and it has more regulatory oversight than it should and the city is more cautious than any other city that I have experienced.” Those distilleries that have survived the often-protracted permitting process can’t just offer the same spirits and experiences that their local peers provide—especially when Portland consumers are notorious for their “been there, done that” attitude. Of all of the producers currently operating in the city, no two are alike. And while being the “local” distillery may have cachet in other markets, Portlanders mostly greet that notion with a yawn. “People probably aren’t as drawn to
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PHOTOGRAPHS: JEFF CIOLETTI
BY JEFF CIOLETTI
Andy Garrison of Stone Barn Brandyworks
‘local’—they’re more drawn to quality or novelty,” says Andy Garrison, head distiller at Stone Barn Brandyworks. The hometown angle likely was more appealing back when Clear Creek Distilling— now owned by Hood River Distillers—set up shop in 1985, but has since worn off. “Portland has had a craft distillery for 35 years in Clear Creek, so they’re not interested in local for spirits, they’re interested in something that’s good,” says Garrison. “So [distillers] have got to take it to the next step.” That “next step” involves establishing a persona—a brand, if you will—that none of your neighbors can claim. “It kind of pressures people to find their own identity in what they want to make,” Garrison explains. “How many local well vodkas can the city support? Probably not that many.” It’s hard to argue, though, that the traditional Scandinavian spirit, aquavit, has reached market saturation and there are two distilleries—House and Rolling River Spirits— that offer their own distinct riffs on the Nordic classic. Rolling River’s portfolio includes an entire line of aquavits that demonstrate the breadth of flavor profiles within the category. While whiskey is among the most pervasive spirits categories among craft producers, Portland distillers know that they have to distinguish themselves within grain-based brown spirits to keep the market interested. House is among a small group of distillers leading the effort to establish a definition for American single malts. House’s Westward
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American Single Malt Whiskey attracted the attention of Diageo’s Distill Ventures, which acquired a stake in the brand last fall. Before that, House helped reinvigorate the American gin category when it launched Aviation, which it has since sold (but still produces). Davos Brands acquired Aviation in 2016, about two years before “Deadpool” star Ryan Reynolds bought a significant stake in the brand. Freeland’s flagship gin has quickly gained national attention, thanks to the inclusion of many fresh Pacific Northwest ingredients, which give it bright, herb garden and citrus notes. And even though it’s getting more and more difficult for a distillery to release a distinctive bourbon in such a cluttered marketplace, Freeland has done just that, particularly by finishing them in Oregon pinot noir barrels. The distillery also recently unveiled Geneva, its interpretation of a Dutch-style genever. The spirit combines a base of Oregon-grown rye with seven botanicals, including locally sourced Willamette Valley hazelnuts. The distillery itself stands out among its peers, as its tasting room—bathed in natural light during the daytime hours—marries a craft cocktail bar with a sort of brewpub concept, serving a variety of snacks, salads and sandwiches. “A lot of places you go today are just kind of shrouded in darkness,” Troupe says. “[Ours] has a very different feeling with lots of light. When this space was finished, we all sat around here and did our work. We felt at home and at peace and people really do
respond to that. It’s one of those places where people really like to hang out.” And then there’s the Freeland bottle, which blurs the lines between packaging and modern art. If you happen to encounter the tinted, 750-mL raindrop-shaped glass container on retail shelves or behind the bar, you’re not likely to confuse it with another distillery’s package. The bottle, says Freeland sales director Jesse Brantley, offers a subtle sense of place. “Of course it rains a lot here in the Pacific Northwest and that, to me, means fertility,” Brantley says. “We have this amazing valley where we have enough rain and protection from the coastal winds where we can grow all of these beautiful products. I think the bottle encompasses a lot.” Stone Barn Brandyworks takes nature’s bounty in a different direction, experimenting with fruits both familiar and further afield. Co-founder Sebastian Degens—who launched the distillery with his wife, Erika—spent much of his youth in Germany, whose schnaps tradition greatly influenced his own work. Oregon and Pacific Northwest-grown Bartlett pears, apples, cherries, plums and grapes are some of the bases for Stone Barn’s eaux de vie, while quince, prunes, cranberries, apricots and rhubarb are some of the fruits that flavor its line of liqueurs. Stone Barn also produces a Nocino from unripe walnuts and a rye whiskey base. Despite the distillery’s name, it does have a robust grain-based program, which includes, at different times, releases such as Dark Roast Straight Rye Whiskey and Straight
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Wheat Whiskey. The producer also has done quite a bit of barrel experimentation, aging ryes in everything from Limousin oak to cooperage that previously contained maple-syrup aged apple brandy. American-made brandy may still be a relatively small, niche category, the same really can’t be said for U.S.-produced baijiu— it’s nearly non-existent. And the credit for that being “nearly” and not “totally” goes to Vinn Distillery, the 10-year-old family-owned producer that crafts a rice-based, Stateside interpretation of the Chinese spirit. The first time that many Oregonian consumers ever had the chance to try baijiu was at Vinn’s tasting room, part of southeast Portland’s
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Experience PDX’s distilling scene before you reach baggage claim at House Spirits’s airport tasting room. Then check out where the spirits are made at its S.E. Portland distillery (above).
Distillery Row (Vinn’s main production facility is in Wilsonville, just south of the city). “Ten years ago, no one knew what [baijiu] was,” says Vinn president Michelle Ly, who runs the distillery with her four siblings. “One out of hundreds of people would even be familiar with the word and even fewer had tried it.” That’s changed, thanks to the growth of craft spirits, as well as the craft cocktail industry—in which Portland bartenders continue to be trendsetters. “The landscape has changed,” Ly says. “With the craft spirits movement, I feel that consumers have become a lot more sophisticated and educated and more willing to try
something new.” The distillery’s fruit liqueurs and ricebased vodka and whiskey help pay the bills, but increasing consumer savvy has enabled Vinn to expand its baijiu line to include some flavored versions (honey and mocha), as well as a 106-proof Family Reserve, whose strength is much closer to that of its Chinese counterparts (Vinn’s flagship baijiu is 80 proof). “The scene in Portland and [throughout] Oregon has developed a great deal in the past few years,” Ly observes. “There are so many more distilleries here than when we got started and they’re all making so many different kinds of spirits. We’re just so excited to be a part of that.” ■
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PHOTOGRAPHS: JEFF CIOLETTI
Discover the excitement of Portland’s craft distilling scene at ACSA’s 7th Annual Distillers’ Convention and Vendor Trade Show, March 29-31, 2020.
Freeland Spirits opened its doors last year.
Freeland’s tasting room offers a full cocktail menu.
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raw materials
Malteurop Malting Co.: Packaging Upgrade Malteurop Malting Co. has unveiled a new packaging design. The bag will feature an EZ Open Strip for fast, convenient and clean opening, eliminating the need for box cutters or knives. The malt type labeling can be found in various areas on the bag making it clear and easy-to-read from any angle, including when stacked on a mixed pallet. Product details, including batch number and packaged date, is also highly visible on pallet stacks. The bag size will increase from 50 to 55 pounds. The new bag packaging also will continue to use the high-performing polypropylene material that is recognized for its durability in transportation and integrity to protect product quality from water and pests. The material is recyclable and does not fray or thread. All Malteurop Malting Co. malts sourced from North American barley are available in the new packaging. malteurop.com
GRAIN AND MALT BUYERS GUIDE A roundup of grain- and malt-related supplies and updates.
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Colorado Malting Co.: Single Malt Grain New this year, the Colorado Malting Co. of Alamosa, Colorado, is offering a malt specifically designed for single malt whiskey. The company says the special variety brings complex flavors and aromas, within traditional style, to finished spirits, all made possible by the company’s proprietary steeping and germination processes. The malt is now available from the Colorado facility and will soon be available through Country Malt Group. coloradomaltingcompany.com
Briess: Blonde RoastOat Malt Briess announced the launch of Blonde RoastOat Malt, malted and lightly drum roasted, providing mild sweetness, full mouthfeel and oaty flavors. The company notes that it’s best used within six months from the date of manufacture and recommends that it be stored in low-humidity, pest-free environments in temperatures below 90 F to preserve freshness. brewingwithbriess.com/distilling
Admiral Maltings: California Spirit
BSG CraftBrewing: Gambrinus Rye Malt BSG CraftBrewing says its Canadasourced Gambrinus Rye Malt supplies earthy and sweet cereal notes “with suggestions of toast and dough,” as well as an enhanced mouthfeel. The company says it’s an ideal base for vodka, gin and aquavit, as well as a wide range of whiskey styles—everything from straight rye to malt whiskeys and bourbons with generous helpings of rye in their mashbills. bsgcraftbrewing.com
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California Spirit is a new malt intended for grain whiskies from Admiral Maltings in Alameda, California. This non-glycosidic nitrile-producing distiller’s malt is high in protein, diastatic power and alpha amylase. While it is very low in color, the low kilning temperature used to preserve the high enzymatic content means that none of those dimethyl sulfide precursors have been eliminated in the kiln. It also contributes a dry grass aromatic to the grist. Admiral Maltings starts with high-protein malting-quality barley and keeps it on the floor slightly longer than its other malts to modify the barley kernel in favor of enzymes over extract. Finally, the company kilns it at low temperatures—not exceeding 145 F. While the low temperature does not promote much color or flavor, it is friendly to the enzymes. Admiral Maltings also plans to release a malted rye soon. admiralmaltings.com
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technical
A FRESH PERSPECTIVE Shelf-life stability of distilled spirits, liqueurs and cocktail mixers BY GARY SPEDDING
A resurgence of interest in cocktails and cocktail mixes is among the factors fueling the growth of the craft spirits industry. A desire to avoid artificial ingredients has led to the production of fruit- or spice-flavored cocktails and liqueurs using fresh fruit and freshly picked herbs and other spicy-flavored plants as raw ingredients. In addition, there has been an increase in the number of fruitbased brandies and fruit-infused distilled spirits being marketed today. This has led us into new territory for many distillers—the idea of preserving and lengthening the shelf-life of such beverages. When novel products are introduced to the marketplace and gain initial popularity, they are consumed quite quickly by the consumer. When the novelty wears off, those products often sit much longer on the shelf or in the liquor cabinet. It is then that unexpected problems arise such as flavor deterioration, the appearance of unsightly sediments, colloidal gels and hazes, etc. Light-induced damage to beers—the phenomenon known as sun-struck or light-struck—leads to unpleasant sulfur notes. Spirits sitting on brightly lit and warm bar shelves are also prone to heat and light-induced flavor deterioration. However, this problem has seen little in the way of published research. Delicately flavored spirits such as gins suffer oxidation starting immediately upon opening the bottle. Mixes with fruit juices quickly show a loss of that desirable crisp, fresh fruit flavor. The longer they sit in partially filled bottles the worse things can get. Honey flavored and sweetened bourbon whiskies eventually throw a haze, especially when low-fill volumes remain in the bottles. In the latter case the haze formation is, as of this writing, an unresolved problem even among the biggest producers of such beverages (though the flavor itself may not be adversely
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Delicately flavored spirits such as gins suffer oxidation starting immediately upon opening the bottle. affected). Consumers have started to store their spirits in the freezer ready to make a cool refreshing cocktail or fruit-flavored tipple over ice. This often leads to the appearance of those previously mentioned hazes and gels or unidentified floating objects, as we sometimes refer to them. Solving the problem—where to start If a spirits, liqueur or cocktail-mixer producer is formulating a product with the help of a flavor house then, as part of the service, shelflife studies may be performed as part of the package deal. For a beverage producer not using a flavor house, or if it is trying to use fresh fruit ingredients on its own recognizance—then that is when problems arise that cause panic and the need for a lab to address and cure the problem. However, these things can be tricky and expensive to solve. An understanding of the need to prepare one’s wares under food-grade clean conditions or to use preservatives may be necessary. The need to understand the quality of all raw materials and production and dilution water is also paramount to success. How to clean fruits and other vegetative matter and preserve the flavor and physical integrity of the materials used, or to understand the ingredients in flavor formulations and purees must be known—including preservatives that may already be present in such supplied flavor ingredients. A lack of understanding of experimental design and a lack of some basic physics and chemistry knowledge can lead to the incor-
rect use of preservatives and to unwanted flavor and visually unappealing issues. Forcetesting is sometimes called for and could be performed by the distiller. Storing product under warm and cold conditions for short and longer periods, followed by visual and taste examination, can give some clues to potential deterioration. It also can help establish a bestconsumed-by shelf-life statement. However, there are certain doubts within the industry as to such brute force types of stability testing (see the references). Simply picking up known food-grade preservatives and using them without understanding their physico-chemical properties can be a useless exercise. Some are only active under specific pH conditions, and because they work in non-alcoholic beverages and foods does not mean they will work effectively in alcohol beverages. And used in the wrong dosage, such agents can adversely affect flavor either immediately or later, if given time to interact with other components in the beverage. A general rule is that microbial contamination and spoilage is prevented or reduced with alcohol contents above 18-20 percent ABV. But the use of fruit syrups or other ingredients already presenting taints (odd flavor notes) from microbial spoilage can impact the flavor and quality of the beverage even before packaging. When using unusual or novel ingredients it is best to see if they are GRAS (Generally Recognized As Safe) for use in an alcohol environment. (See: Code of Federal Regulation Part 21. §172.510. Natural flavoring substances and natural substances
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used in conjunction with flavors.) For further exploration The issues presented above will hopefully give some food for thought and the following references will possibly assist in raising the reader’s knowledge base for them to better understand product stability issues leading to the prevention of product deterioration—and help the reader to best determine a reasonable time frame for the product to be out in the marketplace: “Brewing Microbiology: Managing Microbes, Ensuring Quality and Valorising Waste,” edited by Annie E. Hill; “Sensory Shelf Life Estimation of Food Products,” by Guillermo Hough; and “Food and
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Beverage Stability and Shelf Life,” edited by David Kilcast and Persis Subramaniam. Think also about how to ensure that product is not sold after the suggested bestby date. There are also some sensory firms that can conduct extensive trials—though at quite a high cost—to determine when quality changes occur, but a little education can possibly ensure greater success for the craft producer at lower cost. However, there’s one caveat: This piece is for information purposes only—as a beverage producer there are no guarantees that can be given as to product potability, stability and safety without extended testing by a third party or fully equipped in-house lab. This is why the
industry is regulated by both the Alcohol and Tobacco Tax and Trade Bureau and the Food and Drug Administration. Follow their guidance carefully. ■ Gary Spedding, Ph.D, is a biochemist, analytical chemist and sensory specialist. He is the owner of Brewing & Distilling Analytical Services (bdastesting.com).
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Business Sense
Every business owner should have a concise view of WHY they are starting a brand or building a distillery.
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YOUR VISION: EARLY STAGE DECISIONS Important aspects to consider before starting a distillery. BY DAVID LARGE
Every entrepreneur in the spirits sector knows that starting a brand is not easy. Most get an idea and begin to run with it quickly, often putting the blinders on to naysayers and challenges ahead. Speedily building a team, getting quick financing, renting a space and putting down payments on equipment is both fun and empowering. While all are necessary, every business owner should pause, take a deep breath and reflect on some critical questions that will dictate a number of decisions in the early years and set up the business for long term success. Vision, entity formation, capital source and governance, and portfolio selection are crucial to determine on day one to set the tone for the business and foundation for the future. The first and most important aspect of your business is your overall vision. Every business owner should have a concise view of WHY they are starting a brand or building a distillery. We encourage all our clients to write out a statement of purpose, defining both what the beverage brand or distillery is about and the intent of the business in the future. This is critical in both providing a framework for the operation of the company and the succession of your brands. A quick and to-the-point mission should articulate what motivates the owner(s), touch on why you wish to operate in this particular business or sector, and guide future employees, and perhaps family members, on the intent of the endeavor. Yes, it’s simple in theory, but this exercise has many ramifications to all parts of the business and often is overlooked during this ever-so-important start-up phase. While it shouldn’t be so stifling and restrictive to limit the ability to operate in the future, the mission should be based on a set of principles set as a foundation for future owners, family members and operators.
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Once you’ve articulated the mission, and you know WHY you are starting, it is essential to set up the business legally in a manner conducive to those goals. The decision-making process for your brand/distillery ownership may seem easy. LLC, C-Corp, S-Corp, right? Not so fast; that’s just the first level of setting up your business. Who owns it and why? Consulting with a legal professional is extraordinarily important at this stage. Is the brand(s) itself under the same entity as the operating business? Is your real estate siloed into a separate LLC or other entity? What are the tax ramifications now versus when you potentially exit the business? During this exercise, there are three primary goals in determining a customized structure for your business: • Tax minimization (income, estate, sales, international, business exit) • Asset protection (creditors, lawsuits, divorces) • Asset succession (buy/sell agreements for business partners; if a legacy business, getting it safely down generations) In determining the structure, you will also have to answer where you are getting the capital to start and how much capital is comfortably needed. While this is a lengthy discussion in and of itself, your initial raise is, of course, greatly determined by your portfolio (aging inventory, package, etc.); business plan; building and infrastructure plan; equipment needs; and growth strategy. Our common suggestion to start-up clients is to raise at least enough capital where you won’t need to undergo another round for at least three years. It merely takes time and a lot of effort to raise capital, and this takes your eye away from your core business and can be detrimental to your early growth. In addition, there are several considerations
to take into account when deciding how that money comes in. Are you going to go through a traditional capital raise, issue convertible notes (similar to a loan initially that is converted to equity at a later date or future capital raise) and other debt structures, or borrow money from banks or other institutions in a more traditional manner? All are important considerations as they have additional ramifications such as governance and all are directly tied into our first question centered around your high-level vision for the brand(s). Lastly, you need to consider the portfolio itself. Most distillers or entrants to this business have one idea and jump right in to pursue based upon one primary product or SKU. While this strategy is not inherently wrong in every case, we try to get new clients to think about both possibilities and risks inherent in the spirits arena. The world and spirits business is too complex and changing to build a dogmatic brand portfolio and distillery. Being flexible, dynamic and able to respond to unanticipated events and remarkable opportunities is more important than ever. Distributor alignments, new liquor laws, spirits class cycles, unforeseen market changes, scarcity of supply (barrels a few years ago), the rise of CBD and marijuana and opportunities in new packaging vehicles should all be considerations when building a portfolio. In addition, the number of SKUs and how they are positioned within the portfolio (Are you a “branded house” or a “house of brands”?) directly correlate to an exit multiple when potential acquirers come knocking. All new brand owners are eager to jump in and get moving. All want to grow, and grow fast, but with that growth will come some pain and some new considerations. By being true to one’s self about reasons to start a business and proactive about the important decisions early on in the process, a new entrepreneur can perhaps gain some insights about themselves all while planning for a successful business and mitigating some of the risks along the way. ■
David Large is the director of Thoroughbred Spirits Group. Learn more at tbspirits.com.
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packaging
Cardinal Spirits’s canned cocktail line includes Vodka Soda, Bramble Mule and Maui Mule.
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TESTING YOUR METAL Canned cocktails are all the rage, but they present production challenges for craft distillers. BY ANDREW KAPLAN
The nine-year-old organic cachaça producer Novo Fogo faced a challenge common to many craft distillers today: in an increasingly crowded space, how do you break out and find an audience for your new brand? The company thinks it found the answer by packaging its Sparkling Caipirinha in cans. “For a company like Novo Fogo, we sell a spirit, we sell cachaça, which as a category is growing a lot, but we have a long way to go in terms of becoming a normalized category,” says the Seattle-based distiller’s marketing director Luke McKinley. “I mean, quite frankly, we’re working on just basic pronunciation with a lot of folks in North America. “The canned Sparkling Caipirinha cocktails are very critical door openers for us. We want to really lower the barrier to entry and allow people to relax and enjoy these cans even though they may not have any awareness of what cachaça is. Maybe they’ve never had a caipirinha, but this is just such an easy, delightful way for them to enjoy it that the next time they go to the store, they might want to grab a bottle of our Silver Cachaça and make a fresh caipirinha at home.” However, McKinley and other craft distillers who have recently started canning, say that the process can be challenging. Distillers who go down this path may have to contend with everything from confusing government regulations to large investments in canning equipment and supplies to exhaustive searches for co-packers. And then there are a host of unique, technical challenges that come with canning a premium craft cocktail. Despite all this, the advantages to canning are so great that many are willing to devote the time, energy and money to do it. “It’s a great format,” says Adam Quirk, co-founder of Cardinal Spirits in Bloomington, Indiana. “The lower weight saves on shipping and packaging costs. Also, aluminum doesn’t let any light in that could foul the juice that we use. And it’s a good way to introduce people to craft spirits, too, because I think there’s a lot of folks who are not necessarily going to buy a bottle of craft gin, but will buy [a craft cocktail in a can] and
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become aware of the brand and then hopefully we see some kind of halo effect.” The expanding popularity of canned cocktails can be seen in the latest industry data, as they outpace the growth of the rest of the spirits industry. Between 2014 and 2018, canned cocktails by volume had a compound annual growth rate of 23%, according to market research company IRI. Regulatory hurdles Before the liquid even touches the can, however, distillers will have to get the necessary government approvals when it comes to such things as can size and labels. And, sometimes, the process can be confusing and require a lot of back and forth. For example, when Cardinal Spirits sent in its Vodka Soda for Certificate of Label Approval (COLA) to the Alcohol and Tobacco Tax and Trade Bureau (TTB), the distillery was told it had to be called “Cardinal Spirits Vodka.” “Which was confusing to me, because it’s a 5% ABV product,” Quirk says. “So, I had to write a letter of explanation so that we could call it Cardinal Spirits Vodka Soda.” Interboro Spirits and Ales of Brooklyn, New York, ran into virtually the opposite COLA approval problem when it was told its Gin & Tonic could not be labeled gin if it’s not 40%
ABV. “They made me resubmit it as a ‘recognized cocktail,’ so the actual class and type on the can is Gin and Tonic with carbonation,’” says Jesse Ferguson, founder and brewmaster. “Getting the COLA approved was very difficult. It was a lot of hurdles and phone calls with the TTB.” The size of the can also proved a hurdle for Interboro, both because of technical limitations with the canning line its mobile canner was using and also because of TTB regulations. Interboro originally wanted to use an 8-ounce can—the perfect size for the distillery’s 10% ABV Gin & Tonic—but Interboro was told it was not a legal size for spirits. Also, the canning line its mobile canner was using could not adjust the fillers to work with that can size. Interboro’s final Gin & Tonic products, in regular and Hibiscus & Lime versions, ended up being packaged in 12-ounce cans and Interboro adjusted the recipe down to a 7% ABV to maintain the same drinkability. Thomas Hogue, director, Congressional and Public Affairs for TTB, says the same process and regulations apply regardless of whether a product is canned or bottled. What matters, he explains, is whether it is properly labeled, has an approved formula (where required), and whether the container meets the standards of fill.
Interboro wanted to package its Gin & Tonics in 8-ounce cans, but legal restrictions led them to settle for 12-ounce packages.
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“The most frequent mistake we see with distilled spirit label applications involves the label having information that conflicts with the underlying formula,” Hogue says. “Not having an approved formula and having misleading information on the label are also easily avoided mistakes.” He adds that there is no fee for TTB approval and processing times should be in line with other spirits label and formula approval times, “absent the industry member failing to submit something that is approvable or responding to requested corrections in a timely manner.” Technical challenges Canning a spirit or cocktail brings with it several unique challenges. One known to many distillers is that the high acidity in some products can eat away at the structure of the can itself, such as the inner liners. But Megan Easterling, marketing manager for Ball Beverage Packaging North & Central America, one of the major cans suppliers, says Ball works with its customers to test their recipes to make sure they are compatible with cans. “We perform similar tests for all new beverages packaged in cans and are able to leverage years of experience to advise our customers on how to make their beverages best suited for cans,” she says. Quirk also says that when Cardinal initially began canning its cocktails, it encountered an issue with post-canning fermentation. This can be a challenge with craft cocktails that use sugar-heavy ingredients like real fruit juice in their recipes. The solution Cardinal turned to was tunnel pasteurization, where the cans go through a high-heat process to kill off any bacteria after the beverage has been canned. One of the drawbacks, however, is that tunnel pasteurization can be a costly process to deploy. “The big thing to worry about there is you absolutely want the finished product to be as stable as possible,” says Tyler Wille, CEO of Iron Heart Canning, a mobile canning company based in Manchester, New Hampshire. “We recommend pasteurization, or you can use things like Velcorin, which is a chemical additive, to basically stop yeast from acting.” Using very fine filtration is another common way to make sure any remaining yeast or bacteria is removed prior to canning. Another thing craft distillers should be aware of is the need to pressurize the cans properly, either with carbonation or nitrogen dosing, to maintain the integrity of the can structure. But carbonation presents its own
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The cachaça brand Novo Fogo offers RTD versions of Brazil’s national cocktail, the Caipirinha.
“Finding the right carbonation level for the can is really important when you’re creating a canned cocktail.” —Luke McKinley of Novo Fogo set of challenges as well. It’s one thing to can a still cocktail, McKinley notes, but it’s a whole other matter when you introduce the element of carbonation into a cocktail. Bartenders putting cocktails on tap and carbonating them through the draft system would know that issue all too well. Taking a margarita, for example, putting it in a keg and then adding carbonation changes the chemistry, as well as the mouth feel and the flavor of the drink. “You’re adding carbonic acid and it sort of adds a bitterness and an acidity that you don’t have in just the cocktail you drink out of the glass,” McKinley explains. “So it definitely required us and our co-packer to formulate that recipe and really refine that over time so that when you drink it straight out of a can, it’s a really nicely balanced cocktail.” Getting the liquid cold enough for proper carbonation is also important when it comes to canning. If the liquid is not cold enough, it can become foamy and hard to can. Interboro, for example, (which now cans in-house) uses the glycol system from its brewery to cool its Gin & Tonics for canning. “Finding the right carbonation level for the can is really important when you’re creating a canned cocktail,” McKinley says. “You want it to be fizzy enough and bubbly enough so that it’s got that lively character, but of course a can has constraints. You have to make sure that you really dial that into the right level so that you’re not over-carbonating and the can will burst.”
Of course, if a craft cocktail is to flourish in today’s increasingly crowded market, it has to maintain the high-quality flavor consumers expect when it comes to a craft spirit product. “The number one thing is the flavor,” McKinley says. “We want to lead with really highquality, really good flavor that highlights our product, our cachaça, so that when you drink these beverages you don’t think you’re just drinking some tropical juice. It is very clear that this is a spin on a caipirinha cocktail with organic cachaça in it.” It actually took Novo Fogo three years to develop the first canned version of its Sparkling Caipirinha, and six to nine months for its new formulations. “We’re learning, we’re getting better as we go,” McKinley says. In the meantime, companies like Iron Heart Canning can provide the help a small distiller needs to get up and running quickly through mobile canning lines that are wheeled right into the distillery. “The demand is so big right now and there’s not that many people doing it. I just see it as such a massive opportunity for the industry and for all the distilleries out there,” says Wille. “Our business certainly has a life cycle to it, where we work with customers until they grow to a size that is conducive to them to buy their own equipment in-house. We haven’t gotten to that point on the spirits side where we see the distilleries actually outgrowing us.” At the rate canning is catching on in the craft spirits industry, Wille and his team should be staying busy for quite a while. ■
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legal corner
CRACKING DOWN ACSA’s legal advisor weighs in on the latest from the TTB enforcement front. BY RYAN MALKIN AND ASHLEY HANKE
Increased enforcement activity by the Alcohol and Tobacco Tax and Trade Bureau (TTB) has made headlines since 2017, when it first received an additional $5 million in funding specifically for trade practice enforcement activities. TTB certainly put those funds to use, plus the additional $5 million it received for fiscal year 2018. Since receiving increased funding, not only did TTB conduct trade practice seminars in most major cities, but it substantially increased trade practice enforcement activities by adding staff and investigatory ability. The investigations over the past two years have resulted in, so far, 43 offers in compromise. Industry members nationwide paid record-breaking sums for alleged trade practice violations. Although TTB is receiving a few million less for trade practice enforcement for its next fiscal year, TTB will prioritize the highest-risk cases, expressing concerns over the “high incidence of unlawful activities.” Recent enforcement actions Consignment sale violations ranked high on TTB’s radar over the past year. Between December 2018 and February 2019, four California wine wholesalers and two California wineries each served one-day stipulated permit suspensions for consignment sale violations. An additional California wine wholesaler also under investigation opted to surrender its permit. These stem from a joint operation TTB conducted with the California Department of Alcoholic Beverage Control. Specifically, these industry members allegedly engaged in consignment sales of wine to buyers who were not obligated to pay for the wine until after it had been sold to retailers, giving an unfair advantage over other industry members. Meanwhile, a $350,000 offer in compromise was accepted from a wholesaler in Peoria, Illinois, for an alleged consignment sale and exclusive outlet violation. Here, the wholesaler sold beer to retailers with the right of return and entered into arrangements in a requirement that retailers buy the wholesaler’s products. The trend in outsourcing unlicensed third parties for marketing, promotional and pay-
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ment services was also reflected in TTB’s enforcement priorities when the TTB recently accepted two offers in compromise regarding the use of third parties to circumvent tiedhouse laws and indirectly engage in activities that would otherwise be considered a tiedhouse violation.
TTB will prioritize the highest risk cases, expressing concerns over the “high incidence of unlawful activities.” For instance, a $420,000 offer in compromise was accepted from a large beer importer for entering into indirect agreements or “understandings” with retailers through a supposedly independent third party. The importer paid the third party but the money ended up in the pocket of the retailer for advertising, display and distribution services related to the importer’s brands of beer. Specifically, the TTB alleged that the importer made payments, in part, to secure tap handles and that this amounted to a slotting fee. A $2.5 million offer in compromise was also accepted from a major beer importer for allegedly providing money or things of value to retailers for product placement and providing certain retailers with draft systems at no charge while reimbursing other retailers for the cost of purchasing the draft systems through credit card swipes. Other alleged violations included payments to retailers that purported to reflect permissible activities such as consumer sampling, but the payments were actually slotting fees. Additional violations TTB noted in its investigations include: · Entering into sponsorship agreements that are tied into product placement or
exclusivity arrangements. · Using third-party marketing companies to indirectly provide things of value to retailers, including to pay for entertainment. · Providing otherwise permissible promotional items but in exchange for preferential product display/menu space. · Altering invoices to conceal impermissible payments. · Paying retailers for “events” that never took place. · Engaging in consignment sales under the pretense of brokerage agreements. · Making false statements to TTB investigators during interviews, even after being provided the opportunity to amend their statements. · Illegally operating without a valid federal permit due to not timely reporting changes of ownership, management, or control over operations. What should you do if TTB shows up at your distillery? Consider a policy that all requests for information and records from regulators, like TTB, be directed to the company’s CEO or attorney. However, nothing will give you more comfort than knowing that you followed the rules. ■
Malkin Law, P.A. is a law firm serving the alcohol beverage industry. Nothing in this article is intended to be and should not be construed as specific legal advice.
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safety
A FORTIFIED FOUNDATION How distilleries can avoid common safety mistakes BY JON PAGE Gary Yurt of ISTS
In two decades as a professional safety advisor, Gary Yurt has witnessed working conditions at large companies listed on the stock market that could potentially injure or kill workers. But in his work with distilleries, he rarely sees such egregious violations. “I don’t think we’ve seen something where we would [want to] shut their door,” says Yurt, the president and founder of Kentucky-based Industrial Safety and Training Services, Inc. (ISTS). “I think today’s human being is smarter than the person 40 years ago, from a workplace safety standpoint.” However, craft distilleries are not immune to making mistakes that threaten the safety of their employees and visitors. From electri-
Caleb Kilburn of Kentucky Peerless Distilling Co.
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cal issues to general complacency regarding record keeping, confined spaces, first aid, forklifts and chemical storage, there are many best practices and habits that distilleries should master and revisit. Ideally, a distillery’s safety plan should be underway before breaking ground, but it’s often years later before some distilleries come to Yurt. “We’re going into these craft distilleries that are one or two years old and they don’t have a program, and they’re a little behind but we catch them up real quick,” he says. One of the most common mistakes is unfortunately an expensive fix for small startups, according to Colton Weinstein, the head distiller at Corsair Artisan Distillery in Nashville
and the chair of the American Craft Spirits Association (ACSA) Safety Committee. “The biggest one to me that I see pretty much everywhere is where electricity is in your facility,” Weinstein says. “What needs to be grounded, where you can run computers or lights or what type of lights you need. It’s a hard one to fix because you build out and you pay to install these breaker boxes and lighting and everything that goes along with it and then you find out afterwards it really shouldn’t be quite so close to the still.” To guard against potential electrical problems, Weinstein recommends that distillers review a presentation titled “The Electric Sombrero of Death” from Dalkita, a Coloradobased construction and architecture firm. The presentation illustrates the dangers of mixing electricity with flammable liquid and vapors. Another common mistake involves the lack of proper procedures and training required by the Occupational Safety and Health Association (OSHA). When ISTS works with new clients, Yurt says that OSHA’s list of top 10 cited standards is on his mind as he walks into a distillery. “My safety eyes begin immediately,” says Yurt. “They have vessels. They might enter a vessel space so we immediately know that they have confined space issues, meaning that if they climb in a vessel you have procedures you have to follow to make entry into those vessels.” In addition, many small distilleries often do not have procedures and training for forklifts, chemical management or lockout and tagout to control hazardous energy. ISTS helped Kentucky Peerless Distilling Co. develop a safety plan to maintain OSHA compliance, but master distiller Caleb Kilburn says that is a small portion of the value provided by Yurt’s team. “For whatever reason, people always see safety as how little can we get by with,” says Kilburn. “That is the complete wrong way of
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looking at it. When you look around at your co-workers, these are people with families. You want them to be happy and healthy at the end of every single day. I don’t care what an agency holds me to, my accountability is to them and their families.” According to Kilburn, ISTS consistently thought two steps ahead of potential emergency issues when developing safety manuals and evacuation plans; it breathed life into otherwise mundane first-aid training; and irrespective of OSHA, it suggested using cutresistant work gloves that Kilburn had never considered. One of the more eye-opening lessons for Kilburn was understanding when to do nothing in the event that a co-worker was trapped in a confined space. “You can complicate a situation well beyond reason … if you act in the wrong circumstance,” says Kilburn. “[In an emergency], I think, ‘Yeah, I’m a healthy, able-bodied guy and if there’s someone in there I need to be a hero.’ Well, I get in there and now the firefighters have to save two people. You’ve just lowered the chances of both of you getting out of there safely.” The Bardstown Bourbon Co. of Kentucky, which celebrated its 1,000th accident-free day this past May, also works with ISTS. John Hargrove, Bardstown’s VP of Manufacturing Operations, appreciates outside auditors
Bardstown Bourbon Co.
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“because we’re not going to see every thing every single day, so we need a new set of eyes,” he says. But Hargrove, who has a decade of experience in manufacturing, says that a safety program is only as strong as the company culture. Bardstown, he says, aims to drive safety from the bottom up, so that the newest worker should feel comfortable calling out an unsafe practice from longer tenured employees. “The number one recipe for success is the culture of your people,” Hargrove says. “It’s a very open environment culturally how we drive our safety success around here and how we communicate it down to everyone. Weinstein, who is creating a digital toolbox of safety resources for ACSA members, agrees that building safety into a distillery’s culture is key. At Corsair, Weinstein holds safety meetings in which he asks one or two employees to review and present OSHAcertified presentations on topics such as fire extinguishers or exit signs. He also asks the employees to add details about how the presentation specifically relates to their facility. “It really got people much more involved than me just standing up there lecturing,” Weinstein says. “When safety is on everyone’s mind it makes it a lot easier than if it’s just on one person’s mind.” ■
Colton Weinstein of Corsair Artisan Distillery
“When safety is on everyone’s mind it makes it a lot easier than if it’s just on one person’s mind.” —Colton Weinstein of Corsair Artisan Distillery
John Hargrove of Bardstown Bourbon Co.
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Retail: On-Premise
BOOM AT THE INN Growth for hotel bars outpaces other on-premise venues. BY JEFF CIOLETTI
It’s not just about the mini bar. Hotels represent an increasingly significant opportunity for spirits, with hotel drinking outlets growing at a rate that outpaces other channels. In a recent study of 5,000 hotel visitors, Nielsen CGA—a joint venture between Nielsen and CGA Strategy—found that consumers are likely to ring up higher checks at hotel bars than they are during regular drinking occasions at non-hotel drinking establishments, and not only because hotels tend to charge more for beverages. The study indicated that 31% of consumers are likely to order cocktails at a hotel bar, versus 28% in other on-premise sites. As far as specific spirits, the report tracked only vodka and whiskey consumption, but found that the same trend held true for those—28% are likely to order vodka in hotels, versus 22% in other venues and 24% are likely to drink whiskey, versus 21% in non-hotels. When it comes to happy hour, 56% of respondents reported that they partake during that post-work, pre-dinner period in hotel bars, compared with only 36% outside a hotel. “Among those who said they drank spirits in the hotel bar specifically, almost half—49%—said they choose higher quality drinks in hotel bars than normal,” notes Matt Crompton, client solutions director at Nielsen CGA. “And 58% of those who drink spirits in hotel bars—compared to 43% of average hotel visitors—spend more in hotel bars than the general on-premise environment.” Additionally, Crompton points out that the range of drinks offered at such drinking establishments is important to 3 in 5 hotel visitors. “So, to stand out, [spirits] suppliers can stress the importance of their range in satisfying hotel visitors,” he says. Naturally, large spirits producers tend to reap the benefits of this, as many hotel groups have lucrative deals with the megamarketers. But that hardly precludes craft distillers from seizing hotel-based opportunities.
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Boutique properties offer the greatest potential where craft producers are concerned. “Independent hotels are often more willing to provide guests with local flavors or more artisanal products that will make the guest experience a more memorable one,” Crompton notes. “Capitalizing on that fact while many chain hotels tend to offer similar experiences across each location, forwardlooking hotels can make guests more likely to remember their experience and return by offering a craft product.”
“Boutique properties offer the greatest potential where craft spirits producers are concerned.” The inhabitants of the Williamsburg neighborhood in Brooklyn, New York, are known for their allegiance to all things craft and local and the bars at the Wythe Hotel reflect that aesthetic. “We try to keep a fair amount of local products stocked on the back bars, while at the same time walking the balance of it still being a hotel with [guests] who want what they want,” says the Wythe’s beverage director, Jim Kearns. “[Those selections] are just as important as having those local items.” The Wythe typically carries spirits from Brooklyn favorites like Kings County Distillery, New York Distilling Co. and Greenhook Ginsmiths. Success in the channel also depends on how much the property has invested in making it a destination. And that means attracting not only guests, but folks in the community, as well as travelers staying in other hotels.
“We certainly try to appeal to the locals,” Kearns says. “No matter what or where your venue is, they are your lifeblood. Those are your people who come in on a Sunday or Monday night and keep your bar afloat on a Sunday night—and you’ve got to cultivate that.” Consumers, he notes, are drawn to dynamic programming. For instance, the Wythe has partnered with chefs at the trendy Brooklyn eatery Chez Ma Tante. The hotel also hosts a revolving roster of local DJs and live music at the rooftop bar during the summer. Kearns also keeps the cocktail program as fresh and relevant as possible. The hotel recently gave one of its spaces an Amalfi Coast-inspired aesthetic, with a focus on lowABV drinks like spritzes. “We wanted to make [the space] light, airy and colorful and give it a glow and a lighter, more energetic feel,” Kearns says. “The drinks reflect that—summery, easy-drinking and fun. We tweak things as demand dictates” Drinks are cycled in and out every few months and the menu gets a full refresh about every six months. “I believe in being seasonal without being slavish to it,” Kearns reveals. “You don’t have to be strictly dependent on seasonality of ingredients—it’s the 21st century, there’s produce available pretty much all the time, for better or worse. But I try to balance that, particularly when it’s cold outside versus warm outside. It’s a lot easier to think about drinking a peaty Scotch when it’s cold outside rather than on the rooftop in the sun.” Crompton contends that it’s particularly effective when food and beverage venues are seen as separate from the hotel itself, with their own themes, atmospheres and offerings. “Consumers who are celebrating an occasion are the most valuable to the hotel bar, drinking and spending more on average per day, compared to other visitor types,” Crompton asserts. “Food and drink visitors are the most valuable in hotel restaurants, having the highest average drink quantity with their meal.” ■
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Natural light illuminates the bar at Brooklyn’s Wythe Hotel.
“Independent hotels are often more willing to provide guests with local flavors or more artisanal products that will make the guest experience a more memorable one.” —Matt Crompton of Nielsen CGA
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retail: Off-Premise
ONLY IN L.A. Bar Keeper is the one-stop, independent shop for smallbatch spirits and all the tools for mixing and serving them. BY JEFF CIOLETTI
In its nearly decade and a half of existence, Los Angeles specialty shop Bar Keeper has become something of a farm team for new and emerging spirits. Take it from the team’s “coach,” Joe Keeper. “What we sell is mostly small-batch and unique [products]—that’s not to say they’re not available at other places, it’s curated,” says Keeper, founder of the store in the city’s hip Silver Lake neighborhood. “We launch a lot of products and once they get up on their feet and get into Gelson’s or Trader Joe’s, we’ll abandon them because there’s no reason to carry them after that.” But there’s no denying the role Bar Keeper plays in helping some local brands reach “the majors.” “A good example of that is Gray Whale Gin,” Keeper says of the Golden State Distillery spirit launched in the spring of 2018. “We were early retailers for them and now, evidently, they’re in grocery stores. I just can’t compete with the price point when someone is buying multiple pallet loads of a product.” Items currently on the shelves at Bar Keeper include the Pinhook line of ryes and bourbons and the locally popular liqueur Amaro Angeleno. Amari, in general, do quite well at the shop and its shelves are always stocked with a generous selection of fernets and their ilk (the presence of Cynar is a notable exception to the store’s “small-batch and unique” ethos). Bar Keeper also is home to a vast array of artisanal cocktail bitters. But the spirits themselves are only part of Bar Keeper’s overall inventory. The shop specializes in bar tools—Boston shakers, Hawthorne strainers and the like—and carries a sizeable range of glassware, vintage barware
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and gifts for cocktail enthusiasts. “The consumer, pro-sumer and professional are our three groups of clientele,” Keeper notes. The non-professionals who walk into the store often require some level of hand-holding and the shop’s highly trained staff are always ready to oblige with insight on how to properly handle different types of strainers and which specific applications each is suited for. They’re able to offer the same sort of expert advice during in-store tastings or when a consumer is trying to decide which spirit to buy. California law allows for three, quarterounce pours per person per day at off-premise retail establishments and that means cocktails are pretty much out of the question. “It’s really hard to regulate when something’s already mixed,” Keeper explains. In other words, it’s virtually impossible for a shop to prove that it’s abiding by the law when there’s no way to measure how much of a spirit went into a mixed drink. As for which spirits Bar Keeper chooses to stock, the team abides by a simple rule. “Everyone has to like it,” Keeper reveals. “All of my employees taste everything we sell and no one can hate anything—everyone has to at least like it and one person has to love it. We hand-sell everything and it won’t sell if employees are not behind it.” Those who want to buy anything at Bar Keeper—even the items that aren’t regulated by the California Alcohol Control Board—are going to have to visit the Silver Lake destination (its second site in the neighborhood, since moving last fall from its previous location a quarter of a mile away). The shop is not set up for online retail. “I am truly a brick-and-mortar store,” Keeper
says. “There’s no point in me being online because I can’t compete with barproducts. com or Amazon.” And, he adds, there’s value in big-box retailers if consumers know exactly what they’re looking for. “Because we hand-sell every bottle, [our employees] listen to what people say, parrot it back to them and explain why something is germane to what they’re looking for,” Keeper notes. “Big box stores don’t offer that kind of advice—not saying they all don’t, but most don’t.” ■
“We hand-sell everything and it won’t sell if employees are not behind it.” —Joe Keeper Joe Keeper
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Have You Looked for OSHA Courses Only to Wish They Were Specific to Distilling?
We Get It. OSHA training is tough enough without having to wonder if you’re receiving the most pertinent information to meet your needs. That is why ACSA has partnered with Industrial Safety and Training Services (ISTS) to bring you an OSHA 10 Certification Course specific to distilleries. What else is in it for you? Well, after this course, you will: • Recognize and Prevent Health and Safety Hazards in Your DSP • Evaluate Your Facility Through the Eyes of an OSHA Inspector • Have Hands-on Auditing Practice in an Actual Distillery • Receive an OSHA 10 Card From Eastern Kentucky University • Take Home the Knowledge to Ensure a Safe Workplace and Prevent Hefty Fines for OSHA Violations
Join us at Philadelphia Distilling (PA) on Aug. 19 & 20 or Garrison Brothers Distillery (TX) on Nov. 4 & 5
REGISTER TODAY!
americancraftspirits.org/education/regional-programs/.
P.O. BOX 701414 Louisville, KY 40270 (616) 745-6373 education@americancraftspirits.org
ACSA Member: $299 Additional Member: $199 Guild Member: $349 Additional Guild Member: $249 Non-Member: $429 Additional Non-Member: $429
Distribution
BOTTLENECK Increased competition is plugging up the distribution pipeline. Here’s how America’s craft distilleries are keeping the flow going. BY ANDREW KAPLAN
It’s a crowded marketplace out there for craft spirits, and it continues to get even more so. The number of active craft distillers in the United States rose from 1,589 in 2017 to 1,835 in 2018, an increase of 15 percent. That means that bars, restaurants and liquor stores are bursting at the seams with hand-crafted whiskeys, gins, vodkas, you name it. The rise of craft, coupled with the renewed popularity of spirits and cocktails in general, has created a bottleneck when it comes to distribution. It’s become increasingly challenging for a small distiller just starting out to get
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his or her products to market. Oftentimes, distributors’ portfolios are already maxed out, or the craft distiller’s products have a hard time competing within them for attention. “Distributors are being inundated with new product requests every day, either from new suppliers or from existing suppliers who are introducing new products,” says Mark Shilling, managing principal of Shilling/Crafted and Immediate Past President of the American Craft Spirits Association (ACSA). “They’re overloaded with new things that they have to try and move.”
Adds P.T. Wood, founder of Wood’s High Mountain Distillery in Salida, Colorado: “I think one of the biggest challenges to our industry is the amount of shelf space that’s out there. It’s a finite amount, so you’re fighting for placement.” But help may be on the way. “I honestly do believe that the problem will be solved very shortly by the marketplace,” says Dan Farber, founder and distiller of Osocalis Distillery, in Soquel, California, and chairman of the ACSA’s Direct to Consumer Shipping Committee. There are signs he might be right. Some
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PHOTOGRAPH: JON PAGE (THIS PAGE)
Michael Myers of Distillery 291
distillers are taking advantage of laws in their states that allow them to self-distribute, for instance. Others are tapping into new distribution platforms, such as Liberation Distribution, aka LibDib, which describes itself as “The ‘Airbnb’ of alcohol distribution.” Others are shipping their products directly to consumers in those states which allow it. And then there is the traditional route. According to the Wine & Spirits Wholesalers of America (WSWA), despite a long-term trend of consolidation, the number of distributors operating in all 50 states and D.C. has increased in recent years with many new, niche distributors entering the marketplace (though WSWA says it does not have specific figures). “Many wholesalers have designated divisions of experts whose sole focus is on introducing craft beverages to consumers,” says Michael Bilello, WSWA SVP, communications & marketing. “Craft brands are able to partner with and utilize the brand building, strong relationships, and marketing expertise of wholesalers to get their product on retail shelves around the country—something that would not otherwise be possible with organic reach.”
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To self-distribute, or not to self-distribute? Sensitive to the legal requirements of the three-tier system set up after Prohibition in the U.S., only about a handful of states currently allow some form of self-distribution, according to the latest tally by the ACSA. And yet, self-distribution can be a vital option for a newly founded distiller struggling to survive in today’s crowded marketplace. Those who decide to do it, however, should also be aware that it comes with its shares of challenges. In fact, some in the industry frown on it altogether. “I think most distillers who’ve really thought about self-distribution realize the additional expense, logistics and infrastructure it would take to manage that outside of maybe your local area, and it makes it not worthwhile,” says Shilling. “Unless you’re super huge, it just doesn’t make sense” Farber takes that one step further. “It’s probably the most foolish thing a small distillery could ever do,” he says. “I don’t think it’s effective for a small distillery. It’s direct head-to-head competition with distributors
that frankly do a better job at it.” And yet, Farber acknowledges that it’s often hard for a small craft distiller with just a few products to get the same amount of attention from a big distributor that a major, mainstream brand does. Given this, he believes there are limited situations where it makes sense. If their territory is small and compact, like in a big city, for instance. But for territories that stretch further than that, say 100 miles or more, he calls it “a fool’s errand,” especially when catering to top-tier cocktail bars that expect frequent visits and service from the distiller. Wood says he self-distributed in his distillery’s early years, but then turned to wholesalers after getting into about 150 accounts in the state, enough he says, “to give us a little extra negotiating power.” He says it helped that many of the retailers in his market are independently-owned so he was able to form personal relationships with them as one independent business owner to another. “The states that do have self-distribution, like Colorado, have a really good success
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story,” he says. “And for states that don’t, if they’re able to get to their legislature and talk about local job growth and being an agriculturally focused business and how it actually helps in a lot of ways to support the three-tier system, they’ve been successful [in changing the laws]. “For the big distributors,” he continues, “handling a spirit brand that is going to sell a thousand cases or something, it’s not worth their time and effort for the most part. But as in Colorado, we’ve been able to go out and build this industry that has really taken off. Consumers are coming in and asking [for craft spirits]. So, we’ve been able to build our brands to a point where the distributors can take over for us and actually make some money at it. So it’s a win-win for everybody I think.” Colorado is currently the state with the fifth highest number of active craft distillers: 99. This, despite being ranked 21st in population. Another distiller, Michael Myers, owner and distiller of Distillery 291 in Colorado Springs, has been self-distributing throughout the state for roughly eight years. He tried working with distributors when he first started out for just a single one of his products, but distributors warned him that he risked “getting lost” in their large portfolios. He also felt pressure to supply enough product to satisfy his distributors’ requirements, a challenge for him because he was so small. So he began to selfdistribute, and still does to this day. It was challenging at first, with 15 to 18hour days spent tending to production and competing for space at local accounts with large local distributors. But, as the popularity of craft has grown, it has become less so, Myers says. For one thing, his workforce has grown to 10 people, including four sales people, making the operation more manageable. “We’re in over 500 accounts,” he says. “There was a period we were probably 450 accounts with only two salespeople. So, we’re very efficient.” What’s more, Myers recently joined the online distribution platform LibDib’ to begin selling to other states for the first time. (For more about LibDib, see page 80.) Shipping direct-to-consumer There is also the direct-to-consumer shipping option, currently available in just a few states. For craft distillers, direct-to-consumer shipping can be invaluable: It allows small distilleries the chance to continue a relationship often begun in tasting rooms with tourists or enthusiasts when they go back home. This enables the distilleries to try to grow their
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reputation beyond their local market. “I think that probably the place where the most time and interest is right now is when it comes to direct-to-consumer shipping,” says Shilling. “Looking for parity with wine in the ability to ship directly to a consumer whether in-state or out-of-state.” The ACSA is in the process of developing guidelines to help these efforts along. “What we’re trying to do is work with shippers and state legislatures to identify impediments to shipping and fix them if we can,” says Farber. There is some hope that the number of states that allow direct-to-consumer shipping of spirits may expand. A recent decision by the U.S. Supreme Court may help do just that. In Tennessee Wine & Spirits Retailers Association v. Thomas, the court struck down a Tennessee law that imposed a two-year residency requirement on those seeking to operate retail liquor stores in the state. The Court, in essence, held that while the 21st Amendment gives states broad latitude to regulate alcohol, the interest of interstate commerce trumps the state’s interest in enacting laws that discriminate against out-of-state entities in favor of in-state ones. Whatever happens, Shilling says the opportunity presented to the craft distilling industry from direct-to-consumer shipping “is huge,” pointing out that 90 to 95% of the distilleries in the nation are very small, under 5,000 cases a year in production. To be able to maintain relationships with the tourists and visitors to their tasting rooms through direct shipping would open up a vital source of revenue for many of them. “As the rest of the world continues to move more and more to online sales and shipping transactions, there’s really not much left other than alcohol, spirits and beer specifically, that you cannot do that with. The world’s leaving us behind on that,” Shilling says. Working with a wholesaler The most traditional option for distribution is working through a wholesaler. This option has many benefits but also requires the distiller to be okay with giving up some semblance of control over their products. Distillers warn that this can be frustrating if the product disappears into a large wholesaler’s portfolio and isn’t given as much attention by their sales team as, for instance, major spirits brands. And yet, WSWA’s Bilello points out that the wholesaler-distiller relationship brings with it many advantages. “The American three-tier system provides consumers the safest, most diverse beverage alcohol market in the world,”
“I think that probably the place where the most time and interest is right now is when it comes to direct-to-consumer shipping. Looking for parity with wine in the ability to ship directly to a consumer whether in-state or out of state.” —Mark Shilling of Shilling/Crafted
he says. “No other country has a craft market like the U.S. because no other country has a system like the U.S. This system has been the breeding ground for suppliers of all sizes and varieties to thrive—assisted by their wholesaler partners. Collectively, for both suppliers and wholesalers, the U.S. system is considered the global standard by many when it comes to marketplace competition, opportunity and profits, innovation and safety.” He adds, “A number of states have chosen to allow limited self-distribution and a few have passed laws allowing direct-to-consumer shipping of spirits. It is the right of distillers to utilize these routes to market where legal. However, for most suppliers, it is the benefits that come with a distributor partnership—including brand building, marketing and logistics of getting product to retailers—that open new market opportunities and propel their brand to success.” Myers, however, says the costs necessary to work through a wholesaler were too much of a burden for him to bear as a new distiller. “They take your product and they’ll order a pallet of it, and then they expect discounts, they expect placement bonuses… and it’s a lot
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of dollars to do that,” he says. “Especially as a startup. With a large distribution company you have to be ready to ship four pallets to them before you’re really even making any money from it.” Bilello, however, stresses the many valueadded services that a wholesaler provides. “They help identify markets where brands can be most successful and help producers with brand building so that their brand can succeed once it’s on the store or bar shelves,” he says. “Wholesalers do this through a variety of ways, including conducting tasting seminars for wait staff, developing and printing cocktail lists, and training bartenders on cocktail recipes. They also help organize special events at bars and restaurants, develop advertising and promotional programs to complement local events, and act as the local representatives for distillers.” In fact, Bilello says wine and spirits distributors save producers and retailers $6.8 billion in operating costs. “They also help craft distillers with market intelligence that enables them to focus their distribution and penetrate new markets based on trends and tastes,” he says. The key to better craft spirits distribution Whichever distribution option one chooses, one way to add additional capacity to the supply chain so all of the new products can flow smoother is to show that strong consumer demand exists. Then, as Farber says: “the problem will be solved very shortly by the marketplace.” How to do that, he says, is for the industry to continue in its efforts to educate consumers about craft spirits. “Yes, there’s consolidation amongst distributors,” Farber says, “but in a real market that will work itself out as more people come in and say, ‘hey, there’s a market for these small little brands. They’re not being represented, I’ll do that.’ But the reason why we don’t see more people taking that on is because there’s no consumer pull yet for craft spirits. When people order a cocktail in Manhattan, in Chicago, in San Francisco, they’re not really questioning what ingredients go into that cocktail. So, therein lies, I think, the real core issues for our industry. “It’s up to the distilleries themselves to build the market,” he continues, “yet we all expect our distributors to do it for us.” So, craft distilleries looking for more distribution may have to recalibrate and focus closer to home first: in their tasting rooms and their local markets to create that next generation of consumers that understand the value of what they do, and seek it out. ■
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P.T. Wood of Wood’s High Mountain Distillery Mark Shilling of Shilling/Crafted
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Distribution
Chicago’s Rhine Hall Distillery turned to LibDib to get its products into New York.
DISTRIBUTION FOR ALL Billing itself as the Airbnb of alcohol distribution, LibDib offers all craft distillers access to the marketplace via an online platform. BY JON PAGE
Jenny Solberg Katzman started receiving the calls in 2017. An account planned to open in New York City and demand for Rhine Hall Mango Brandy was strong. The only problem? Rhine Hall Distillery (which Jenny co-founded in 2013 with her father, Charlie Solberg) is based in Chicago and had no relationship with a distributor in New York state. Katzman quickly realized that traditional distribution in New York wouldn’t work for Rhine Hall. Distributors told her that Rhine Hall wouldn’t sell at its price point, that it didn’t have enough volume to be a priority. Then Katzman heard a tip from an industry acquaintance about a startup helping small alcohol producers distribute out of state. “LibDib kind of fell in our lap,” Katzman says. “It ended up being a fantastic solution for us in New York.” Short for Liberation Distribution, LibDib bills itself as the Airbnb of alcohol distribution, giving makers of wine and craft spirits a three-tier compliant web-based platform to
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sell wholesale alcohol. Using an online platform, makers can choose which products they want to sell in specific markets and can name their own price. Via an online marketplace, retailers, bars and restaurants can place orders that are to be fulfilled by the winery or distillery. LibDib, which launched in March 2017, provides the suppliers with instructions on how to ensure the shipment is compliant. “Craft distilleries have many challenges,” says Cheryl Durzy, LibDib’s founder and CEO. “They can’t ship across state lines to consumers, they’re often too small to get distribution because of the consolidating distributor side of the industry. So, our company offers distribution for anybody that wants it. Our goal as a company is to be everyone’s first distributor, so when they start off with a distillery, here you go, you have access to the marketplace through LibDib.” While wineries and distilleries from anywhere in the United States can offer their products on LibDib, distribution is currently
limited to California, New York and Wisconsin. However, LibDib is soon adding Colorado and it recently announced a partnership with Republic National Distributing Company, which operates in 22 states. Durzy understands the challenges of distribution because she struggled with them while working for her family’s winery prior to starting LibDib. Building a traditional distribution channel required an extensive amount of time, money and resources—something most new craft distilleries don’t have. “You have a lot of craft distilleries where it’s just a few people, so you have to put your resources where it’s going to be most successful,” says Durzy. “Here you don’t have to have a massive investment up front. You can sell into a market [one case at a time]. It gives an opportunity for growth without putting tens of thousands of dollars into a marketplace.” That sentiment rings true for Amy Bohner of Alchemy Distillery in Arcata, California, who co-owns the distillery and a construction
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Steve Bohner of Alchemy Distillery
company with her husband, Steve. When she first heard of LibDib, Amy thought it sounded too good to be true. “The retailer is ordering directly and [our product is] theirs to keep whether it sells or not,” Bohner says. “We can pursue more accounts or not. There’s so much flexibility.” In particular, Bohner enjoys the flexibility of staying with her local distributor while also pursuing new markets. When Alchemy wanted to sell its whiskey and gin in the San Francisco Bay Area, the Bohners couldn’t imagine working with a larger distributor. “We were afraid they would say, ‘Okay, but you have to give up your local account with Humboldt Beer Distributors,’ and we just don’t ever want to do that,” Bohner says. “They’re really small like us, they’re family owned … and I plan on having them until the last bottle we ever want to distribute.” A non-exclusive arrangement also appeals to Michael Myers, the owner and distiller of Distillery 291 in Colorado Springs, Colorado. The distillery self-distributes its products in Colorado and partnered with LibDib to distribute its Colorado Rye Whiskey and Colorado Bourbon Whiskey in Southern California. Now that LibDib is expanding distribution to his state, Myers has yet to feel any pressure to use LibDib in Colorado. Myers says his experience with LibDib has been “stellar” and eagerly encourages other distilleries to give it a try. “It was easy to sign up,” Myers says. “We’re not tied to them. We can not use them or we
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can use them at any point, which sounded great. … They’re a very good partner.” Myers adds that the technology behind LibDib is user friendly. “It allowed us to go open an account [in California] and put the order through standing in the store,” he says. “Here in Colorado, the email came in and [our team] started packing it before we walked out of the store.” Katzman enjoys the ability to easily access sales numbers, as opposed to wondering how many of her products are sitting in a warehouse. “In terms of having a clear picture of your success in a market, it’s nice to know the product is actually getting used per case you sell versus not knowing,” she says. LibDib can present challenges, however. For Bohner, the most difficult aspect was connecting with the right person at FedEx to setup an account to ship alcohol (she succeeded on her seventh try). But the biggest hurdle facing craft distillers is selling their products. While LibDib provides the occasional sales lead, Durzy is quick to remind distillers that their destiny is in their own hands. “It’s ultimately up to the suppliers to be contacting people and build those relationships,” Durzy says. “We are probably one of the first distributors to say we encourage that. We want them to be able to sell to each other and have that relationship. I don’t see any better salesperson than the maker themselves.” ■ Andrew Kaplan contributed to this story.
LibDib founder & CEO Cheryl Durzy
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M&A and Strategic Investments for Leading Artisan Spirits
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closing time
GLOBAL SPIRITS VOLUME GROWTH By category
■ CAGR 2013-2018
The worldwide gin boom continues. With an unprecedented level of innovation coming out of American craft distillers—experiments with unconventional botanicals, foraged ingredients and local terroir—expect a similar surge in the U.S. market.
Vodka -2.6%
Vodka -2.7%
Flavored Spirits/Liqueurs -1.5%
Flavored Spirits/Liqueurs -1.0%
Rum +1.7%
Rum -0.4%
Brandy +2.7%
Brandy -1.1%
Pre-Mixed Cocktails +5.0%
Pre-Mixed Cocktails +3.6%
Agave Spirits +5.5%
Agave Spirits +4.8%
Whiskey +6.9%
Whiskey +3.6%
Gin +8.9%
Gin +4.9%
■ 2017-2018
Source: IWSR Drinks Market Analysis
U.S. SPIRITS VOLUME GROWTH By category
■ CAGR 2013-2018
As detailed in this issue’s story on cocktail canning, RTD pre-mixed drinks are having a moment. Whiskey, brandy and agave-based spirits are proving that they haven’t lost any momentum.
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Flavored Spirits/Liqueurs -5.1%
Flavored Spirits/Liqueurs -2.3%
Rum -3.1%
Rum -1.4%
Gin +0.2%
Gin -0.3%
Vodka +0.4%
Vodka +1.4%
Brandy +4.0%
Brandy +5.8%
Whiskey +4.8%
Whiskey +5.0%
Agave Spirits +7.6%
Agave Spirits +6.4%
Pre-Mixed Cocktails +15.2%
Pre-Mixed Cocktails +6.3%
■ 2017-2018
Source: IWSR Drinks Market Analysis
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THERE IS
STRENGTH IN MEMBERS
The American Craft Spirits Association (ACSA) is the only national association of craft distillers created and governed by craft distillers. Our mission is to elevate and advocate for the community of craft spirits producers.
WHY JOIN? •
Build long-term relationships and enhance industry connections
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Engage in the battle to make permanent the reduction in the Federal Excise Tax
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TAKE ADVANTAGE OF MEMBERSHIP ONLY OPPORTUNITIES BY
JOINING TODAY! A: P.O. Box 701414, Louisville, KY 40270 P: (502) 807-4249 E: membership@americancraftspirits.org