Artisan Spirit: Spring 2021

SPRING 2021

Artisan Spirit OF THE YEAR BITTERS

CAN'T BE BEAT

EYES ON THE

future

FOUNDATIONS OF CRAFT DISTILLING:

MASHING

Drink With Your Eyes™® Drink With Your Eyes

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TABLE of CONTENTS A LETTER FROM THE EDITOR

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QUARTERLY GUILD & INDUSTRY REPORTS

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Updates from guilds and associations within states, across the nation, and beyond!

The craft bitters industry gets taken for a wild pandemic ride

DIFFICULTIES AND DISPUTES WITH WHOLESALERS A brief step-by-step primer to dealing with the inevitable

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RUM AGING SCIENCE

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Craft Beverage Modernization and Tax Reform made permanent for craft distilleries

Part V (Final Installment)

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Unseen liability

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Maybe it’s OK to never be “the next big thing”

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SHOCHU

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THE BIG SQUEEZE

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TRIPLE WHISKY DISTILLATION TECHNIQUES

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The economic impact of the past few years on the distilling industry was detailed in a report presented

by DISCUS, and everyone’s feeling the pressure

READ THE CONTRACT, HIRE AN ATTORNEY

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FOUNDATIONS OF CRAFT DISTILLING 106 1: Mashing

ARTISAN SPIRIT OF THE YEAR 48 Recognizing a distiller of distinction

TRANSPARENCY SHIFT

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Know Your Alcohol is committed to informing the public and elevating the industry

NEW WORLD OF FEDERAL EXCISE TAXES

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BETTER LATE THAN NEVER

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IT’S IN THE PROOF, PUDDIN’

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THE ROLE OF BREWING IN DISTILLED SPIRITS PRODUCTION

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SOUTHERN COMFORTS

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LEGUMES

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THE SIN OF CINNAMON IN GIN & BEYOND

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ADVERTISER INDEX

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The rate of FET was not the only thing to change at the end of 2020; find out about other developments that you can anticipate

Breaking down Mississippi’s decision to (sort of) end Prohibition 90 years after the 21st Amendment

2020 SPIRITS INDUSTRY MERGERS & ACQUISITIONS

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Year in review

Let Me Tell You What I Wish I’d Known

The story of your brand has never been more important

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WHAT’S NEXT? 69 Part one in a series

Just 50ml makes a big difference

THE INTERNSHIP

When to absolutely call in the pros

AQUAVIT'S POTENTIAL

NEW STANDARDS OF FILL CREATE OPPORTUNITIES, RAISE QUESTIONS

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Distillation Chemistry 101

WEBSITE ACCESSIBILITY

A craze like any other

SPIRITS IN THE VIRTUAL WORLD

Part One: It is all about the base and the koji too!

VITAL TAX REDUCTIONS

BOURBON: THE NEW BEANIE BABIES

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Making room for fresh talent in distilling

A hidden gem from the Basque-speaking regions of Spain and France

(Not exactly the same as the old boss)

TO BE OR NOT TO BE

How the pandemic has influenced tasting events

PATXARAN 36

MEET THE NEW BOSS

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Rethink your RTD plans

Moving towards more sustainable distillery operations by upgrading byproducts into coproducts

FEAR, PERSEVERANCE, & PROFITS 29

WORKSHOPPING YOUR NARRATIVE

LESSONS TO LEARN FROM THE “CANDEMIC”

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from the COVER

Brewing and distilling are bound up on a fundamental level

Twelve 33 Distillery of Little River, South Carolina

Good for you, good for vodka, good for the planet

When it comes to certain botanicals like cinnamon, less is definitely more

Cover image by Amanda Joy Christensen.

Issue 34 /// Spring 2021 PUBLISHER & EDITOR Brian Christensen

BOURBON S TA R T S W I T H WHITE DOG

CREATIVE DIRECTOR Amanda Joy Christensen SENIOR WRITERS George B. Catallo Devon Trevathan

Margarett Waterbury

CONTRIBUTORS

Luis Ayala Corey Day Brian B. DeFoe Carrie Dow Andrew Faulkner Ashley L. Hanke, Esq. Reade A. Huddleston Paul Hughes, Ph.D. Aaron Knoll Rich Manning

AGED SPIRITS AND NEW FILL BARREL STORAGE AVAILABLE FOR LEASE OPENING FEB. ‘21 • 55,000 SQFT Bourbon Whiskey storage facility in Woodford Co., KY • Horizontal racking and palletized storage

Jim McCoy Daniel P. McGuire Kevin O’Brien Kurt A. Rosentrater, Ph.D. Gary Spedding, Ph.D. Matt Strickland Gabe Toth Molly Troupe Mark A. Vierthaler Tom Woods

PHOTOGRAPHERS Luis Ayala Amanda Joy Christensen

• Long & short term storage solutions

Carrie Dow

• Meets DISCUS and FM global standards

SALES & MARKETING Ashley Monroe

www.whitedogllc.com sales@whitedogllc.com Office 859-214-7000 Tyler Harris 859-806-5855 Mark Harris 859-321-2049

ARTISAN SPIRIT is a quarterly publication by Artisan Spirit Media. www.artisanspiritmag.com facebook.com/ArtisanSpiritMagazine ArtisanSpiritM

ArtisanSpiritM

General Inquiries (509) 944-5919 Advertising (509) 991-8112 PO Box 31494, Spokane, WA 99223 All contents ©2021. No portion of this magazine may be reproduced without the written consent of the publisher. Neither Artisan Spirit Media nor ARTISAN SPIRIT magazine assume responsibility for errors in content, photos, or advertisements.

While ARTISAN SPIRIT makes every effort to ensure accuracy in our content, the information is deemed reliable but not guaranteed. We urge our readers to consult with professional service providers to meet their unique needs.

At ARTISAN SPIRIT, we take the opportunity to enjoy many different craft spirits and adult beverages. However, it’s also our responsibility, and yours, to always drink responsibly. Know your limit, and never drink and drive.

ARTISAN SPIRIT’s number one goal is to share and celebrate the art and science of artisan craft distilling. But please remember to follow all the laws, regulations, and safety procedures. Be safe, be legal, and we can all be proud of the industry we love.

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Where Science Meets Art Yeasts, Nutrients, and Process Aids

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© 2019

THANK YOU TO ALL OUR SPONSORS. Our mission at Artisan Spirit Magazine is to share and celebrate the art and science of artisan craft distilling.

We are humbled by the support of our sponsors. With their help, we can further our common goals of supporting creativity, innovation, and integrity within the industry we all love so much.

The American Spirits Exchange is a national importer and distributor serving the alcoholic beverage industry (spirits, wine, and beer). We provide domestic and international companies with access and support to the U.S. market. Regardless of your size — from micro, craft distiller to publicly traded multinational — our focus fuels your growth. Our flagship Foundations™ program provides companies with access to the U.S. market. We handle your business-to-business functions from start to finish: permitting, brand approvals, purchase order processing, invoicing, and compliance.

BSG is focused on supplying craft distillers with the best ingredients from around the world. The craft distilling market trusts BSG to deliver the finest ingredients at competitive prices, without sacrificing customer service. With distilling malts and grains from Rahr Malting Co., Weyermann®, Simpsons, Crisp and Malting Company of Ireland, as well as a full range of yeasts, yeast nutrients, enzymes, botanicals, and finishing products, we have a wide range of distilling ingredients to help you create high quality, artisanal spirits.

Cage and Sons Distilling Systems build premium distillation systems and equipment for premier distilleries.

Every element of Cage and Sons equipment is designed and crafted to provide you with the very best distilling experience at an affordable rate because we know that bottom line matters, but so does function. At Cage and Sons, adequate is never an option, and we continue to develop and design new high functioning, cutting-edge distillation systems that enhance the distillation industry. Cage and Sons works every day to bring you the very best distillation systems for the very best value.

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Unlike other agencies that work within a blinding myriad of industries; our focus is 100% within the spirits, wine, beer, and other alcohol sectors. This specialization has allowed us to become experts in the alcohol beverage category. We have an exceptional understanding of design that sells, complemented by professional project management and flawless production oversight. The result has been strategic solutions that consistently produce both critical acclaim and strong measurable return on investment for our clients.

The Distilled Spirits Council of the United States (DISCUS) is the leading voice and advocate for distilled spirits in the United States. Representing producers and marketers of distilled spirits, DISCUS advocates on legislative, regulatory, and public affairs issues impacting the distilled spirits sector at the local, state, federal, and international levels; promotes the distilled spirits sector, raising awareness and opening markets in the United States and around the globe; and encourages responsible and moderate consumption of distilled spirits as part of a healthy adult lifestyle based on evidence-based research and policy. DISCUS also powers Spirits United, a grassroots platform for the distilled spirits industry. Spirits United is comprised of a community of advocates united with a common goal: to ensure adult consumers can enjoy distilled spirits where they want, how they want, and when they want. Learn more at distilledspirits.org and spiritsunited.org.

Decorative label solutions…we’ve got you covered. Fort Dearborn has the expertise and creative appreciation for development and application of labels for the spirits market. Whether your application needs cut & stack labels with specialty hot stamping and embossing, the “no label” look of pressure sensitive film labels, or full body graphics using shrink sleeve labels, we have a product to meet your needs.

We service brands large and small. Contact us today to discuss your brand building objectives.

Trusted Oak Expertise Since 1912.

We’ve been in this industry for over 100 years, during which time we’ve learned a thing or two about what makes a great barrel to age great spirits. Our R&D team and account managers have hundreds of barrels currently in experimentation. Partnering with distillers, we think outside the box to develop new products that push your vision forward.

Our Mission: To craft world-class oak barrels and other cooperage products so our employees, customers, and communities flourish.

Lallemand Biofuels & Distilled Spirits is the industry leader in supplying fermentation products and valueadded services to the distilled spirits industry. We specialize in the research, development, production, and marketing of yeast and yeast nutrients as well as a solid belief in education of the distilled spirits industry.

A vital part of the alcohol production process, fermentation products from Lallemand Biofuels & Distilled Spirits have been designed and selected to create value by tailoring objective solutions to distillery needs.

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Moonshine University is located in Louisville, Kentucky on the Beverage Campus with its sister company, Flavorman. Moonshine University offers a variety of classes for enthusiasts, entrepreneurs, industry professionals, and those seeking careers in the distilling industry. Our distillery was designed as part of our classroom, and all classes incorporate hands-on learning and sensory evaluation in order to provide a complete and comprehensive education. In addition to its knowledgeable instructors, Moonshine University hosts a range of renowned industry experts for specialized instruction and training.

Founded in France in 1897 and based in the USA for more than 30 years, Saverglass provides for the premium & super premium spirits and wines. Over the years, the Saverglass Group has distinguished itself by its undeniable quality of glass coupled with innovative decoration techniques.

Today, one of Saverglass’ main asset lies on its product offer: 110 original designs and 425 references which represent the largest selection on the market! Thirsty for genuineness, Saverglass has created exclusive bottles dedicated to Artisanal distilleries: The Craft Spirits collection is designed to convey the image of authentic, locally sourced and rare high-quality products. Recently, the Group has strengthened its presence and service offering in the US by opening an ultra-modern bottle manufacturing and decorating plant in North America.

Southern Distilling Company is one of the largest state-of-the-art craft distilleries in the nation. In addition to our own award-winning Southern Star Bourbon and Double Shot Bourbon Cream Liqueur product lines, we also offer contract distillation services of standard and custom mash bill whiskeys, barrel warehousing, product development, and co-packaging services for spirits brand owners.

Our spirits are distilled on top-of-the-line Vendome Copper & Brass Works continuous column stills.

Our product development services include working with you to perfect your recipe or consulting with you to help you create your own recipe. We can barrel and warehouse age your product to meet your short and long-term goals. At Southern Distilling Company, you get “Your Product, Made Your Way.”

For over 60 years Tapi USA has produced cork stoppers and a wide variety of bottle closures.

Family-owned and operated since its inception, our company continues to develop new products and enter new markets. Tapi USA is proud to support the growth of the artisan distillery industry and is honored to be the Bottle Closure Sponsor for Artisan Spirit Magazine.

Total Wine & More is the country’s largest independent retailer of fine wine, beer, and spirits. Our strength is our people. We have over 5,000 associates, who must demonstrate comprehensive beverage knowledge before they are invited to join our team. After coming on board, all of our team members undergo an extensive initial training program.

We believe that an educated consumer is our best customer. We want to demystify the buying experience for our customers so they will feel confident in choosing the bottle that is perfect for them. Total Wine & More works closely with community and business leaders in each market it operates to support local causes and charitable efforts.

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A LETTER FROM THE EDITOR: We all need something to celebrate.

I won't lament the chaos that was 2020, but after a difficult year for our industry, and the world as a whole, it's nice to find people to look up to and appreciate.

Last year we awarded our very first Artisan Spirit of the Year — recognition for an individual distiller selected by a committee of distilling peers. Last year the award went to the amazing Nicole Austin. Since that high mark we have been eagerly anticipating who this year’s selection committee would choose to recognize. They did not disappoint. It is with great honor that we announce Chris Montana as the 2021 Artisan Spirit of the Year (see the full article on page 48). I could speak for hours on why Chris is a deserving distiller and an incredible human being, but I’ll let the interview and article speak for itself.

While we're on the topic of articles...

There is a moment at every tasting event, when a consumer is talking to a distiller and it dawns on them that they are talking to one of the people who actually made the spirit in their hands. A light shines in their eye and sheer joy spreads across their face. It's unexpected and delightful every time I witness it happen.

As a publisher, the closest I get to that moment is when I tell someone, often a reader, advertiser, or industry peer, that Artisan Spirit Magazine never allows “native advertising.” That is the fancy name for advertisements formatted to mimic the regular content of a given platform. Sometimes it takes a minute, but a similar light shines from their face as they consider the consequences, and they are thrilled.

Every business owner needs to learn how to adapt to changing markets, emerging trends, and technological innovations without sacrificing their founding values.

For us, native advertising is a revenue stream we do not persue.

Our hearts are with the artisans and craftspeople of this industry who are dedicated to transparency and building a relationship of mutual support within their community. I want every article in Artisan Spirit Magazine to be written with knowledge transfer in mind, not salesmanship.

It is important to note that industry vendors do submit articles, our advertisers are occasionally contacted as resources for interviews on relevant topics, and some independent writers may also be consultants who work with clients they report on. But we separate church and state. No pays us for articles they submit, we maintain editorial control over everything, and we do not offer sleight of hand workarounds. You want to buy an ad and submit an article? Great, but those are two separate conversations with separate teams. We will not take money for an article and advertisers will not get published just because they spend money on advertising.

An article is an article, and an ad is an ad.

We are leaving money on the table and some readers may not mind if articles are actually ads. However, I know that readers can trust in the integrity of every article they see in Artisan Spirit Magazine. I will not trick you. Selfishly, I want to sleep easy at night. I am proud as hell that when I tell people we only publish transparent content; I get to see their eyes light up.

Brian Christensen (509) 944-5919 /// brian@artisanspiritmag.com /// PO Box 31494, Spokane, WA 99223

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Available through BSG 800.374.2739 bsgcraft.com

Y R T S U D N I & S D T L R O I P U E R G Y L R E T R QUA T

he end of 2020 brought a surprising, but welcome, gift in the form of permanent FET tax reduction. The win on the federal level was heartening, but the work on state-level legislation has only intensified.

Many state guilds are striving to get bills passed that would impact direct-to-consumer sales, increase production caps for state-level licenses, institute cocktails-to-go permanency, provide parity on tax credits, expand or reopen on-premise sales, reduce bottle sale restrictions, and allow distilleries to participate in festivals. As always, thank you to all of the state guilds that have taken the time to share with us and the community.

— BRIAN CHRISTENSEN

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AMERICAN CRAFT SPIRITS ASSOCIATION As 2021 got underway, ACSA took a brief pause to celebrate that our FET relief was finally made permanent. This has been an effort uniting the entire spirits industry over the past 10 years, and the suspense held up right until the last possible minute.

We are grateful for the efforts of everyone who has taken time to advocate for this relief with their elected officials. At long last, small distilleries can plan their business moves knowing that their tax liabilities will be eased going forward. Job growth and business expansion will be supported by this move.

ACSA's sister organization, STEPUP, has begun fundraising to kick off its inaugural class of interns.

This program will offer a breadth and depth of experience to our interns that should make them highly qualified employees and entrepreneurs in the industry. The board of directors will be soliciting partner distilleries to host interns for eight to 12 weeks, under a set curriculum and conditions.

Lastly, it is time to start looking forward to the annual convention, which will be operating under a hybrid model this year. I, for one, am hopeful that

many of us will be vaccinated and ready to attend in person! The educational schedule is being put together, and I am excited to attend so many of the seminars, as well as to visit with industry friends outside of a Zoom meeting. The new projects you may be conceiving of this spring may need outside resources, and our vendors have a track record of supporting our industry — let's support their businesses right back!

If you are not currently a member of ACSA, join us!

I will attest personally that the time I have given to this association has been incredibly rewarding. I love to see our members and membership grow and thrive. I cannot wait to visit as many of you as I am able, once I am back on the road in support of my own business.

For more details, see www.americancraftspirits.org.

I am incredibly excited to welcome this spring with new energy and hope that as the pandemic recedes, our industry blooms anew.

Rebecca Harris President, Chief Distiller, Catoctin Creek President, American Craft Spirits Association

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AMERICAN DISTILLING INSTITUTE Even as the year 2020 drew sighs of relief simply for ending, the new year was then immediately off to an auspicious start following the late-December passage of the Craft Beverage Modernization and Tax Reform Act (CMBTRA). Last year proved to be one of the more difficult years for the world economy.

Yet as vaccines are distributed, and with federal excise tax relief passed into law permanently, the American Distilling Institute (ADI) shares in the industry-wide sense of cautious optimism for 2021.

Owing to the uncertainties of the pandemic, last year ADI postponed the annual Judging of Craft Spirits — usually held in late January — until this June. Awards will be an-

nounced at our 2021 conference in August.

The deadline to register products for this year’s judging is May 7. (Find out more at distilling.com/event/2021-judging-of-craftspirits) ADI is on pace to hold the 2021 Craft Spirits Conference & Vendor Expo as an in-person event this year in Louisville, Kentucky, Aug 23–25. ADI is taking great care to organize and conduct the conference according to the highest public health standards, and we will be detailing these efforts to keep attendees and their families safe later in the year. Registration is open now. For registration info, visit distilling.com/adi-conference.

The annual auction kicks off on March 1

and runs through April 16. The auction will be taking bids on goods and services for distilleries, and proceeds will go toward funding the Distilling Research Grant. The DRG committee will review and select research proposals to be funded later in the year. To find out more about items up for auction, visit distilling.com/event/auction.

For proposal guidelines, or to submit a research proposal for consideration, visit distilling.com/event/drg-rfp-2021. The proposal submission period is open until April 16, 2021.

Brad Plummer Director of Communications, ADI Editor in Chief, Distiller Magazine

DISTILLED SPIRITS COUNCIL OF THE UNITED STATES While 2020 presented our industry with unprecedented challenges, we closed out the year with a monumental win for craft distillers. DISCUS, working with our industry allies, secured the passage of the Craft Beverage Modernization and Tax Reform Act making the reduced tax rates for craft distilleries permanent and giving distillers a renewed sense of certainty and hopefulness for the future.

And our lobbyists and legal team literally rung in the New Year by working with the Department of Health and Human Services (HHS) to successfully defeat the unexpected FDA facility user fee for hand sanitizer producers, which would have punished hundreds of struggling craft distillers who jumped in during a time of need to support their communities.

We have kicked off 2021 with the same level of intensity. In the states, DISCUS is closely monitoring 1,387 alcohol-related bills.

State legislatures across the country are pressing forward to make many of the temporary COVID-19 relief measures for the hospitality industry permanent such as cocktails to-go and expanded delivery options. Permanently enacting these marketplace modernizations will aid in the recovery of restaurants, bars, and craft distilleries.

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To date, 26 states have filed legislation to extend or make cocktails to-go permanent, and many more bills are expected. Legislation has also been filed in some states to permit direct-to-consumer shipping of spirits, which was expanded in six states during the pandemic to support craft distillers who were forced to shut down their tasting rooms and tours.

Direct-to-consumer shipping has, will, and should continue to serve as an additional market access channel to the traditional three-tier system of alcohol beverage distribution.

We are working closely with many craft distillers’ guilds to support state measures that permit direct-to-consumer shipping of distilled spirits, which will create a more convenient marketplace and provide much-needed support to craft distillers facing financial hardship.

While our lobbyists work to expand consumer convenience and access to spirits products, they are also keeping a close watch on attempts to raise spirits taxes as states face budget shortfalls. To date, tax threats have emerged in Oregon and Hawaii.

At the federal level, we are working to ensure craft distillers and our hospitality partners get the economic support they need to get back on their feet. The pandemic’s toll on restaurants, bars, and craft distilleries has

been devastating and the hospitality industry has a long road ahead toward economic recovery. A new survey of COVID-19 impacts on craft distilleries by DISCUS and the American Distilling Institute found that 36 percent of craft distilleries reported a total revenue decline of 25 percent or more in 2020.

DISCUS is urging Congress to include the RESTAURANTS Act as part of the next COVID-19 relief package. The bill creates a Restaurant Revitalization Fund, which will help stabilize hospitality businesses.

Through this fund, eligible entities, including craft distilleries where the public may taste, sample, or purchase products, may receive grants to offset revenue losses in 2020 compared to 2019.

DISCUS is also working with our international colleagues to lift the debilitating tariffs on spirits products. Since the EU’s imposition of a 25 percent tariff on American Whiskey in 2018, the value of American Whiskey exports to the UK and EU have decreased 53 percent and 38 percent, respectively. In June 2021, the EU tariffs on American Whiskey will automatically increase to 50 percent.

With craft distillers in 37 states exporting American Whiskey, this issue is a top priority for DISCUS. We are hopeful the Biden administration will clearly recognize the widespread damage caused by the escalation of

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these trade disputes. We urge the U.S., EU, and UK to make it a priority to immediately suspend these tariffs.

On all policy fronts, we are tapping into the expertise and knowledge of our Craft Advisory Council members to provide important craft distiller input and feedback on key issues at the federal, state, and local levels.

The Council elected Philip McDaniel, CEO and co-founder of St. Augustine Distillery, as chair and Rob Cassell, president of New Liberty, as vice chair for the 2021-2022 term.

DISCUS ACADEMY This year also marks the launch of DISCUS Academy, an exciting new initiative aimed at providing education and training for distilled spirits industry professionals. The goal of DISCUS Academy is to develop the next generation of leaders by facilitating the transfer of knowledge from our industry’s legends and business luminaries.

DISCUS Academy, which is open to DISCUS members and non-members alike, focuses on the business of distilling. The curriculum focuses on five key subject areas: Leadership Development; Business Management & Finance; Sales & Marketing; Safety & Risk Management; and Laws & Regulations.

In partnership with Cornell University, DISCUS Academy will also offer two Leadership Development Programs to provide professionals of varying leadership experience education tailored to their career stage. Learn more at DISCUSAcademy.com.

And planning is underway for the DISCUS Annual Conference. Mark your calendar to join us in Austin, Texas from Oct. 6-8. We’ll have much more conference news on the way. Stay safe everyone and here’s to a bright and optimistic 2021!

Chris R. Swonger President & CEO Distilled Spirits Council of the United States and Responsibility.org

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DISCUS’ New Craft Advisory Council Sets Its Sights on Engagement, DTC In January, DISCUS announced a new crop of 19 elected members to its Craft Advisory Council (CAC). Those members, in turn, voted to select Philip McDaniel, CEO and co-founder of St. Augustine Distillery in St. Augustine, Florida, to serve as chair; and Robert Cassell, president of New Liberty in Philadelphia, Pennsylvania, to serve as vice chair. All council members serve a two-year term.

As the council chair, McDaniel will sit on the DISCUS board along with representatives from some of the largest companies in spirits. He says he’s looking forward to taking an active role. “When talking about a very small business like mine sitting on a board with Diageo and Bacardi, it’s common that you’d expect those people to be quiet. I want to educate people,” he said. “Our partners have invited us to have a seat at the table for a reason. It’s not for show. They want to hear what we need.”

The CAC has existed in some form for more than a decade, but DISCUS President Chris Swonger said the council had grown “dormant” by the time he stepped into his current role in 2018. “For me, it was imperative that DISCUS be invested totally in supporting the craft distilling community across the board,” he said. “We are much stronger when we’re unified on advocacy issues.”

Swonger acknowledges that DISCUS hasn’t always been a voice for small business. Director-level members of the trade organization read like a top-10 list of the biggest multinational brands in spirits, including Diageo, Bacardi, Pernod Ricard, Beam Suntory, Brown-Forman, and Moët Hennessy. DISCUS defines a “craft” member as any producer with less than $60 million in revenue.

“I think for a while, DISCUS probably earned the reputation of just really representing the big guys,” said Swonger. “But we’ve worked really hard to try to garner some credibility and recognition that we’re invested in the success of the craft distiller community.”

Swonger points to DISCUS’ extensive work on the Craft Beverage Modernization and Tax Reform Act as a recent example of successful collaboration between small and large producers. DISCUS invested heavily in supporting the proposed legislation, including developing a communications platform called Spirits United that made it easy to contact legislators.

Craft distilleries, in turn, leveraged their community goodwill to generate an enormous number of letters to congresspeople in support of the law. “We were able to generate more than 40,000 letters to members of congress through the Spirits United platform,” he said. “That’s been to the benefit of everybody in the industry.”

As small and large producers celebrate the FET reduction, the CAC and DISCUS are turning their attention to policy goals for the 2021-22 term. “Direct-to-consumer (DTC), for me personally and for the craft industry, is the number one issue at this point,” said McDaniel. “Particularly with COVID and all the challenges it has presented, it speaks now more than

ever to the opportunity and need to be able to put suppliers in direct contact with customers.”

It’s not shaping up to be a simple issue. The COVID-19 pandemic has brought relaxed rules around shipping and online sales in many states, but wholesalers and retailers remain generally opposed to any substantial change in the existing three-tier system.

Cassell acknowledges the challenge, but thinks compromise is possible by emphasizing how DTC has the potential to actually boost sales through the existing three-tier system by driving customers to try out new products. Customers might happily pay the shipping. “A customer might pay FedEx $20 to ship your bottle one time. But the next time, they want to go buy it in the store,” said Cassell. By emphasizing how DTC has the potential to actually grow the entire market, rather than simply siphon business from retailers, he sees a potential path to move forward.

Plus, of course, you’ve got to start somewhere. “I can remember FET being brought up at a distillers conference in 2004, when there were 40 of us in a room,” said Cassell. “Seventeen years later, you actually have FET reform and parity for the first time since Prohibition. That, I think, is a great example of the small and large working together for a common goal towards something that sets people up for the future.”

In support of that collaborative vision, Cassell said one of his priorities as vice chair is to continue to encourage small producer engagement on the DISCUS Craft Advisory Council. “Looking at this with a 10- or 20-year vision, the more participation we can get, the better,” said Cassell. “Regardless of what the issue might be, a goal is making sure everyone feels there’s a conduit the whole way through the organization and industry, making sure the craft guy in Indiana, North Dakota, California, is able to talk at the table and know their voice is being heard at the highest points of our industry.” —M. Waterbury 2021-22 DISTILLED SPIRITS COUNCIL OF THE UNITED STATES’ CRAFT ADVISORY COUNCIL CHAIR

Philip McDaniel, CEO and co-founder of St. Augustine Distillery VICE CHAIR

Rob Cassell, President of New Liberty OTHER COUNCIL MEMBERS

Scott Harris, Catoctin Creek (VA) Jeff Quint, Cedar Ridge Distillery (IA) Tom Lix, Cleveland Whiskey (OH) Brian Facquet, Do Good Spirits (NY) Michael Paluzzi, Falls Church Distillers (VA) Steve Gould, Golden Moon Distillery (CO) Adam Hirsch, Goza Tequila (GA) Ted Huber, Huber’s Starlight Distillery (IN) Amir Peay, James E Pepper (KY) Jaime Windon, Lyon Rum (MD) Tom Potter, NY Distilling Co. (NY) Alex Castle, Old Dominick (TN) Phil Brandon, Rock Town Distillery (AR) Gareth Moore, Virginia Distillery Co. (VA) Randy Carlson, Vermont Spirits (VT) Lisa Cloutier, Whistling Andy Distillery (MT) Kate Jerkens, Uncle Nearest Premium Whiskey (TN)

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In our first three decades, funded by leading distillers and lead by an independent Advisory Board, we worked alongside dedicated advocates to create best-in-class, science-based educational programs, design cuttingedge communications campaigns and champion effective legislation that made our roads safer, communities stronger and families healthier.

That’s real progress — but we’re not done.

The next decade presents new challenges in the fight to advance alcohol responsibility — challenges we will rise to meet and overcome — but we need your help.

Like the 30 years before, it will take the leadership, commitment and united effort of people like you—distillers who want a better, more responsible future for us all.

Join us, and let’s define the future of alcohol responsibility, together.

NATIONAL HONEY BOARD With uncertainty still overshadowing 2021, the National Honey Board is maintaining its focus on virtual education and outreach. A cornerstone of these efforts is our popular Honey Spirits Summits, a three-hour educational deep dive that tells the story of honey’s use in distilled spirits, from the honey bee to the filtration of spirits made with honey.

These virtual events also include a comprehensive honey and spirits tasting and provide insight into various research projects we have conducted with distilleries throughout

the United States. The Virtual Honey Spirits Summits are free but limited to 20 distillers per session so we can ensure a more interactive experience. If you’re interested in attending, email alison@honey.com.

Although virtual meetings will dominate most of our efforts in 2021, we will be conducting our fourth annual Honey Spirits Competition in person. Last year, our expert panel of socially distanced judges tasted 85 spirits that were either sweetened/flavored with honey or used honey as the primary

distillate. This is a free competition, and all entrants receive judge feedback and promotional opportunities. Register today at www.honeyspiritscompetition.com.

And finally, do you make a spirit with honey? Let us know! We are creating a database of made-with-honey spirits and we’d love to add your product to the list. Email alison@honey.com with the information.

Keith Seiz Ingredient Marketing Representative National Honey Board

WINE & SPIRITS WHOLESALERS OF AMERICA Wholesalers across the country are aware of the strain the pandemic has put on supplier partners, specifically craft, startup, and small production wine and spirits brands who have been unable to operate tasting rooms at full capacity for nearly a year now.

Wine & Spirits Wholesalers of America (WSWA) recently launched the WSWA Access initiative, a hub for emerging brands to find educational programming, resources, and best practices to earn distribution deals in the world’s most dynamic marketplace even in these uncertain times. These resources are developed by the WSWA Access Advisory Council, a select group of brand representatives and wholesaler advisors who have demonstrated a commitment to achieving excellence in the wine and spirits industry, are committed to professional

development and growth, and support the three-tier system.

Over the next few months, WSWA Access programming will be focused on preparing brands to compete in the 2021 WSWA Brand Battle Tournament. In lieu of a convention this year, WSWA will be holding a virtual, can’t-miss event for craft, startup, and small production wine, spirits, and low-alcohol/ no-alcohol/mixer brands. Typically held during the convention, this annual stand out Shark Tank-style event showcases rising brands with unique stories, packaging, and flavor profiles.

This year’s expanded, bracketed event will feature 40-50 brands that will battle in eight specific competition categories — each with a chosen Best in Category winner that will continue onto the final round of competition

to determine the overall 2021 Brand Battle Champion. This year’s brand categories are:

> > > > > > > >

Vodka / Gin Tequila / Mezcal / Cachaça Whiskey / Whisky / Bourbon / Scotch Ready-to-Drink / Hard Seltzer Rum Cordial / Liqueur / After-Dinner Drink Low-Alcohol / No-Alcohol / Mixer Wine

Do you think you have a unique and exceptional product? If so, visit www.wswa.org/ BrandBattle to enter to compete today!

Michael Bilello Senior Vice President Communications & Marketing Wine & Spirits Wholesalers of America

AMERICAN STATE GUILDS CALIFORNIA CALIFORNIA ARTISANAL DISTILLERS GUILD The California Artisanal Distillers Guild (CADG) introduced SB-220, Craft distillers: direct shipping, in January through bill sponsor and longtime craft spirits industry ally senator Nancy Skinner. The bill represents

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the CADG's response to many small distillers in the state facing tremendous pressures on their businesses from state-mandated COVID-19 shutdowns and restrictions. The bill, if passed in its current form, would make permanent privileges which were granted from the California Alcohol Beverage Control on a temporary basis for certain licensees to ship direct-to-consumer (DTC) during the

state of emergency. While those privileges helped provide an outlet to distilleries struggling during the pandemic, they are also a response to consumer demand, which has drastically altered under stay-at-home orders and indoor/outdoor dining restrictions.

As the bill works through the legislative process, CADG will be working with the California Craft Brewers Association, DISCUS, and

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other industry groups to reach the widest audience of DSPs. The retail environment has changed and the 2020 pandemic has shown consumers are moving towards hav-

COLORADO COLORADO DISTILLERS GUILD Happy 2021 all! Our Colorado distillers are very much looking forward to a much more positive year than 2020 and have hit the ground running. Most of our 2020 goals had to be pushed to 2021, as I'm sure is true for most state guilds. We are hoping to revamp our Colorado Spirits Trail to adapt to the changes we've had to make in the last year and encourage in-state travel to our tasting rooms across the state. We have also joined forces with our other Colorado craft beverage guilds (beer, wine, and cider) to create a Colorado “Liquid Arts Passport.” We received a matching grant from the Colorado Tourism Office to create a series of online passport programs for different regions in the state for discounts and offers to each of our members' tasting rooms/taprooms. Throughout the last year, all four guilds have worked closely together to ensure our united voice

CONNECTICUT CONNECTICUT SPIRITS TRAIL & GUILD The Connecticut Spirits Trail & Guild members are, of course, very happy about the recent federal law changes including the passage of the permanent FET reduction and the waiving of the FDA fees for distilleries that are making hand sanitizer. These should assist distilleries in Connecticut and all over the U.S., which is certainly needed in the challenging times that the pandemic has brought to the industry.

At the state level here, we have had some legislative successes but also have some work to do in order to achieve long-term solutions to promote and protect business growth.

In a past legislative change, effective July 1, 2020, Connecticut distilleries are

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ing products delivered to their homes. This bill looks to allow California distillers to stay in that retail sales path and hopefully allow for a return to the growth the craft spirits move-

ment in California was experiencing before the COVID-19 pandemic.

was heard in the creation of ever-changing rules and guidelines. Our guild is proud to be in a state where these types of collaborations are possible.

As far as legislative goals and accomplishments go:

3. We’re still pursuing direct-to-consum-

1. We’re working with our counterparts in the

cider community to get a bill passed that will greatly increase the production cap on distillery pub licenses, giving us a parity with brew pubs (based upon number of typical servings).

2. We’re currently fighting a challenge to the

cocktails-to-go issue. A bill is being written that will make cocktails-to-go permanent, however the beer wholesalers have asked that manufacturers be excluded from it.

This is due to their fear that AnheuserBusch InBev or Molson Coors might gain unfair advantage somehow. If they get their way, we (those of us with manufacturing licenses) would simply be collateral damage. We’re working with various folks to see that doesn’t happen. now able to hold a café permit, allowing the sale of drinks by the glass and/or hold a full restaurant permit, and to be able to double the individual sales limit to tasting room visitors. Certainly this is progress, but its impact was effectively delayed by the impacts of the pandemic.

We are going to push for the permanent allowance for home bottle and pre-made drink delivery and for in-state shipping, which has been temporarily allowed due to the pandemic.

State law currently has a gallon threshold that, if crossed, forbids the sale of bottles in the tasting room. While this may have been intended to allow only small craft distillers’ tasting rooms to sell product, with the advent of canned cocktails/alcoholic RTDs we realize that this aspect of state law needs to be revisited to accommodate growing produc-

Cris Steller, Executive Director Ryan Friesen, Vice President

er (DTC) shipping in some way, shape, or form. At present both the Wine and Spirits Wholesalers of Colorado and the Colorado Licensed Beverage Association (CLBA) are in opposition. We are working with various folks at the national level to build a case that shows that wine DTC has increased, rather than decreased, both wholesale and retail sales.

Lastly, we will be working on improving our sponsorship program for the guild. We envision sessions and training that our sponsors will be able to present to our members so that each member has more access to resources our sponsors provide.

We have appreciated all of our national and state guilds’ hard work this last year and look forward to working with you all again in 2021.

Meagan Miller Talnua Distillery, Co-Founder & Vice President Colorado Distillers Guild, President

tion levels.

We will prioritize lifting that restriction and attaining other modernizations to the state code — such as the ability to sell bottles at certified farmers markets and operate satellite tasting rooms without the need to have a licensed distillery on the premises.

The business environment improvements that we have attained are creating more encouragement amongst our current members and for those considering getting into the industry. We realize that our work in this arena will likely never end, so we will continue to press on while working within the threetiered system and with our state lawmakers.

Cheers to everyone!

Tom Dubay President, CT Spirits Trail CEO, Hartford Flavor Company tom@hartfordflavor.com

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FLORIDA FLORIDA CRAFT SPIRITS ASSOCIATION Through the middle of 2020 more than 40 Florida craft distillers joined together for a common cause and have established the Florida Craft Spirits Association (FCSA). The FCSA mission is to grow the market for Florida craft spirits through education, marketing, and regulatory influence. Florida craft distilleries, along with other small businesses, are the epicenter of our state’s economy and must have aggressive advocates in Tallahassee.

The FCSA works with state and federal government decision-makers while informing the FCSA membership on new laws and agency rules. The FCSA also works closely with other industry organizations such as the Distilled Spirits Council of the United States, the American Craft Spirits Association, and the American Distilling Institute.

MARYLAND MARYLAND DISTILLERS’ GUILD The Maryland Distillers’ Guild heads into 2021 with 60 members. The membership consists of 30 stellar distilleries, 15 undeterred startups, and 15 supportive corporate affiliates. This year, we successfully raised funds to engage a lobbyist to codify the new sales privileges made possible during COVID (originally issued via executive order by our governor) including home delivery, DTC shipping within the state, and lifting of previous on-premise sales limits and restrictions. We are celebrating a successful partnership with

NEW YORK NEW YORK STATE DISTILLERS GUILD The New York State Distillers Guild has been working hard to introduce legislation for direct-to-consumer (DTC) legislation in January 2021. The bills would allow DTC

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As the unified voice of Florida distillers, FCSA is the go-to association for information about the distilling community. Internally, the members are a community of proud entrepreneurs with a passion for the art and alchemy of hand-crafting spirits who willingly share ideas to help launch, grow, and sustain their livelihoods. The FCSA maintains a code of conduct, as well as standards of production, ensuring those who proudly display the badge represent the best of the industry.

The FCSA works to grow the distilled spirits market through events and partnerships with associations and organizations at retail stores, on-premise establishments, end consumers, and the media — ultimately raising awareness of each individual hand-crafted spirit.

Fees for the membership-based organization range between $600 and $3,000, and benefits include access to unified industry-wide lobbying efforts at state and federal levels, public relations, media, industry-tai-

2020-2021 FLORIDA CRAFT SPIRITS ASSOCIATION EXECUTIVE LEADERSHIP PRESIDENT

David Cohen, Manifest Distillery VICE PRESIDENT

Matt Armstrong, St. Petersburg Distillery TREASURER

Matt Allen, Dark Door Spirits SECRETARY

Jeremy Craig, Copper Bottom Distillery

lored education and training programs, state and national level mutual support, and more.

For a complete list of FCSA members across the state, please visit FloridaCraftSpirits.org.

“Our organization has been in the works for quite some time and we are excited to finally bring it to fruition,” said David Cohen, inaugural FCSA president. “Our industry has never been more united and engaged to move craft distilling in Florida further.”

David C. Cohen President, Florida Craft Spirits Association

one of the few government-controlled liquor wholesalers and dispensaries in our state, Montgomery County Alcohol Beverage Services. The ABS committed a marketing focus to Maryland-made spirits during November 2020 (Maryland Spirits Month) by featuring and discounting local products, resulting in a serious boost to Maryland spirits sales in the more than 25 county stores during that month. We are also in the process of electing and installing a brand new board, as three of our founding members, including myself, are termed out after six years. Our members continue to be active locally and participate on a national level through positions on the DISCUS Craft Advisory Council and ACSA

committees. I couldn’t be more optimistic about the future of our guild and the spirits industry in Maryland, and I am extremely proud to have played a part in founding and growing this organization. Cheers to my fellow booze makers, and massive thanks to Kevin Atticks for his foresight and dedication as our guild director from day one. Kevin: your guidance, insight, and friendship have proven invaluable, and you are the reason our guild is such a wild success!

shipping within NY State as well as allow New York distilleries to ship to other states that allow DTC shipping. The passage of the bill will be a challenge, but we are committed to fighting for our members’ livelihoods and the opportunities to grow and market our brands. We have also introduced two parity bills, which will give New York distillers

the same rights and production tax credits as our counterparts in beer, wine, and cider.

All of our legislation consists of non-partisan bills, which are designed to help our members today and as we move to the future.

Jaime Windon CEO/Founder | LYON RUM Windon Distilling Company President | Maryland Distillers Guild

Brian Facquet Founder — Distiller Prohibition Distillery

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NORTH CAROLINA DISTILLERS ASSOCIATION OF NORTH CAROLINA Members of the Distillers Association of North Carolina (DANC) met virtually in January to finalize our 2021 legislative agenda.

Our agenda includes the following priorities for the 2021 session of the North Carolina General Assembly: 1. Appropriate $300,000 to the Department

of Agriculture and Consumer Services for marketing and promotion of North Carolina distilleries.

TEXAS TEXAS DISTILLED SPIRITS ASSOCIATION The Texas legislative session began on January 12. Governor Greg Abbott has asked the legislature to make cocktails-togo a priority this session and four bills (HB

VIRGINIA VIRGINIA DISTILLERS ASSOCIATION The past year has been a rollercoaster here in Virginia as regulatory priorities have become even more important in response to the COVID-19 public safety and economic crisis. As the crisis began, many Virginia distilleries began producing sanitizers and antiseptics to meet their civic duties and to fill in breaks in the industrial supply chains.

As the public safety crisis progressed, the state-mandated closures of all distillery store

WYOMING WYOMING DISTILLERS GUILD Hello all, and Happy 2021. FET TAX IS PERMANENT! That was a heck of a nice present to get before the new year…way to go everyone who made their voices heard and put the monstrous efforts in to make this

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2. Establish a North Carolina Spirits Board in

b. Authorization for distillers to sell bottles

the Department of Agriculture and Consumer Services to foster the development of the North Carolina spirits industry.

along with offering free tastings at special events.

3. Request an exemption in the North Caro-

lina building code for construction of barreled spirits storage buildings (rickhouses) to resolve the disconnect between the state fire code and the state building code related to the storage of spirits stored in wooden casks and barrels.

4. Parity with breweries and wineries:

c. Exempt distilleries that are not engaged

in food preparation from food and lodging facility sanitation regulations.

5. E-commerce sales for distilled spirits to

out-of-state consumers.

The North Carolina General Assembly will be meeting through July, and DANC will be working with our lobbyist to promote our legislative agenda.

a. Authorization for distilleries to be sub-

ject to the same day and time operating restrictions as breweries and wineries.

Pete Barger President, Distillers Association of North Carolina, Principal Partner, Southern Distilling Company

983, HB 1024, HB 1102, and SB 298) have already been filed. The Texas Distilled Spirits Association is working with representative Bernal (D-San Antonio) to advance HB 1299 this session. HB 1299 will give distillers the ability to participate in festivals, civic events, farmers markets, etc., which will help distillers market their products in their communi-

ties and across the state. TDSA is also working on bills which will expand the two-bottle limitation on sales from Texas distilleries and provide direct-to-consumer opportunities for the public.

tasting rooms, where more than 80 percent of all Virginia spirits SKUs were/are sold, created enormous economic strains for our industry members. The state enacted several fundamental emergency privileges to expand market access for our constituency through the Governor’s emergency orders, creating critical lifelines for distillery stores that allowed our industry members to maintain income and employment throughout the pandemic. Emergency privileges included direct-to-consumer (DTC) delivery and shipping privileges, as well as curbside pickup and to-go cocktails.

DTC delivery (by a distillery employee or

third party) is now a permanent privilege.

The Virginia Distillers Association is actively working to make DTC shipping permanent as our number-one priority.

For promotional updates, the VDA is working on an annual marketing plan centered around promoting the DTC delivery and shipping privileges to Virginia residents and programming to drive tourism and visitation to Virginia distilleries as the pandemic pressures ease in the short/long-term.

a reality. With all of our combined efforts we gained a massive win for the craft distilling industry.

Our big news here on the home front is that we hit the “big time” and finally hired an executive director for the Wyoming Distillers Guild. Our new ED is also the director of the Wyoming Brewers’ Guild, so in a state

like ours with relatively small membership numbers, the combined interest of both groups creates a realistic full-time position.

She will essentially contract separately for both guilds, but we do plan on collaborative efforts in the future with both guilds. Having the executive director will allow the guild to significantly grow through increased mem-

Mike Cameron President Texas Distilled Spirits Association

Amy Ciarametaro Executive Director Virginia Distillers Association

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bership of DSP’s and also general industry members. This will significantly increase our revenues and impact ability in our state.

She is also tasked with getting creative with fundraising efforts, and we will report more on that as she grows into her position. Of course, there are still a lot of questions regarding how events and such will be conducted in 2021, but we are hopeful here in Wyoming that we will be approaching some level of new normalcy soon.

Speaking of events and such, we all have our fingers crossed here that we can all meet up in person once again in Louisville, Kentucky this summer. Some of our members have entered a selection of spirits into the ACSA Judging of Craft Spirits, which of course is always an exciting night to top off the ACSA Convention. If you haven’t registered your entries, get on it right away.

Here’s to a bright and healthy new year to all of you. May there be cocktails in person with you all this year!

Travis Goodman Secretary/Treasurer, Wyoming Distillers Guild Partner, Jackson Hole Still Works travis@jhstillworks.com

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Craft spirits play an important role in driving innovation in our industry. Southern Glazer’s Wine & Spirits is committed to supporting this thriving and diverse sector and is proud to be a part of the new WSWA Access Advisory Council helping brands identify opportunities to get to market. As part of our ongoing commitment to the craft spirits industry, and our desire to help entrepreneurs achieve their dreams, we would like to offer all craft spirit distillers access to our distribution platform in your local markets.

Interested producers can send inquiries to newproducts@sgws.com.

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© 2021 Southern Glazer’s Wine & Spirits

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FEAR, PERSEVERANCE, & PROFITS Written by Rich Manning

The Craft Bitters Industry Gets Taken for a Wild Pandemic Ride

T

ake a moment to ponder cocktail bitters. They’re intense, complex, and equipped with a highly concentrated purpose. The raw functionality of these drink-enhancing elixirs serves as a rather fitting metaphor for the craft bitters industry during the pandemic. The potent peril caused by COVID’s initial onslaught demanded an intricate and layered response.

Passion and perseverance were the binding agents necessary for survival. One year after the pandemic began, the application of these attitudes has produced surprisingly positive results.

To fully understand how we’ve arrived at Point B, we must revisit the dark clouds swirling about point A in the spring of 2020. While COVID was shrouded in mystery when it began its cross-country rampage, its ability to rip through the food and beverage industry quickly became well-known and rather infamous, specifically relating to the opening and closing of venues. This put craft bitters in a uniquely unfortunate situation. While the FDA technically classifies bitters as an extract or ingredient instead of an alcoholic substance, there was typically enough alcohol adjacency for bitters producers to feel the sting of restriction.

“At the beginning, it was pretty dire,” explained Ira Koplowitz, co-founder of Bittercube in Milwaukee, Wisconsin. “We underwent a reduction in staffing because our cocktail bar and tasting room was closed. We also had to put our consulting and sales staff on hold. We just had enough staff to handle hands-on activities, which was difficult. We were giving it a go, but it wasn’t certain we were going to make it through early on.”

COVID’s disruptive powers also affected the business of merely trying to do business, particularly due to the pandemic’s choking effect on supply chain. Suddenly, shipments of neutral grain spirits

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were delayed instead of arriving like clockwork.

Bulk orders of botanicals and unique ingredients such as vanilla were difficult to complete even from familiar and trusted sources, partially due to supply chain hiccups on the purveyor side. The packaging required to get the finished product to the masses became tough to come by. This plunged producers into mad scrambles to try and keep operations running smoothly and prevent their distribution partners from enacting force majeure clauses. It also yielded the occasional harrowing eleventh-hour issue, complete with narrow escapes. “There was one time early on where shipping delays caused a discrepancy between bottles and droppers we received,” recalled Raymond Snead, co-founder of Cocktail Punk in Boulder, Colorado. “Thankfully, I had just enough of a surplus of bottles in stock to cover us until the full order kicked in. I was extremely lucky — it would have been a disaster if I weren’t.”

The robust sales numbers concerning alcohol purchase were deceiving, too. Even though the figures suggested increased sales, larger and more familiar brands were driving the uptick.

While this wasn’t too surprising, it was nonetheless a point of frustration. “Everybody knows Angostura and Peychaud’s because they nearly have a 200-year head start on craft brands,” explained Lawrence Floyd Batterton, CEO of King Floyd’s Bitters in Novato, California. “This makes it tough for a brand like ours to penetrate the bitters market under normal conditions. When the pandemic first hit, it made it even tougher.”

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Despite the curveballs COVID threw at the craft bitters industry’s metaphorical head, those in the game dug in and remained resilient.

“We never really questioned if we were going to make it,” said Biambu Garrett, King Floyd’s General Manager. “We just put our head down and became determined to move forward no matter what.”

This sturdy gumption took on many forms. King Floyd’s took advantage of the extra bandwidth caused by trade show cancellations to get new and experimental flavors ready to go to market, such as wild plum bitters made from the abundance of plums grown in Batterton’s backyard. (“We almost called it ‘pandemic plum,’” Garrett said). Cocktail Punk tapped their corporate agility to supply white label aromatic and lavender bitters to Jack Rudy Cocktail Company for their line of canned cocktails. Bittercube unleashed the power of the Internet to host cocktail classes and virtual happy hours, ongoing fêtes which have provided revenue and forged bonds that transcended mere transactions. “We’ve received support from all across the country, from fans of our products to bartenders stuck at home,” Koplowitz said. “Because of our online programs, some of our customers almost feel like regulars at a bar. As crappy as the pandemic has been, the support from this group of awesome people has helped us remain positive.”

Regardless of the path taken, calm nerves and a positive attitude kept them on the road. “Our strategy was not to panic,” Snead explained.

“We just had to take a deep breath and figure out what to do under the circumstances. We figured if we stayed calm, good things would come.”

After the initial shock of the pandemic wore off and bulk buying gave way to more sensible shopping, consumers returned to the craft bitters sector via online or off-premise specialty store shopping, led

by the rallying support of long-time customers. Ultimately, this return to craft pushed that end of the market towards impressive gains, from sizable sales increases to record-setting numbers. These numbers are cause for celebration, but they also demand a little context. “We saw a 45 percent increase in sales, which is fantastic,” Batterton stated. “At the same time, we’re still a small operation with a lot of overhead. That bump doesn’t necessarily mean a huge increase in profits.”

Nonetheless, an economic win in these times is an economic win, and craft bitters producers are quite cognizant of this victory, particularly when this isn’t the norm elsewhere. “We’ve worked hard to build a strong community, and our customers rewarded us by buying more of our bitters than ever before,” Snead said. “I feel a little guilty because of how well we’ve done.”

There’s confidence within the craft bar scene that online tastings and at-home cocktail consumption will continue after the pandemic ends.

While these are positive concepts to look forward to, they do little to scratch the obvious itch for normalcy felt within the community, be it in the form of a warm conversation on a trade show floor or pouring a cocktail for guests in person. “I can’t wait for our bar to open again,” Koplowitz said. “It’s a really nice place for us Milwaukee cocktail nerds.”

When this does happen — whenever it does — those in the craft bitters industry will be ready. “The pandemic has taught us to be prepared to think differently, be adaptive, have a good attitude, and try to have a good time no matter what,” Batterton stated. “But it doesn’t matter what happens. We’re going to keep doing this because we love doing it.

That’s never going to change.”

Rich Manning is a freelance food and drink writer based in Fountain Valley, CA. He lives about 15 minutes south of Disneyland, but he hasn’t gone there in ages — he’d rather visit the nearby breweries and distilleries instead. You can check out some of his other written hackery by visiting richmanning.pressfolios.com. He can be reached at richmanning72@gmail.com.

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STEP 1: IDENTIFY THE ISSUE Failing to identify and properly handle a serious shortcoming in wholesaler performance can have serious ramifications for your business. On the other hand, exaggerating the significance of a small problem can lead to overreactions, which often only exacerbate the underlying issues. Prematurely threatening termination or a lawsuit can backfire, with terrible results.

Hence, the first task at hand is to categorize the issue properly, and thereby to calibrate its seriousness and the range of appropriate solutions.

Consider the following list of examples:

DIFFICULTIES AND DISPUTES WITH WHOLESALERS

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A BRIEF STEP-BY-STEP PRIMER TO DEALING WITH THE INEVITABLE

·

BY DANIEL P. MCGUIRE

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A

s a craft distiller, you have likely encountered difficulties related to wholesaler performance in the past, and will likely do so again in the future. These difficulties can be major or minor, and can include such travails as temporary dips in sales numbers, persistent failures to reach contractually agreed-upon targets, and even breaches of contract or applicable law (such as failure to restrict sales to an appointed territory).

Handling these problems correctly when they arise could be a crucial factor in the long-term success of your business.

Importantly, both state law and the language of your distribution agreement will often circumscribe the options open to you. While each set of facts is different, and there is no one-size-fits-all formula, what follows is a flexible step-by-step guide for contextualizing wholesaler difficulties properly, and handling them constructively within the confines of law and contract.

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·

·

When reviewing monthly reports, you notice fluctuations in sales numbers that do not appear to correspond to the wholesaler orders.

A period of growth in a new market is followed by three months of declining sales and a corresponding drop-off in orders.

You learn of products being sold in a territory where no wholesaler has been appointed, and while you suspect transshipping the wholesaler denies any knowledge.

A large national wholesaler refuses to participate in co-marketing programs.

You become concerned that the wholesaler does not employ sufficient staff dedicated to the promotion of craft brands.

•

After a period of no orders, you reach out to the wholesaler only to find that the wholesaler fails to return your telephone calls or emails.

•

You sign a written contract with a wholesaler who then “sits on” your brand, refusing to place orders for products or placing only minimal orders.

•

A wholesaler with whom you do not have a written agreement, and which has never placed an order, claims the exclusive legal right to distribute your products in an entire state. You are not quite sure what they mean when they threaten to “take actions to defend their legal rights.”

•

You learn that a wholesaler has been recommending that retailers place orders for competing brands, and you suspect that the wholesaler may be disparaging your own.

Naturally, each of these scenarios represents a qualitatively different kind of problem, and the appropriate remedy will differ accordingly.

STEP 2: IDENTIFY YOUR OBJECTIVE The second task is to identify your desired outcome. In light of the issue you have identified, what is your goal for resolution? Defining the desired outcome will inform your practical approach to the issue. It may be helpful to prepare a short written summary of your objective. This will (i) enable you to clarify your own next steps; and (ii) facilitate constructive communications with the wholesaler as to how they can solve the problem you have identified in step 1.

Examples:

• •

I want the wholesaler to redouble sales efforts, and thus to recover lost market share.

I want the wholesaler to support local marketing programs and targeted promotions, to provide pricing support if permitted, etc.

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•

We signed the contract last month but there has been no action. I want the wholesaler to begin placing orders and using reasonable efforts to promote brands.

•

The relationship isn’t working. I want to terminate and move my brands to another wholesaler.

•

The wholesaler’s behavior in disparaging my brands has caused actual damages. I want to seek recovery of money damages for commercial disparagement and breach of contract.

Conferring with counsel can be an important aspect of this step.

Your attorney will be able to assist you by: (i) reviewing the terms of any written agreement, particularly the termination, notice, and cure provisions, and (ii) providing guidance based on local law, particularly in states that provide wine and spirits wholesalers with franchise protections. This will clarify the range of options at your disposal.

Furthermore, your attorney can provide guidance to ensure that in any communications with the wholesaler you avoid waiving your legal rights, and that you lay the proper foundation for your desired objective.

STEP 3: DECIDE ON A COURSE OF ACTION TO REMEDY THE ISSUE, AND IMPLEMENT IT Having identified both the issue and the desired resolution, the third step is to decide upon and implement a course of action. Here it will be critically important to understand the broader legal and contractual framework in which you will be operating, and competent legal advice will often be indispensable at this stage. Your rights and obligations will depend upon the jurisdiction in which the wholesaler operates, whether (i) under a state franchise law, (ii) under one of the many different “control state” regimes, or (iii) in a more open environment where the terms of your written distribution contract will likely constitute the determining factor.

Armed with the proper advice, you will want to ask yourself how best to achieve the objective identified in step 2:

•

Can I resolve this with an informal call, or would an email be better?

•

In addition to seeking a resolution of the issue at hand, should I be making a record to lay the groundwork for termination, if push comes to shove?

•

Do I have the legal right to terminate this wholesaler upon written notice, or must I allow the wholesaler an opportunity to cure the defect or breach?

•

Is there another wholesaler in the jurisdiction that could service my brands?

You will then want to formulate a clear plan of action to be implemented. This plan will differ depending on the underlying problem and your desired resolution. A key principle to keep in mind here is that failure to implement your solution will often leave you back at

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square one, possibly having squandered the opportunity to achieve the resolution you identified in step 2.

For example, if the issue is a persistent problem with overdue payments, and your desired outcome is to terminate and move the brands to another wholesaler, your contract and applicable state law may allow you to do so. But failure to act in a timely manner by providing written notice of termination within the timeframe specified in your contract, followed by acceptance of payment of the arrears, could be interpreted as a waiver of your right to terminate.

You may now face the uncomfortable prospect of needing to wait for the next time the account is overdue before you can take action.

Now the prior overdue payments, while a source of frustration for you, may be irrelevant or even harmful to your position in the event of a dispute.

STEP 4: FOLLOW THROUGH AND IDENTIFY WHEN THE ISSUE HAS BEEN RESOLVED Having begun to implement the plan you formulated in step 3, it is critically important to keep track of the resolution process, and to identify the point at which you believe the problem can be written off as solved.

This can be complicated in situations where you are still trying to work with a wholesaler who has given you trouble in the past.

Following up on written or oral communications in a timely manner and adhering to the formal notice provisions of your written agreement can be critical.

Here again, the assistance of counsel can also prove invaluable, especially if you feel that your efforts are not leading to the desired resolution. Depending on your particular circumstances, involving counsel sooner rather than later can often help avoid litigation and keep things on track toward an amicable resolution.

CONCLUSION As a craft distiller, while you hope that difficulties and disputes with your wholesalers will be rare, you know that they will occasionally arise. Approaching the inevitable problem with the right mindset, clear objectives, and a well-advised plan for resolution can help ensure that your commercial relationships with wholesalers remain “win-win” propositions, rather than an endless series of zero-sum contests. Finally, when a nascent dispute arises and you are unsure what your legal rights are, timely recourse to counsel can be of critical importance to achieving a desired outcome, even (or perhaps especially) if you hope to avoid the expense and strain of litigation.

Daniel McGuire is an attorney in the Washington, DC, office of McDermott Will & Emery, LLP. Daniel has represented supply-tier clients in the alcohol beverage space for several years in both commercial and corporate transactions as a member of McDermott’s full-service alcohol regulatory team. He can be reached by email at dmcguire@mwe.com.

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We are a boutique creative agency specializing in strategy, storytelling and utterly unignorable package design.

Patxaran

Written by Reade A. Huddleston

t

he Basque-speaking regions of Spain and France have always done things a little differently from the rest of the world. The Basque language is a rare “isolated language,” meaning that it is not related to any other spoken languages. Similarly, Basque folklore is filled with characters and stories that do not seem to be shared by others.

This uniqueness extends to Basque cuisine and food etiquette, which differs greatly from other Spanish provinces.1 Therefore, it should come as little surprise that the Basque also have their own cadre of alcoholic drinks and drinking customs to go with them. Many have heard of Basque cider, which has become very popular around the world. However, fewer have heard of the sloe-berry infused liqueur patxaran.

Patxaran, which can also be spelled in Spanish as pacharán, is one of the most common drinks in Basque-speaking households and is perhaps one of the Basque-lands most wellkept secrets.

What exactly is patxaran? Well, the answer to that is somewhat complicated. In order to properly answer, we need a brief lesson in history. The earliest written mentions of people consuming patxaran come from the early 15th century in the Kingdom of Navarre, which occupied much of the modern Basque region.2 Like many other liqueurs from Europe at the time, patxaran first began its life as a medicinal drink designed to cure digestive disorders. Indeed, one of the most popular stories about patxaran from this time comes from the

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Navarrese royalty themselves.

Supposedly, sometime in the mid-1400s — sources differ on the exact date — Queen Blanca of Navarre took ill while visiting the monastery at Santa Maria De Nieva. The monks mixed a special batch of patxaran for the queen that cured her of all of her ills.2,3 Over the years, the supposed curative powers of patxaran helped make it a staple of many Basques' dayto-day life, and it eventually began to be consumed both recreationally and medicinally.2 Despite this almost universal acceptance and use by all levels of Basque society, patxaran’s production remained largely in the home for many decades. Most households throughout Navarre and the rest of Basque-speaking Spain made and enjoyed patxaran only in the home with recipes that were passed down from generation to generation. Thus, patxaran remained a mostly Basque product and was relatively unknown even to other peoples of the Iberian Peninsula.4 Because of patxaran’s relative anonymity, it was not until relatively late that the first commercial brand began to become available.

The Velasco family, which had been producing patxaran on a small scale since the late 1800s, was the first to put out a commercial patxaran in 1956.5 Their brand, which they named Zoco, was not an instant success, so patxaran remained a mostly regional product and few outside of the Basque-speaking community even knew of its existence.2 However, with the death of Spain’s fascist dictator Francisco Franco in 1975, and the

Patxaran is one of the most common drinks in Basque-speaking households and is perhaps one of the Basque-lands most well-kept secrets.

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reorganization of Spain that followed, there was a renewed interest in Basque culture and history. Many aspects of Basque society that had been suppressed by the fascist regime began to be celebrated, and by the 1980s, patxaran had gained notoriety across much of Spain.1 This newfound popularity actually presented a problem for many commercial patxaran producers.2 Sloe berries, the main ingredient in patxaran production, had traditionally been harvested from wild blackthorn bushes throughout Basque territory. However, as patxaran’s popularity increased, demand for sloe berries quickly outstripped supply.5 Worse, many producers entering the market produced patxaran with sub-par ingredients and methods. In order to combat these problems, the major patxaran producers banded together and created a regulatory council that put strict controls on the raw materials and methods used when making patxaran. A specific denomination for patxaran production was granted in 1988 by the Spanish government, and as of 2008, the European Parliament grant-

References 1) Kurlansky, Mark, 1999. The Basque History of the World: The Story of a Nation. Penguin Books. London United Kingdom.

2) Pacharán Navarro. 2021. Elaboration. Available from <https:// www.pacharannavarro.org/> [February 10, 2021] 3) Rubio, Sonia Torre, 2010. Gastronómadas: ¡Un Pacharán, Por Favor! Available from <https://www.redalyc.org/ pdf/921/92152537020.pdf> [February 12, 2021] 4) Sierra, T., Sierra, L., 2019. What is Pacharán Liqeuer. Available from <https://www.thespruceeats.com/what-is-patxaranpacharan-liquor-3083098> [February 19, 2021] 5) Pacharan Zoco. 2021. 60 Years of Tradition. Available from <https://pacharanzoco.com/60-anos-de-tradicion/> [February 10, 2021] 6) Council Regulations, 2008. Regulation (EC) No. 110/2008.

Available from <https://eur-lex.europa.eu/LexUriServ/ LexUriServ.do?uri=OJ:L:2008:039:0016:0054:en:PDF> [February 10, 2021] 7) Opaz, Gabriella, 2021. La Rioja’s Traditional Liqueur: Patxaran.

Available from <https://catavino.net/la-riojas-traditionalliqueur-patxaran/#:~:text=Traditionally%2C%20it%20is%20 served%20chilled,their%20own%20concoction%20in%20house. > [February 12, 2021] 8) Parada, M. et. al. 2010. Ethnobotany of Food Plants in the Alt Empordá region (Catalonia, Iberian Penensula). Journal of Applied Botany and Food Quality. 84. Pp 11-25(2011).

9) Pacharán Baines. 2021. Baines Gold. Available from <https:// www.pacharan.com/productos/Baines-Oro> [February 12, 2021] 10) Fernández-García, T., Martín, M. & Casp, A. 1998. Quantification of significant volatile components of pacharán. Z Lebensm Unters Forsch. 206. Pp 414–416 (1998).

11) Gironés-Vilaplana A. et. al. 2015. Novel Maqui Liquor Using Traditional Pacharán Processing. Food Chemistry. 173. Pp 12281235.

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ed patxaran a specific geographical indication.2,6 The process for making patxaran is relatively simple, though there are some important rules that must be followed. Officially, there are only three ingredients allowed in traditional patxaran making: sloe berries, aniseed, and sugar.2 However, many home recipes also include small amounts of coffee, cinnamon, and other botanicals.7 The first most important step in patxaran production is acquiring the sloe berries. Sloe berries (Prunus spinosa) are the small dark fruit of blackthorn bushes that grow wild throughout much of Europe.8 Sloe berries normally ripen in early autumn, and it is important that any berries selected are clean of any dirt or other contaminants. Although the sloes can be dried, it is best to use them when they are fresh so that their full flavor is preserved.2 Once the sloe berries have been selected, they are macerated in alcohol along with the anise, which can be either green or star, and the sugar. The base alcohol for patxaran can come from any source, however, grape-based is the most traditional.7 Once the ingredients are macerated, the patxaran is allowed to rest, sometimes in barrels, for at least one month and up to eight months before being proofed and bottled.9 It is important to note that the regulatory body that controls commercial patxaran production, The Pacharán Navarro, does not allow any color or flavoring additions to be used.2 This means that patxaran’s traditional bright red coloring comes exclusively from the sloe berries. Traditionally, patxaran is bottled between 25 and 30 percent ABV, though homemade versions can vary wildly when it comes to proof.4,7,10 A well-made patxaran should have an intensely fruity aroma and be complex and long-lasting on the palate. Many Basque enjoy patxaran as a chilled after-dinner drink to aid digestion.

That said, there are no hard rules about when to consume it, and it can be enjoyed at any time.4 Although patxaran remains a relatively unknown drink outside of the Iberian Peninsula, its popularity remains strong among those in the know. In 2009, thanks to an intense cultivation program, Patxaran Zoco was able to once again produce all of their product using sloe berries cultivated within Spain.5 What’s more, in 2015 researchers in Chile used patxaran production methods as a blueprint to try and create their own anise- and berry-flavored liqueur using Maqui berries.11 Who knows? Perhaps patxaran will one day find a footing outside of Basque-land and become the next must-have spirit.

Reade A. Huddleston is Head of Production at Headframe Spirits in Butte, Montana. He received his Masters Degree in Brewing and Distilling Sciences from Heriot-Watt University, and is fascinated with all things drinkable. If you would like to contact him about any strange and forgotten spirit, please email him at ReadeHuddleston@gmail.com.

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VITAL TAX REDUCTIONS MADE PERMANENT FOR CRAFT DISTILLERIES WRITTEN BY ASHLEY L. HANKE, ESQ.

T

he alcoholic beverage industry has taken some

hard hits since March of 2020 when the COVID-19 outbreak led to many mandatory closures for on-premise restaurants, bars,

and tasting rooms. And with onpremise alcohol sales accounting for a significant portion of many brands’ annual revenue, the outlook for a prosperous 2021 was bleak. In addition to the hardships faced by distillers in 2020, there was also a looming sense of uncertainty regarding Congress’s extension of the Craft Beverage Modernization and Tax Reform Act, or CBMTRA, an Act that has provided craft distillers with significant Federal Excise Tax (FET) reductions since January of 2018. Due to the temporary nature of the excise tax provisions, which were set to expire at the end of 2020 had Congress not acted, many craft distillers feared that without the passage, they would face detrimental financial hardships in the form of a 400 percent hike in taxes.

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Recap: The Craft Beverage Modernization Act was a portion of the Tax Cuts and Jobs Act of 2017. The Act amended the Internal Revenue Code of 1986 as it related to the alcohol provisions that are administered by the Alcohol and Tobacco Tax and Trade Bureau. The original version of the Craft Beverage Modernization Act created a tiered excise tax rate for distilled spirits, a sizable reduction from the previous $13.50 per proof gallon rate. The act provided for reduced tax rates on spirits distilled or processed and removed during the calendar year or imported into the United States during the calendar year. The reduced rates were equal to $2.70 per proof gallon on the first 100,000 proof gallons removed or imported, and $13.34 per proof gallon on the next 22.13 million proof gallons removed or imported. The tax rate for distilled spirits not subject to the reduced rates were set at $13.50 per proof gallon.

The reduced rates were initially applicable only in 2018 and 2019, but on December 20, 2019, the President signed into law the Further Consolidated Appropriations Act of 2020, which extended the provisions of the Craft Beverage Modernization Act related to alcohol for one year, through December 31, 2020. And with the hardships faced by many in 2020, an 80 percent reduction in taxes on the first 100,000 gallons manufactured meant significant savings for producers feeling the effects of COVID-19.

Fortunately, as a difficult 2020 came to an end, distilleries across the U.S. received a welcomed boost of confidence to ring in the new year when the omnibus appropriations and COVID-19 stimulus package, passed by the House and Senate and signed into law by the President on December 27, 2020, made the Craft Beverage Modernization and Tax Reform Act (S. 362/ H.R. 1175) permanent for the country’s craft spirits producers.

CBMTRA Provisions Made Permanent: Key aspects of the CBMTRA provisions that are now made permanent for distillers include:

> Preservation of the FET rate of $2.70 per proof gallon on the first 100,000 proof gallons distilled or processed and removed during the calendar year;

> Preservation of the FET rate of $13.34 per proof gallon on the next 22.13 million proof gallons processed or removed during the calendar year;

> Preservation of the FET rate of $13.50 per proof gallon for distilled spirits not subject to the reduced rates (or beginning in 2022, processed only by bottling); and

> Preservation of the CBMTRA provisions applying the overall quantity limitations associated with CBMTRA tax credits and reduced rates to controlled groups of DSPs. WWW.ART ISANSPI RI TMAG.CO M

Projected Annual Savings for Craft Distillers: Production Amount:

Pre-CBMA Tax Amount: Permanent FET Amount:

Projected Savings:

5,000 proof gallons

$67,500

$13,500

$54,000

10,000 proof gallons

$135,000

$27,000

$108,000

20,000 proof gallons

$270,000

$54,000

$216,000

50,000 proof gallons

$675,000

$135,000

$540,000

75,000 proof gallons

$1,012,500

$202,500

$810,000

100,000 proof gallons

$1,350,000

$270,000

$1,080,000

Amendments to CBMTRA: Some noteworthy amendments to the CBMTRA provisions include:

> Restrictions on the Transfer in Bond of Non-Bulk Distilled Spirits: The temporary CBMTRA provisions authorized the transfer in bond of distilled spirits for beverage purposes between distilled spirits plants irrespective of whether the distilled spirits are transferred in bulk or non-bulk containers. (Prior to 2018, transfers of non-bulk or bottled distilled spirits for beverage purposes were prohibited.) Under the 2020 Act, effective January 1, 2021, transfers of bottled spirits for beverage purposes are not autho-

rized except for transfers between bonded premises belonging to the same person or members of a controlled group and certain transfers for storage or bottling where the spirits are transferred back to the original transferor.

> Changes to the Single Taxpayer Provisions: The temporary CBMTRA provisions provided that two or more entities (whether or not under common control) that produce products “marketed under a similar brand, license, franchise, or other arrangement” shall be treated as a single taxpayer for purposes of the credits and reduced rates. The 2020 Act makes permanent these provisions

with amendments to apply the single taxpayer rule to DSPs who process distilled spirits. As revised, the single taxpayer provisions apply to two or more entities (whether or not under common control) that produce beer, wine, or distilled spirits, or process distilled spirits, under a license, franchise, or other arrangement.

> Changes to the Type of Processing Activities that Qualify for Reduced Tax Rates for Distilled Spirits: Beginning in 2022, only DSPs who perform a processing activity other than bottling are entitled to take CBMTRA reduced rates on distilled spirits that they process and remove in the calendar year.

Ashley L. Hanke, Esq. is an attorney at Malkin Law, P.A., a law firm serving the alcohol beverage industry. Ms. Hanke’s practice focuses on a wide variety of regulatory and compliance issues involving alcohol beverage industry members, including assistance with a broad range of Federal Excise Tax matters as they relate to the provisions of the Craft Beverage Modernization and Tax Reform Act. Nothing in this article is intended to be and should not be construed as specific legal advice.

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RUM AGING SCIENCE

PART V (FINAL INSTALLMENT)

WRITTEN & PHOTOGRAPHED BY LUIS AYALA

A

ging is the most value-added transformation that rum can undergo while at a distillery or aging cellar. But aging spirits in general involves so many variables, that distillers/cellar masters often leave key decisions to chance (building insulation, orientation, etc.). To further complicate things, the scarce literature on rum aging tends to be centered around the Caribbean basin, where large distilleries have been producing rums in industrial scales for multiple generations. How is the modern craft distillery, with a small still and in a relatively small warehouse, supposed to define and carry out a successful aging program?

In this series, The Rum University and Rum Central closely monitored and shared data from a single barrel, so that readers could better understand the transformations that rum undergoes while aging. The barrel was filled in late December 2019 and the rum’s chemical transformations were monitored throughout 2020.

Different climate conditions around the world affect these transformations in different ways, but while the effects are universal, the results presented in this new series were those from Rum Central’s Florence Distilled Spirits Plant, located in Central Texas.

In the first installment (Artisan Spirit Spring 2020 issue) we discussed the experimental design aspect of this study, as well as the environmental parameters and the equipment involved in gathering the data.

In this fifth and last installment of the series we look at how the rum behaved in the aging cellar during the end of the year, as it completed its first full year of aging.

HUMIDITY IN THE CELLAR, NOVEMBER-DECEMBER 2020 As shown in previous installments and also on the graph to the right, there is a daily, rhythmic increase and decrease in humidity, directly related to temperature changes inside the cellar. The data from November and December also showed an increase in average humidity, with very large swings between the low and high points.

TEMPERATURE IN THE CELLAR, NOVEMBER-DECEMBER 2020 As depicted to the right, there is a rhythmic pattern of daily temperature changes inside the warehouse, corresponding to diurnal and nocturnal cycles. There was a noticeable drop in average temperature in late November, but the rhythmic pattern afterward continued to have a similar delta of values between high and low temperatures as before.

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THE RUM After 12 months inside the barrel, the rum has undergone its most drastic chemical transformation. Additional years in the barrel will result in further color extraction at reduced rates and acidification (pH reduction) will appear to stabilize.

COLOR: As the photographs show, the color of the samples taken out of the barrel at monthly intervals is an indication of how much extractable material (tannins, lignin, etc.) was still left in the staves when the barrel was filled with rum. Keep in mind that this particular barrel was previously used to age whiskey. During its aging, the whiskey extracted a much higher quantity of these materials, resulting in a color that was much darker than our rum, in the same amount of time. Most of the rum aged around the world is matured using ex-whiskey barrels because these barrels are cheaper than new ones and because mainstream rum drinkers usually want softer oak notes in their products. There are now several craft distillers aging their rums in new-make barrels and the resulting rums are, no surprise, equivalent to whiskey in oak intensity.

The photograph below shows what the impact of our study would have been, after just one month of aging, if we had used a new barrel instead of an ex-whiskey one. As the photograph clearly shows, one month in a new barrel (middle sample) had a greater color impact on our rum than 12 months in a used one (sample on right).

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TASTE: The taste definitely speaks of cask-conditioning, with different layers of oak com-

plexity. Among these layers are the tannic ones, where we find both oxidized (reduced) and unoxidized tannins. We have tasted commercially available rums that claim to be older, yet lack even this basic level of oak intensity. Ideally, however, the rum would be allowed to mature at least two more years to achieve a higher level of extraction and to ensure that all the extracted tannins have had time to oxidize.

PH: The rum that went into the barrel had a pH of 7.04. The final pH value after 12 months is 4.63, a number that represents a considerable amount of acidification of the ethanol.

Subsequent pH readings may give the impression that there is no further acidification, but a quick look at the Fischer esterification equation reminds us that the formation of carboxylic acids and esters is balanced, meaning that esters also dissociate into their originating components. So, even if pH seems to stabilize, all that means is that the new acMONTH pH ABV ids and esters being January (fill) 7.04 63.43 formed are balanced by the increase of pH February 5.67 63.42 resulting from the libMarch 5.23 63.42 eration of water moleApril 5.23 63.41 cules from the formaMay 5.10 63.40 tion of the esters.

June 5.03 63.40 ABV: The alcohol con-

July

4.96

64.39

centration first went down and then up during the 12 months.

The final reading is 63.84 percent.

August

4.95

63.39

September

4.84

63.62

October

4.66

63.72

November

4.64

63.81

December

4.63

63.84

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CONCLUSIONS 1) BARREL SELECTION IS CRUCIAL. This 12-month study focused on recording the physical transformation of rum aged in an ex-whiskey barrel. If we were to empty the barrel now (to sell the contents as one-year-old rum) and refill it with fresh rum again, the color and flavor extracted into the second rum would be lower than in the first rum. What this means is that, in order for a rum program to offer longterm consistency, it must incorporate new (ex-whiskey in this case) barrels regularly.

2) STARTING (FILL) ABV DICTATES CHARACTER INTENSITY IN THE FINAL (BOTTLED) PRODUCT. The higher the ABV inside the barrel, the fewer barrels a distiller will need to age a given volume of rum. Unfortunately, higher ABVs will lead to higher evaporation losses and will require a larger volume of water to cut the proof down to bottling strength.

More water means more flavor dilution, so in order to end up with a bottled rum that retains much of the cask-strength character, the bottling strength and the barrel fill strength should be closer to each other. This means more barrels (higher cost for the distiller), but hopefully the end product can be retailed at a higher price point too.

3) WAREHOUSE LOCATION AND CONDITION WILL HAVE AN IMPACT. The temperature deltas (the difference between daily high and low temperatures) contribute to the expansion and contraction of the rum inside the barrel. The expansion helps the rum penetrate deep inside the staves, dissolving extractable materials. The contraction then carries those extractable materials out of the staves and mixes them with the rest of the rum in the barrel. The larger the deltas are, the faster the extraction will take place. If you want to maximize the maturity of the rum in a relatively cool warehouse, identify the warmer area (usually west-facing walls) and place your rum barrels as close as possible to those walls.

Luis Ayala is an international rum consultant and broker of specialty aged rums. He is founder of The Rum University, Rum Central, and Got Rum? magazine. For more information visit www.gotrum.com or email luis@gotrum.com.

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Website Accessibility UNSEEN LIABILITY

WRITTEN BY TOM WOODS & COREY DAY

Y

ou get a notice in the mail (or even hand delivered) saying your distillery is being sued by a customer. You think to yourself, “I’ve been essentially on lockdown since March last year, what could a customer be suing me for?” You read further and get the gist, a visually impaired customer attempted to use your website to make a purchase and couldn’t because the website was not compatible with the customer’s screen reading software. As a further complication, there’s a bunch of jargon in the complaint you’re not familiar with: WCAG 2.1, W3C, alt text, and Title III of the ADA, and potentially mention of the California Unruh Civil Rights Act (Unruh Act) or New York State Human Rights Law (NYSHRL).

This scenario is occurring more and more often. Distilleries and other alcohol businesses are increasingly the target of these website accessibility lawsuits. To help to avoid finding yourself in this situation, we suggest getting up to speed on website mechanics, the law, and how to comply. This is just a brief introduction to these issues and further study will definitely be necessary.

WEBSITES: IN A NUTSHELL

Websites are basically written words that tell the web browser how the site should appear and behave. If you had the skills to create your website from scratch you’ve seen this, but if you hired a web developer or used a website creation service — like those offered by WordPress or Squarespace — you can take a peek at that code by clicking “inspect” within your web browser’s settings or options. If you do that, you’ll see a wall of words. That’s the code.

Besides containing the written content visible on your website, your site’s code includes invisible instructions and other information that contribute to the behavior of your site. One such piece of information is alt-text. Alt-text is a written description of non-text portions of your website. So, a picture of your award-winning gin would include an alt-text label “Bottle of gin with gold medal next to it.” Screen reading software takes the code of the website, including alt-text and other background information, and verbally transmits that information. This allows visually impaired customers to get an equivalent experience to sighted people.

To help guide development of accessible websites, the advocacy group World Wide Web Consortium (w3.org) has put out its Web Content Accessibility Guidelines (WCAG) — currently in version 2.1. The WCAG 2.1 details recommendations on what site owners can do to maximize visually impaired visitors’ ability to use their site.

WEBSITE ACCESSIBILITY LAW

In 1990, Congress passed the Americans with Disabilities Act (ADA). The law put an affirmative duty on businesses to make their premises accessible to people with disabilities. At the time the law was passed, the concern was access to physical locations; websites and the internet were understandably not mentioned. Fast-forward to now and some federal courts have ruled that the ADA also applies to a business’ website.

In that same period of time, a number of states enacted their own antidiscrimination laws. For example, the Unruh Act in California and the NYSHRL in New York. Courts in those states have also interpreted those

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laws to require a business’ website be made accessible for the visually impaired. While the courts have expanded the scope of the ADA and similar state laws, they’ve yet to rule on what exactly needs to be done to make a website accessible.

The penalties for a non-compliant website can be severe.

Specifically, a court can order you to make your website compliant, award the plaintiff ’s attorneys’ fees (which if the case goes to trial can be in the six figures), and if the case is under a state statute additional monetary damages can be added on top of the rest.

Suffice it to say, once you receive one of these lawsuits, there is no cheap fix.

HOW TO ENSURE YOUR WEBSITE COMPLIES

As discussed above, there is no website accessibility standard that has been adopted by all states and the federal government. That said, several courts have approved settlements in which websites agree to comply with the WCAG. Accordingly, until and unless your state or the federal government says otherwise, ensuring your website is WCAG compliant is the most likely way to protect your company from potential claims. Unfortunately, this is not as easy as flipping a switch. You’ll want to make sure that if you manage your website in-house, that you review the latest WCAG and determine if you can make the changes yourself. If you use a third-party web developer, confirm they have built your website to this standard.

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Also, make sure to review your web developer agreement to see if they specifically agreed to defend and indemnify you for any ADA or related claims arising from the accessibility of your website. Finally, this area of the law is rapidly developing, so check with your attorney for recent developments.

CONCLUSION

Take the time to review your website now for compliance, then make sure you have a plan in place for maintaining compliance. It will save you in the long run.

DISCLAIMER: This article is intended to be a source of general information, not an opinion or legal advice on any specific situation and does not create an attorney-client relationship with our readers.

Tom Woods is a commercial dispute and consumer practices litigator at Stoel Rives (stoel.com). Tom likes to sip spirits while smoking meats. Give him a call (916) 319-4748 or email him tawoods@stoel.com to discuss indirect fire techniques.

Corey Day is an alcohol beverage attorney and litigator at Stoel Rives (stoel.com). Corey likes chatting about potent potables, so email him: corey.day@stoel.com, call him: 916-319-4670, or follow him on twitter: @coreyday.

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Aquavit's Potential Rooting for the Perpetua� Underdog WRITTEN BY AARON KNOLL

A

quavit would be the top-selling spirit in the world — if predictions were sales. Seemingly every year, the spirits community states that next year will be aquavit’s year.

The Globe & Mail called it a “next big” thing in 2015. The Daily Beast proclaimed it “your new bar mainstay” for 2016. Mixology Magazine called it for 2017. The Gentleman’s Journal said in 2018 it was “having a moment.” The IWSR forecasted aquavit as a major “emerging category” from 2018-23. Master of Malt put it at the top of their 2020 trends predictions (though humbly admitted in their 2021 forecast that while sales grew, the spirit didn’t take off).

The point isn’t to pour it on — I’ll even admit that I’ve been guilty of forecasting every “next year” as being aquavit’s year. But amid all of this prognosticating, a watershed moment for the Scandinavian spirit has taken away from its slow and steady growth, especially stateside.

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Aquavit begins to blossom in the states Distiller and co-founder of Norden Aquavit, Robyn Cleveland, recalled a time when he worked at Clem’s in the fashionable Williamsburg neighborhood in Brooklyn in the mid-00s. “I think we had like one dusty old bottle of aquavit under the bar, in the cabinet,” he said, laughing. “Nobody ever asked for it.”

“I started Aquavit Week in 2012 back when I was managing the bar at Metrovino in Portland, Oregon,” recounted Jacob Grier. “There was very little aquavit available in the United States back then, but I took it as a personal challenge to collect as much of it as I could ... which worked out to 6-7 bottles at the time.” Aquavit on the American market has increased by an order of magnitude since 2012; available aquavits now number in the tens.

For example, the American Distill-

ing Institute’s Craft Spirits Database in 2016 listed nine aquavits produced in six states. In 2019 they listed 16 in eight states. The TTB approved only three COLAs for spirits with the name Aquavit or Akvavit from 2010 through 2014.

In 2015, they approved eight just that year.* Numbers have remained consistently higher since.

“As a deep lover of aquavit for years, I've been pleased to see the rise of quality in aquavit in the last five plus years,” shared food and drink writer Virginia Miller. She was quick to note that the change she’s seen has been driven by American distillers. “The growth in taste quality compared to ten years ago, especially with the launch of excellent aquavits like Tattersall [Distilling] in Minneapolis and Long Road [Distillers] in Michigan...It’s just getting better.”

* Note: Spirits which would be considered "Aquavit" under the TTB General Class definition can be designated as one of several, more general Product Class identifiers. This makes reporting absolutely on total aquavit difficult. These numbers shouldn’t be considered exhaustive. Instead, they illustrate the increasing number of Aquavits on the American market.

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Grier notes another major change he’s seen in the later half of the ’10s, “For some brands it's just a side project, but a few — like Gamle Ode, Rolling River, and Norden — are really making it their focus or their whole business.”

Barriers to mainstream Despite its growth, aquavit still faces some barriers in the American market.

“In Scandinavia, this is a neat spirit. This is something you drink with food. You drink with a cold beer. There’s a cultural disconnect,” Cleveland said. (Spirits and food pairings are another oft-cited trend that has failed to truly take off.)

Grier is quick to point out the effect of Americans’ preference for cocktails or mixed drinks. “One difference between the US and Scandinavian countries is that we tend to use aquavit primarily as a cocktail ingredient. It's catching on that way in Nordic countries too, but there they have more appreciation for it as a spirit to enjoy straight.” He sees an opportunity though.

“One thing that would help a lot is if a particular aquavit cocktail were to take off in popularity. I keep hoping that the aquavit Negroni will take that role, but it hasn't happened yet!”

“If you look at the Savoy Cocktail Book...not a single one calls for aquavit,” Cleveland said. He echoed Grier’s search for something easy to latch onto, “...classic, easy one-step or two-step cocktails. I think that’s what we’re missing with the aquavit category.” He’s tried quite a few.

Tonic water, lemon soda, and ginger beer are among his favorites.

Miller has seen more aquavit cocktails appearing on menus in recent years, which afford bartenders an opportunity to educate consumers. However, these efforts thus far have been unable to leverage the heightened level of consumer knowledge about botanical spirits engendered by the gin renaissance. “I think it could ride gin's massive wave if education were to the level of helping consumers understand this is

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a sister — very similar but with a different range of botanicals. But I don't necessarily see that happening, much as I've tried to write and educate via tastings that way over the years.”

“Another problem with the category is language barriers,” Cleveland said. “I’ve noticed a lot of brands trying to really go heavy with the Nordic sounding names. That might be slowing them down a little bit.” When he was coming up with the name for his aquavit, he worked hard to balance paying respect to Nordic culture, while keeping the everyday consumer in mind. “We were really careful in choosing a Nordic word that was easy to pronounce.”

Opportunities, in a space where education isn’t required While gin is an obvious comparison point, other spirits have entered the American market and managed to cultivate a following through consumer education. Grier pointed to the rise of mezcal. Miller sees similarities in the success of Pisco. Cleveland noted, however, “a lot of Scandinavian brands have spent millions of dollars trying to push the category forward.”

And yet — here we are.

However, there are pockets where education isn’t a barrier. “It's an especially popular choice for distillers in places that have historically Scandinavian populations and interest in Scandinavian culture,” said Grier. “So Oregon, Washington, and Minnesota are unsurprisingly three of the states where you see the most producers making it.” Cleveland agreed. “Not only are they great cocktail towns, there’s also high concentrations of people with Nordic heritage. It’s an easy situation to introduce it. You don’t have to do the deep education

Top 5 States

Residents with Scandinavian Ancestry By population

By percent of population

(rounded to nearest 10k)

Norwegian Minnesota

(780k)

Minnesota (13.7%)

Wisconsin

(410k)

Montana

(8.3%)

California

(350k)

Wisconsin

(7.0%)

Washington

(350k)

Iowa

(4.6%)

Illinois

(150k)

Washington (4.5%)

Swedish Minnesota

(410k)

Minnesota (7.2%)

California

(330k)

Nebraska

(3.9%)

Illinois

(240k)

Utah

(3.3%)

Washington

(200k)

Idaho

(2.9%)

Wisconsin

(140k)

Montana

(2.7%)

Finnish Minnesota

(100k)

Minnesota (1.8%)

Michigan

(90k)

Michigan

Washington

(50k)

Washington (<1%)

California

(50k)

Wisconsin

(<1%)

Wisconsin

(40k)

Montana

(<1%)

(<1%)

Danish California

(150k)

Utah

(4.7%)

Utah

(150k)

Nebraska

(2.1%)

Minnesota

(60k)

Idaho

(1.9%)

Washington

(60k)

Iowa

(1.4%)

Wisconsin

(50k)

Minnesota

(1.1%)

Source: U.S. Census Bureau. 2019. 2019 American Community Survey 1-Year Estimates [Table B04006].

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that you might in another market.”

Minnesota has the highest numbers, both absolute and by percentage, of Norwegians, Finns, and Swedes. However, some markets are underserved relative to their Scandinavian populations. There may be opportunities in some of these markets, but to assume that heritage and tradition alone translates to consumption would be to repeat the same mistake that major producers, like Norway-based Arcus, made. While still a mainstay on holidays, younger drinkers weren’t drinking it as much as their parents and grandparents. Education wasn’t necessary but cocktails (with a little bit of the “hipster movement” and a “surge back to authenticity”) helped turn the tide.1 Some people might find other categories, such as gin, more attractive, or at the very least, more well-established. Cleveland wants none of this. “We love aquavit and we want aquavit to be popular!...Everybody makes a gin. I love gin. But I don’t feel like I have as much to add to the gin world as I do to the aquavit world.”

Norden Aquavit is uniquely positioned to weather this critique. In addition to both aquavit standards, caraway and dill, it boasts a botanical bill that reads like a who’s who of essential gin botanicals: coriander, angelica, orris root, citrus, and the big one — juniper. Cleveland clarifies, “It’s got juniper, [but] not by any means is it enough juniper to qualify as a gin. The juniper is really there to bridge the gap between the sumac and the caraway.” The approach goes back to Norden’s genesis.

“We didn’t say this recipe is going to have juniper in it ... the juniper kind of found its way into the flavor profile we had our mind set on.”

So… Will it ever be the next big thing?

Miller is doubtful. “I fear my beloved aquavit … may never be ‘the next big thing,’” she said. Grier is of a similar mindset. “I don't think it will ever approach the size of the really big spirit categories, but there's a lot of potential for growth,” he

Sources “High-End Bars on Pairing Cocktails with Food.” The Spirits, Aug. 2019, www.thespiritsbusiness. com/2019/08/high-end-bars-on-pairing-cocktails-with-food/.

Kulp, Kayleigh. Aquavit, Gin’s Nordic Cousin, Is Your New Bar Mainstay. 25 Dec. 2015, www. thedailybeast.com/aquavit-gins-nordic-cousin-is-your-new-bar-mainstay.

Sherry, Kristiane. “Our Top Drinks Trends for 2020!” Master of Malt Blog, 20 Jan. 2020, www. masterofmalt.com/blog/post/our-top-drinks-trends-for-2020.aspx.

Sherry, Kristiane. “Our Top Drinks Trends for 2021!” Master of Malt Blog, 5 Jan. 2021, www. masterofmalt.com/blog/post/our-top-drinks-trends-for-2021.aspx.

Sinard, Ally. “Why It's Time to Get into the Spirit of Aquavit.” The Gentleman's Journal, 18 Oct. 2018, www.thegentlemansjournal.com/article/why-its-time-to-get-into-the-spirit-of-aquavit/.

stated. He points to the modest success of the still running Aquavit Week and the support of the Portland bar community.

“It's still a niche event but we have a very dedicated following. And bars all around the city embrace the week by putting aquavit cocktails on their menus. In other cities we tend to do smaller, more focused events.”

Even I will admit — I’ve backed away from my bullish predictions. I still love aquavit and think there’s opportunity for distillers in the future; however, compared to ten years ago, aquavit’s modest growth still warrants a closer look from distillers.

Cleveland has been there before. From the 2017 launch of Norden to their more recent release of a barrel rested aquavit, he’s committed to staying the course.

“From an advice standpoint, aquavit is definitely a hard sell,” he said, and paused to think. “But look at your competition.

If you’ve got something that stands out, I think you’re going to have an easier time introducing a category that doesn't have as much competition.” He points to the shelves at your liquor store, at bar backs across the country. “You’re going to have to win a lot of awards and have a lot of marketing behind you to compete in the gin space.“ But moreso, he said it’s about what drives you. “I'm more excited about the concept of being a real craftsperson and being dedicated to a single category and being an expert in that category.”

1 Smith, 2018

Smith, Hamish. “Aquavit: A New Lease of Life - Drinks International - The Global Choice for Drinks Buyers.” Global Drinks Industry News, Analysis and Brand Updates, 22 Aug. 2018, drinksint.com/ news/fullstory.php/aid/7917/Aquavit:_A_new_lease_of_life.html.

"Spirit of the North; Scandinavian gin-like drink aquavit finding a foothold in Canadian bars." Globe & Mail [Toronto, Canada], 7 Oct. 2015, p. L3.

“United States Craft Spirits Market 2018-2023.” 2017, www.researchandmarkets.com/ reports/4587493/craft-spirits-market-in-the-us-industry-outlook.

U.S. Census Bureau. 2019. 2019 American Community Survey 1-Year Estimates [Table B04006].

Wilson, Jason. "Jump-Starting the Aquavit Renaissance: [Dining in, Dining Out / Style Desk]." New York Times, Late Edition (East Coast) ed., Mar 14 2018, ProQuest. Web. 27 Jan. 2021.

Wrage, Nils. “FIVE! These Are The Emerging Drink Trends of 2017.” Mixology, 18 July 2017, mixology.eu/five-emerging-drink-trends/.

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Aaron Knoll is a noted gin historian, critic, and consultant. He authored 2015's “Gin: The Art and Craft of the Artisan Revival,” which has since been translated into three languages, and additionally co-authored 2013's “The Craft of Gin.” He also founded leading gin website TheGinisIn.com in 2009.

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A RT I S A N S P I R I T OF THE YEAR

Chris Montana

WRITTEN BY MARGARETT WATERBURY PHOTOGRAPHY BY AMANDA JOY CHRISTENSEN

In the Spring 2020 edition of Artisan Spirit Magazine we announced our first ever “Artisan Spirit of the Year.”

The annual recognition is not chosen by the team at Artisan Spirit directly; instead a group of industry peers does the hard work of nominating and selecting an individual who personifies the aspects of quality production, mentorship, community building, innovative thinking, and leadership. This year's recipient is none other than Chris Montana. The industry is full of exceptional individuals and supremely talented distillers, and among that group Chris has stood out as one of the best among an industry of greats.

It is our honor to recognize Chris Montana as the 2021 Artisan Spirit of the Year.

— BRIAN CHRISTENSEN

“We’re this tiny, tiny little distillery in Minnesota. It’s just really humbling, I’m really grateful, and I hope that we can live up to who people think we are.”

2020 was tough on pretty much every distiller. But perhaps

no other producer faced as many crises — or responded with quite as much grace — as Chris Montana, co-founder of Du Nord Craft Spirits in Minneapolis, Minnesota. When the pandemic began, Montana shut Du Nord’s tasting room and partnered with Tattersall Distilling and Brother Justus Whiskey Co. to produce tens of thousands of gallons of hand sanitizer. Then, during the civil unrest following George Floyd’s murder, Du Nord’s warehouse was burned along with many of the other businesses in the neighborhood.

But instead of letting it get him down, Montana and his team responded to the upheaval by recommitting to a neighborhood in pain. They started a food pantry that served hundreds of families a day, leveraged donated funds to help other struggling businesses, and launched the Du Nord Foundation, which is dedicated to addressing racial inequities in the Twin Cities. In a year when so many have struggled, the selection committee said that unshakable commitment to community has served as a beacon of inspiration. “Chris is a leader and pioneer like no other,” said Philip McDaniel, CEO of St. Augustine Distillery in St. Augustine, Florida, and a member of the Artisan Spirit of the Year Selection Committee. “His commitment to community and selflessness sets a standard for all to follow.”

Just don’t expect Montana to take a victory lap. “I truly do not believe I deserve this,” said Montana. “We’re this tiny, tiny little distillery in Minnesota.

It’s just really humbling, I’m really grateful, and I hope that we can live up to who people think we are.” We sat down with Chris to learn more about his vision for the newly founded Du Nord Foundation, how a high school drama teacher inspired his award-winning coffee liqueur, and why The Big Lebowski has such a special place in his heart.

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Selection Guidelines Base Selection Standards: › An individual (not a business) › A distiller (active or retired) › Having the fundamental skills in distilling, blending, fermentation, aging, etc. › Recognized as a quality producer › Distillery size is not a consideration (craft or macro)

How did you get interested in distilling, and what led you to start Du Nord Craft Spirits?

I knew I wanted to run a business. I’d heard enough bad things about business owners and thought, “Why not? I think I can do it better.” But I didn’t really know what. I had been a homebrewer for about 15 years, but there were just so many breweries, and I didn’t want to have to make these huge, high-alcohol beers. A friend of mine suggested, “How about a distillery?” I had already started getting interested in maybe doing a little ’shining on my own. And then I thought, hey, this is a way to do it legally. Why not? Miraculously, my wife Shanelle agreed, and the rest is kind of history.

› Distillery ownership is not a requirement Education & Values: › A steward of knowledge who educates passionately › Fosters community › Collaborates › Not a “dick” (aka, no history of shouting people down, pretentiousness, bigotry, sexism, etc.)

Innovation: › Willing to push boundaries while still understanding and learning from tradition › Not afraid to learn from failure

Before starting Du Nord, you were an attorney and a congressional aide in D.C. How do you think that experience influenced your work as a distiller and business owner?

I think a law degree is a great degree if you’re going to go into business.

What I did for a hot minute as a commercial litigator was come in after things have been broken. You get into this mindset of protecting yourself from everything that can go sideways in a business transaction. At times, I felt like that mentality held me back, to be honest. There’s so much of running a business that’s just about relationships and people. It’s really finding a balance between using the legal training, and then remembering you’re still a human who’s going to work with other humans, and sometimes you have to take a risk to build a real human relationship.

Advocacy & Leadership: › A leader in legislative or community issues and regulations (state/federal/guilds/ associations) › Industry advocacy to customers and others outside the boundary of the distillery › Celebrity status within the distilling industry is not a selection requirement

Selection Committee Nichole Austin, George Dickel Philip McDaniel, St. Augustine Distillery Jason Barrett, Black Button Distilling Jason Zeno, Porchjam Distillery Thomas Mooney, Westward Whiskey Amber Pollock, Backwards Distilling Company

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Of your products, which one was the most challenging to create — and how did you finally figure it out?

The one that took the longest was our coffee liqueur. It took almost two years to get that right. By that time, I already had a number of other products, and since I was the distiller, janitor, and every other job, I didn’t have that much time to work on things. Also, I had an idea of who I was going to name it after, and I could not screw this one up if I was going to name it after my favorite teacher. Louise Bormann — better known as Frieda — was more than a teacher to me; she was another mom, at a time when I was in kind of a rough patch in my life. She ran the theater program. I was a tough kid, there was a lot going on, and she invested so much in me.

I don’t drink coffee, which is a huge impediment if you’re going to make a coffee liqueur. So we needed to find people who did. I would just take samples out to the cocktail room, about eight at a time, and it ticked off the bartenders because I was giving out free booze, but we learned a lot from that. I have a tendency to take as much sugar out of things as I can, but it turned out you needed a little more sugar than I thought.

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2020 was a hugely challenging year for you and your business. Yet throughout, you’ve maintained this sense of community service. What do you think motivates you to default to giving back to your community, even in the face of personal adversity?

If you’d have talked to me at 15, I didn’t expect to see 20. But so many people have defaulted to supporting and investing in me. I feel everyone has a basic debt to society. But I have a particularly deep debt to society because so many people have showed up for me.

And it’s not just me. I get credit for things other people do. It’s not like I single handedly created a food bank. I reached out to people I knew from campaign days, and they came and invested massive amounts of time. Marie was our volunteer coordinator, and in two days we had a list of volunteers 300 deep. My friend Jessica showed up and designed and ran the thing, and was there every single day, even on her birthday. Nobody got paid, and nobody was getting real notoriety. The press and media prefer to tell a hero narrative, but usually I don’t think it’s true. When anything of note gets done, it’s because a community of people get together, and I was just fortunate to be part of that community.

What led you to start the Du Nord Foundation, and what’s its mission?

It started from this massive outpouring of support that came from the distilling community, and random people I had never met, including many people in the distilling community I’d never met. These two Go Fund Me campaigns were started, and thousands of dollars started running into them. The distilling community showed up for us. Those funds raised helped us stay alive. At the same time, we did have some insurance, and I knew that many of the businesses in that Lake Street corridor in St. Paul and Minneapolis were not insured at all, or certainly underinsured. So instead of getting a windfall, we said OK, we’ll divert the money to people who particularly need it.

The foundation has three pillars. One is food security. The second, it would be a double injustice if George Floyd got murdered in Minnesota and the aftermath destroyed the few Black- and brown-owned businesses we have. So we took that money and sent it out to these other businesses in need as fast as possible. The last piece is, if we’re going to rebuild this, we need to address some of the reasons the types of destruction happened where it happened. There are people like me who grew up understanding business was not for them. When you don’t see yourself, you don’t have these types of jobs or businesses or careers on your horizon. And when that’s the case, when the anger spills over, it’s easy for it to be directed at the nameless and faceless business community.

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Why focus on entrepreneurship and new business incubation?

We wanted to have the business community be more representative of the people who live in the area. To do that, you’ve got to prime the pump. When I started Du Nord, I raised just $60,000 from a community development organization.

Then I bought this book titled something like, “How to Start a Micro Distillery for $50,000.” The bottom line is you can’t do it, and it shouldn’t be done. I tried anyway, but I was working two jobs, and my wife had a job, and any money I made went right into the business. I scraped along. But it shouldn’t be that hard.

I did well in school. I have a law degree.

I worked in Congress. And I couldn’t raise those funds. How many people in

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the Black community have that college degree, that law degree, that professional experience behind them? Not enough. Imagine what it would be like if you wanted to start your business and you don’t have all that paper behind you that’s supposed to validate you. It’s too much.

If you really want to be able to start any business, you need to be properly resourced. If, by virtue of your accent or the color of your skin, you are less likely to get those resources, that’s a massive failing of the business community and the country as a whole. You can be mad about that, which is righteous I suppose, but what are you going to do? We try to default to doing rather than talking. So we said, let’s use our business. If we can cashflow a building, we’ll just carve out pieces for a business incubator, and use our foundation to get money into the hands of these would-be entrepreneurs so they have the chance to grow.

You own and operate Du Nord with your wife, Shanelle. What’s it like working with your partner?

I think it’s kind of awful, to be honest! I tell her that all the time. My wife is awesome. We are made for each other in a way, in that we’re two extremely headstrong individuals who always think they’re right. Now, imagine putting two of those people in a room and having them solve an issue. The reality of working in a business with a spouse is that you never get away from it. There’s no way to say, “What was your work like today, honey?”

You were there!

You know how it was. The argument you had about nonsensical things can continue into your home, and I don’t think that’s particularly healthy. So about two years in, we made the decision together that it would make more sense to have me lead Du Nord and for her to focus on her other job.

Having said that, I’ve had the luxury to do a number of things the way I do them because of my wife, because she has been able to be the actual breadwinner in our family and let me do this experiment of mine and chase my dream. You take her out of the equation — if she were to say “Nope, I’m done,” — Du Nord goes away in an instant.

Even though she’s not there working on it day to day, she’s very much a part of it. Her fingerprints are all over everything. However, if you have the opportunity to not work with your spouse, I would highly recommend it.

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You get to Du Nord bright and early one morning, before anyone else, and the production floor is quiet.

Before firing up the still, you put on your very favorite distillery album. What is it?

The first two years of Du Nord, when there was nobody else there and it was just me going kind of crazy by myself, I had two DVDs: Snatch and The Big Lebowski. I basically watched them on [a] loop. Mostly Lebowski, which was already one of my favorite movies. So it’s more likely I would have come in, turned on Lebowski, and gone about my day. To this day, you say some random line from Lebowski, and I not only remember the part of the movie, but also what I was doing at Du Nord at that moment.

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TRANSPARENCY SHIFT M

uch is made of the differences between small producers and conglomerate brands, at least in the certain circles of people who think about this aspect of distilling often. Initially, “quality” was the rallying cry of the craft distillery. This was an area that perhaps those distilleries did not rightfully have a claim to — they were young, ironing out their kinks, and hard-pressed to match the functional expertise of a centuries-old production facility. Then there was “creativity,” and that seemed a slightly better fit, but maybe we’ve been looking at this all wrong. Perhaps the most advantageous quality of small distilleries is that they can be totally transparent about how they make their products, so that the closer consumers look the more appealing the picture becomes.

That’s how Helena and Woody Hambrecht, co-founders of Haus Spirits, feel, anyway, and to such a degree that they have launched an initiative called Know Your Alcohol that’s committed to arming consumers with the right questions to ask with regard to what they’re drinking while simultaneously amplifying producers who make alcohol in an honest and transparent fashion. “We believe today’s drinkers deserve WWW.ART ISANSP IRITMAG.COM

Know Your Alcohol is committed to informing the public and elevating the industry

Written by Devon Trevathan Photography provided by Haus Beverage, Inc. 53

to know the truth about what’s inside most bottles and cans. So, we decided to make that information accessible,” explained Helena. True to a generation that recognizes the importance of the digital space, Know Your Alcohol was launched in part on social media, directing curious followers to a website that is organized in an engaging and dynamic format. It’s there that the core values of Know Your Alcohol are laid bare, beginning with a prompt — what are you drinking? They continue by offering a series of questions: “Where was it grown? Who distilled it? And what exactly was it mixed with before the cork went in? When it comes to alcohol, even the simplest questions can be as murky as an old bottle of red.”

As Mark Byrne, a co-founder of Good Vodka, who partnered with Haus on Know Your Alcohol, put it, “This isn’t consumer behavior that’s altogether foreign.” Many of us already think about our food this way. Even though they are both agricultural products, that level of inquiry has not been applied to alcohol to the same extent. “My hope with this project we worked on with Haus — and I think that Haus

54

shares this with me — is to arm consumers with a list of questions to ask the brands that they drink,” said Byrne. Questions that would offer any consumer or beverage enthusiast the kind of clarity that they aren’t usually afforded (without the addition of gelatin or egg albumen, at least).

The idea is simple yet it feels bizarrely rebellious. Could a small cohort of passionate producers really shift the public consciousness away from all of Big Alcohol’s flashy marketing and glossy ads and back to the real root of our business?

It Starts on a Farm The public’s perception of alcohol is many things, influenced by multiple forces, but rarely is alcohol spoken about as an agricultural byproduct. This is just one element of the industry that Helena hopes to correct. “We’re a third-gen booze family, and we’ve seen firsthand that most booze is not made with our generation in mind,” she

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explained, referencing the fact that they have grown up in an age where the origins of one’s agriculture, at least with food, is paid attention to and prioritized. “While every other consumer goods industry — from food to clothing to skincare — has adapted to the demands of the newer generation, alcohol is decades behind.”

For the average small distiller in the United States, the process from harvest to bottling is relatively straightforward. Some distillers pay particular attention to the suppliers from whom they source their ingredients, even going so far as to create an exclusive relationship with a particular farm. Other distillers are not so fortunate or have not positioned themselves in the same way.

Even considering all the different variations, the average small distiller’s facility will always more closely resemble that of their peers on the craft side of the industry rather than those on the macro side. With macro, as the name suggests, nearly every aspect of the production process has been industrialized. There is an emphasis on efficiency and consistency over all else. Byrne realizes that fact: “I don’t want to seem too negative about it because this industry has been built on that and it makes the products cheap enough to enjoy, but it is not what is interesting to me about alcohol.” He’s not alone; it’s the reason that many macro brands spend so much money to push forward a narrative rather than rely on transparent marketing. “I think that conglomerized alcohol has a vested interest in creating a level of opacity around their sourcing,” continued Byrne. “That’s why they market these things as a price point instead of a flavor profile or create these intricate family stories to put on the label that haven’t been true in 200 years.”

Any small producer of alcohol will realize the uphill battle that is competing with conglomerate brands, yet despite all odds craft distillers have made enormous headway in the last decade. This industry has been revitalized to become one of great growth and prosperity. Small producers have invited their customers not just to taste their products, but also to literally step inside the spaces where they are made, showing them the labor that leads to the fruit. Conglomerate brands have shifted their own strategies to invest in or envelop small brands, working hard to keep the “craft” feeling well after the cash infusion has been made, but the agricultural origins of their production will rarely stand up to scrutiny in the same way that a small producer’s can. Transparency is a tool that can better a producer’s marketing edge, and improve the industry as a whole if enough brand owners choose to adopt it.

Good Production Haus Spirits and Good Vodka are companies that very much practice what they preach. It seems that for them there was never any question as to how candid their marketing materials and labeling would be. Haus Spirits is focused on creating modern apéritifs made entirely from natural ingredients. “Every bottle of Haus starts with real ingredients that we source from farms we WWW.ART ISANSP IRITMAG.COM

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know and trust, like our own in Sonoma County,” said Helena.

“Our elderflowers are wild foraged from Germany’s Black Forest, our cherries are hand-harvested from heirloom trees in Michigan, and we source rose petals from the bushes Woody’s grandma planted 40 years ago.”

Good Vodka began when co-founder Tristan Willey was visiting a coffee farm and realized that there was an abundance of discarded coffee fruit not being utilized. Willey had a background in the drinks industry and Byrne had already worked in distilling at Kings County Distillery. Together, over a period of six years, Byrne and Willey figured out a way to create a supply chain for a product that had never existed in the American market before: vodka made from coffee fruit. “What we eventually did was take the wastewater, so the water that washes the pulp off the bean, and basically treat that like a sugar. We condense it into a thick syrup that’s about 50 Brix and then we import that concentrated syrup,” said Byrne. The syrup is then distilled into vodka at Finger Lakes Distillery in upstate New York.

The Know Your Alcohol initiative is concerned as much with labeling transparency as they are operational transparency. They point out that alcohol is regulated by the TTB rather than the FDA and is not subjected to the same rigorous demands when it comes to labeling as food and other beverages. Calls for greater labeling transparency have been growing as of late, even within the pages of this magazine, but many producers worry about sacrificing label real estate in an increasingly competitive industry that’s so focused on brand narrative. Helena understands that perspective, but she offers a counterpoint: “The bottle will no longer be the only place a producer can share context with their customers,” she said. “Tools like QR codes and other digital experiences will help producers deliver context and education to their customers without worrying about the limitations of label size.”

There is some level of education required to introduce both Haus Spirits and Good Vodka to a novice drinker; the same could be said for Know Your Alcohol. I have heard before that a product that requires education can never succeed, but to that person, I would say look at these two companies. These are thriving businesses committed to improving the industry in which they operate, and the response from customers has been extremely positive. Perhaps we should not underestimate the public as much as conventional wisdom tells us to. Helena explained her position on the matter, saying that “our goal is to empower drinkers with education so that they can make informed decisions, but long term we hope to raise the standards across the industry.” That is a stance that all passionate producers can certainly support.

If you would like to learn more about the Know Your Alcohol initiative and how to support it, or how to appear on the site, visit www.knowyouralcohol.com or email hello@knowyouralcohol.com.

You can also reach out to either brand directly at hello@drink.haus or vodka@goodvodka.com.

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Spirits Industry Mergers & Acquisitions Year in Review Written by Kevin O’Brien

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pirits industry mergers and acquisitions activity remained buoyant in 2020. Despite the unprecedented challenges encountered during the COVID-19 pandemic, numerous leading beverage alcohol suppliers continued to bolster their Consistent with prior years, spirits suppliers once again 7.7% portfolios with investments during the year. 7.9% outperformed their beer and wine peers. Beer, the largest beverage 7.3% 12.7% The beginning of the year provided a great environment in alcohol category, grew sales by 1.4 percent while the wine category grew $35.2 which to transact, with a bustling economy that included low by 3.5 percent. As the $34.7 year continued, spirits transactions re-emerged $31.3 interest rates, strong employment figures, healthy consumwhile beer and wine deals were muted. $29.0 er spending, and a stock market that remained on With the spirits industry projected to FIGURE 2 Sales Growth by Beverage fire. Several deals were announced early on, and become the Alcohol Category ($ in Billions) 7.9% then a once-in-a-generation global 7.7% largest bev18% 7.3% 2019 2020 pandemic hit. The economy came erage alcohol 7.7% Source: Distilled Spirits Council $34.7 $35.2 -0.3% to a screeching halt, as did gencategory by <$12

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eral M&A activity. Businesses 2025, it ap$31.3 $13.0 $13.5 $29.0 turned their focus inwards trying pears prudent to re-calibrate as they faced an to continue inonslaught of daunting internal vesting in the 18% -44% and external challenges. category at a +1.4% +7.7% +3.5% 7.7% Of particular torrid pace.

-0.3% note for the spirits industry was the sudden Similar to the $13.5 $13.0 Wine shutdown of the hospitality inlast few years, Beer Spirits dustry. The financial impact to there continued the on-premise to be invest-44% channel was ments in the FIGURE 1 +1.4% +7.7% +3.5% 2020 Spirits Sales Growth by Channel catastrophic. increasingly popSource: Distilled Spirits Council During the year, ular tequila and the on-premise whiskey categoWine Beer Spirits channel experienced a sales decline of more than 44 ries. Additionally, percent. Fortunately for the spirits industry, they were investments in saved by the off-premise channel. Vodka Representing about super-premium priced products remained prevalent. Aside from these well5.1% 80 percent of pre-pandemic volume, consumers turned known areas of focus for spirits M&A, two notable areas of interest came to to their local grocery, mass market, and liquor stores to light in 2020. The gin category, having experienced numerous transactions in Whiskey 5.5% load their pantries at an extraordinary rate. Sales in the the last five years, saw its highest amount of activity in 2020. Lastly, the most off-premise channel grew almost 18 percent during interesting activity during the year took place in the rapidly expanding ready-to5.9% Gin the year. The net result for the year is that the spirits drink (RTD) cocktails category, which saw investment activity from several of the industry actually increased sales by 7.7 percent. beverage alcohol industry’s largest players.

Rum 5.9% Vodka 5.1% 5.5%

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7.7% 17.4%

READY-TO-DRINK (RTD) COCKTAILS

STOCKING UP ON GIN

Reviewing the list of notable transactions for 2020, it was surprising to see the number of investments in gin brands. This was surprising in that there has been a glut of gin transactions in the last Each year there are trends in the beverage alcohol industry few years but also because the growth rates are trending below that garner the lion’s share of consumer interest and media the overall market. During 2020, the gin category experienced coverage. Without a doubt, the headlining trend in 2020 was the sales growth of 5.9 percent, lower than the overall industry explosive growth of the hard seltzer category. Led by the juggernaut growth rate. Additionally, while the super-premium pricing White Claw brand, hard seltzer sales grew by more than 150 percategory for gin grew a respectable 8.7 percent, it was also 12.7% $4.0 billion in sales. Goldman Sachs cent during the year, surpassing lower than the overall growth rate of 12.7 percent for all forecasts the rapid growth will continue with the hard seltzer market super-premium products. Regardless of the segment’s reaching $30 billion in sales by 2025. This is astonishing growth for a performance, gin deals were plentiful during the year category that seemingly came out of nowhere just a few short years ago. and included a very familiar name in the entertainWhile significantly smaller than the hard seltzer category, RTD cocktails ment world.

7.9% spot for future7.7% offered a bright growth in the spirits industry. As previous7.3% Just prior to the beginning of the global ly mentioned, the overall spirits industry grew by 7.7 percent year-over-year.

COVID-19 pandemic, there was a flurry of gin-re$35.2 $34.7 During this same period, the RTD cocktails category grew nearly 40 percent. lated deals announced. MGP Ingredients, known These products appear to be benefiting from emphasis on convenience, “cocktail $31.3 primarily as a leading distilled spirits suppli$29.0 culture,” and expanded drinking occasions. While still a small category at approxier for third parties, acquired New Columbia mately $500 million in sales, DISCUS estimates the category could eventually reach Distillers, who produce the super-premium about $7 billion. If the category meets these growth expectations it would be equivalent Green Hat Gin. Shortly thereafter, drinks to approximately 20 percent of existing spirits sales. The rapid growth of a new beverage giant Pernod Ricard announced a “sigalcohol -0.3% category didn’t go unnoticed by large beverage alcohol suppliers, who have previnificant investment” in Japan’s Kyoto ously dabbled with RTD cocktail offerings.

Distillery, producers of the acclaimed $13.0 $13.5 Early in the year, AB InBev announced the acquisition of Goodridge & Williams, producer of KI NO BI Kyoto Dry Gin. This brand Canada’s largest RTD cocktail brand named NÜTRL. This deal comes on the heels of acquiring will join the group's robust gin portCutwater Spirits one year earlier. Leveraging the expansive ABInBev distribution network, IRI refolio, which includes Beefeater ported that Cutwater grew more than 120 percent during the year. As the world’s largest supplier of +1.4% +7.7% +3.5% and Plymouth as well as recent beverage alcohol products, ABInBev has quickly established themselves as a leader in this emerging investments Malfy and Monkey category.

47. Completing the group of Validating the importance of the RTD cocktails category, several large spirits suppliers announcedWine Beer Spirits early gin acquisitions was investments in the space in the second half of the year. Beam Suntory revealed they would be acquiring private equity backed Intethe remaining interest in On The Rocks after holding a minority position since 2018. Shortly thereafter, grated Beverage Group’s Brown-Forman announced an agreement to acquire Part Time Rangers Holdings Limited. Based in New Zeapurchase of Ransom land, Part Time Rangers produces spirit-based RTDs with Spirits. Ransom Spirall-natural fruit flavoring. Finally, Bacardi publicized takits, a pioneering craft FIGURE 3 ing full control of London-based premium batched cocktail Sales Growth by Product Category (2019-2020) distillery, introcompany Tails, after acquiring a minority stake in 2018. Tails Source: Distilled Spirits Council duced the United cocktails are made using Bacardi brands and then pre-batched States’ first Old in bottles or on draft.

Vodka Tom gin and in5.1% The collective effect of these transactions signals that this category is in its nascent novated with stages with plenty of headspace for growth. These investments are compounded by Whiskey the launch 5.5% numerous well-known brands adding line extensions to leverage their existing goodwill. of the Jose Cuervo, Bacardi, Evan Williams, Captain Morgan and Absolut are just a few of these 5.9% first barGin extensions. Diageo, an industry heavyweight, explicitly stated their intention to focus on rel-aged the category in 2021. The company plans to launch Ketel One Botanicals Spritz in addition Rum 5.9% O l d to line extensions for the popular Tanqueray and Crown Royal brands. While much of the To m growth in the RTD cocktails segment has been led by independent 7.7% Total gin. brands, these line extensions should further support strong growth for this up17.4% Tequila and-coming category.

38.9% RTD Cocktails

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FIGURE 4

Notable Spirits Industry Transactions in 2020 Several years after turning Source: Zepponi & Company heads with their acquisition of the George Clooney-led Casamigos Target Acquirer tequila brand, Diageo added another Hollywood star to their roster.

Ritual Zero Proof Diageo In August it was announced that Diageo would acquire New York-based Goodridge & AB InBev Davos Brands for $610 million. The Williams jewel of the Davos portfolio is Aviation Gin, a rapidly growing high-end, premiEdrington Beam Suntory um-priced brand fronted by movie star Ryan Reynolds. Case sales were estimatGreen Hat Gin MGP Ingredients, Inc. ed to eclipse 100,000 during the year; this will be further boosted by leveraging Kyoto Distillery Pernod Ricard the distribution muscle of Diageo.

Diageo, not satisfied with just Aviation, Integrated Beverage Ransom Spirits further expanded their gin portfolio with two Group additional gin-focused investments. Shortly after the Davos Brands deal, they announced Tequila Ocho Samson & Surrey the acquisition of the U.K.'s Chase Distillery.

Chase is known for its super-premium GB gin Proper No. Twelve Grupo Cuervo Whiskey brand. Diageo stated the Chase deal bolsters its range in the U.K.'s premium-plus gin segment, Saint Liberty which has been growing by strong double-digits Harris & Simms Whiskey in recent years. Finally, through its Distill Ventures drinks accelerator, Diageo took a minority stake in Ojo de Tigre Pernod Ricard Rheinland Distillers. The Bonn, Germany-based distillery produces the acclaimed Siegfried Dry Gin. Multiple BrownSazerac The amount of attention Diageo directed towards Forman Brands the gin segment during the year indicates this is a Aviation Gin Diageo category that they believe consumers will continue to gravitate towards.

Rheinland Distillers Diageo As previously mentioned, the number of deals taking place in a category that is underperforming Trinchero Family the overall spirits market is interesting. On reflecTres Agaves Estate tion, these deals may make sense in the long-run if consumers continue to gain confidence acting as On the Rocks Beam Suntory mixologists in their homes. Gin has a long history in cocktail culture and provides a great platform for Productos experimentation. Additionally, the ability to scale a Regionales de Willliam Grant & Sons Atotonilco gin brand is significantly easier than brown spirits, which require lengthy lead times, or tequila which Part Time Rangers Brown-Forman can be hindered by the supply of the increasingly competitive agave market. Lastly, the “secret sauce” Chase Distillery Diageo of gin is how botanicals are incorporated into the base spirit. The creative nature of these recipes alTails Batched Bacardi lows for producers to utilize local ingredients thereCocktails by connecting to a unique sense of place. Gin remains a small category in the overall spirits industry WhistlePig Whiskey LVMH but the aforementioned investments signal that the tides may be turning for gin offerings.

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Category Non-Alcoholic Spirits RTD Cocktails Super-Premium Scotch Whisky High-End Premium Gin Super-Premium Gin Super-Premium Gin & Whiskey Super-Premium Tequila Super-Premium Irish Whiskey Super-Premium American Whiskey Super-Premium Mezcal Whiskey Portolio High-End Premium Gin Super-Premium Gin High-End Premium Tequila RTD Cocktails Tequila Distillery RTD Cocktails Super-Premium Gin RTD Cocktails Super-Premium American Whiskey

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Additional notable investments during the year includInvestments in the RTD and gin categories led the way in 2020 but ed a smattering of whiskey brands and an interesting there were numerous transactions in other spirits categories that took place non-alcoholic spirit deal. Whiskey, consistently the during the year. Consistent with prior years trend of “premiumization,” most active category in spirits M&A, continued to perthere was a continued concentration of investments in the super-premium form well during the year, growing 5.5 percent, which (>$35 per 750ml) price category. During the year, dollar sales growth of was led by blended whiskey (+11.6 percent) and products in the super-premium category increased 12.7 percent, far outpacAmerican whiskey (+8.2 percent). Of particular note ing the overall dollar sales growth of 7.7 percent for the total spirits categois that the super-premium whiskey category grew ry. Overall, higher-priced offerings continue to outperform the overall spirits by 10.5 percent, an impressive feat considering a market, resulting in additional investments by some of the largest players in large majority of these brands sell for $50 or more the beverage alcohol industry. per bottle. Reflecting these trends, international Early in the year, it was announced that global beverage giant Beam-Suntory luxury powerhouse LVMH announced purchasing acquired 10 percent of the shares in Edrington. Edrington is a leading supplia minority stake in the acclaimed WhistlePig er of super-premium Scotch whisky brands including The Macallan, Highland brand. Along with their previous investment Park, and The Famous Grouse. In a similar vein, Grupo Cuervo confirmed they in Woodinville Whiskey, this deal gives LVMH increased their stake in Eire Born, producer of the high end-premium Irish whisincreased exposure to the fast-rising upscale key brand Proper No. Twelve. The move increases the Mexican company’s equity rye whiskey category. Spirits advisory group interest from 20 percent to 49 percent. This investment capitalizes on the exploHarris & Simms also announced taking an unsive growth of the Conor McGregor fronted brand in a category that continues to disclosed stake in Saint Liberty Whiskey, a develop at a rapid pace. super-premium brand based in the ever-popThe last several years have seen numerous inular city of Austin, Texas. Lastly, industry vestments in super-premium tequila and mezcal 12.7% titan Sazerac, purchased a collection of brands, including Diageo’s high-profile acquisition whiskey brands from Brown-Forman which of Casamigos and Bacardi’s blockbuster deal with included the Early Times, Canadian Mist, Patron. While 2020 didn’t have any similar “game and Collingwood. changing” deals, there were several investments Rounding out the year in spirits-indusmade during the year to take advantage of con7.9% try M&A was Diageo’s minority invest7.7% 7.3% sumers' increasing desires for tequila and mezment in Ritual Zero Proof. Ritual procal offerings. Sales the tequila/mezcal cat$34.7 in$35.2 duces non-alcoholic offerings that are egory grew by 17.4 percent during the year with marketed as providing “the taste of gin, $31.3 the super-premium category experiencing a blis$29.0 whiskey & tequila – without alcohol or tering growth rate of 25.4 percent. Pernod Ricard calories.” This is of interest due their announced taking a stake in mezcal brand Ojo de previous investment in Seedlip, a Tigre, bolstering their mezcal portfolio that also inBritish company that makes plantcludes their recent investment in Del Maguey. Adbased liquor substitutes for use in -0.3% ditionally, Trinchero Family Estate, a leading wine non-alcoholic mixed drinks. As the supplier, acquired Tres Agaves tequila. Trinchero had $13.5 beverage alcohol company $13.0 largest distributed the brand since 2012 but now adds it to in the world, it is telling that they their growing spirits portfolio which includes Hanson are placing bets on the rapidly of Sonoma Organic Vodka, Amador Whiskey Co., and evolving non-alcoholic beverage +1.4% Trincheri Vermouth.

Samson & Surrey+7.7% also added to their+3.5% category. Based on conversaspirits portfolio with the acquisition of super-premium tions with numerous industry Tequila Ocho. Finally, William Grant & Sons purchased the Wine executives, this is a trend that Beer de AtotonilcoSpirits Productos Regionales distillery in Mexico. appears to have legs and will This deal will help to support the growth of the Milagro garner further investment in tequila brand, which has quickly surpassed the coming years.

300,000 in case sales.

FIGURE 5 Sales Growth by Pricing Category (2019-2020) Source: Distilled Spirits Council

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Vodka

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5.1% 5.5%

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WHAT DOES THE FUTURE HOLD? After a year like 2020, it almost seems as if everyone’s crystal ball has been smashed into a million pieces. While there will be many unknowns in the new year, it appears that the worst may be behind us.

Anecdotally, there certainly seems to be a lot more deal activity shaping up for 2021. Many of the largest suppliers have signaled they want to remain aggressive in building out their portfolios to take advantage of the growing spirits category. Additionally, these suppliers have benefited from having established distribution footprints, allowing them to capitalize on the rapid growth of the off-premise channel.

Conversely, independent brands have struggled with limited distribution and a non-existent on-premise channel. Long an avenue for small brands to gain consumer trials, this channel will remain challenged in 2021. It is very likely that many of these brands will be looking for a partner to help keep them afloat. Additionally, RTD cocktails category should remain an area of interest for suppliers looking to establish, or increase, their positions in this breakout category. Overall, it appears that 2021 should be another healthy year for spirits M&A activity.

Kevin O’Brien is a Principal with Zepponi & Company, a leading beverage alcohol M&A firm. Dedicated to the beverage alcohol industry, Kevin has presented on various accounting and finance related topics for the American Craft Spirits Association, Wine & Spirits Daily, and American Distilling Institute. Kevin will be providing additional insight into M&A activity during his presentation at the American Craft Spirits Association convention in December 2021.

COMMITTED TO SUPERIOR SERVICE FOR ALL SHAPES, SIZES & SPIRITS.

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A

s we begin to round a corner on the events of this last year and hopefully have the end of the pandemic in sight, new brands across the country and around the world are preparing themselves to break out into the market. You can trust that they have taken this forced hiatus as an opportunity to strengthen their narrative in some way or another, probably by using simple tools that any brand owner can adopt to help their story become more memorable and engaging to customers.

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THE BROAD STROKES

We operate in an industry that is all about the story. For better or worse, the average visitor is not going to take away much more from a video detailing the entirety of your production process or a guided tour at your distillery than the bare bones of your brand narrative. Most successful brands realize this and do everything in their power to strengthen those basics.

Here are a couple of rules to follow regardless of the content of your brand narrative:

1.

EMPHASIZE SHOW OVER TELL

Avid readers will know this one intrinsically — a story is so much more impactful if the author puts in the work to illustrate it with details and intuitive thinking instead of listing vague qualities. Consider the way that your consumers are interacting with your brand.

What are you offering them? Decide to approach your narrative by selecting an angle that will actually connect with a smaller subsection of the general population and trust that your brand will grow from there. Random, bland mass-marketing rarely sticks, and when it does it’s always a startup away from being relegated to the shadows. Connect with your audience by showing them the values that matter to your company and the people who work there.

4.

2.

DON’T FORGET THE LONG-TERM ARC

You can write a short story for your brand, but don’t forget to continue working on the long-term arc as you progress. Your audience will continue coming back if they know that there is an evolution to the story being told, that your brand is growing as you do. Consider some challenges that a “hero” in a story might have to overcome and then incorporate them into your marketing. If you’re a small business owner, you likely can pull that information from your own life. Weave these challenges into your story over time so that it’s a dynamic saga rather than a one-off. An ongoing narrative arc will give consumers the opportunity to become invested in your company.

3.

BE CONSISTENT

Once you’ve identified the values that matter most to your brand, do your best to remain consistent. With the inundation of advertising material these days, consumers are becoming very adept at spotting inauthentic brands. If you align your company with certain values, stick to them; otherwise, you will run the risk of losing customers.

OPEN YOURSELF UP AND ALLOW YOUR CONSUMERS TO GET AN IDEA OF WHAT’S AT THE CORE OF YOUR BUSINESS

Your mission and passion are likely at the heart of your brand’s origin story. Don’t shy away from discussing the ways in which they impact your operation. An origin story is the opportunity to humanize any brand. If you present yourself as not just another company but as a group of people who have had to face challenges and overcome adversity just like anyone else, that will go a long way towards establishing trust with your customers. Invite your audience in by sharing with them the vision for the brand and connecting it to elements they care about.

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5.

UTILIZE YOUR UNIQUE NARRATIVE

USP, folks — what’s your unique selling proposition? Or more simply, what makes you different from every other spirits brand that’s stocking the shelves? Use classic “who, what, why, and how” prompts to get to the root of this question: Who are you? Why did you start this company? What are your values? What is your origin story? How does it differ from someone else’s?

As you answer these questions and they influence your brand narrative, consider that this narrative will act as a strategic statement from which you can pull ideas and create conversations with your audience. Once you’ve found what makes you unique, write 500 words on the matter, and continue editing it as your company evolves. Touch on brand history and evolution, as well as future goals, giving back, essential products, and beliefs.

THE ELEMENTS OF YOUR BRAND’S STORY

Your brand story encompasses so much, from the products you provide, your company’s ethos, the logo, website, About page, and interactions on social media. If you’re unclear about the story that you’re trying to tell, your audience will have a hard time engaging with you. When workshopping the story of your brand, look to classic narrative structures for inspiration. Consider the hero’s journey. Used by religious organizations for centuries and more recently in film and television, the hero’s journey permeates so many of the narratives we know and love. Despite its ubiquity, it follows a pretty standard framework:

Starts in the ordinary world

—>

There is a refusal of the call

—>

Enter the mentor

—>

The hero crosses the threshold

—>

Thus begins a series of tests, during which allies and enemies present themselves

—>

This one is a classic for a reason. How can you effectively market to an audience that you know nothing about? An audience is more than just data. They are fully fleshed-out people with their own thoughts and desires. A helpful exercise to better understand them is filling out Buyer Personas. Start with one, and describe in as much detail as you can who they are, what they need, and how they go about their day. But don’t forget to incorporate the data that your social media accounts offer you as well.

—>

6.

KNOW YOUR AUDIENCE

Some kind of “call to action” acts as a catalyst for the story

The hero approaches the dragon’s den

Vanquishing the big boss, the hero claims their treasure

—>

Road leads back to ordinary life

—>

Resurrection

—>

Return with the treasure

—>

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An ordeal will take place

—>

When you better understand your audience and the demographics that are interacting with your brand, you can begin tailoring your brand story to have more staying power. This should be pretty intuitive to most small business owners; most of their audience is the community that they themselves are a part of, whether that’s online or in person. Use language and content to pique your audience’s interest and then quickly shift that attention to an emotional connection.

—>

7.

ONCE YOU GET YOUR AUDIENCE’S ATTENTION, KEEP IT

Back to normal

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Backstory

—>

Hero

—>

Stakes

—>

Disruption

—>

Antagonists Mentor

—>

Journey

—>

Victory

—>

Moral

—>

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—>

This might be a little elaborate for a company story, but the basic beats are the same: there’s a central character who faces challenges, overcomes them, and through their perseverance is able to claim victory.

This framework can be distilled down further to apply to business communications via The Story Cycle, created by author Park Howell.

Ritual

To simplify a story even more, breaking it down into elements small enough to make up the perfect elevator pitch, consider Dr. Randy Olson’s narrative template called “And, But and Therefore” (ABT), which comprises the perfect three-act structure.

With ABT, there’s a setup, problem, and resolution, which offers a clarifying foundation from which to build out a brand story. At the core of all storytelling, logic, argument, and reason are the elements of agreement (And), contradiction (But), and consequence (Therefore). Bad narrative forms are ones that are made up of “And, And, And,” which is a story that has no contradiction and thus no narrative. On the opposite end of the spectrum, “Despite, However, Yet” stories have too much contradiction. Following a simple ABT format allows you to be concise with your brand story but also compelling. There’s no exact length that an ABT story needs to adhere to; your goal is to use enough

words that you clearly communicate your idea without sacrificing a narrative structure that will make your story engaging to listeners. As you progress with your basic story, you’ll soon realize that most listeners are focused on the solution, so you can adjust your pitch to quickly get through AB and focus instead on T. Now is the time to audit your brand and consider the story that you are trying to tell.

We have seen in the last year some major shifts in the habits of consumers, but one constant remains: everyone is susceptible to the power of good storytelling.

Devon Trevathan writes about spirits, wine, and cocktails for a variety of publications. Her focus tends to be on the science behind distillation and the history of drink culture. When she’s not working, she’s probably at home in Nashville painting watercolor tasting notes or dreaming about the pack of dogs she hopes to have one day. You can follow her @devontrevathan on Instagram and Twitter, or find her at a bar with a Negroni in hand.

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M EET THE

NEW BOSS (NOT (N OT EXACTLY THE SAME AS THE OLD BOSS) WRITTEN BY BRIAN B. DEFOE

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t the time of writing this article, just a few weeks past the inauguration of President Joseph Biden and the conclusion of the most tumultuous election cycle in the United States in living memory, one could be forgiven for wishing that the world might simply slow down. The daily barrage of news and noise — whether focused on the pandemic and the world-wide despair it has caused, incidents of racial injustice, or the election and storming of the U.S. Capitol and never-ending jabber of the 24-hour news cycle, the unrelenting pace of misfortune and national trauma has become simply exhausting. Any respite from these claxons and reversion to “normal life” would be welcome. But, unfortunately, we are not yet ready to return to lessfrenetic times. Instead, we have a new administration that has just taken office, with new priorities and initiatives. What follows is an exploration of a few of those — both known and suspected — and how they may impact spirits producers in the United States.

Pandemic relief will be a federal priority Until such time as COVID-19 and its newly discovered variants begins to subside worldwide, it seems likely that we will see continued regulatory restrictions related to the operation of bars, restaurants and tasting rooms — each of which will of course impact spirits companies. But even though the Biden administration is still in its very early days, we have already seen a change in direction on COVID-related issues. In his first three days in office, Biden signed sixteen separate executive orders (and one proclamation) intended to address aspects of the federal government’s response to the pandemic.

It remains to be seen whether these actions, and the actions which will likely follow (e.g., the efforts to pass additional COVID-relief legislation through Congress), will be effective. But the simple fact that the executive branch is taking a more active approach to managing the pandemic will undoubtedly change the dynamic between federal, state, and local authorities as each seeks to limit the spread of the disease and the impact the disease and its cure have on the economy.

A persistent challenge to businesses in responding to COVID throughout 2020 was the reality of trying to comply with the patchwork of inconsistent — and occasionally contradictory — legal requirements of multiple jurisdictions. With the federal government taking a leadership role in response to this crisis, it is possible that we see a more coordinated and systematic approach to dealing with the issue. It is, unfortunately, also possible that federal leadership may result in an increase in restrictions for some parts of the United States where the local response has been less involved. But regardless of how increased federal involvement in the pandemic response changes our country’s approach to the issue, the Biden administration has made it clear in its first few days that the federal presence will be felt.

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Business taxes are likely to increase — or at least get more complicated Before his inauguration, President-elect Biden released a tax plan calling for a number of changes to existing U.S. laws.

Included among those changes was a proposed increase in the corporate tax from the current rate of 21 percent to 28 percent. But the proposal also included a 10 percent “made in America” tax credit for certain investments supporting domestic manufacturing. And so the net effect of the increase in cor-

porate tax rates for any individual U.S. manufacturer — such as a spirits producer — will depend entirely on the business’ specific circumstances. But it should be noted that every time the tax code is revised, it seems to get more complicated, even when one of the stated objectives of the revision is simplification. For that reason, spirits producers should follow carefully any tax changes that may occur. It would be unfortunate if the recent hard-won gains in federal excise tax relief were significantly undercut by changes in corporate tax rates. Tax planning may be needed to avoid that result.

Employees are likely to receive additional protections During the Trump administration, several aspects of federal law were modified in ways that had the effect of weakening employee protections against mistreatment by their employers.

Overtime rules, for example, were revised in a fashion that reduced the number of employees who would be eligible for overtime pay. Similarly, the definition of “employer” was revised in key regulations in a way that made it narrower, thereby excluding some individuals providing services from legal protections afforded to employees. Finally, the Trump administration failed to fill many roles within the Department of Labor — limiting the agency of the resources necessary to enforce existing labor laws.

It seems quite likely that Biden’s administration will reverse the course adopted by his predecessor. While the prior administration may have had its thumb on the scale in favor of the employer-side of the employer/employee relationship, the new administration is poised to tip the balance in the other direction. In the America Rescue Plan announced by Biden before taking office, he proposed as part of COVID-19 relief an increase in the federal minimum wage to $15 per hour — up from the current minimum of $7.25 per hour. In addition, the proposal called for the reinstatement of COVID-related paid sick and family leave through September 2021 along with paid leave for parents of children whose schools are closed as a result of COVID. But it isn’t just in the arena of COVID-relief that the Biden administration seems poised to provide employees with additional protections. Prior to the election, then-candidate Biden expressed a desire to expand the definition of “employee” so that more workers would be entitled to receive the benefit of the federal minimum wage, overtime benefits and other legal

protections. In part, Biden’s aspirations appear to be simply a desire to appeal to the voters who make up his base. But perhaps equally importantly, they also represent a response to the rollback of protections during the Trump administration and a philosophical difference between the positions of the Democratic and the Republican parties with respect to the gig economy.* For smaller spirits producers, this debate will impact primarily questions about who is, and who is not, an employee. Misclassification of an employee as an independent contractor is an area of meaningful risk, a risk that is likely to increase under the Biden administration.

Regardless of the rationale for the change in approach, the Biden administration seems poised to shift the balance of power between employers and employees in the years ahead.

But it would be a mistake to see the Biden agenda as necessarily anti-employer or anti-corporate as a result. Instead, the push for greater employee protections is likely to be tempered by a renewed focus on promoting United States businesses.

The America Rescue Plan itself calls for some $15 billion in relief to small businesses impacted by COVID-19 and Biden signed an executive order on his sixth day in office which called for the federal government to strengthen requirements related to purchasing products and services from U.S. businesses (closing loopholes that have allowed some businesses to produce products offshore while still claiming that they are U.S.-made). Two days later, Biden issued an executive order requiring the federal government to prioritize the purchase of American-made zero-emission vehicles. Each of these three items seems to be a calculated effort to provide meaningful boosts to the U.S. economy in ways intended to benefit both workers and employers.

* While often touted as a modern development, the gig economy resembles in many respects the kind of working life that was common in Europe and North America prior to the industrial revolution — and that remains common in many parts of the world today. The labor laws that exist in the United States today were developed after the industrial revolution, after which our relationship with work changed from one where an individual worker typically engaged in multiple jobs to one where an individual worker typically participated in employment with a single employer. In essence, this involved trading a position of meaningful autonomy but significant risk of starvation to one of reduced autonomy but also reduced risk of starvation. Once the workforce shifted to one where most workers depended for their livelihood on a single employer, workplace conditions led to the establishment of laws governing the relationship between employer and employee. With the renewed prevalence of the gig economy, many of these nineteenth and twentieth century workplace norms may be subject to reconsideration.

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Environmental and climate issues will be areas of attention On his first day in office, President Biden issued an executive order revoking the permit for the Keystone XL pipeline, pausing efforts to lease portions of the Arctic National Wildlife Refuge for oil and gas exploration, and restoring the size of several national monuments which had been previously reduced

by President Trump. While at the time of this writing President Biden has not officially endorsed the Green New Deal, his early action to designate climate change as a matter of national security and to cause the United States to re-enter the Paris climate accord send a clear signal that issues of climate will be matters of priority (though perhaps not as immediate a priority as COVID relief) for the administration. According to a June 2020 Pew Research Center study, two-thirds of Americans believe that the federal government should be doing more to combat climate change. So Biden is trying to tap into that groundswell of support on the issue. But importantly, in his early days in office Biden seems to be seeking to link progress on climate initiatives to their potential economic benefit.

As the new administration prioritizes issues of climate and the environment, we can expect some of that focus to involve

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greater enforcement of existing laws. To that end, businesses such as spirits producers should reexamine their practices around wastewater discharge and other operational processes that touch on environmental matters. With the change of administration, we would expect an increase in the number of cases brought alleging violations of the Clean Water Act (and similar claims), and an increase in the penalties that the government may extract to resolve such matters. In addition, spirits producers should consider the extent to which their businesses face risks, imposed or exacerbated by climate change or the interventions intended to address climate change, and plan accordingly. To the extent that the federal government begins to consider climate issues in policy decisions, this would be expected to create both risk and opportunity for businesses of all types.

Brian B. DeFoe is a business lawyer, consultant to spirits brands, and distillery groupie — formerly in private practice and now in-house with a large retailer. Brian can be reached on Twitter @BrianBDeFoe, on Instagram @HoochLaw or via LinkedIn. Visit www.hoochlaw.com for more thoughts on spirits and the laws that govern them.

This is intended to be general information, not an opinion or legal advice on any specific situation, and does not create an attorney-client relationship with our readers.

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PA RT O N E I N A S E R I E S W R I T T E N B Y D E V O N T R E VAT H A N

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Talking about the future in terms of “trends” almost seems to trivialize the situation; the industry is changing in ways that are too impactful (and permanent) to be considered simply a trend...

here’s no denying it: the distilling industry has experienced seismic shifts of late. From the first round of retaliatory tariffs in 2018 that began applying serious financial pressure, to the global pandemic that shuttered our tasting rooms and the bars and restaurants that we rely on, this has not been an easy time. Talking about the future in terms of “trends” almost seems to trivialize the situation; the industry is changing in ways that are too impactful (and permanent) to be considered simply a trend. So instead, I’d like to look at the forces pushing us in these new directions, beginning with the coronavirus. As we cast an analytical eye on these different catalysts for change keep in mind that the developments they cause will likely overlap and may be covered more than once throughout the installments.

In March 2020, the coronavirus brought life as we knew it to a grinding halt in the United States. Since that time, states have reopened to various degrees, but generally, the consuming public has stayed at home.

The habits that have developed during these extended periods of lockdown have shifted buying behavior in a way that will not revert once we’re no longer actively worried about a pandemic, and producers in our industry will want to adjust to these new behaviors rather than work against them.

THE PHYGITAL SPACE

Obviously, much of the recent interactions that customers have had with brands and products have been online. There was already a trend toward online marketing pre-pandemic, but 2020 forced us all, willingly or not, into the digital arena. As consumers are able to spend more time out of the home, producers seem to be tailoring their marketing strategies for the “phygital” space, meaning that their efforts are covering both physical and digital interactions. There will obviously be a great deal of excitement to return to guided tastings and human interaction, but no one is likely to

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abandon their online classes or Instagram tutorials; they will remain key to driving e-commerce sales (if you’re in a state that allows it) and collecting data that can be used to improve the marketing approach.

If you haven’t considered the way that your online marketing is representing your brand, now is definitely the time to do so. “I think you need to spend a little extra time and money and thought to make sure that image is representing what’s happening on your packaging,” said Don Wright, owner and chief strategic officer at Wright Global Graphics. “Design matters. To simplify the statement, that’s what it comes down to.” The design behind a brand’s packaging and marketing has always been impactful, but without that human element to help make the sale, it is now paramount to success. Investment of the time and energy to incorporate some design into the packaging and the marketing of a brand will certainly continue moving forward, and brands that are familiar with the online marketplace will know to put an emphasis on consistency.

That will be crucial in communicating their story to potential consumers.

This is also the time to consider whether your brand is staying true to your values or simply riffing on what has been popular in the past. Matt Ebbing, founder and chief creative director at Ebbing Branding + Design, expects the tide to turn on generic spirits labeling: “Take a walk down the whiskey or gin aisle at your favorite liquor store — so many of these bottles look like they were designed for my dad, or my dad’s dad,” he said. “We see a lot of passion (and influencers) in the younger cocktail and spirits audience, and they’re looking for brands to connect with that share their attitude and values.”

Taking a risk on a more unique packaging design might not be so risky after all; in a crowded online marketplace, it could be the distinctive label that stands out. To further evince their individualism, a greater number of brands seems intent on taking packaging up a level. According to Stephane Stanton-Brand, Saverglass’ east coast market manager for the US and Canada, bottle personalization was already on the rise before COVID and is showing itself to have the legs to continue. There are multiple ways to do so, including embossment, adornments, and decorations of all sorts. “The most dramatic way is to create your own bottle, and a lot of people are doing that and COVID doesn’t seem to have slowed that down at all,” he explained. Those that choose to invest in the small upgrades that ultimately elevate their product will be sure that they don’t skimp on the imaging side of marketing. Sticking a bottle in front of a white background and snapping a couple of pictures on an iPhone will not do any longer. Now is the time to bug a friend with a decent understanding of Lightroom or hire a professional.

MORE THAN A BUSINESS Seeing that a company is operating in a way that is beneficial to the greater good is of increasing interest for a large segment of consumers. Following COVID-19, a stressful political cycle, and the recent spotlight on inequality, customers are now concerned more than ever with spending their money wisely.

They want more than just value; they want to make sure that they are purchasing in an ethical fashion.

We have already seen examples of industry members taking action and using their platforms for good. This year, San Antonio, Texas-based brewery Weathered Souls launched the Black Is Beautiful initiative, which is an interactive mission committed to bringing awareness to the injustices suffered by people of color on a regular basis. Participating breweries were asked to donate 100 percent of the proceeds to a local organization of their choosing that supports police reform and legal defenses for those who have been wrongfully arrested. They are also asked to commit to the long-term work of establishing equality and inclusion in the brewing business and beyond.

A stout recipe was provided to breweries as a base with a directive that they be as creative as they like to add their own spin. So far, 1,207 breweries from all 50 states and 22 countries have participated in the initiative, and that number is still growing. Within the distilling industry, Du Nord Spirits in Minneapolis, Minnesota established a fund to help build back businesses in the Twin Cities that were affected during the protests, and, in collaboration with Tattersall Distilling and Brother Justus Whiskey Co as the All Hands MN Team, donated one million meals to Second Harvest Heartland in May 2020. Last year, STEPUP (Spirits Training Entrepreneurship Program for Underrepresented Professionals) Foundation was launched and is offering internships to increase diversity within our industry.

Brand activism is a part of the future of this business. Consumers have had plenty of time to watch brands as they react to the events of this last year, and they are taking note. For a small business owner, it was always beneficial to be open about their values and what they support; it’s an easy and honest way to find passionate fans amidst the larger drinking public. But moving forward it seems likely that that kind of behavior will ramp up even more. COVID-19 knocked many in this industry back a step, but it also created an opportunity to start to heal old wounds. “You can almost say you’ve looked at this disaster — whatever it is, it’s a disaster — and it’s heightened everyone’s awareness of the things that are broken perhaps,” said Wright. Things that are broken don’t have to stay that way — there is always the opportunity to fix them, if enough individuals are willing to do the work.

Devon Trevathan writes about spirits, wine, and cocktails for a variety of publications. Her focus tends to be on the science behind distillation and the history of drink culture. When she’s not working, she’s probably at home in Nashville painting watercolor tasting notes or dreaming about the pack of dogs she hopes to have one day. You can follow her @devontrevathan on Instagram and Twitter, or find her at a bar with a Negroni in hand.

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BOURBON: The New Beanie Babies

A craze like any other

WRITTEN BY G E O R G E B . C ATA L L O I L L U S T R AT I O N B Y AMANDA JOY CHRISTENSEN

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ne of my favorite history teachers, Mr. Clements at Brighton High School in the suburb of Brighton in Rochester, NY, aptly stated that: “History doesn’t repeat itself — it rhymes.” This statement has over the years proven to be absolutely true. This has also shown to be true with consumeristic crazes.

If you don’t remember the darkest era of the 1990s, there was a stuffed animal line called Beanie Babies. These stuffed toys had cute names and were made with fun colored fabrics. Nothing overly special or different, just in the right place at the right time. The world went mad for them. People flooded McDonald’s restaurants to buy them all out when they were a Happy Meal toy. Any store with them had lines and sold out every single one.

It was madness.

As with anything this immensely popular, there were people turning profits in both legitimate and illegitimate ways. This was the early days of eBay, and they could sell for potentially hundreds of times more than their original price. But it didn’t stop there. Where there’s opportunity and mountains of cash, there is also crime. Forgeries and mass theft aplenty. Fake Beanie Babies flooded eBay. Ambitious pirates would steal delivery trucks full of these unremarkable stuffed animals to resell them and make thousands of dollars.

This often left people who had just wanted the hot new toy for their kids empty handed.

Sound familiar?

Yep. Just like bourbon.

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Unfortunately, and fortunately, the fanatical response is not category-wide and is more laser-focused on a range of core products. This focus runs the gamut from entire shipments of specific products selling out in minutes at retail locations all the way to Pappygate, the internal theft of over $26,000 worth of Pappy Van Winkle bourbon and rye from the Buffalo Trace Distillery.

And of course, a thriving secondary black market where some products can resell for more than 10 times their original value.

This makes the products more collectable than consumable. An investment instead of something to enjoy, taking the fun directly out of the hands of those simply wanting to enjoy a hobby.

Just like comic books, video games, and, of course, Beanie Babies.

The products this phenomenon is centered around are largely well established brands. The most notable brands come from Sazerac’s Buffalo Trace Distillery. Blantons, Eagle Rare, Elmer T. Lee, E. H. Taylor, Rock Hill Farm, Weller, the fabled Antique Collection items, the Van Winkle line, and even their every day regular Buffalo Trace in some markets are allocated and disappear even faster than they came. This is also the case with things like Willett’s Family Estate Bourbon, Kirin Brewery Company’s Four Roses’ limited offerings, Michters, and Heaven Hill’s limited selections. And, of course, many many more. The international releases of these products, such as the Japanese releases of Blanton’s, even find their way back into the US to be resold illegally online.

Aside from being established, there are some things in common with these products.

They’re often tied to something or someone historically significant to distilling. >

Kentucky Colonel1 Edmund Haynes Taylor, Junior was a distiller and cosigner of the Bottledin-Bond Act of 1897.2

> Pappy Van Winkle is named for Julian “Pappy” Van Winkle Sr., who was a notable salesperson for the W. L Weller & Sons wholesale company. This company was the key distributor for the Stitzel Distillery, which then went on to acquire and rename the distillery the Stitzel Weller Distillery which was most known for Old Rip Van Winkle bourbon. > Elmer T. Lee is named for the famous master distiller of the Buffalo Trace Distillery who is credited with modernizing the facility. > Blanton’s is named for Albert B. Blanton, the former president of the Buffalo Trace Distillery.

This product is reportedly the first ever to market single barrel bourbon and was released by the aforementioned Elmer T. Lee. But most importantly, they received a ton of really great press, get talked about and hyped up on social media, and are often highly decorated in competitions. This makes them a combination of a status symbol to be in possession of as well as an alluring new beverage to try for the first time in hopes it lives up to the hype.

Whether or not these types of products are actually the best tasting on the market is absolutely up for debate. But we can say that the distiller’s perspective on really old bourbon is about the same as a winemaker’s perspective on natural wines.3 The concept is often met with a chuckle.

But how can independent smaller distillers learn from and capitalize on this hype beast that has been created? It’s a situation marked by a certain pattern, where once readily available products become impossible to find on shelves overnight, and within months nearly double in wholesale cost. Henry McKenna 10 Year Bottled-in-Bond is a notable example of this. What was once an under $30 daily drinker is now an allocated, nearly-$60 bottle in

1 A Kentucky Colonel is an honorary title bestowed upon an individual by the state honoring them for their service to Kentucky as a citizen. It has no military ties of any kind. Think Colonel Sanders. He got it for his chicken.

2 The Bottled-in-Bond Act of 1897 was established as a consumer protection act to ensure the quality of whiskey in the United States. Read more about it in the Summer 2019 issue of Artisan Spirit.

3 Natural wines are unfiltered, spontaneously fermented wines that are handled and processed as minimally as possible.

They are often cloudy, super heavy on brettanomyces, and naturally carbonated. The end result is whatever nature creates; there isn’t an artistic vision at work.

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some markets. That seems like it’s a one-in-a-million stroke of luck, but it’s possibly replicable. However, it's worth noting that while high demand is often a good thing; not being able to meet it is bad.

The most important thing in pursuing hype sales is to get the press and social media talking about the product. One such way to garner this attention is to submit samples to notable reviewers, publications, and blogs. Remember, you are submitting these for an honest review. Make sure to put your best foot forward with anything you submit. Another avenue to pursue is to send samples to prominent social media influencers whose opinions consumers trust. Marketing works best when the target audience doesn't know they’re being marketed to. That drives interest in a big way.

But the holy grail of good press is, of course, huge-name competitions. They are expensive to get into, they are highly competitive, and you have little control over whether your investment in the entry fee is ultimately worth it. But if you truly believe in your product it can be worth the gamble of trying to garner the notoriety of winning a medal in a competition like the San Francisco International Spirits Competition.

Perhaps, though, hype sales over your product aren’t exactly what you’re looking for.

Maybe you just want to ride on the waves without making new ones yourself. The way to make that happen is straightforward. Your products have to be good, your branding and packaging need to be top notch, and the products need to be affordable. It's not as glamorous as Beanie babies, but that's probably a good thing.

George B. Catallo is the “Whiskey Guy” and Floor/Social Media Manager at Parkway Wine and Liquor in Rochester, NY. He has been in the beverage industry since he turned twenty-one and has worked as the Bar Operations Manager of a wine bar, an Assistant Distiller and Supplier Rep for a craft distillery, and has even hosted a spirits review web series on YouTube under the moniker 'Just One Dram.'

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NEW

STANDARDS OF FILL

CR E AT E

OPPORTUNITIES, RAISE QUESTIONS w

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In late December 2020, the TTB published a new final rule for standards of fill that immediately added four new allowed container sizes for distilled spirits: 700ml, 720ml, 900 ml, and 1.8L.

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ot on the heels of the passage of the Craft Beverage Modernization and Tax Reform Act, the TTB’s administrative ruling on standards of fill might have been easy to miss. On the surface, a few new options for permitted bottle sizes don’t sound particularly exciting. But the new ruling has the potential to dramatically change the spirits industry, particularly when it comes to international trade.

In late December 2020, the TTB published a new final rule for standards of fill that immediately added four new allowed container sizes for distilled spirits: 700ml, 720ml, 900 ml, and 1.8L. “These new container sizes will provide bottlers with flexibility by allowing the use of the added container sizes, and will facilitate the movement of goods in domestic and international commerce, while also providing customers broader purchasing options,” the TTB said in a statement.

The final rule came after a notice published in the summer of 2019 that indicated the TTB planned to eliminate all standards of fill, with the exception of a minimum and maximum container size. However, after reviewing comments, the TTB decided to go with a more restrained approach — telling distillers exactly what sizes they were allowed to use, rather than leaving it up to individual business’ discretion.

The standard spirits bottle size in the United States had long been 750 ml. But in other major spirits markets, including the European Union, Australia, and the United Kingdom, the standard bottle size is 700ml. Before the ruling, this discrepancy

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“It’s really exciting, because we’ve got a whole heap of limited release products we have available to other markets that use the 700ml size.”

skyrocketed, exports to meant any distillthe E.U. represented about 11 er wanting to export percent of revenue for Catobetween 700ml and ctin Creek in Purcellville, 750ml regions would Virginia. “Then the tariffs need to add a new SKU got announced, and it’s complying with export been next to zero since,” market regulations. Now, said founder and general distillers in 700ml markets manager Scott Harris. will be able to export their Catoctin Creek has a standard SKU to the United — DAVID VITALE, custom 750ml bottle for States, and American distillers FOUNDER of STARWARD WHISKY domestic sales, but opted will be free to use 700 ml packfor an off-the-shelf 700ml aging, even for products they plan export bottle to save costs. Now to sell domestically. that 700ml is permitted domesticalThe ruling is likely to trigger a rush of ly as well as abroad, they’re discussing what it new brands to the U.S. market, especially smaller might look like to switch entirely to 700ml containers. international producers who have been unable to justify the “We’re certainly contemplating it,” said Harris. “The abilcost of adding a new export-only SKU. It will also likely inity to have a single bottle type in our inventory is attractive. crease the number of special releases, single barrels, and oneIf we had one that we could sell here in the U.S., and in offs from established international brands that find their way to Europe, we wouldn’t have to stock and track different parts.”

American shelves.

That said, Catoctin Creek hasn’t decided to make the switch, One of those producers is Starward Whisky in Australia, which at least not while tariffs are still in place. “Unless I have a is thrilled about the new ruling. “It’s really exciting, because roaring European market, I’m not considering making those we’ve got a whole heap of limited release products we have kinds of investments in my European business when it’s still available to other markets that use the 700ml size,” said foundat a trickle. It’d be the cart before the horse, for sure,” said er David Vitale. “Typically, those limited releases are really small Harris. in quantity, and we’ve just never been able to justify creating a The new ruling also raises some questions. “Typically, the new label and a small batch of 750ml bottles for the U.S. So it’s market speaks to suppliers, partners, each other, in 9-liter a great opportunity for us.” equivalent cases,” said Huston. “I don’t know how those conVitale sees it as not just good news for Starward, but good news versations are going to go when we start mixing things. It’s gofor the world whiskey category in general. “A rising tide lifts all ing to be weird.” Thomas Mooney, CEO of Westward Whiskey boats,” he said. “We’ve done a lot of work trying to establish this in Portland, Oregon, also sees an imbalance in how the rules category. I think it will mean we’ll see more of them here, which disproportionately benefit foreign producers, potentially at the will only create more shelf feet in the aisle of this great, diverse expense of domestic ones. category.”

“This is the best thing that’s ever happened to European proMonique Huston, vice president of the wholesale spirits portfoducers,” said Mooney. “As a consumer, I think it’s awesome. lio at Winebow, an importer and distributor in Chicago, Illinois, is As a producer, it’s a bit annoying that we’ve opened up that already seeing an uptick in new international brands interested in possibility to entering the U.S. market. “The news came out on December 29, and the next day, I had 15 emails in my inbox,” said Huston. She said the need for a special U.S.-only 750ml bottling had been a hurdle — and often an unexpected one — for international producers. “700ml has really been a global standard,” said Huston. “It’s not general knowledge for many small producers that the U.S. required a 750.” Producers with custom bottles face even larger hurdles, in the form of creating new glass molds and potentially altering bottling line configurations.

But it might not just be international brands popping up in 700s. Domestic producers with an eye towards export now have the option to ditch the 750 altogether and only sell 700ml bottles, here and abroad. Before tariffs

“Unless I have a roaring European market, I’m not considering making those kinds of investments in my European business when it’s still at a trickle. It’d be the cart before the horse, for sure.”

— SCOTT HARRIS,

FOUNDER and GENERAL MANAGER of CATOCTIN CREEK

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The Oldest and Largest Craft Spirits Competition

Judging AMERICAN DISTILLING INSTITUTE

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Participating in spirit competitions and winning medals, brings Spirit Works Distillery expanded brand awareness while also showcasing the high-quality standards of our spirits to our customers.

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As part of ADI’s commitment to partnering with craft producers we make tasting notes from the judges available to all entrants, providing valuable written feedback on quality and production of the entered spirit.

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European producers but not done the same thing reciprocally…I know these have been very strange times with the relationship between Europe and the U.S., but I hope where this is headed is that both sizes are legal on both sides of the Atlantic, which really opens up a lot of markets for small producers here, and there.”

Finally, of course, there’s the matter of markup.

700ml is about seven percent smaller than 750ml, raising the potential specter of consumers getting less for the same price. “The part that gives me pause is that one of the ‘advantages’ of the 700ml bottle is that you could charge the same price, and you make a little better profit on the bottle.

It’s sort of like what you’ve seen at the ice cream aisle at the grocery store. They keep getting a little bit smaller, but you’re still paying the same price. Is there public backlash to that? That’s something we’d want to consider very carefully,” said Harris.

Mooney thinks consumer response is worth considering, but he also thinks distilled spirits’ premium price point and slow purchasing cadence will insulate producers from much pushback on a smaller bottle. “If you look at the typical purchase behavior for craft spirits, these aren’t things people buy every day or even every week. For a luxury craft brand, it’s probably once or twice a year. So the amount of time that passes between purchases make people think less about the slight changes between the last time they bought it,” said Mooney. And, of course, the container’s volume will still be required on the label.

Winebow’s recent sales data supports the idea that price sensitivity is far from top of mind for premium spirits consumers. “The people who had $70 to spend on a bottle of Scotch pre-tariff and pre-COVID probably have $100 or $150 now. We have seen our case price increase double digits, quarter on quarter, all the way through COVID,” said Huston. “When the tariffs go away, we know the prices aren’t going to come back down. If they’re going to start selling the 700ml, is the price going to come down? It’s not. It’s probably going to stay the same.”

Margarett Waterbury is a drinks writer who lives in Portland, Oregon. Her first book, Scotch: A Complete Introduction to Scotland’s Whiskies, released in fall 2020.

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LESSONS TO LEARN FROM THE

“CANDEMIC”

RETHINK YOUR RTD PLANS WRITTEN BY ANDREW FAULKNER

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he distilled spirits community should be aware that there is a shortage of aluminum cans. Other than running around like Chicken Little, screaming “The sky is falling!,” what can be done? Delaying launches, using alternate packaging, reducing SKUs, and dialing back marketing plans appear to be the best strategies to longterm profitability.

The main cause of the shortage — hundreds of thousands of barrels of beer being redirected from on-premise kegs to off-premise cans — will be with us until bars and full-service restaurants return.

Just as no one can predict when the pandemic will end, the best estimates regarding when the can supply will recover are just that: estimates. It could be years. Even though major can manufacturers are building new factories, those will take time to come online.

Aaron Parker, COO of Flavorman, a Louisville-based beverage development company, is cautious about the timeline for recovery. “I'm hearing estimates [that] we

might not normalize that operation till mid2025, somewhere in there,” said Parker.

Not being able to supply distributors can cause years of damage to a brand. “For a lot of these guys, especially the smaller ones, not being able to supply is the kiss of death,” said Parker. “If you can't get product out, you'll get replaced.”

JUST SAY NO The first thing to consider is scaling back marketing plans and delaying launches.

Managing Director Scott Schiller of Thoroughbred Spirits Group said, “We're just delaying launches, it's not worth the risk.

The problem is, you get the one order; you may not get the second order, and when a new SKU launches that's risky.”

One producer that has faced the slings and arrows of outrageous shortages is Ventura Spirits, which launched an RTD in December.

“We just released the Angeleno Spritz,

which is in a 200-milliliter can, just before the holidays,” Ventura Spirits co-founder Henry Tarmy said. “Right after we launched, the product was doing well. And then the cans that we had on order: First they were three weeks late, and then they were four weeks late, and then they were maybe six weeks late. And so, we were in a bit of a bind where we had literally just launched this product and it would be a terrible look to be, basically, out of stock immediately.”

ALTERNATIVES Fortunately, Ventura Spirits was able to pivot. “We ended up tracking down brite cans and roll-on labels to tide us over and bridge the gap,” said Tarmy.

Labels and sleeves are one alternative.

Repurposed cans branded for underperforming SKUs with heat-shrink sleeves show little difference from factory-printed cans to the untrained eye. Consumers would have to look to see the seam and

“

Right after we launched, the product was doing well. And then the cans that we had on order: First they were three weeks late, and then they were four weeks late, and then they were maybe six weeks late.”

Henry Tarmy, VENTURA SPIRITS

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a slight gap between the sleeve and top.

Many mobile-canning operations have developed a secondary market ferreting out unused cans that are gathering dust in clients’ warehouses.

Flavorman’s Parker estimates that sleeves add a cost of three to five dollars per case.

“It's a lot more expensive — the sleeve or the sticker — than it is for Ball or Ardagh or Crown or any of them to print those cans,” he said.

“It's obviously an extra step on the production line,” said Schiller. “It's another piece of equipment to add to the production line.”

However, the long-term cost of losing shelf space may be more costly and worth the short-term expense.

Some producers have looked to China for an alternate source of cans, and Parker said that has been a mixed bag for his clients who are accustomed to the way U.S. suppliers send shipments. Sometimes, Parker said, “It's on a pallet that they can't pick up with a pallet jack, or move with a forklift, or it doesn't fit on their de-palletizers.”

One of Flavorman’s clients, an RTD that moves nearly one million cases a year, had their can contract halved. Parker said, “They are paying probably three times as much for Chinese aluminum than they would for the U.S. product. And they just have to have it. They can't go without it, so they've been in a world of hurt because of that.”

GLASS Some brewers who switched from bottles to cans have reverted temporarily to bottles. But this may be impractical for companies without a history of bottling individual portions and comes with its own considerations, not least of which is that many distillers already have trauma from trying to get labels approved.

Glass carries other factors, such as shipping weight, shelf life, breakage, being prohibited from pool areas, and light sensitivity.

“They've got to look at the potential problems that they could have on the shelf-life side and say, ‘Hey, now all of a sudden I've got flint glass that you can see through. Well, what happens if my colors start fading?’” said Parker.

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DIALING BACK For Angeleno Spritz, plans to enter new markets and sell directly from the distillery took a back seat to keeping their distributor happy. “We also heavily limited our marketing plan,” said Ventura Spirits co-founder James Greenspun. “It was going so well that we had to totally push the brakes on all our direct sales stuff just to keep supply going for RNDC,” referring to the Republic National Distributing Company.

For those in the market already, overcoming shortages seems based around servicing existing clients and reducing SKUs. Natural selection in the marketplace may be favoring core brands and

their extensions that are the top sellers.

Major producers, such as Coca-Cola and AB InBev, have reduced or even stopped supplying niche labels in favor of keeping the core brand alive and wellstocked. Coke Classic may not disappear from your local supermarket, yet a shortage of Coca-Cola Zero Sugar Orange Vanilla might go unnoticed.

“In most portfolios, it's not unusual that there's one or two leads and the rest kind of go along for the ride,” said Schiller.

“Maybe it's intentional for shelf presence.

Maybe it's personal pride in that flavor.

Maybe it fits a small niche, but maybe it shouldn't exist. Focusing on your core SKUs is never a bad idea.”

Andrew Faulkner was Managing Editor of Distiller magazine for six years. In 14 years at the American Distilling Institute he coordinated curriculum for Hands-on Distilling Workshops, helped plan the Annual Spirits Conference and Vendor Expo, and was the architect of the ADI’s International Judging of Craft Spirits. He is the co-author, along with Bill Owens and Alan Dikty, of “The Art of Distilling Whiskey” (2019, Quarry Press) and has edited six books on distilled spirits.

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To Be or Not to Be

Moving towards more sustainable distillery operations by upgrading byproducts into coproducts.

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istilling is a water-intensive process. Water is involved in most distillery activities: fermentation, heating, cooling, cleaning, and tasting room operations. Without water, there is no distillation.

Pandemic aside, the past several years have been a very exciting time for the alcohol industry — not just companies that produce wine and beer, but especially those who produce distilled spirits. Indeed, there has been sustained growth of distilled spirits in the USA and through many regions of the world. This has been illustrated by vigorous growth in distilled spirits, particularly among small and craft spirits companies, both in the number of distilleries as well as quantity of distilled alcohol produced. However, with that success comes an increase in byproducts and waste.

Unfortunately, producers using any kind of grain mash for the production of your spirits, which is true for most distilleries, the quantity of stillage (non-fermentable grain components — proteins, fats, fibers, minerals) is increased as well.

Thus, we are experiencing a significant growth in stillage production around the U.S.

The Problem As discussed in a previous article, one bushel of grain coming into the distillery will yield about 17 pounds 80

Written by Kurt A. Rosentrater, Ph.D.

of alcohol (produced by the yeast), 17 pounds of carbon dioxide (also produced from the yeast metabolism as a byproduct of fermentation), and about 17 pounds of non-fermentable solids (on a dry basis) + water from the fermentation. The nutrient profile of the byproducts (on a dry basis) will follow that of the grain which has been mashed prior fermentation, and all nutrients (except the starch — which is consumed by the yeast) will be concentrated by a factor of about three. This is the socalled Rule of Thirds.

Dealing with stillage can be highly impacted by geographic location as well as other factors. There is no one-size fits all option. Distilleries that are near agricultural areas and thus livestock feeding operations will find that sales of their stillage either in wet or dry form can be very attractive. But, if your distillery is located in an urban setting, or in an area that is already saturated with stillage production or other competing feed ingredients, the sale of stillage or DWG may not be so attractive, let alone viable, for your operation. Thus, many distilleries end up sending their stillage down the drain for treatment at the local municipal water treatment plant.

The Solutions For more than 100 years, byproducts from alcohol production have been shown to be excellent ingredients in diets of livestock, poultry, fish, and other animals. Because of the high nutrient content, good digestibilities for many species, and organoleptic acceptance of these products, using WWW.ART ISANSPI RI TMAG.CO M

stillage as animal feed ingredients — either as stillage directly, as wet cake (distillers wet grains, DWG) if the dissolved solids and some water are removed, or as distillers dried grains (DDG) which is primarily the dried suspended solids — is a good option for many distilleries, as it can lead to substantial economic returns.

Many distilleries have also found in recent years that the use of stillage as a fertilizer on agricultural fields can be a viable option, although overuse is becoming a problem in many parts of the country due to a buildup of various nutrients in the soil, which leads to reduced crop productivity. Even though these approaches may be the easiest way to deal with your stillage, it is not a very cost-effective option in the long run (due to disposal fees and fines, which I discussed in a prior article), nor is this approach to disposal sustainable in terms of the environment due to the excess burdens placed on municipal systems and potential pollution of water bodies.

Selling wet ingredients is not easy. It is expensive to ship and store water, especially for high-moisture products such as stillage which do not contain high levels of solids, which is where the nutrients actually lie. Solids separation equipment will be an important component to this endeavor, especially because it is relatively easy to remove the suspended solids and sell them as wet cake. In a previous article I discussed cost-effective centrifuge separation and potential payback returns.

Even if you sell wet cake, there are still challenges. It has been estimated that a 50mile delivery radius is about the maximum WWW.ART ISANSP IRITMAG.COM

distance you would want to transport stillage or DWG to be a cost-effective ingredient for a farmer. In the summer the stillage and DWG will degrade rapidly due to microorganism growth. Generally, a shelf life of five to seven days is the maximum storage time before significant mold growth occurs and the livestock refusing to eat or potentially becoming ill from consuming mold-contaminated feed.

And, in northern climates, the winter is difficult. Farmers’ tanks and bunkers may freeze, animal feeders may freeze, and so on.

Producing and selling dry products is not easy, either. It is not typical to dry stillage directly, but rather many companies have found success in drying of the wet cake to produce DDG, then sending the thin stillage through an evaporator to condense the dissolved solids into condensed syrup — which can be sold separately or combined with the wet cake prior to drying — which results in distillers dried grains with solubles (DDGS).

Maintenance and proper operations of dryers and evaporators can be a challenge requiring skill and attention. Producing dried products also takes energy. It has been estimated that up to approximately 1/3 of a distillery’s energy budget could be devoted to coproduct processing operations alone. But the advantage is a very long shelf life, easy transportation and logistics, and a market price more than double that of wet distillers products. If you produce dried products, you will have the avoided cost of sewer disposal of the stillage, and will avoid the potential for overuse of land application.

The Future So, what is the best option for dealing with stillage? Definitely not sending it to the local water treatment plant, and not using it as a field fertilizer. You are losing potential profit with either of these approaches. Moving from byproducts to more valuable coproducts is going to be a key to improving both economic and environmental sustainability for your distillery. Thus, we are talking about improving the longevity and reputation of your operation.

Environmental issues are becoming more and more important to consumers, communities, and even government regulators, so now is the time to consider stillage options.

Removing solids from the stillage then using them as livestock feed ingredients is one option for dealing with your byproduct, but it is not the only option. This is going to become a more important issue as time goes on, so now is the time for industry to make progress toward more effective stillage utilization.

Stay tuned: some exciting developments are underway in the industry, with several new technologies and approaches that can be implemented at your distilleries. These have the potential for improved environmental performance and increased revenues.

Kurt A. Rosentrater, Ph.D. is with the Distillers Grains Technology Council in Ames, IA. For more information, email karosent@iastate.edu or call (515) 294-4019.

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E H T N I S T I SPIR

L A U T R I V D L R WO

How the Pandemic Has Influenced Tasting Events WRITTEN BY RICH MANNING

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our different expressions of The Busker Irish Whiskey stand before me. The quartet — Single Grain, Single Malt, Single Pot, and Triple Cask Triple Smooth — have spent the last two weeks stored in the shrouded cover of my patio bar. Even under wraps, they’ve managed to taunt me with their pedigree: produced by the historic Royal Oak Distillery in Carlow, Ireland; a recent spate of awards from the game-changing LA Spirits Awards to their credit. Their mystery is about to be revealed, but a few quick adjustments must first be made. I arrange the glassware, a mishmash of pieces ranging from properly narrow tasters to blue-green mid-century modern tumblers, taken from my cupboards. Fortunately, there’s ample room on my desk for the accessories and my laptop, which is just about ready to connect to Zoom. The same can’t be said for the plate of palate-resetting cheese and crackers I’ve prepared — they’ve been relegated to the TV tray to my right.

I shoo my dog out of my office and shut the door, so my imbibing doesn’t disrupt my daughters’ online classes.

Welcome to spirits tasting in the pandemic era. These virtual sessions aren’t new at this point — we’ve been in the COVID soup for a year now, so they can’t be. In a weird way they almost feel rote, if not oddly normal, to the point where we dare take them and the tech that makes them possible for granted. This marks a somewhat stunning evolution from the mad scramble of the pandemic’s early days, when traditional tastings were suddenly unsafe and an industry was forced to determine an unprecedented next step.

Not surprisingly, the burden that came with figuring things out at the start landed square on the shoulders of the public relations and marketing professionals. “Adaptation had to happen almost immediately,” explained Andrew Quinzi, senior account executive for Colangelo & Partners, a New York City-based food and drink-centric public relations agency. “Simply emailing journalists and shipping them bottles only gets you so far. It doesn’t get you that personal connection that’s so essential to a tasting. We knew WWW.ART ISANSP IRITMAG.COM

we had to do something more.”

The solution came in the form of technological innovation, but integrating it into a strategy wasn’t just a basic process of purchasing a Zoom account and blasting login instructions to a list of media contacts. Sometimes it involved trial and error. Other times it involved learning from the errors of other companies prior to conducting their own trial runs. It often allowed tech-savvy individuals within PR agencies to step to the forefront. Yet for PR pros like Quinzi, the biggest ingredient to the mix — arguably the very reason these virtual sessions work as well as they do — was a commitment to forging interpersonal communication strategies in a virtual space.

“One of the reasons why I enjoy meeting people face-to-face is that you don’t feel the need to always talk shop,” Quinzi said.

“Those are the types of conversations that can build relationships and friendships in the long run. It’s why one of our goals behind these virtual meetings is to try and make personable, off-the-cuff moments occur as much as possible. Even in a virtual space, it’s important to try and establish that level of connection with the brand and the distiller.”

*** Quinzi arranges The Busker tasting, and he hits on his stated goal of connection. The session is as smooth as the juice, which is excellent. Guests quickly loosen up and engage in jovial conversation. The host, Royal Oak Brand Ambassador Woody Kane, leads the tasting with wit, knowledge, and a gregarious passion that comes through 17 inches of dusty laptop screen.

Kane says the guests’ shared imbibing lays a sturdy foundation for a successful virtual tasting. At the same time, he confesses it takes plenty of preparation for such an event to run at a seemingly effortless level, particularly when it comes to connecting to an audience in a detached atmosphere. “It’s difficult to read the audience and adjust what you’re speaking in a virtual tasting compared to in-person,” Kane said. “You can’t see their full body

language, and you may not see them on your screen at all. You also don’t know what their mindset may be. For all I know, a person could have just had a row with their spouse at home right before sitting down. They may not be in a good head space. These are all challenges that must be met.”

The expanded reach of virtual tastings also poses a unique hurdle. “If I’m hosting a virtual tasting and if it’s evening where I’m at, it may be morning where the audience lives,” he said. “It’s important to be aware of these timing discrepancies, because it changes your approach.”

Kane clears these hurdles by adhering to a formula of storytelling driven by personality and passion. It’s a pattern that delivers a key lesson for distillers and distillery owners still getting used to presenting within the virtual tasting environment. “Story is an important part of these types of tastings, and you can relay the story to a point,” Kane said. “There’s a big difference between reciting the story and telling it, and without the personable energy and passion there, the story’s message may be lost.”

*** It’s one thing for a group to evaluate and discuss the same spirit in a virtual setting. It’s another thing entirely to judge and award medals to an eclectic batch of spirits remotely.

Nicolette Teo was forced to solve this puzzle ahead of the inaugural Los Angeles Spirits Awards. It wasn’t her intention to do so when she and event co-founder Joel Blum hatched the idea in 2019. In fact, the intention was far nobler: to have a spirits award competition that celebrated the importance of diversity and inclusion within a panel setting. “We didn’t want to build a diverse panel just for the sake of doing it,” she said. “We wanted our panel to show there is a wealth of opportunities out there from a marketing perspective, that brands and agencies could expand their marketing strategies to include groups they may not otherwise consider.”

When the pandemic sent everything

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to hell, Teo and Blum were left with the unique challenge of making sure this message came through in the virtual setting, not to mention the logistics involving bottle shipments and remote judge coordination. Fortunately, the duo had plenty of experience to lean on: Blum helped launch the internationally renowned San Francisco International World Spirits Competition in 2000, and Teo served as the event’s director from 2015 to 2018.

This knowledge laid the foundation for a robust event preparation strategy that focused on minimizing disruption in a virtual space, from testing shipping boxes and glassware to creating “how to” videos and accounting for distractions like ringing doorbells or screaming children. “If we didn’t have so much experience putting together tasting events, I’m not sure we would have been able to pull it off,” Teo stated. “But because we’re old pros, we were able to pivot. I wouldn’t say it was easy, but it ended up not being too difficult, either.”

Teo noted the judges’ camaraderie and

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professionalism helped the event succeed and allowed its message to shine through despite their distance. At the same time, her watchful eye from afar helped keep things running smoothly. “I was sort of like the mom during the tasting,” she said. “If someone [was] coming across as grumpy or too aggressive in their assessments, I’d step in and manage the situation. Fortunately, there [weren’t] too many of these situations to worry about.”

*** There is no drive home after The Busker tasting, which for me means no afternoon Los Angeles traffic to slog through. I can immediately jump into my next work project after I bring the tasting’s accoutrements to my kitchen downstairs. These post-event perks are admittedly nice, and it’s not an isolated feeling. “We’ve learned more people have been available to enjoy these tastings in the comfort of their own home,” Quinzi stated. “It’s why I anticipate that even when the pandemic subsides, we’ll be doing virtual tastings

as a supplement to press trips. It can only help the spirits we promote come onto the market even stronger.”

Still, even with the promise of an expanded reach, there’s still no substitution for the real thing. “You can’t get the tactile feeling of a live tasting when you taste online,” Kane said. “You can’t see the distillery. You can’t shake hands. In-person tastings just offer a whole different experience.”

“There are some advantages to holding a virtual tasting, such as cost-effectiveness,” Teo said. “But there’s a lot of intangible stuff that you can’t replicate in a virtual setting. It may be economically cheaper, but the in-person experience is something that money can’t buy.”

Rich Manning is a freelance food and drink writer based in Fountain Valley, CA. He lives about 15 minutes south of Disneyland, but he hasn’t gone there in ages — he’d rather visit the nearby breweries and distilleries instead. You can check out some of his other written hackery by visiting richmanning.pressfolios.com. He can be reached at richmanning72@gmail.com.

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the INTERNSHIP Volume II

Written by Molly Troupe

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mall craft distilleries also have small production teams. As these distilleries grow, so does their team. For small companies, it is normal to want to protect growth, and a common occurrence is to hire people you already know to fill any roles that become available. However, this can lead to an insular, noncreative, lackadaisical team, filled with hive mentality and a lack of differing opinions. Ultimately, it can stunt creativity and growth.

It is the responsibility of distillery leadership positions to look around the room and see who is not represented. It is our responsibility to cast larger nets than our immediate circles and to hire the unfamiliar. Most importantly, it is our job to create opportunities and open doors for those who have had access denied to them by gatekeeping with paid internships. Many distilleries, like the iconic Uncle Nearest, are taking the initiative to start internship programs to specifically help those who have been underrepresented in our field. Other distilleries are also stepping up to dispel barriers in the hopes of making the spirits industry an inclusive field. Freeland Spirits started an internship program in the fall of 2020 geared towards giving women and people of color the experience needed to start distillery careers. With only a small production team at hand, Lee Hedgmon and I worked to develop a program that would be simultaneously encouraging and challenging, to showcase the truths of being a part of production.

the LESSON PLAN One of the most important elements to a good internship is a lesson plan. When we were first developing Freeland’s lesson plan, we spent time processing and thinking about our initial industry experiences. The hurdles, the triumphs, who offered mentorship, and who guarded the gate.

Thinking about our own experiences, both positive and negative, allowed us to dive into what was really needed for someone just starting in our field. We spent time discussing what we would have wanted if we were in our intern’s shoes.

We spent over a month cultivating a lesson plan. It included lessons for: mashing, low wines distillation, spirit runs, gin runs, and ready-to-drink production. It included scheduled tasting panels, field trips, and a project that would start in the first few weeks and end the last week of the internship. This lesson plan spanned all four months of our internship, detailing activities for each day.

Once this lesson plan was developed, we sent it to our academic and industry contacts to get their thoughts. The feedback helped hone the material, and the week before our intern was due to start the entire lesson plan was finalized.

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When first developing an internship lesson plan, we spent time processing and thinking about our own initial industry experiences.

The hurdles, the triumphs, who offered mentorship, and who guarded the gate.

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the STAGE Hiring anyone is a process that takes time and patience. The job description, advertising, where to post it, etc., are all important details that are reflected in your hiring pool. A job description for an internship does not need to be lengthy. In fact, it should be short and easy to read and avoid distillation jargon that would confuse someone new to the industry. Keep job expectations short with just necessary information, like: must be able to lift 50 lbs, be prepared to be on your feet all day, must be ok working with heights, etc, so that an applicant can grasp what kind of job atmosphere they will work in, but do not make any requirements like education. The only real requirement is that the applicant is over 21. The biggest ask for applicants should be a cover letter answering the question, “Why do you want to be a distiller?”

Thankfully there are many places to post job ads that come in handy such as Indeed, any brewing or distilling industry job board, social media sites like Facebook or Instagram, and more. Through our different postings, we were able to get over 150 applicants. Because of the cover letter, we were able to distinguish applicant interest levels, and quickly narrowed down interviewees to twenty people. Thirty-minute interviews were set up throughout a week in July where we further got to know our applicants. While there were plenty of strong applicants, and a lot of interest, we identified one applicant who became a standout because of their self-awareness, quick wit, and interest in learning the basics.

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the INTERNSHIP Spanning from September to December, our intern learned the ins and outs of production.

We started with a gin focus where we talked about botanicals and their impact on flavor. We walked through all three of Freeland’s gins, the thought behind each product, the development story, and how each gin is produced. Our production team did sensory panels on mostly regional gins, including background information and all known production details. Next, we did bourbon. Our intern helped with the production of Batch 8 and Batch 9 of Freeland Bourbon and witnessed the magic of barrel aging. We ended our education with rye whiskey, which included mashing, fermenting, and two distillations, before being laid to rest in barrels. The in-between project moments were filled with sweeping and scrubbing, record-keeping, bottling, liquor store tastings, and more.

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the LESSONS LEARNED Freeland Internship Program will continue, with a short break, until Summer 2021. Internships are a lot of work for our small production team. Because we wanted an educational experience for our intern, Hedgmon and I had to show up and explain our lessons, on top of our other tasks. Of course, we did expect this, however, it is hard to quantify without the experience. Moving forward, we now know the amount of energy needed to do this program justice with our small team. Until then, we are taking the lessons we learned from our first experience and applying them to make this program the best possible.

One lesson we learned was to incorporate flex time. There will be some weeks where what you had scheduled for your intern and what has to happen in production don’t align, so leave some wiggle room. This is especially true during busy times of year. The notoriously busy fourth quarter proved difficult and our team had to pivot multiple times. For our intern, this pivot did give valuable insight on production. It’s one thing to say that everyday is something new, and it’s a whole different story to live it.

Another lesson we learned is that, while field trips are a great idea, it may not be realistic during a pandemic, and certainly unrealistic during October, November, and December, when many distilleries are experiencing high sales volume. Field trips to neighboring distilleries were meant to allow our intern glimpses into the production of other spirits. We were hoping to see brandy and rum, in particular, but it just was not possible given the situation.

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Freeland’s Internship program is still in its infancy, but we are looking forward to helping it grow. Hedgmon and I used our personal experiences to guide our lesson plan development, and after our first intern, the lesson plan will adjust accordingly. We will allow ourselves more flexibility to make room for the production moves that will need to be made, and either eliminate field trips or make sure to schedule them out of Q4. While we know the road is long, Team Freeland is happy to play a part in trying to make our industry more inclusive.

Molly Troupe is the Master Distiller and Partner at Freeland Spirits, located in Portland, Oregon.

Freeland Spirits is one of 2% of the world's distilleries owned and operated by women. You can write to Molly at molly@freelandspirits.com.

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S H O C H U PART ONE It is all about the base and the koji too!

WRITTEN BY G ARY SPEDDING, PH.D.

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hochu (old name Arakishu) is a distilled alcoholic beverage produced in, and unique to, Japan. It is mainly made from starchy crops such as rice, barley, sweet potatoes, buckwheat, and, under special geographical and agricultural designation, brown sugar. Like for saké manufacture, it requires a specific mold inoculation of raw materials to start the saccharification of starches to fermentable sugars as well as Saccharomyces yeast for the actual sugar to ethanol conversion and flavor production.

The focus of this article is a discussion of the raw materials and the Honkaku Shochu: flavors produced and appreciated Known as authentic shochu in shochu, rather than full details of — a popular distilled the origins/history and the entire spirit distilled over five production process (though some centuries in Japan. There of those details are necessarily covare two categories of shochu, ered here for context). Material based on taxation. Single providing a more extended overdistillation shochu comes in view of such topics is adequately at 45 percent ABV or less, covered in several recommended and multiple distillation works which are all available onshochu can be 36 percent line (1, a-e). For a concise and clear ABV or less. It is generally view of the topic as a whole, pay made with certain grains or particular attention to the Honkatubers, a saccharifying agent ku shochu and awamori guide from (koji mold), distilled under the Japanese Sake and Shochu defined atmospheric or Makers Association (1c). With that reduced pressure conditions, said, a brief description of the basic stored (aged) and bottled. production process and raw materials follows — forming part one of Certain other raw materials this two-part project. In the next issue, part two will cover the wide may be used (apart from world of flavor contained within shochu and its wide spectrum of brown sugar, such materials styles, made using different starchy raw materials. are not covered in detail Recently, Artisan Spirit magazine featured an article about the fascinating world of a beverage that is neither beer, wine, nor spirit — though goes by the term Japanese “rice wine” — saké! Now we consider rice-based and other raw materialbased beverages that are created by fermentation and distillation, with awamori as the first entry point to this wide-ranging flavored beverage. Part 1 presents an introduction to this fascinating spirit and how it is produced, with Part 2 to deal with the flavor profiles of its various types.

A BRIEF NOTE ON SHOCHU PRODUCTION AND RAW MATERIALS

here). Honkaku shochu and awamori should incorporate the flavors of the raw materials from which they are made. However, shochu made via multiple distillation is regarded as inferior in aroma and taste characteristics.

Typically (see Figure 1), a koji mold starter, such as rice koji or barley koji (detailed below), is mixed with water and yeast for the preparation of a first mash (moromi mash). Double parallel fermentation, meaning simultaneous saccharification and alcohol fermentation, is allowed to occur in this first mash for about five days. Then water and an additional main infusion of a starchy raw material (steamed sweet potato, barley, rice, or buckwheat etc.) is added to form the second moromi mash. Fermentation continues for about 10 days, and then the mash is distilled as noted below.

For awamori, which uses only the rice added in the first step, no further material is added. The moromi mash is allowed to continue prior to fermentation, followed by distillation, usually in a pot still (1-5).

Two types of distillation are employed leading to two categories of shochu; a traditional pot distillation (one time distilled for each batch of shochu produced), and a 19th century-era invented continuous distillation process (officially used for shochu production only since 1949) (2, 3). Distinct flavor differences are produced by the two methods. The single distillation process (Otsu-rui — in use since the 14th century) leads to a full flavored product with characteristic aroma, and around 45 percent ABV. The multiple distillation (Koh-rui) patent still method leads to shochu with less flavor, less aromaticity, and less than 36 percent ABV (3).

Further note must, however, be made of two variants of the single pot still method — atmospheric vs. vacuum methods. The old-style atmospheric method relied on local atmospheric pressure (ca. 1 WWW.ART ISANSPI RI TMAG.CO M

FIGURE 1

ATM), whereby the moromi mash from the shochu fermentaShochu Production Practices tion is boiled in the pot still to 90-100 °C by steam. As a result, cooked Maillard compounds lend a “burnt” note to this type of shochu, via furfural and related compounds. The modern distillaMain Raw Materials Raw Material for Koji tion method calls for vacuum pressure reduction whereby the temRice, Sweet Potato, Barley, Rice, Barley, Potatoes, Etc. perature, at which compounds in the moromi mash vaporize in the Brown Sugar, Buckwheat still, is reduced to about 50 degrees C (about 122 degrees Fahrenheit).

If rice is used it is polished, washed, If sweet potatoes used; soaked, and steamed.

“Overcooked” flavors are not produced, so the aroma is more delicate peeled, steamed, and fruitier characteristics are often noted as the result of this process. and mashed.

As will be further noted below, the type of shochu which historically led Rice is also steamed. the way is known as awamori. The product and the two types of distillation Even if brown sugar Koji Production employed are briefly mentioned in a very nice article by Reade Huddleston, used a koji stage Aspergillus spore inoculation is still required. also within the pages of this magazine (4). Today, most shochu alcohol made by the single distilling method is categorized as Honkaku-shochu (“authentic shochu”) and/or awamori (1-3).

A quick note on aging completes this introductory section (“Sake expert” — First Stage Moromi-Mash 1e, 7, 8): Shochu is usually stored as genshu, fresh out of the still without adding Koji, water, yeast any ingredients or water. Freshly distilled, the shochu is generally coarse, oily, and S. cerevisiae yeast added from a preculture. pungent. Storage, prior skimming, or filtration (removing unwanted components) will attempt to minimize oxidation which otherwise leads to rancidity. The alcohol content of genshu will be about 37-43 percent. The alcohol content will usually be Fermentation for 5-6 days reduced — proofed down — to 20-25 percent with pure water prior to botting and shipment. Most shochu will be aged about six to nine months.

Typically, there are three ways of aging shochu: within oak barrels — often used sherSecond Stage Moromi-Mash ry barrels; ceramic pots (traditional with a long and complex sherry solera-type process Raw material, water, first stage moromi known as shitsugi — see below); or in stainless steel or enameled iron tanks. The terms For awamori so second stage, fermentation kame or tsubo shikomi apply to storing (shikomi meaning “to put materials into a tank”). contines with the initial rice bill.

Both kame and tsubo are types of pottery barrels often used to store shochu. Placing shochu into such containers for aging makes the shochu taste mild because of the many pores on the surface of the storage vessel. This provides for some physical and chemical activity perhaps akin Fermentation for 8-15 days to that which takes place in brown spirits maturation in the barrel. If the label says kame or tsubo shikomi, the product is a shochu that has been stored in a pottery barrel.

“Shitsugi” refers to a fraction blending technique applied to making aged shochu called kuus Distillation (3 years minimum aged). Jars containing shochu are arranged in chronological order according to their age, and as portions of the older brew are tapped for bottling, that jar is filled with the contents from the next succeeding jar in a “flavor-tempering” method. This technique is the base for the uniquely rich aroma associated with Awamori” (8). Chemical interactions occur within the Purification and Aging porous ceramic pots — discussed a little later, which affects flavor outcomes, though minimal effects occur upon or to shochu aged in the stainless steel or enameled metal tanks. Oxygen uptake and catalytic For awamori (if aged) earthen pots for three years. activities promoted by mineral and metal ions eluted from the earthenware jars help mellow out aromas and flavors. If stored in barrels, then wood and prior content components will become part of the overall shochu flavor experience.

IT BEGINS WITH AN A – A FOR AWAMORI

Bottling

The Ryukyu Islands, also known as the Ryukyu Arc, are a chain of Japanese islands stretching southwest from Kyushu to Taiwan: the islands are known as Ōsumi, Tokara, Amami, and Okinawa, and included here, Yonaguni one of the Yaeyama islands being the westernmost inhabited island of Japan. Okinawa Island (one of more than 150 islands in the OkiThe figure adapted from (17) and several other resources provides a generalized outline of shochu production. The program and stages nawa Prefecture) is the largest of the of the operation are often referred to as a shikomi (“to put materials into a tank”) process (1c). The enzymatic machinery for saccharification must be in place for shochu production even for Kokuto — brown sugar shochu production by law — though not necessary there Okinawa Islands and the Ryukyu as sugars are already present for conversion to alcohol. The koji in kokuto production, however, provides amino acids, fats, minerals, and other nutrients vital for fermentation; thus, a koji must be prepared. Later the main fermentation substrate is added — steamed sweet (Nansei) Islands of Japan. These ispotato, barley, rice, or buckwheat. If the main material is not added (Thai rice) and the first moromi-mash is continued it becomes the mash for Awamori. Awamori shochu must use only Thai (Oryza sativa indica) rice. Japanese koji uses steamed rice or barley cultured lands lie in the Kyushu region in the with koji fungi and is sometimes referred to as “Bara-koji”. Mugi shochu may sometimes be made by a three stage shikomi process.

East China Sea between Taiwan and JaOther raw materials may be used for koji production. Incredible detail pertaining to sweet potato shochu production, including general and specific koji details, and associated enzymatic activities, can be found in Takamine, ref. 17, and see ref. 5. For kokuto see ref. 6.

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pan's mainland. The islands boast a tropical climate, broad, sunny beaches, and coral reefs. It is suggested that the culture of Okinawa is the culture of awamori, and it is where shochu production may first have been introduced to Japan. Also note the reference by Huddleston on this topic (4).

There is much historical speculation as to how distillation practices and spirits like shochu, known in China and S.E. Asia from the 13th and 14th centuries, were transported to Japan. The most favored seems to be the Ryukyu route and Okinawa as it was on a maritime trade route (9). Without going into much detail here it is also likely the practices arrived from Thailand. It may be no mere coincidence then that awamori-shochu must be made with Thai rice. In fact, it is the only distilled spirit made with 100 percent Thai (long grain indica) rice and black mold koji (much more on koji below).

Awamori closely resembles rice-based Honkaku-shochu; this spirit generally contains around 30 percent ABV. There are several types: ippanshu (un-aged), kusu (aged) and hanasaki (a rare version containing 60 percent ABV). Awamori’s first mash stage is fermented using koji (the starter known as tane-koji) — Aspergillus species (A. awamori — black mold koji) grown on steamed indica rice — which is both the main starch ingredient and saccharifying agent in this case (for tane-koji details see the links in ref. 1). Indica rice is cheaper than the shorter grain Japonica rice (detailed below) and is not sticky, leading to less clumping during processing. Fermentation, “parallel fermentation,” itself is done in a pot still. A careful dosing of sugar is fed, via saccharification, to the yeast when parallel fermentation occurs (9). After brewing and distillation, done quickly to avoid mash souring, the spirit is aged in ceramic jars for three years, producing the fragrant liquid known as kusu. An elaborate “sherry-like solera system” of aging, shitsugi, as noted above is involved — an old jar has contents removed for botting and this is filled up with the next oldest jar and so on down the line in a long series (8). Vanilla aromatics win the day with this aging process (see flavor section in Part 2). Additional details on awamori production may be found in the review by Kanauchi (9) and the details on the atmospheric and reduced pressure forms of distillation are discussed briefly above. There is much more to be said on awamori flavor — see below and Part 2.

ON TO RAW MATERIALS

Shochu is made with water, a koji culture, and certain raw materials.

As already noted, shochu is mainly made from starchy crops such as rice, barley, sweet potatoes, buckwheat, and, under special designation, with brown sugar. Another type of shochu, known as sake kasu, is also made — using saké cake — from the materials left after saké has been pressed out of the moromi mash (also not discussed in any detail here — see 1c). Malted grains cannot be used directly, though in essence the koji mold culture effectively renders the innoculated raw material as a malted package of activated saccharifying and protein degrading enzymes. (See awamori above). We begin with a look at the desirably moldy side of things, then the yeast that drives ethanol and flavor generation, and on to coverage of the main starchy or sugary raw materials used for shochu production. These raw materials convey unique flavor properties to the spirits. Flavor details for the different types of shochu 90

will be presented in Part 2, in the next issue of Artisan Spirit.

As an aside, despite some clear preferred substrates, there is in fact a listing of nearly 50 other ingredients that are permitted by The National Tax Administration Agency for use in shochu manufacture. The website below lists the complete list of ingredients as: ashitaba, azuki beans, amachazuru, aloe, oolong tea, ume seeds, enokitake, otaneninjin, pumpkin (kabocha-shochu), milk, ginkgo nuts, kudzu powder, kumazasa, chestnut (kuri-shochu), green peas, acorns, sesame seed (goma-shochu), kombu, saffron, cactus, shiitake mushroom, shiso leaf, daikon radish, non-fat powdered milk, onion, various weeds, horse chestnut, tomato, dates, carrots (ninjin-shochu), nori, peppers, water chestnut, sunflower seeds, safflower, matatabi vine, matcha, lily root, mugwort, lotus and wakame. The wild experimenter is on their own for uncovering the meaning of some of these ingredients, speculating as to how and why they would be used, to play with or turn their nose away from the alternatives — onions, cabbage? Come on! Though not covered in the literature, nor regulations, other non-malted grains are fair game and there are examples of corn based shochu (tomorokoshi-shochu), for example. Grains or materials must not be malted or otherwise converted without the use of a koji preparation. [https://japanese-wiki-corpus.github.io/culture/Shochu.html, https://en.wikipedia.org/wiki/Sh%C5%8Dch%C5%AB]

KOJI AND KOJI-KIN

Technically koji is a substance made by combining a cultivated mold with foodstuffs; that is, used as the starter preparation for making fermented foods and drinks. Koji, deriving from the Chinese character meaning moldy grains, is interpreted in Japanese as meaning naturally or artificially molded cereals and beans. Many refer to koji more simply as the Aspergillus mold involved in the process. This topic was discussed in some detail in the earlier saké articles by this author (11).

Here we consider koji as the starter used in the production of shochu and made by growing the useful mold koji-kin on rice, barley, other grains or other specified raw material ingredient. In the context Koji-kin: Generic name for of saké and shochu making, the those members of the group word koji is generally used to inof asexual ascomycetes of the dicate kome-koji (that made with genus Aspergillus included rice) but other types are used and in the family of koji molds covered in this article. which are used in Japan’s brewing and fermented food industries. (The Japanese word kin refers to fungi (including molds, yeasts, and mushrooms and toadstools), but colloquially, and in compound words, can also refer to bacteria.

Saikin being the full word for bacteria.) The koji-kin group is broadly divided into yellow and black varieties based on spore coloration.

Yellow koji Ki-koji-kin: (Aspergillus oryzae). A. oryzae is the primary member of the koji-kin group, and this important “domesticated yellow-green aspergilli” mold has a long history of use in Japan, in the production of seishu, miso, soy sauce, mirin, amazake (low alcohol rice fermented drink) and so on.

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[Definitions adapted from: http://www.nada-ken.com/main/en/index_k/104.html]

Black koji Kuro-koji-kin: (Aspergillus luchuensis, Aspergillus kawachii).

Black koji is used in making shochu spirit. There are two kinds, Aspergillus luchuensis — also known more traditionally as A. awamori with black spores, and the grayishwhite colored Aspergillus kawachii (Shiro = white koji-kin, see text below).

They are characterized by the production of large quantities of citric acid (which as seen later confers antimicrobial protective properties)

Koji thus plays a role like that of malt in whiskey production and is made by sprinkling mold spores (koji-kin) on the various starchy and protein-rich substrates. Mold enzymes act to saccharify the starch and to decompose proteins that provide the nutrients (such as amino acids) to support yeast and sometimes desired bacterial growth essential to the main fermentations for such products as saké and shochu; strains of koji-kin are thus generally selected for high amylolytic activity (the sugar producing enzymes in particular). Koji may be so named after the cereals used, e.g. kome (rice) koji, mugi (barley) koji, etc., or according to the color of the spores produced by the cultivated molds such as ki-koji (yellow, or more like yellowish-green) for that cultured by Aspergillus oryzae (typically used for saké) or simply saké koji (describing its end purpose). Kuro-koji is black koji — Aspergillus awamori (see reclassification details below) and was typically originally used for awamori (as noted above for the distilled spirit unique to the tropical islands of Okinawa). Shiro-koji (white spores) also known as white koji or Aspergillus kawachii, is the main mold agent for shochu and is a mutant strain of the black koji. While A. kawachii is typically and traditionally used for most non-awamori shochu production, all three Aspergillus species (oryzae, kawachii, and awamori) are used today by shochu distillers, resulting in distinctly different product flavor profiles.

A WEE BIT MORE ON KOJIKIN – THE CLASSIFICATION

As an important microorganism in food and beverage production, much has been written on koji molds. For those distillers wishing to use Aspergillus molds, a few up-to-date references might be consulted (11, 12 with several other key references also cited therein). The genus Aspergillus belongs to the Family Aspergillaceae and this family is a close relative to the genus Penicillium. There are further subdivisions in classification but the main one, as noted already, important to the shochu brewer/distiller is the Aspergillus division or section known as Nigri (12, 13). The main take home for now is that the key black, white, and yellow food-grade and food-safe molds noted above have recently been reclassified or redefined. Thus, it is now known that A. kawachii, A. awamori and another mold, A. acidus, are synonyms of A. luchuensis (12, 15, 16) and exist within the Nigri group. A. luchuensis (aka. A. awamori as still generally known to many) was initially isolated and identified by Inui and was used, as we have seen, for production of awamori (12). The albino mutant (white-koji mold) A. kawachii was named in 1949. The A. luchuensis strains (kawachii, awamori) both produce a high amount of the necessary alpha and beta amylases for WWW.ART ISANSP IRITMAG.COM

starch-to-sugar conversion and citric acid, which helps in preventing unwanted microorganisms spontaneously inoculating shochu mashes (12-15). The brewer/distiller can still refer to them by the terms blackor white-koji-kin to prevent any confusion, as their properties and the flavors they confer are different.

Another section of the Aspergillus family, known as Flavi, contains A. oryzae, A. sojae and A. tamari which are also used in food fermentations and enzyme production. These three fungi are also called the yellow koji molds or domesticated species. A. oryzae is the national microorganism of Japan and used in sake, soy sauce and vinegar production in E. Asia. The fungus is considered a safe organism by both the WHO and as a generally recognized as safe (GRAS)-listed ingredient by the US FDA (12, 13, 15, 16).

As clearly noted above, shochu koji is typically produced from the black or white koji fungi. Yellow koji used for saké had been implemented for shochu quite early on, but a shift back to black koji occurred around 1919. As noted above the black koji species produce large amounts of citric acid compared to yellow koji. This reduces the pH of the shochu moromi to 3-3.5, ideal for promoting dominant growth of shochu yeast and minimizing unwanted growth of other microorganisms. White koji may be used today and shochu produced with white koji delivers a light and floral flavor compared to that made with black koji, which is richer and mellow (17). A highly detailed paper by Bechman, Phillips, and Chen (18) deals with changes in properties and enzymatic activities of rice and barley koji during fermentation and storage, and will be most useful for those contemplating working with such solid state fermentation systems.

YEASTS

Interestingly, there is in general a dearth of literature on shochu application yeast, though Saccharomyces strains are used in the main fermentation. Yeast fermentation does supply much of the flavor of shochu, as it does for most fermented beverages — distilled or not.

Generally stated, “there are many kinds of brewer’s yeasts which have been used for shochu production” (19). Such yeasts go by the names: Miyazaki yeasts, Kagoshima yeasts, Kimamoto yeasts, Awamori yeasts and Kyokai yeasts — from different regions or prefectures (19). Yeast stains are available commercially today and some sakakura (brewers) make use of their own house yeast (ietsuki kōbo) which are indigenous (wild) yeast strains, harbored from the local area or their brewhouses.

All desirable yeasts must have strong fermentative powers, resistance to the high levels of citric acid produced by black and white koji molds, and heat tolerance — certain factors that help prevent the contamination by other unwanted microorganisms (19).

Some yeasts have been isolated and characterized with improved properties and brewing abilities (19, 68). Yeasts with improved flavor-generating properties have been isolated from numerous sources, including many flowers and geographical regions with interesting results for both saké and shochu flavor (20). Properties evaluated in shochu resulting from the use of such strains include smooth taste, sweetness, maturity, acceptable dryness, and clean aromatics. Yeasts with improved fermentative capacities, higher resistance to stress, and those that are less prone to early death and autolysis — which would 91

result in off-flavors — have also been isolated, cultured, and examined (68). Aromatic compound production using new yeasts isolated from shochu mashes have added greatly to the quality and diversity of flavors for shochu production (21). Yeast strain MF062 imparted good ethyl ester compounds, led to reduced off-flavor notes such as acetate (acetic acid) and acetoin, which can convert to the more potent buttery note diacetyl, and induce the condition known in Japan as tsuwarishu (“morning sickness smell”) (21). Yeast produces, in addition to ethanol, several higher or so-called fusel alcohols — including isoamyl alcohol — whose resultant condensation with acetate produces isoamyl acetate (banana/pear ester). These latter components are said to be desirable flavor notes in bread and saké and so, as they were suspected to also be of value to shochu flavor, it is not surprising to learn that several mutants of the Saccharomyces yeast have been isolated that over-produce isoamyl alcohol (22).

R A W M A T E R I A L S and other types of shochu 92

Kome (Rice) Shochu

Rice, as a massively important crop for Japan, would naturally feature heavily in shochu production. The odor compounds in shochu derived from rice koji were detailed a few years ago by Shiraishi, et al. (23) and will be discussed again in detail in Part 2.

Rice is the seed of the grass species Oryza glaberrima (African rice) or Oryza sativa (Asian rice). As a cereal grain, it is the most widely consumed staple food for a large part of the world's human population, especially in Asia and Africa. Asian rice is classified into three strains: japonica, indica, and javanica. Japonica rice is used for shochu and saké production, except for awamori. Japonica is a short-grain rice which is glutinous (sticky) and grows well in Japan under wetland cultivation conditions. Glutinous (Latin: glūtinōsus) rice is essentially glue-like or sticky, and not does not, despite the name, contain gluten. While often called "sticky rice," it differs from non-glutinous strains of japonica

Imo (Sweet Potato) Shochu

Sweet potato shochu was once the leading form of shochu with “bold flavor.” Then it lost out as people looked for more refined flavors in their spirits. However, selection of different varieties of sweet potato, which may be used whole, peeled, then steamed or even roasted, created a growing number of acceptable shochu brands (24, 25). Sweet potatoes belong to the plant genus Ipomoea, which includes several ornamental plants, including the sweet potato known as Ipomoea batanas. Historians tell us that the sweet potato was likely introduced to Ryukyu (Okinawa), Japan from Fujian, China in or about 1605. After they were introduced to Japan, they were named satsumaimo — satsuma potatoes. The name "satsuma-imo" originating from the fact that sweet potatoes were cultivated widely in the Satsuma (Kagoshima) region. They are also called kansho, ryukyuimo, karaimo (Chinese potato), among several other names.

Modern day technological advancements and breeding/selection of new varieties (with different skin and flesh colors — yellow to purple) has led to the production of imo-shochu with unique aromatic and taste properties. In addition, it has been shown that longer cultivation times can result in enhanced floral aroma and taste of imo-shochu (26). A few key varieties: Koganesengan (“Kogane-Sengan”) — dating to the mid-1960’s, heavy in starch and sweetness, and said to confer the aroma of chestnuts; Beniazuma (“Beni-Satsuma”) from 1984, rice which also become sticky to produces rich, sweet and smooth-textured shosome degree when cooked. There chu; Joy White, from ca. 1994, was created for are numerous cultivars of glutishochu production and conveys elegant smooth nous rice, which include japonifinishing notes along with a touch of citrus in ca, indica, and tropical japonica the aroma (17). Other varieties like Tokimasari strains. An understanding of saké (shochu — full bodied, rich flavor and high alproduction may help assist in uncohol yield), and Satsumamasari (shochu with derstanding kome-shochu (11). sweet and fruity flavor — refreshing finish and Kome-shochu is the original high alcohol yield) are also of note (27). shochu from which all the other The shochu brands so produced to date have types came into being, and it is not only been made with conventional white thus regarded as the “Mother of koji mold (A. kawachii — see Koji section) but all shochu.” Showing off the elealso with yellow and black koji — thus adding gant aroma of the rice grains and to flavor variety and complexity. Koji made with presenting a distinct rice flavor, it sweet potato, under the right conditions, has is regarded as sweet and mellow, also been used with good results. This includes like saké. Under modern times the production of and presence, in the resultant and processes, the vacuum distilshochu, of a high concentration of monoterlation process leads to lighter flapene alcohols and with a lower content of the vors and delicate, elegant aromas. less pleasing higher fatty acid ethyl esters, when Rules as to ingredients and specicompared to the use of rice-koji (24, 29, 30 — fication, water source, production more on potato flavors). Many more details process, distillation, and region of concerning desired sweet potato qualities and production apply to kome-shochu selection, production, along with a discussion (1c). Awamori, which also uses of touted health benefits from consuming sweet rice, is a distinctly different and potato shochu, may be found in a recent review unique product as noted herein.

by Takamine (17, see Figure 1) and by Miyazaki It is made with table rice or sake (28). rice (sakamai), which is used for Japanese saké making.

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Mugi (Barley) Shochu

Barley belongs to the globally and economically important plant group Triticeae, which is a tribe in the grass family Poaceae. It was domesticated from its wild relative Hordeum vulgare subsp. spontaneum in the Fertile Crescent around 10,000 years ago. The Fertile Crescent, or “cradle of civilization,” is a crescent-shaped region in the Middle East spanning modern-day Iraq, Syria, Lebanon, Israel, Palestine, Jordan, Egypt, the southeastern region of Turkey, and the western fringes of Iran.

It may also include Cyprus depending upon the historian. It is regarded as where settled farming first emerged. In addition to barley, the Triticeae includes the major temperate small-grain cereals: wheat (Triticum spp.); rye (Secale cereale); and triticale (Triticosecale), a human-developed wheat-rye hybrid crop.

Barley has many different varieties, and there are many ways to classify it. One way to classify barley is to identify it by whether there are two, four or six rows of grains on the head of the grass. Four-row barley is in fact a loose sixrow barley, so many sources only differentiate between two- and six-row varieties. Wild barley is two-row, and most cultivated barley is of the six-row type.

Another way to classify barley is to describe the stiff bristle (awns) covering the kernels: Long awned, short awned, normal hooded, elevated hooded, etc. There are many other ways to classify the plant (https://archive. gramene.org/species/hordeum/barley_intro. html). Nijo oomugi (two-rowed barley) and rokujyo oomugi (six-rowed barley) are grown in Japan, though it seems that two row barley is used and imported from Australia for shochu production.

Barley is commonly made into malt in a traditional and ancient method of preparation and is sometimes used for brewing shochu (though technically, regulations would permit any unmalted grain for use). Barley for shochu production must have large grain size, contain large quantities of starch, be soft, yet hard to hull (remove the outer coatings), and it must have a thin skin or shell. Essentially, just like for rice, the barley is polished — outer layers removed to leave about 60-65 percent of the starting weight — removing the so-called pericarp and aleurone layers. This polishing ra-

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tio affects the water uptake rates and steeping characteristics which form part of the process.

There are distinctions in how barley (mugi) shochu is made and we cannot go into all the details here, but unmalted barley may indeed be used to produce this spirit.

The barley shochu can be proSoba (Buckwheat) Shochu duced using rice koji or barley Buckwheat, aka. Kuttu, (Fagopyrum esculentum: koji — look for 100 percent Polygonaceae), unrelated to wheat (and not a grass), barley on labels to distinguish is notable for being a pseudo-cereal and is related those made with only barley to sorrel, knotweed, and rhubarb. A pseudo-cereal from those using barley as is a plant grown to produce starchy grain suitable the main ingredient with the for human food, but excluding the cereals, legumes, addition of rice koji for sacoilseeds, and nuts. Such pseudo-cereals usually have charification. One type of koji smaller seeds than the major cereal grains and can is, however, produced specifgrow in soils and areas not considered suitable for ically for barley shochu (31, other grain species. Originating in south central Chi32) and helps overcome some na, two cultivated members of the buckwheat famiobstacles to the use of barley ly of the genus Fagopyrum of interest to distillers are as a raw material. Unmalted F. esculentum Moench (common buckwheat) and F. barley contains several undetataricum L. Gaertn (Tartary or bitter buckwheat). sired components for brewing Buckwheat grain is in truth not a grain but a fruit and a low enzymatic activity (achene) and the “grain” color ranges from glossy or potential. The method of abradull gray to brown or black. The outer layer, the hull, sive milling known as pearling, of common buckwheat is softer than that of Tartary however, may remove some of buckwheat and the Common type grain tastes harsh its undesired constituents and whereas that of Tartary tastes slightly bitter. yet still maintain its important Shochu made from buckwheat provides a unique amylase enzyme content. Satnatural and rich flavor, especially if it is 100 percent isfactory results are when the soba produced (requiring part of the buckwheat hull, pericarp, and aleurone to be inoculated with koji mold). Buckwheat itself layer is removed while keeping is recognized as having a good flavor, texture, and most kernels unbroken (66). color (35). The two buckwheat species F. escuThe degree of pearling affects lentum Moench and F. tartaricum (L) Gaertn are the quality of the product shoused to make various foods and dishes in Japan chu impacting both its color with common buckwheat for shochu production and flavor (31, 32). The meaccording to some (35, 36) and the bitter Tartary chanics of the pearling process also touted as being used by others: (https://www. are covered elsewhere (33, sakeschoolofamerica.com/news/discovering-sho66). The fermentation process chu-episode-8-soba-shochu/). Brewed since is also detailed elsewhere, inaround 1970, the process is not easy, as natural including notes on desired flavor hibitors in the outer layers of the buckwheat grain production (34). Overall, and make the cultivation of koji mold and fermentation in general, flavors of mugi-shoa bit more difficult (37, 38). So, to aid fermentation, chu range from hearty/robust many brands will incorporate some rice and barley and complex to light and fruity koji into the mix to provide the enzymatic potential.

— again partly depending on This can lead to signature flavored brands. The taste the type of koji used and the of buckwheat shochu is also milder than those made main ingredient (see more on with barley (39). this in Part 2 in the next issue of Artisan Spirit).

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30) Kamiwatari, T., Setoguchi, S., Kanda, J., Setoguchi, T. and Ogata, S. Effects of a sweet potato cultivar on the quality of Imo-shochu with references to the characteristic flavor. J. Brew. Soc. Japan.

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31) Iwami, A., Kajiwara, Y., Takashita, H. and Omori. T. Effect of the Variety of Barley and Pearling Rate on the Quality of Shochu Koji. J. Inst. Brew. 111 (3); 309-315. (2005).

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35) Suzuki, T., Noda, T., Morishita, T., Ishiguro, K., Otsuka, S. and Brunori, A. Present status and future perspectives of breeding for buckwheat quality. Breeding Science. 70; 48-66. (2020).

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37) Arai, S., Okazono, F., Nakahara, N., Kai, T., Mizutani, M., Kudo, T. and Ogawa, K. Studies on characteristics of buckwheat raw material in shochu making (1). Growth inhibition of koji mold by buckwheat testa. J. Brew. Soc. Japan. 102 (7); 553-562. (2007).

38) Arai, S., Okazono, F., Nakahara, N., Kai, T., Mizutani, M., Kudo, T. and Ogawa, K. Studies on characteristics of buckwheat raw material in shochu making (2).

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44) Taira, J., Toyoshima, R., Ameku, N., Iguchi, A. and Tamaki. Y. Vanillin production by biotransformation of phenolic compounds in fungus, Aspergillus luchuensis. AMB Expr. 8:40. (2018).

45) Koseki, T., Ito, Y., Ito, K., Iwano, K. and Tadenuma, M. Phenolic Compounds Found in Awamori. J. Brew. Soc. Japan. 89 (5); 408-411. (1994).

46) Koseki, T., Ito, Y., Furuse, S., Ito, K. and Iwano, K. Conversion of Ferulic Acid into 4-Vinylguaiacol, Vanillin and Vanillic Acid in Model Solutions of Shochu. Journal of Fermentation and Bioengineering.

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47) Koseki, T. and Iwano, K. A Mechanism for the Formation and Meaning of Vanillin in Awamori. J. Brew. Soc. Japan.

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48) Tamaki, T., Takamiya, Y., Nagamine, J., Takaesu, C. and Nishiya, T. Changes in Free Fatty Acids of Awamori during Aging. J. Ferment. Technol. 64 (1); 1116. (1986).

49) Tamaki, T., Takamiya, Y., Miyagi, T. and Nishiya, T. Changes in Ester Compounds and Higher Alcohols of Awamori during Aging. J. Ferment. Technol. 64 (1); 17-24. (1986).

50) Tamaki, T., Takamiya, Y., Takaesu C. and Nishiya, T. Changes in Sulfur Compounds of Awamori during Aging.

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51) Taira, J., Tsuchiya, A. and Furudate, H. Initial Volatile Aroma Profiles of Young and Aged Awamori Shochu Determined by GC/MS Pulsed FPD. Food. Sci. Technol. Res. 18 (2); 177-181. (2012).

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54) Yoshizaki, Y., Takamine, K., Shimada, S., Uchihori, K., Okutsu, K., Tamaki, H., Ito, K. and Sameshima, Y. The Formation of β-Damascenone in Sweet Potato Shochu. J. Inst. Brew. 117 (2); 217-223.

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55) Ohta, T., Omori, T., Shimojo, H., Hashimoto, K., Samuta, T., and Ohba, T. Identification of Monoterpene Alcohol β-Glucosides in Sweet Potatoes and Purification of a Shiro-koji β-Glucosidase. Agric. Biol.

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56) Fukuda, H., Han, J., Mizutani, O., Kanai, M. and Yamada, O. Characteristics of the volatile composition and simplified discrimination of sweet potato shochu and its application. J. Brew. Soc. Japan. 111 (8); 545555. (2016).

57) Ikenaga, T., Lavin, E.H. and Acree, T.E. A Savory Odorant in Sweet Potato Shochu: 2-Methyl-3-(Methyldithio)-Furan. Chem. Percept. 10; 8-12. (2017).

58) Sakaida, H., Nakahara, N., Watashi, N., Kai, T., Nakashima, Y., Sakakibara, Y., Nishiyama, K., Fukuda, N. and Suiko, M. Characteristic Flavor of Buckwheat Shochu and Comparison of Volatile Compounds from Variety Cereal Shochu. Nippon Shokuhin Kagaku Kogaku Kaishi. 50 (12); 555-562. (2003).

59) Oishi, M., Tanqoue, Y., Kajiwara, Y., Takashita, H., and Okazaki, N. Sensory attributes of furfural formed in barley-shochu making and its formation factors. J. Brew. Soc. Japan. 103 (9); 730-734. (2008).

60) Oishi, M., Nekogaki, K., Kajiwara, Y., Takashita, H., Shimoda, M. and Okazaki, N. Sensory attributes and classification of odor compounds in barley-shochu. J. Brew. Soc. Japan. 108 (2); 113-121. (2013).

61) Fukuda, H., and Han, J. Classification of rums by volatile composition and comparison with kokuto shochu. J. Brew. Soc. Japan. 110 (4); 261-275. (2015).

62) Fukuda, H., and Han, J. Characteristics of volatile composition of Kokuto Shochu in Honkaku Shochu.

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63) Takamine, K., Yoshizaki, Y., Shimada, S., Takaya, S., Tamaki, H., Ito, K. and Sameshima. Y. Estimation of the mechanism for cis and trans rose oxides formation in sweet potato shochu. J. Brew. Soc. Japan. 106 (1); 50-57. (2011).

64) Motonnishi, S., Tsutsui, S. and Mikami, T. Production, uses and cultivars of common buckwheat in Japan: An overview. Acta agriculturae Slovenica. 111 (2); 511-517. (2018).

65) Janeš, D., Prosen, H. and Kreft, S. Identification and quantification of aroma compounds of tartary buckwheat (Fagopyrum tartaricum Gaertn.) and some of its milling fractions. J. Food. Sci. 77 (7); 46-51.

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66) Izydorczyk, M.S., and Edney, M. Barley: Grain-Quality Characteristics and Management of Quality Requirements. In, Cereal Grains Assessing and Managing Quality (Second ed.). Colin Wrigley, Ian Batey and Diane Miskelly (eds.). Woodhead Publishing. Chapter 9; 195-234. (2017).

67) Starowicz, M., Koutsidis, G. and Zielinski, H. Sensory analysis and aroma compounds of buckwheat containing products – a review. Critical Reviews in Food Science and Nutrition. 58 (11); 1767-1779.

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68) Tanimura, T., Hamada, A., Onitsuka, N., Nozaki, N., Kai, T. and Ogawa, K. Isolation and some properties of shochu yeast from Hyuga-nada of the Miyazaki coast. J. Brew. Soc. Japan. 100 (1); 56-64. (2005).

69) Asikin, Y., Kamiya, A., Mizu, M., Takara, K., Tamaki, H. and Wada, K. Changes in the physicochemical characteristics, including flavour components and Maillard reaction products, of non-centrifugal cane brown sugar during storage. Food Chemistry. 149; 170-177. (2014).

70). Yoshizaki, Y., Yamato, H., Takamine, K., Tamaki, H., Ito, K. and Sameshima, Y. Analysis of Volatile Compounds in Shochu Koji, Sake Koji, and Steamed Rice by Gas Chromatography-Mass Spectrometry. J. Inst. Brew. 116 (1); 49-55. (2010).

WWW.ART ISANSP IRITMAG.COM

Kokuto (Brown Sugar or Sugarcane) Shochu

Kokuto-shochu is the traditional Japanese distilled liquor made from non-centrifugal brown sugar. Shochu cannot be made with ingredients that impart a significant taste and aroma recognized as a flavor profile for other types of spirits such as rum or cachaça. (See under Part 2 in the next issue of Artisan Spirit). That includes molasses and maple syrup. A huge exception, however, is brown sugar, which is used to make the heavy, sweet, aromatic, and full-flavored kokuto type of spirit. The Amami islands, which lie between Kyushu and Okinawa, are a site of major sugar cane plantations and kokuto shochu distilleries provide the location for shochu produced from sugar cane. It is referred to as the “island brew,” or shimazake by the locals. Even though the sugar is already present to allow fermentation into alcohol, carbon dioxide, and flavor, to be called shochu, koji must be used in the production process. Kokuto is prepared by boiling and condensing uncentrifuged natural sugar cane juice, and then shaping the residue into blocks. Kokuto shochu must use locally harvested koji, use locally grown sugar cane and with brewing limited to Amami island.

To produce kokuto shochu, an A. luchuensis mold is inoculated in steamed rice for 42 hours to make the koji. The koji is mixed with water and seeded with cultured Saccharomyces cerevisiae yeast to start the first fermentation. After a period of five days, kokuto and water are added to the fermented mash and this is then incubated eight more days (see details of general second-stage fermentation in Figure 1 here, and the overall sugar processing and shochu manufacturing in Figure 1 in Iwasaki (6)). After the second fermentation, mash is distilled once to obtain the kokuto shochu (6).

This type of shochu will have the sweet aroma of the unrefined (brown) sugar somewhat reminiscent of a rum — with a clean and drying mouthfeel, but with a lengthy lingering refined sweetness. Under atmospheric distillation conditions the flavor will be bolder and include Maillard-derived notes of grilled/roasted apples, caramel, and honey. Health-promoting antioxidant compounds are said to be present in kokuto, with certain details found in the references.

IN SUMMARY

Part 1 of this article has hopefully presented readers with the basic details of the main raw materials used for Japanese shochu production and opened up a world of references and facts that will help them better comprehend the flavors of, and to evaluate examples of, the wide world of types and styles of shochu. It is a beverage which is produced in a completely different way from many distilled spirits recognized in the western world. As will be seen though, in Part 2 in the next issue of Artisan Spirit, shochu covers the gamut of flavors from fruits to flowers to vegetables and even into other realms such as meaty and dairy notes. A food-and-drink lover’s gastronomic paradise — helping one become a Shochu gastrophile or perhaps, more appropriately, a shochu flavorphile? Until the next issue, enjoy a few examples if you can find them locally.

Gary Spedding, Ph.D is a brewing, distilling, and sensory analytical chemist, and owner of Brewing and Distilling Analytical Services, LLC — with two facilities (Lexington, KY and Denver, CO). In 2020 Spedding qualified as a Certified Saké Advisor and hopes to educate others further on saké production and appreciation as a result.

Acknowledgments: My thanks are given to Toshio Ueno of the Sake School of America for reviewing and commenting on the manuscript. Readers interested in learning full details of saké and shochu should consider the courses and certification programs at the Sake School of America. Any errors, omissions, or misinterpretation of facts in this article remain my responsibility — however, it should hopefully provide a decent entry into the topic. It covers quite fully the currently available, relevant literature (in both English and Japanese — with some less than expert translations no doubt). Let the shochu conversation continue. It is a fascinating beverage and may be a healthy spirit to consume, in moderation of course, based on its components and properties.

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the

BIG squeeze Written by Devon Trevathan

The economic impact of the past few years on the distilling industry was detailed in a report presented by DISCUS, and everyone’s feeling the pressure.

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he Distilled Spirits Council of the United States (DISCUS) presented its 2020 economic report in January of this year with the help of experts in different fields within the distilled spirits industry. Two factors that were particularly impactful stood out amongst the contents of the report: the sustained effects of destructive tariffs and the uneven economic blow on the American hospitality industry by COVID-19.

Amidst news of a largely unfavorable year for domestic distillers, there were some bright spots.

A key victory was the passage of the Craft Beverage Modernization and Tax Reform Act in the final weeks of 2020, which made permanent the federal excise tax reduction on the first 100,000 proof gallons pulled out of bond. Certain measures were also made to offer economic relief amidst COVID-19 conditions, including legislation allowing direct-to-consumer shipping in some new states and cocktails-to-go in 33 states; Iowa and Ohio wisely passed laws making cocktails-to-go permanent. However, these positives were not enough to right a downward trend, and the focus quickly shifted back to the factors that have negatively impacted the industry.

In 2018, following a period of over 20 years without tariffs, the EU issued a 25 percent retaliatory tariff on American whiskey following US tariffs on EU aluminum and steel.

In October 2019, the U.S. issued 25 percent tariffs on single malt Scotch, single malt Irish whiskey from Northern Ireland, and cordials and liqueurs from Germany, Ireland, Italy, Spain and the UK. In response, the EU issued a 25 percent tariff on rum, brandy, vodka, and vermouth, and so far in 2021 the US has added a 25 percent tariff to Cognac and other grape brandies from France and Germany. I think I can speak for distillers both in America and abroad when I say that being used as a pawn in a tariff war is extremely frustrating, doubly so when our domestic sales have been slashed so much

by COVID measures. If nothing changes, the EU 25 percent tariff on American whiskey will double to 50 percent in June of this year.

To put these challenges in perspective, look at the way that American spirits exports were behaving in recent years. Over the past decade,

US spirits exports grew by 26.7 percent; more and more domestic distillers were looking at export as a key financial stream for their business.

Following the first EU tariff in 2018, US exports dropped to $1.4 billion, a total decline of 22.8 percent. American whiskey exports specifically were down 28.9 percent from 2018 to 2020. The EU had previously accounted for the majority of American whiskey exports (52 percent), but that number has more than halved, dropping 53 percent since retaliatory tariffs were imposed. Similarly, Scottish whisky imports declined by 37 perfect in the 2019-2020 year following a growth of 94 percent between 2010 and 2019. Affected liquors and cordials have seen similar decline, experiencing a decrease of 40 percent from 2019 to 2020.

Clearly, DISCUS and other industry organizations will be focused on halting tariffs on all distilled spirits in 2021, along with legislative efforts to provide further relief for the hospitality industry through the re-introduction of the Restaurants Act. While this will certainly benefit our industry, it’s a tricky legislative area since distilleries are so often left out in the cold when it comes to this kind of assistance. Sonat Birnecker Hart, co-founder and president of KOVAL Distillery in Chicago, Illinois, recognizes these efforts but also sees that “in creating these allowances that afford us the ability to do tours, tastings, retail on site, it has placed us in a category of our own so that while we are maybe a retail venue or maybe a bar on some level, or tasting room, we do not fall under WWW.ART ISANSPI RI TMAG.CO M

the same sort of legislative umbrella as a retail store or a bar because our license is secondary to our main use, which is distilling.” This means that any statewide legislative efforts meant to improve convenience for customers and businesses in her home state have not applied to KOVAL, which is similarly true in many states.

It’s an issue too big to be tackled quickly, as it’s intimately tied up in the threetier system, but so many small domestic beverage producers are being unevenly affected because of it. Birnecker Hart is focusing her energy on raising awareness of this fact. “We’re all kind of trained to work with our local government to make changes, and that’s certainly something we’re trying to do in Illinois right now,” she said.

“But these are very serious issues for small craft distilleries who have relied on our tasting rooms or are sort of designated as a distillery pub.”

There are also ongoing legislative battles on the state level, including the fight for parity within RTD legislation, the repeal of Sunday sales bans in some states, and others. It’s hard, however, for many craft distilleries to focus on anything more than the negative economic effects of COVID-19, which is taking up nearly their entire field of vision at the moment.

This distinct downward turn for distilleries followed a prolonged period of expansion.

As domestic distilling operations opened up in states and counties across the country, Americans saw these companies positively affect their local economy in more ways than one. “They have provided WWW.ART ISANSP IRITMAG.COM

a wide range of jobs that require different skill sets, everything from marketing to bottling in a variety of communities,” noted Birnecker Hart. Beyond just distilling, the craft movement, which is notable for its reliance on domestic agriculture and local suppliers, invigorated their communities with job creation, increased tourism, and local infrastructure. “There’s so much that goes into this and right now the craft sector is experiencing a number of hardships, hardships to growth that are coming from every direction,” she said. “Whether it is our ability to compete with online retail sales, the marketing dollars that are required to compete in this playing field, because it’s not personal it’s really just about clicks.”

While 2020 continued to see overall US supplier revenue growth on trend with recent years, weak on-premise sales and a move to almost entirely online marketing hurt many within the industry, particularly on the craft side. Among craft distillers, many of whom were forced or chose to close their tasting rooms, 36 percent saw sales decline by 25 percent or more, coupled with weak sales internationally. Marketing effectively online is a difficult undertaking that usually requires some amount of skill or money to work out well. Many small producers had not focused on this aspect of their marketing so heavily pre-pandemic and

are now scrambling to get a grip on an ever-changing environment.

“We’ve had to adjust our entire marketing team to learn as much as possible about each of these platforms and then to assess which one would be best for us to engage with, and then how much do you invest financially to do so?” explained Birnecker Hart. No longer are craft distillers competing with other local businesses; in the digital space, brands from all over the world are vying for the same clicks.

While operating online has been a difficult adjustment, Birnecker Hart says that she has also seen opportunities.

Now that people are so much more accustomed to attending events online, it has made interacting with consumers and fans the world over much easier for KOVAL. She can give a presentation to domestic industry members on the economic impact of 2020 at 9 a.m. and lead a tasting with a women’s whisky club in Belgium at 11.

This new habit is something that she expects to continue after the threat of the virus has

faded. “More frequently I feel that we will be able to have a hybrid situation in which we will still go into these markets and still do traditional events or shows once things are safe to do so.”

Many craft distillers were happy to lend a hand when they were needed in the past year. Now is the time to return the favor, offering them the assistance they need to survive this difficult time.

Devon Trevathan writes about spirits, wine, and cocktails for a variety of publications. Her focus tends to be on the science behind distillation and the history of drink culture. When she’s not working, she’s probably at home in Nashville painting watercolor tasting notes or dreaming about the pack of dogs she hopes to have one day. You can follow her @devontrevathan on Instagram and Twitter, or find her at a bar with a Negroni in hand.

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distillation chemistry 101

TRIPLE WHISKY distillation techniques WRITTEN BY MATT STRICKLAND

M

an, time flies when you’re dealing with a pandemic. A few months ago, I started a series on batch distillation techniques (which I’m parlaying into another book, but more on that at a later date). I ruminated on basic distillation separation chemistry, and you the reader tried to keep yourself awake whilst I waxed poetic about such scintillating topics as McCabe-Thiele diagrams and the true definition of “boiling.” I’ll admit, it was quite the literary rollercoaster!

In any case, here we find ourselves, a few precious months later, ready to continue the series and discuss more specific techniques related to particular spirit styles. For this edition, we are looking at the oft-discussed and even more oft(en) misunderstood topic of triple whiskey distillation. It is much more complicated than many people realize and there are several variations on the technique that merit mentioning. But first, we need our requisite history lesson to help frame these techniques with some context.

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HISTORY AND CONTEXT Without a doubt the concept of triple distillation is most closely associated with Irish whiskey. For better or worse, Irish whiskey has earned itself a reputation for being light and delicate, sometimes to a fault. A lot of folks chalk this up to the triple distillation process.

Of course, this really gives the entire category short shrift. First, not all the distilleries in Ireland practice the triple distillation technique. In fact, these days it’s more the exception than the rule. And of those that do triple distill, they all seem to do it differently from each other. Secondly, the idea that triple distillation produces a “boring” whiskey is bunk.

There are so many exciting triple distilled drams out there that you’d be doing yourself a serious disservice by skipping over them.

Finally, the Irish are most certainly not the only distillers who practice triple distillation.

There are quite a few distillers in Scotland and the United States that make whiskey this way was well.

No one is completely sure exactly how, where, when or why the process of triple distillation originated. It is generally believed that the technique came about in Ireland sometime in the late 1800s. Prior to this the Irish (and pretty much everyone else in the whiskey world) were distilling using a single or double distillation process, except for the folks that had invested in the fancy new-fangled continuous patent stills, but that is a different story entirely.

The modern take on the triple distillation process is that it produces a lighter and more delicate spirit. However, some speculate that

this was not necessarily the primary goal of many Irish distillers originally using the method. As often happens within our industry, taxation seems to have played a role here.

Some whiskey historians argue that the use of triple distillation came about to better extract more alcohol out of the weaker yielding washes. In 1785 the Irish government instituted a tax on malted barley, so in an effort to avoid paying excessive tax on their production many distillers began supplementing their recipes with large portions of unmalted barley (this was the beginning of the “Single Pot Still” style of Irish whiskey). However, the alcohol yields were found to be slightly wanting so many distillers began using a third distillation cycle to reclaim greater amounts of alcohol.

In today’s distillation landscape, we have a healthy mix of Irish distillers who use triple distillation as well as others that eschew it in favor of the older double distillation method.

Redbreast, Teeling, Green Spot, and Bushmills are all triple distilled. Auchentoshen in Scotland uses their own version of the process for all their whiskies, while Benromach and BenRiach use both triple distillation and double distillation for their product ranges.

Mortlach, aka “The Beast of Dufftown,” uses their own unique version of the process in which their whisky is said to be distilled 2.81 times. In the United States, the most famous use of triple distillation is that of Woodford Reserve, where a portion of their whiskeys are triple distilled in traditional pot stills and blended with column-still distillates after maturation.

METHODS If you are at all contemplating the addition of a triple distillation process to your production program, you should understand that there are multiple ways to go about it. Not all distilleries are suited to all techniques and you will need to think long and hard about what is going to work best for you and your distillery.

The technique of triple distillation can be as simple or as complicated as you like. You could, in theory, simply distill your wash, collect the low wines, redistill the low wines and then distill one more time, separating fractions only on the final distillation. At the end you wind up with feints and some high ABV hearts. It is the question of feints recycling that forms the crux of the triple distillation process. There are multiple ways to handle this recycling so let’s begin to break the processes down a bit.

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HEADS

BEER STILL

LOW WINES

HIGH WINES STILL

TAILS

HIGH WINES

SPIRIT STILL

SPIRIT

TAILS

figure 1: WOODFORD RESERVE TRIPLE DISTILLATION METHOD In a double distillation process, you take your fermented wash, distill (“strip”) it, and wind up with a low wine of approximately 20-30 percent ABV, depending on the alcohol concentration of the starting wash. There are no fractions separated from each other. Everything is collected in the same distillate collection vessel. The low wines are then re-distilled for a second distillation.

Heads, hearts, and tails fractions are collected separately from each other. The hearts serve as the product spirit. The heads and tails are combined and redistilled with the low wines in the next spirit distillation. (It should be noted that there are variations on the double distillation technique, such as where the feints are recycled and the ratio of feints to low wines in the still.)

In a triple distillation you have some kind of “intermediate” still that primarily serves to recycle the feints. You don’t need to own a third still (or even two stills) to practice these techniques, but for those seriously considering the triple distillation path, it does make workflow much easier. All you really need are good liquid management and record keeping practices because you are going to be shuffling a lot of different liquid streams around.

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METHOD ONE This is the technique that Woodford Reserve purportedly uses to distill some of their whiskey. It is also arguably the “simplest” of the techniques I’ll be discussing. Woodford takes their fermented wash and distills it to a low wine that contains about 20 percent ABV. They then distill the low wine in an intermediate still to produce a high wine of 55 percent ABV. During the second distillation, the distillery takes two fractions, the high wines and the tails/feints. The feints from this distillation are recycled with the next wash in the beer still. The high wines then proceed to a third distillation.

During the third distillation, the heads and tails are collected separately from the hearts/spirit cut (about 78 percent ABV). The heads and tails are recycled into the next middle still/high wines distillation while the heart cut then moves on to the maturation warehouse.

If it sounds confusing, I can assure you it’s not too bad. We can easily break this down into a few key points and steps.

1. Distill your wash in the wash still. a. Collect everything that comes off the still. This becomes your low wine.

2. Distill your low wine. a. No heads cut. b. Collect high wines and tails separately. c. High wines go into the next distillation and tails/feints are recycled with the wash in the next wash distillation.

3. Distill high wines. a. Collect heads and tails into feints vessel. b. Collect hearts/spirit and send to maturation. c. Recycle feints with low wines in the next intermediary distillation.

The question inevitably arises: Where do you make the cuts for these distillations? And here, the distiller has quite a bit of room to experiment. For instance, take the intermediary distillation where we are only cutting out the tails from the high wines fraction. You could cut from hearts to tails relatively early in the distillation at 65-55 percent ABV,which would be the standard cutting range for many double-distilled spirits. This would give you a “lighter” high wines fraction to pass 99

on to the third distillation. You could also wait to cut to “tails” well past the 55 percent ABV level and accept your high wines fraction all the way down to 30 percent ABV. This would produce a more congener-heavy distillate that goes into the third distillation. There is a load of variation between distilleries with regards to triple distillation cuts management. One of the tightest cuts in the whisky industry is at Auchentoshan in Glasgow. The spirit cut in their third distillation runs from 82.5 percent down to 80 percent ABV before cutting to the tails.

The next question pertains to the starting alcohol level of each distillation. Unless your techniques and/or equipment are really inefficient, distilling a 20 percent ABV low wine should give you something significantly stronger than 55 percent ABV Likewise, 55 percent ABV high wine should give you more than 78 percent ABV upon redistillation. Besides, in the case of Woodford Reserve and bourbon in general, you’re not permitted to distill beyond the 80 percent ABV mark anyway.

So, what are you to do?

This is where the practice of diluting low wines and “unfinished” spirit comes into play. This is not done simply to keep your final alcohol concentrations in check. Adding water to unfinished spirit prior to distillation helps to volatilize many congeners and makes them easier to remove through selective cuts and fractioning. (Similar reasoning is behind why many blenders will dilute samples down to 20 percent ABV, so that they can better smell some of the aromatics.)

This helps bring about the lighter style of spirit that these distillations afford.

Let experimentation be your guide here.

There is (usually) no reason to dilute your wash, so the only dilutions that should take place will be at the beginning of the intermediary or third distillations. Diluting the low wines that go into the intermediary distillation might be as simple as going from 20-25 percent ABV down to 1518 percent ABV. The resulting high wine ( about 55 percent ABV in Woodford Reserve’s case) could be diluted down to 30-33 percent if you so choose. Then again, you may decide to forgo pre-distillation dilutions altogether. This is just another technique to add to your distiller’s toolbox.

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HEAD

BEER STILL

LOW WINES

FEINTS STILL

HEA

S

STRONG FEINTS

WEAK FEINTS

DS

SPIRIT STILL

SPIRIT

STR ONG FEIN TS

WEAK FEINTS

figure 2: MIDLETON TRIPLE DISTILLATION METHOD

METHOD TWO The next triple distillation method we’re going to discuss is the technique that Midleton Distillery uses to produce a little whiskey called Jameson. ( Jameson is actually a blend of pot distilled spirit and column distillates, but we will only be discussing the pot distillate methods in this article.) Here, we increase the recycling complexity a notch to produce a delicate, light, and nuanced distillate.

Midleton’s distillation series starts out similarly to our previous method. The fermented wash is distilled in the wash still and produces a low wine (about 20 percent ABV). The low wine is then run into the intermediary still (feints still) and the second distillation commences. During this second distillation the heads and tails are cut apart from the resulting high wines (also referred to as the “strong feints”). The heads and tails are then recycled back into the feints still with the next batch of low wines. The high wines are sent to the third distillation cycle/still. During the third distillation we have four cut fractions: the heads, hearts, tails (strong feints), and weak tails (weak feints). The heads and tails are recycled with the next batch of high wines in the third distillation cycle. The weak tails are sent to the feints still to be redistilled with the next batch of low wines and intermediary feints.

While a bit more complex, Midleton’s technique is not that difficult to pull off. Once again, there is a lot of room for experimentation with regards to exactly how and where the individual cuts are made. The major sticking point here for a lot of folks is exactly where the delineation between strong and weak feints lies. Depending on the distillery you will see a cut from strong feints to weak feints around 20 to 30 percent.

You can see how we have built off of the “simpler” first method that Woodford Reserve uses and added some complexity with the second method. You can also see where there is a lot of room to make things even more complex. Enter Benrinnes.

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FEINTS

WEAK FEINTS

HEADS

LOW WINES STILL

BEER STILL

HEADS/ HEARTS

FEINTS

SPIRIT STILL

SPIRIT

STRONG FEINTS

HEADS/HEARTS

figure 3: BENRINNES TRIPLE DISTILLATION PROCESS BENRINNES Benrinnes is unfortunately not the most well-known of the Scotch whiskies. It is a fascinating distillery and whisky. One of the most interesting things about the distillery (at least from the perspective of a distiller) is that they completely upended their distillation process in 2007. They currently distill their whisky using a standard double distillation process with two wash stills and four spirit stills. However, prior to 2007 they were using a fairly involved triple distillation process.

Benrinnes’ version of the triple distillation process used their intermediate still solely for feints distillations. The wash distillation produced a feints cut and hearts/heads cut. The feints would then head to the “low wine still.” The hearts/heads would move on to the spirit still.

The spirit still would produce hearts for barreling. It would also produce heads, strong feints, and weak feints. The heads and strong feints would be recycled in the spirit still while the weak feints would go into the low wines still.

The low wines still produced heads/hearts that go into the spirit still. The feints from the low wines still were recycled in the same still in the next distillation. Are you dizzy yet? Another diagram might be in order.

This is a really interesting way to recycle feints/tails. The low wines still (intermediate distillation) has to do quite a bit of work dropping out copious amounts of fusel oil from the spirit, but still retain a lot of interesting spirit character. This is definitely the most elaborate triple distillation process we’ve looked at thus far.

Of course, we could take things yet another step further.

THE BEAST OF DUFFTOWN I make no secret of my love of Mortlach. It is one of the most underappreciated arrows in Diageo’s vast quiver of whiskies. While Mortlach doesn’t neatly fit into our triple distillation framework, they do claim that their whisky is distilled 2.81 times. So, if we’re rounding up …

How in the hell, you might ask, does Mortlach arrive at a 2.81 times distilled whisky? The answer to that starts with how the Mortlach distillery has been designed. In what today might be deemed a most baffling production decision, the six stills at Mortlach operate on different sizes in a highly unbalanced distillation system. (A balanced distillation system is when the ratio of wash distillations to spirit distillations is a whole number. While this is a seemingly trite bit of distillation babble on paper, rest assured that if you work out the math on an actual system it makes a massive difference to having an efficient workflow.)

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IN ( IN LAS T VO T 2 S LU 0% M E)

TS

I N 0% ) F E ST 8UME IR L (F VO IN

Mortlach has two 7,000-liter wash stills and a third wash still with a 16,000-liter capacity. They also have three spirit stills with 8,000, 9,000, and 10,000-liter capacities. (Added whisky trivia bonus: all the spirit stills are cooled using worm tubs.)

Now, I would never recommend designing a distillery in this fashion, but admittedly what Mortlach has done is rather clever. They figured out a way to “pair” these stills so that the distillation produces a spirit that is simultaneously both TWO HEADS/ bold and nuanced. Let’s see how it works.

“BLANK” TAILS RUNS We’ll start with the simplest part of the process. Wash still number three is paired directly with spirit still three. No fractions are separated from the low wines during the wash distillation and all low wines go to spirit still three. Spirit still three produces hearts while the heads and tails are recycled directly back into spirit still three.

SPIRIT WASH STILL FEINTS Wash still number two is loosely paired with spirit still number two.

STILL #1 (LAST 20% The first 80 percent of the volume to come off the wash still is run into #1 IN VOLUME) “THE WEE WITCHIE” spirit still two. The remaining 20 percent of the liquid (the weaker “tails”) are run into spirit still one. Spirit still two, like spirit still number three, produces a hearts fraction (which is blended with the hearts from the other stills) and heads/tails fractions that HEADS/ are recycled back into the next run of spirit still two.

TAILS Where things get really odd is with wash and spirit stills one. Wash still number one produces a low wine, the first 80 percent of which is moved into spirit still two. The remaining 20 percent of the low wine volume goes into spirit still number one, also known as WASH SPIRIT “The Wee Witchie.” Spirit still one is distilled twice in STILL STILL HEARTS two “blank” concentration runs where no fractions #2 #2 FEINTS are taken, and everything (except stillage/pot ale) is (FIRST 80% IN VOLUME) recycled back into the same still. On the third distillation cycle of The Wee Witchie, hearts are produced and blended with the hearts from spirit stills two and HEADS/ three. The heads and tails from the third distillation are TAILS recycled into the same still for the next distillation. And you thought your high school calculus class was difficult.

There are quite a few other iterations on the triple distillation method we could mention. Auchentoshan and Springbank, for instance, have their own methods. So does BenRiach. There FEINTS WASH SPIRIT are practitioners in Australia and other far-flung reaches making STILL STILL LOW WINES their own marks with triple distilled whiskies. I’m sure you could easily #3 #3 come up with your own imaginative versions as well.

“Triple Distilled” doesn’t necessarily mean light and it most certainly doesn’t mean boring. Hopefully I’ve given you some more tools to put in your distiller’s toolbox. Besides, experimentation is all part of the figure 4: MORTLACH 2.81 DISTILLATION TECHNIQUE process and fun of making spirits. And I can’t wait to taste what you come up with.

Cheers!

Matt Strickland is the Master Distiller (he hates that title) for Distillerie Cote des Saints in Quebec where he focuses on single malt production. He has a Master's in Oeonology and Viticulture from Oregon State, is a faculty member at Moonshine University, and is the only American to sit on the Board of Examiners for the Institute of Brewing and Distilling in the UK. His spirit spirit is Peruvian pisco and he does not believe that listening to Journey has to be done ironically.

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, T D C A RE CONTRA NEY THE AN ATTOR E R I H rew

by And W r it t e n

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s craft distillers grow, they are being presented with a dizzying array of marketing agreements to sign, getting exponentially more complicated with each new sales territory added. Varying factors such as tied house laws, exceptions to the three-tier system, the growth of consumer delivery, and franchise states are presenting distillers with a more complex and difficult landscape to navigate as they expand their businesses.

Karen Hoskin, founder and owner of Montanya Distillers, said that one e-commerce site promised they would ship spirits to any city in the country. When she pressed them by asking about particular Texas counties, which she knew were dry, the retailer said they would ship there. Hoskin then knew she did not want to do business with them.

Ray Disch, founder of Sourland Mountain Spirits in New Jersey, said some internet retailers were openly asking for money to place products on their sites. “They wanted what they described as a marketing fee,” said Disch. He had words for their ilk that could not be repeated in a family publication. Initially, he had wanted to get on as many e-commerce sites as possible and was excited by the potential, but that and other incidents have soured him on the concept.

Of particular interest are third-party marketing arrangements, which are becoming more common. In these arrangements, the distiller contracts with the third-party marketing company, and the third-party marketing company advertises the spirits online and contracts with retailers in various states to fill the orders by shipping or delivering the product to consumers.

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F a u lk n

er

“We're at a stage of the craft spirits industry where people are trying to come at us. Ten years ago when we started, nobody was trying to take anything from me because there was nothing worthwhile to take. As an industry, we've now progressed so that unsavory operators could take advantage of us.”

— PAUL HLETKO, founder of FEW Spirits and former president of the American Craft Spirits Association Stacy Kula, the chair of the hospitality and alcoholic beverage law practice at Steptoe & Johnson PLLC in Lexington, Kentucky, said it is not unusual for the third-party marketer to use the producer’s brand name, trademark and other intellectual property to market the producer’s spirits online. She said, “A third-party marketer does not inherently have the right to use your trademark and other intellectual property, so that third party needs a limited license to use it.”

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“The agreements can also be particularly difficult to navigate because you have to be sure that the arrangement does not violate tied house or other prohibited trade practice rules.”

Kula stressed that, “You want to be really careful with how your product is advertised by that third party, how a third party is using your trademark, and what rights you are giving them. They need to use the trademark, but that use should be nonexclusive, for a limited time, revocable by you at any time, because they can do harm to — STACY KULA , chair of the hospitality and alcoholic beverage law your trademark if they use it improperly or in a practice at Steptoe & Johnson PLLC manner that is inconsistent with your branding.

You must retain the specific right to control how the trademark will be used.” marketplace. “It was kind of shocking to look at,” she said.

“The agreements can also be particularly difficult to navigate beStamey-White outlined some contract situations where distillers cause you have to be sure that the arrangement does not violate tied should work with a lawyer. She wrote: house or other prohibited trade practice rules,” said Kula. “TTB regulates the advertising of alcohol manufacturers, and that includes > High-risk scenarios where you definitely want a lawyer inthe use by a distiller of social media. Links to third-party sites on volved: distribution contracts (especially in franchise states a distillery’s website may be deemed to be the distillery’s adverand exclusive in nature), bringing on investors (securities tising when the TTB considers the totality of the circumstances.” law and tied house especially), contracts coming from Rick Biagi is a lawyer at Neal & McDevitt, a Chicago-based intelretailers (or from third parties claiming you are required to lectual property and marketing attorneys working in the wine and engage with them in order to work with certain retailers) spirits community. His firm formerly represented Paul Hletko’s FEW > Working with unlicensed third parties: be wary of bad Spirits and works with the American Craft Spirits Association. Biagi contracts — either hard to read, not what you've discussed, wrote:

“Co-branding agreements are ultimately designed to protect both brand owners. As a result, a co-branding agreement should spell out such things as: 1) who owns the co-branded marks during and after the term of the agreement, 2) how are the marks to be used and in what specific context are they to be used, 3) should the co-branded mark be registered and if so, who should own it; 4) what happens to the materials (i.e., print, social, web, television, etc.) that were the byproduct of the co-branding agreement after the agreement terminates (i.e., who owns them, can they continue to be used, etc.); and 5) what mechanisms will be put in place to insure compliance with the terms of the agreement including quality control and style/branding guidelines.”

Rebecca Stamey-White, a partner at Hinman & Carmichael LLP in San Francisco, sympathizes with distillers under pressure because of market disruption due to COVID-19 or an ever-crowded marketplace. “A lot of producers out there right now are needing to pivot and reach the market in a different way,” she said. “It puts craft distillers at a disadvantage if they are not able to hire a lawyer to look at every contract.”

Hletko said, “You better understand what the contract says and what you're giving up and what you're getting because, at this point, there are enough people trying to steal from the craft spirits industry that you better be ready for it.”

Co-branding arrangements in the growing landscape of distributors and internet retailers raise issues regarding what rights a distiller may inadvertently sign away. Stamey-White recalls reviewing a contract from an e-commerce site that asked for worldwide, exclusive rights to the trademark, including indemnity for the unlicensed

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non-negotiable (i.e., terms of use), or look like they've been cobbled together from the internet. Make these folks hire lawyers so that you have a good contract to start with and your legal spend will be less as a result. Additionally, know that these folks don't have licenses to lose, so licensees still have responsibility for compliance with the laws to protect their licenses.

> Specific clauses/contracts to watch out for: ▶ Overly broad intellectual property licenses: i.e., "a

perpetual, irrevocable, nonexclusive, royalty-free, worldwide, fully paid, and sublicensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, publicly perform and display your content and any name, username or likeness provided in connection with your content in all media formats and channels now known or later developed without compensation to you" ▶ Clauses that are not mutual — i.e., you indemnify

them, but they don't indemnify you; you have to have insurance and add them as an additional insured, but they have no similar responsibility ▶ Bad force majeure clauses that don't account for

COVID or don't say what happens in the event of an "act of God" ▶ Representations, covenants, and warranties that you

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In the relatively established world of distributors, the unscrupulous players may not be as obvious as in e-commerce, but that does not mean the land mines are not there. Distillers doing business in franchise states had better be well-informed about the distributors they are signing with and the provisions that each one of these states has.

In a franchise state generally, “If the distributor complies with the statutory requirements, you often can’t fire them without good cause,” said Stamey-White. “Once you get into a franchise market with a distributor, you basically can’t fire them, or getting out often requires a termination payment, an expensive lawsuit, or leaving the state for a while.”

Hletko said, “Maybe you're going to take a permanent partnership with a distributor. That may well be something you decide is okay, and in your interest, or worth it. But you should affirmatively decide that, ‘I know the risks but the benefits outweigh them.’ And that's okay if that is your affirmative decision. But go in smart, because those contract terms are not likely in there for you.”

Distributors in non-franchise states may try putting franchise clauses into agreements, making it all but impossible to leave the distributor without paying hefty fees, regardless of sales performance.

Things that seem boilerplate are worth understanding and also should be negotiable. “There are many clauses that, when you are not trained to read them, you do not know what they say, especially if they are written in legalese and not clearly stated,” said Stamey-White.

Distillers need to weigh the cost of an attorney, and the potential cost of not hiring an attorney, against the gains they hope to acquire from entering a new market. The bottom line in this issue is that, when presented with a contract, producers should read it carefully and seek legal counsel.

“Not using a tax or intellectual property or an alcohol attorney in these matters is like making a cocktail with methanol,” said Kula. “Maybe you come out blind or maybe you die, but nothing in that range is good.”

Andrew Faulkner was Managing Editor of Distiller magazine for six years. In 14 years at the American Distilling Institute he coordinated curriculum for Hands-on Distilling Workshops, helped plan the Annual Spirits Conference and Vendor Expo, and was the architect of the ADI’s International Judging of Craft Spirits. He is the co-author, along with Bill Owens and Alan Dikty, of “The Art of Distilling Whiskey” (2019, Quarry Press) and has edited six books on distilled spirits.

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FOUNDATIONS of CRAFT DISTILLING WRITTEN BY GABE TOTH

1: Mashing

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s the American craft spirits world grows, new and would-be distillers do not always have access to the best information on the fundamentals of distilling.

What worked for grandpa in the woods, or a friend’s methods on their garage still, don’t always translate into making the best possible product for a commercial operation.

To that end, we hope to provide some basic, foundational distilling knowledge for new craft distillers and those who have not been formally trained in a series of articles that cover the key foundational components of distilling at a craft level.

While the principles laid out in the subsequent articles are not always hard and fast rules, there are often good reasons that they have become guiding principles. Rules can be broken, but one should learn the rules in order to know best how to break them. As much as possible we will attempt to explain the reasons for these principles or best practices, but given the space constraints, this will not always be possible.

These articles will be broken up into four groups of content: Mashing/Cooking, Fermentation, Distillation, and Aging/Packaging. The content laid out in these four articles will form the core of a future publication that will more fully explore and elaborate on this content, so any omissions, errors, or questions are welcome and we will work hard to make this material as thorough and accurate as possible.

To begin at the beginning, any foodgrade source of sugar or starch can be fermented and used for spirits. This includes grain, fruit, starchy vegetables, honey, agave, even dairy products. Spirits are often defined 106

by these original feedstocks. Whiskey is made from grains, brandy and eau de vie from fruit, and rum from sugar cane. Vodka and neutral spirit can be made from any source of sugar or starch, including fruit, grain, potatoes, sugar beets, and sugar cane, while grain spirit or neutral grain spirit is produced from grain.

The primary grains used for whiskey production are corn, rye, wheat, and barley. Geography and agriculture traditionally would dictate the types of whiskey made in different locations; in the south, corn is historically predominant, leading to the prevalence of

bourbon, while rye and rye whiskey were traditionally most common in northern states and Canada. The primacy of barley in Scotland and Ireland led to those countries’ development of malt whiskey and Irish pot-stilled whiskey. The Scottish tradition, in particular, has informed many of the craft malt whiskey distillers in the United States, while bourbon producers look to the traditional methods that developed in the American south.

Corn, rye, and wheat are most commonly — though not exclusively — used in their raw form. (Malted rye, corn, and wheat are also WWW.ART ISANSPI RI TMAG.CO M

available to varying degrees.) Barley, on the other hand, is most frequently malted prior to distillation.

To produce malted grain, the maltster relies on natural reactions within the grain kernel that make starch more available, using moisture and temperature to trick the dormant seed into germinating. To do this, the maltster exposes the grain to a series of water steeps and air rests that hydrate and wake up the seeds. When the grains begin to sprout rootlets and a shoot that would eventually grow into a grain stalk, the maltster transitions to the germination stage, draining excess moisture, oxygenating, and periodically turning the bed to keep the sprouted grain’s rootlets from matting.

In germination, the kernel undergoes a set of biochemical transformations. Of importance to the distiller, the grain breaks down the cell wall material and protein matrix to make starch within the endosperm more accessible and produce enzymes that the distiller will later take advantage of.

Finally, in kilning, the maltster then locks these changes in place by carefully drying the grain at low temperatures to prevent denaturing the enzymes, then increasing the temperature as moisture is driven off, reducing the impact on the enzymatic content.

Bourbon and rye distillers who use malt primarily for its enzyme content will often use distillers six-row malt. (It’s also common among adjunct lager brewers who use large amounts of corn or rice.) Six-row and two-row barley refers to the number of barley seeds that grow in each cluster on the stalk; barleys with clusters of six seeds have higher enzymatic content, also known as diastatic power, but lower starch content, making them ideal for converting starch in grain that has low diastatic power such as corn and rye.

Two-row barley malt, with plenty of diastatic power to self-convert and a greater starch content, is the preferred choice for malt whiskey (and all-malt beer), but a tworow that has been gently and lightly kilned to preserve its enzymes may also work for the bourbon or rye distiller.

The “typical” whiskey grain bill, naturally, depends on the style or type of whiskey.

Bourbon is required, among other things, to consist of at least 51 percent corn, though WWW.ART ISANSP IRITMAG.COM

the proportion commonly ranges up to 80 percent. The remaining percentage is generally made up of either rye or wheat to add character, and malted barley to add enzymes.

Bourbons with rye, which adds a spicy, earthy character, are more common. Wheated bourbon tends to be softer and sweeter; many of the over-the-top rare and expensive bourbon brands are wheated bourbons. A few bourbons make use of all four of the most commonly used grains: corn, rye, wheat, and malt.

Rye and wheat whiskies, likewise, must consist of at least 51 percent of the named grain. While these base grains are often used along with corn and malted barley, similarly to bourbon, a few distillers are producing whiskies made of 100 percent rye or 100 percent wheat.

Malt whiskey is required to consist of at least 51 percent malted barley, though malt whiskey distillers tend to use 100 percent two-row malted barley. However, the type of malted barley can vary. Some distillers add a layer of flavor — subtle, in-your-face, or somewhere in between — by using smoked

malt for some or all of their grain bill. Craft distillers are also using specialty malts more commonly used in brewing, such as roast, chocolate, or caramel malts. This is often done to build layers of flavor and add complexity in whiskies that will not have as many years to age in-barrel.

In Ireland, there is also a tradition of using unmalted barley. Irish pot-stilled whiskey is made with a minimum of 30 percent malted barley and 30 percent unmalted barley, with a small percentage of other grain (oats, wheat, rye) also allowed.

To mash grain for malt whiskey, malted barley must first be milled. The level of milling is determined based on the available equipment and desired outcome, i.e. lautered malt will be milled to a larger particle size than grain-on fermentation.

A roller mill will break down grain, malted barley in particular, into small pieces of starchy endosperm and larger pieces of husk material that will aid in lautering. A hammer mill, on the other hand, will break down grain into flour, allowing for better penetration of water

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and enzymes later. Hammer milling is preferred for bourbon, rye, and wheat whiskies.

To begin making malt whiskey, the malt is combined with hot water (commonly called hot liquor) to steep at 143 to 149 degrees Fahrenheit. At this temperature, the beta amylase enzyme that was created in malting becomes most active.

Beta amylase will gradually convert most of the grain starch — essentially long chains of glucose — into single, double, and triple molecules of glucose (respectively glucose, maltose, and maltotriose) that yeast can digest. Alpha amylase, which breaks starch down more randomly and creates more unfermentable long chains of sugar known as dextrins, is also a major component of malt’s enzyme content. It is primarily active at higher temperatures, though it does show some activity at this temperature.

Starch must go through three stages before it can be fermented: gelatinization, which dissolves the crystalline starch structure to make it more accessible; liquefaction, where the starch is partially broken down via water absorption or the activity of alpha amylase; and and saccharification, which converts the starch fragments into fermentable sugars and is driven by beta-amylase and glucoamylase.

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In malting, well-modified malt (with a fully-broken-down endosperm cell structure) does not require gelatinization, and the beta-amylase temperature range corresponds with the gelatinization temperature range for unmalted barley and wheat. However, gelatinization must be considered for unmalted grains because rye and corn have higher gelatinization temperatures.

Depending on the distiller’s preference, a malt mash is generally calibrated to give wash that is about 12 to 18 degrees Brix. Brix is a common scale used by distillers, brewers, vintners, and other fermented beverage producers that measures sugar content in a solution. A liquid that has 12 percent sugar by weight is 12 degrees Brix. Plato is a scale that measures all dissolved solids and is interchangeable with Brix, while specific gravity measures the weight of a sample versus water.

Gravity is a measurement of the density of a solution as compared to water. With water as a baseline of 1.000, a starting gravity might be in the range of 1.050 to 1.080, depending on the distiller’s preferences.

A final (end-of-fermentation) gravity might drop below 1, potentially measuring as low as .995 for a solution that has fully attenuated, or down as far as -1 in Brix and Plato. This is an indication that all starch has been converted to sugar and all sugar fermented into alcohol.

This reading is the result of ethanol’s lower density compared to water; a solution of water, ethanol, and little else will be lighter than water.

For reasons that will be discussed later, the distiller generally does not want to go too low or too high with the initial concentration of sugar in their wash. Mashes in the range of 2.5 to 3.5 pounds of grain per gallon of water will generally put you in the proper range, but the distiller’s exact recipe will vary based on preference and equipment limitations. A thinner mash will facilitate faster enzymatic activity compared to a thicker mash, while a thicker mash will preserve enzymes, slowing their denaturation and maintaining enzymatic activity for longer.

For malt whiskey, once the malt has been mashed in with a proper amount of hot liquor, it needs to rest for about an hour to allow the enzymes time to act on all of the starch to convert it to sugar. This is the saccharification rest, and it is generally the only temperature rest needed in a malt mash. A hotter mash (above 150 degrees) will convert more quickly, but will result in more alpha amylase activity and more unfermentable sugars. A cooler mash (below 145 degrees) will not self-convert because the beta amylase enzymes will not be activated and the starch will not be gelatinized.

A mash pH of about 5.2 to 5.8 is generally considered optimal for mashes that use only endogenous enzymes (those that are produced in the grain). Exogenous enzymes, which do not occur naturally in the grain and are added separately, have a wider window, but in general the enzymatic activity will be reduced below 5.0 and eventually stop the farther it drops.

Once the starch has been fully converted (this can be tested by mixing a few drops of iodine into a sample of mash — the iodine will be a deep blue or black color in the presence of starch), the liquid can be separated from the grain. This is a process familiar to brewers, who will lauter wort — the sugary liquid that results from mashing malt — into a boil kettle where it will be boiled and hopped.

In lautering, the liquid and grain solids are separated using a false bottom constructed of screen or wedgewire that sits just above the bottom of the mash tun (or lauter tun, if WWW.ART ISANSPI RI TMAG.CO M

your system has separate vessels designed for mashing and lautering).

Some of the initial strong wort, the first runnings, will be run off and the grain in the mash will settle into a stable grain bed, aided by the pieces of barley husk that were preserved in milling and are not soluble. After the first runnings are drawn off, the distiller or brewer begins to add water to the top of the mash. This additional water, called sparge water, will work its way down through the grain bed and pull additional sugars from the mash, then flow through the false bottom and out of the tank.

Sparge water is generally added at an approximate rate of a gallon for every two pounds of grain. Too little sparge water will leave sugars behind in the grain, too much and the wort will become too diluted. Sparge water should be hotter than the mash to help solubilize sugars. (The target is generally 170 degrees in brewing, as a higher temperature can leach tannins from the grain near the end of the sparge, but this is less of a concern in spirits production.)

While the wort is not boiled in traditional malt whiskey production, many former brewers among the ranks of U.S. craft distillers aim for a pasteurized, “clean” wort fermentation.

The implications of pasteurized versus dirty fermentation will be explored in a future article. Another common brewing practice sometimes used to produce the clearest wort possible is the vorlauf. Prior to collecting the first runnings from the mash, the wort is recirculated from the bottom of the mash back onto the top of the mash. This helps the filter bed separate grain particles and provides a brighter, clearer wort to run off.

Less frequently, but sometimes done because of the flavor impact or equipment limitations, malt whiskey can also be transferred to ferment and distill on-grain.

For bourbon or rye whiskeys, the starches in corn and rye require an extra step before being converted to sugar. These grains require a higher initial temperature rest to gelatinize their starches, making them available for breakdown into simple sugars.

This rest is generally 180 degrees F or higher, and at industrial bourbon distilleries is sometimes done in a pressurized vessel above 212 degrees F. Gelatinization can be done WWW.ART ISANSP IRITMAG.COM

simultaneously with the beginning of liquefaction using exogenous enzymes, usually a high-temperature alpha-amylase. Beginning liquefaction simultaneously with gelatinization helps to loosen up the mash and reduces strain on equipment such as motors and impellers or paddles in the mash cooker.

After the gelatinization rest, liquefaction and saccharification can commence at a lower temperature. This stage is traditionally done with the addition of up to ten percent malt by weight depending on the malt’s enzymatic content.

The activity of the endogenous (naturally occurring) malt enzymes can be augmented or replaced entirely using exogenous enzymes. A commercially available amyloglucosidase, also known as glucoamylase, operates best below 140 degree F and will completely digest starches down to single glucose molecules. The addition of a glucanase or protease enzyme to break down beta-glucans and pentosans, which occur at high levels in rye, oats, and wheat, and have a thick, gummy texture, can make mashes thinner and easier to work with and unlock small amounts of additional starch. This stage takes less time than a gelati-

nization rest, 30 to 60 minutes.

If following traditional whiskey production methods, the mash will not be boiled to pasteurize and the enzymes can continue to act on the mash during fermentation until the pH falls out of the enzyme’s tolerance.

Because the grains used in bourbon, rye, and wheat whiskies more resemble oatmeal or porridge, as compared to a malt mash that can be cleanly separated into liquid and solid components, these mashes are ready to cool down to fermentation temperature and move into a fermenter as soon as the sugars are fully converted.

We will continue in the next issue with an examination of fermentation principles for whiskey, brandy, rum, and neutral spirit production.

Gabe Toth is lead distiller at The Family Jones Distillery in Denver and Loveland, CO. A former craft brewer, his passion for fermenting and transforming ingredients also extends to sausage and meat curing, cheesemaking, and pickling. He can be found up in the mountains or at gabetoth@hotmail.com.

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NEW WORLD OF FEDERAL EXCISE TAXES WRITTEN BY JIM MCCOY

Three notable law changes included in the Taxpayer Certainty and Disaster Tax Act of 2020...

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T

he Taxpayer Certainty and Disaster Tax Act of 2020, signed on December 27, 2020, included provisions which historically make rate reductions and some other law changes in the Craft Beverage Modernization Act (CBMA) a permanent part of the legal landscape in which distillers operate under Federal law and regulations. This important step forward provides a solid basis which the distiller can rely upon for decision making in respect to how the federal tax rules impact financial and operational considerations. The past three years of temporary tax relief, while positive, had the spectre of a return to the high rate burden that the industry faced prior to 2018.

Distillers have enjoyed the temporary reduced rate of tax on the first 100,000 proof gallons of spirits removed subject to excise tax during each calendar year since 2018, and that rate structure has now been made permanent. However, some changes were made in conjunction with the rate reduction which bears attending to. Let’s discuss three notable changes made in the 2020 law.

Since the beginning of 2018, the in-bond transfer of bottled distilled spirits has been permitted, under the same guidance as bulk transfers had been since 1980. With the 2020 law, rules for transfers were changed.

Bottled beverage products may now only be transferred in bond between DSP premises owned/operated by the same proprietor, or within a controlled group, with little exception.

The law allows a limited exception where a DSP is “storing” the bottled goods at another proprietor’s DSP, or has contracted for bottling by another proprietor’s DSP, and the first DSP retains title to the spirits involved and the spirits are returned to the originating DSP. This restriction conforms to the original intent of restrictions on transfers prior to 2018, when such restrictions were in place to prevent “downstreaming” of excise tax payments, whereby a person warehousing bottled spirits might set up as a DSP solely for the purpose of bonded warehousing of bottled products, similar to a wholesale dealer, who may only acquire tax-paid spirits products. The 2020 law tightens the rules on transfers, the general net effect being to

WWW.ART ISANSPI RI TMAG.CO M

allow bottled goods transfer only by DSPs of similar ownership, such as a multi-location owner, or a group of related companies (“controlled group” as defined in tax laws).

Next, beginning in 2022, the reduced rate of tax is only applied to distilled spirits processed by a DSP, specifically in this rule processed does not include solely bottling. So, if DSP A ships a finished product to DSP B, who only bottles the product, DSP B cannot withdraw the product at the reduced tax rate. We can look to TTB for further guidance on this, as the current definition of “processing” includes bottling activity, and of course there will be questions as to what processing activity they will consider as being sufficient to qualify for reduced rate. I would conjecture here that adding water to set bottling proof, and final filtering may be considered part of bottling operations. However, it’s best to defer to TTB for the answers on such questions. As this restriction begins in 2022, there is time to work out the details for this rule.

Also, in respect to this “processing” rule, look above to the new transfer-in-bond rule enacted in 2020, effective in 2021.

If this product is solely bottled by DSP B, the product can be returned to DSP A by transfer in bond, where DSP A may then withdraw the product and pay the reduced rate. Further, if DSP A contracts with DSP B to process and bottle the product, the reduced rate may be allowed, as under the “single taxpayer” rule, according to TTB in their guidance, “the single taxpayer provisions apply to two or more entities (whether or not under common control) that produce beer, wine, or distilled spirits, or process distilled spirits, under a license, franchise, or other arrangement.” In this sense, DSP A and DSP B, if producing products under a contract, may be treated as a single taxpayer for purposes of applying the reduced rates.

In previous articles, I wrote about the single taxpayer rule and transfers, hoping to provide some direction to those looking to understand these new angles in the federal spectrum of distilled spirits laws and regulations.

If you haven’t already, you will.

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In closing here, the best source to refer to is the TTB guidance which they post to their website. Just look to the header on the TTB.gov homepage, and click to access their FAQ, guidance documents, laws and regulations and related details. As with any newly enacted changes to laws, the agencies and the impacted industry must work to find the new ground where both can share a clear understanding of how the stated mechanism in law will work in their real-world application of the rule to regulated operations, tax liability considerations, and how businesses can function profitably.

Jim McCoy operates J. McCoy Alcohol & Tobacco Compliance Consultants LLC, and since 2010 has assisted alcohol and tobacco businesses in their efforts to meet Federal regulatory and tax requirements. For more information email Jim at jmccoy@jmccoyconsultants.com.

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BETTER LATE THAN NEVER W

18th Amendment ground legal drinking to a halt nationwide. The ruling ended a weird, almost alien era of liquor possession rules; an era so out of step with what conventional wisdom it nearly feels like it exists outside reality.

“In a sense, the ruling was just an adjustment toward normalcy,” said Richard Patrick, co-founder of Cathead Distillery in Jackson, Mississippi “It will take time to implement it, but it’s still good to see that progress is being made.”

Like pretty much every law on the books concerning alcohol, the passage of Mississippi House Bill 1087 carries convoluted context that must be deciphered to be completely understood. This begins with Mississippi’s strange relationship with the 21st Amendment. The repeal of the Volstead Act occurred at a federal level, leaving leeway to allow states to decide if they wanted to follow suit. A handful of states dragged their feet on this, and nobody dragged them longer than Ole Miss, which didn’t Mississippi’s new Prohibition law means repeal Prohibition until 1966. the “dry by default” stance is gone in the When they did, they implestate. However, the designation itself is not mented an odd designation forgotten elsewhere. Kansas and Tennessee are commonly known as “dry still considered “dry by default” states. Kansas’ by default.” status is arguably not much of a shock. Its state-level Most states are inProhibition was on the books for a whopping 68 herently “wet.” Some states, primarily states years, from 1881 to 1948, and it was the de facto home in the South, allow base to the infamous hatchet-swinging temperance counties to pass “dry” movement leader Carry Nation. Tennessee is legislation that prohibits considerably more surprising given its robust ties to the sales and distributhe spirits industry, although the law does add an tion of liquor within their extra layer of backwoods mystique to the state’s boundaries. From 1966 “Jack Daniel’s is produced in a dry county” until this past January, Misnarrative. With Mississippi’s law reversing sissippi walked the exact opits “dry by default” status, these two posite path, prohibiting alcohol holdouts are now on the clock. in the state unless counties passed legislation allowing for booze. The e all know the 21st Amendment repealed the 18th Amendment and ended Prohibition. We’ve all seen images of people gathered on December 5, 1933, joyously hoisting a legal libation. Distillers, industry professionals, and imbibers around the country are wont to celebrate this date with a tipple, and appropriately so. Yet every so often, a story comes along to remind us that pesky remnants of The Noble Experiment remain like stuck crumbs at the bottom of a muffin tin after a washing, and there is still some work to be done on what history largely considers a resolved issue.

The beginning of 2021 gave us such a reminder, and it was a doozy. Prohibition finally ended in seventeen of Mississippi’s counties, ninety years after the

“dry by default”

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Breaking Down Mississippi’s Decision to (Sort of) End Prohibition 90 Years After the 21st Amendment WRITTEN BY RICH MANNING

new law flipped the switch by removing the “dry by default” designation, thus removing restrictions in counties that had no “wet” laws on their ledger. The new freedoms afforded by the affected county residents include the legal possession of liquor, although it’s assumed that this may not have been much of a concern in the first place. “I don’t know much about the enforcement of possession laws,” Patrick stated. “However, it wouldn’t be surprising to find out the people in charge of enforcing the laws were also the ones that were breaking them.”

Patrick’s statement isn’t flippant. In a roundabout way, it calls back to a key moment in Mississippi’s Prohibition lore.

In February 1966, then-Governor Paul Johnson got caught attending an illicit Mardi Gras ball at a Jackson country club with other Mississippi socialites.

Johnson signed off on Prohibition’s state-level repeal three months later.

The new law reversing the “dry by default” designation wasn’t spurred by hands caught in cookie jars. At the same time, it doesn’t have as massive of an impact as it may look on paper. The counties most affected by the law are rural areas — Mississippi’s mass population centers have been wet for decades.

It doesn’t make the state fully wet, either. Despite being “dry by default,” 29 counties still saw fit to pass their own dry laws. These provisions may make the new legislation appear as nothing more than a showy, empty gesture to the cynical outsider. To a distiller like Patrick, however, the new law is a crucial decision. “This opens the door for more opportunity in some of the areas affected by the law,” he said. “Things won’t change overnight, but eventually, it may produce new business opportunities in WWW.ART ISANSPI RI TMAG.CO M

the form of new liquor stores, new restaurants, or even new distilleries. This could lead to economic growth and job creation, which would be awesome. The state could certainly use more businesses.”

Only five distilleries currently dot the Magnolia State. Cathead is the oldest of the bunch, and they’ve only been around since 2010.

This sparseness leaves ample room for growth, and the state’s rich agricultural traditions and the potential for agricultural- and liquor-based tourism on the other side of the pandemic provide fertile grounds for future liquid innovation. According to Patrick, the state’s small yet passionate group of artisanal spirit-makers would be more than happy to welcome new players into the fold. “None of the current distillers are in competition with each other,” he said. “We’re always talking to see how we can be supportive. If a new distillery came around, I know we’d all embrace them with open arms.”

In a way, they’ve already cleared a path for the next wave of spirit-making talent. The distillers’ collective lobbying efforts with state officials were instrumental in getting the law passed, a process that included promoting awareness of the public’s changing attitudes toward alcohol consumption in the craft era.

These attitudes compel Patrick to be reluctant to accept much kudos for the push toward new legislation despite his work. “I’m not sure there’s much of a stigma around drinking anymore,” he said. “It’s the evolution of the times, and I can’t take credit for that.”

Of course, Mississippi’s liquor laws aren’t fully evolved. They won’t be until the last of the state’s dry counties overturn local legislation and allow the statewide wet mandate to fully take hold. Still, the state’s decision to finally ditch their “dry by default” status nearly 90 years after the 21st Amendment passed is a major step forward. It’s a decision worth raising a glass and celebrating — on December 5th or otherwise.

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Rich Manning is a freelance food and drink writer based in Fountain Valley, CA. He lives about 15 minutes south of Disneyland, but he hasn’t gone there in ages — he’d rather visit the nearby breweries and distilleries instead. You can check out some of his other written hackery by visiting richmanning.pressfolios.com.

He can be reached at richmanning72@gmail.com.

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KNOWN: W H AT I W I S H I ’ D LET ME TELL YOU

I T ’ S T H E

I N P R O O F ,

P U D D I N ’ K A . V I E RT H A L E R WRITTEN BY MAR

o the spirits dumped the water int tering their like a Florida retiree wa driveway. was super After all, proofing spirits h proof. hig a at simple. You had spirits of. So, pro lower You need spirits at a y-boppity-booze, you add water. Bippit t’s ready to be you’ve got a product tha what-have-you. sold, blended, bottled, ple of minI gave the spirit a cou with a stainless utes of hearty stirring y went on my steel paddle, and merril overnight, I sit way. After allowing it to proof. came back to check my was dead on of pro the And, while horrifying had the money, something s cloudy. Nighhappened. The spirit wa t as troubling — on opaque. And — jus ctly astringent it had taken on a distin

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flavor.

It was soapy. must have Convinced that there water, I immebeen something in the a litany of tests diately began running tem had failed. to figure out why our sys d that it had Eventually, I discovere water. Or, rather, nothing to do with my quality of the nothing to do with the water that I had used.

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fallen victim I was a fool who had blunders. No, I to one of the classic in a land war in hadn’t gotten involved Asia. esters. I had, I had hydrolyzed my ah, turned my like a Dime Store Messi whiskey into soap.

TH E IS SU E

ly, my rude This was, unfortunate known as saponawakening to what is onification is ification. Simply put, sap ition of water caused by the rapid add results in ich wh to high-ester ethanol d salts within the creation of fatty aci the suspension. roach to proofThis eager-beaver app especially when ing isn’t unheard of, American whisit comes to traditional ver, with prodkey production. Howe gins, and rums ucts such as brandies, to have high es— products that tend -fast addition of ter content — the too lihood of both water increases the like as well as that a cloudy end-product, taste. none-too-pleasant soapy th ALL of your Whiskies — and in tru

from a more spirits — can benefit seful approach thoughtful and purpo spirits. Because to proofing down your r and end up if you do get over-eage ’re out of luck. with saponification, you ch else you can There’s really not mu r from scratch. do other than start ove ounce of preLike in many cases, an nd of cure. vention is worth the pou

G PR OP ER PR OO FI N

ctly take to How long should you exa n? Hours? Days? proof down a spirit the Months? Years?

Yes. The simple answer — It depends.

The complex answer — es (Summer, In these august pag blender Nancy 2015 issue) master from renowned Fraley — who learned bert Germainbrandy producer Hu this very issue Robin — discussed rek Bell. With with Corsair Spirit’s Da , proofing down some higher end spirits can take multiple years. ducts I want “With higher quality pro r time,” Fraley to go very slowly ove ed it, I put it said. “Once I’ve water in, let it sit back in the barrels aga g I want to do there, determine how lon WWW.ART ISANSPI RI TMAG.CO M

LIPIDS, O F FAT S , O I L S , O R N O I S R E V N O C E H S T S A P O N I F I C AT I O N I H E AT

BY THE ACTION OF L O H O C L A D N A P INTO SOA LI. OF AQUEOUS ALKA IN THE PRESENCE

up to a year. this program. It can be rels I lower it Then from the same bar again.” ducted with In an informal poll I con , the answers the Good Guy Distillers ” to “severtes ranged from “20 minu ut anything we al years.” Like just abo it 100 percent do within our industry, that you want depends on the product to produce. rit? A gin?

An unfiltered aged spi Single barrel?

Upwards of a month. a week or two.

Bottled in bond? Maybe any sort of Or seven to 10 days for three days for aged spirit and then vodka and gin. more than Or, if you’re Fraley — three years sometimes.

SA PO N IF IC AT IO N

ee different There are actually thr a look at when factors we want to take tion, floccufica proofing spirits: saponi lation, and louche. talking a lot Obviously we’ve been and it tends to about saponification — terms of propbe the biggest issue in s it make the er proofing. Not only doe nt, it makes the product look unpleasa nt. But what is product taste unpleasa

it? ey science Let’s put on our old-tim and get nerdy professor mortar-board at is saponifiwith it for a second. Wh cation, really? conversion of Saponification is the o soap and alcofats, oils, or lipids, int t in the preshol by the action of hea e hydroxide Th ence of aqueous alkali. solution reacts anion of the salt in the up of the ester. with the carbonyl gro de generates a Expulsion of the alkoxi oxide ion is a carboxylic acid. The alk proton is transstrong base so that the WWW.ART ISANSP IRITMAG.COM

ylic acid to the ferred from the carbox alcohol. alkoxide ion creating an tion, this lica In a practical app r distilled spirmeans that if any of you of fatty acids — its that are chock-full — are reduced say brandy for instance ength quickstr from barrel to bottling n to soap. The ly, it will essentially tur ing increases likelihood of this happen percent ABV. the closer you get to 50

FL OC CU LATI ON

other hand Flocculation on the -chill-filtered is often found in non up a bottle of whiskies. Ever picked too cold and le whiskey that got a litt ps and clouds you start seeing wis together? You that seem to be bonded they float back move the bottle, and spirit warms and forth, but when the That’s flocculaup, they’re all gone. tion. the oils, fats, In high proof spirits , etc. tend des proteins, oligosacchari giving a bright, to stay in solution — en you begin crisp and clear spirit. Wh water, however, to add your proofing teins are then those oils, fats and pro n and create pulled into suspensio on, those floaty what we call flocculati to settle at the little clouds that tend en things get bottom of the bottle wh chilly.

LO U CH E

le bit about Finally, let’s talk a litt to oils and e du louche. Louching is compounds other water-insoluble mentation and produced during fer out of solution distillation that come er proofs. This into suspension at low up in oil- and louche effect shows h as corn new fat-heavy distillates suc distilled gin, make, macerated and

It may not fulbrandies, and liqueurs. re of a slightly ly cloud, just give mo t scattering in bluish cast due to ligh the liquid.

IT ’S IN TH E PR OO F, PU DD IN ’

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F THE LIKELIHOOD O E C U D E R O S L A N A G C SLOWER PROOFIN D ETHANOL I N G T H E WAT E R A N V I G E R ’ U O Y S A G LOUCHIN DS. FORGE THEIR BON A LONGER TIME TO

into the final busted our asses to get we want to do product. Why would of protein? To that for only a few bits Brothers’ whismisquote the Blaum ll filtered. Bekey labels — “Never chi ers.” cause we’re not monst other can of Louching is a whole a few products worms. There are only bably want to out there that you pro che effect withactively develop a lou producing abin your spirit. If you’re anise-flavored sinthe, ouzo, or other ually considspirits, louching is act y. These prodered a desirable qualit s of anethole ucts have massive gob gives black lic— the chemical that e flavor. Someorice its black-licoric effect, this times called the “ouzo” to these ter wa occurs when you add thole ane ause high-proof spirits bec but not at all is very ethanol-soluble ition of water water-soluble. The add pension and pulls these oils out of sus white spirit. creates a beautiful milky

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f spirit to sit for low the final high-proo we begin proofat least a week before t of the final ing. We take 50 percen g, which then spirit and begin proofin reduce the liketakes another week to And finally, it lihood of cloudiness. on filter sock goes through a 10-micr ty molecules. to catch the bigger fat proof, we fill a Once we’re at bottling it in the fridge small bottle and stick cloudiness, we for a day. If there’s no rest of the the know we can bottle haze, we’ll rebatch. If we still have h-proof spirit blend some of the hig spirit, and reback into the proofed going slower. peat the process, while — three disSo, there you have it d one very distinctive visual flaws (an t can be adtinctive tasting flaw) tha ed on just bas justed for and dialed in while proofing how patient you are tribution. your spirits down for dis

rnational and has won over a dozen inte pany in Frederick, Maryland nk that Com sku ng & tilli hog Dis und rd gro Wa th nal ad Distiller at Ten Roast, and the occasio mp Ru cat by tab , al and ose ion Mo Mark A. Vierthaler is the He ent silver lab unusual, unconv He lives with his wife Jenn, illery, dedicated to distilling dist ed own anawards for spirits he’s made. wom a is co. y pan Ward @tenthward Tenth Ward Distilling Com @whiskyicarus and Tenth wanders into his backyard. low Mark on Instagram at Fol ry. ina Ord Off g rdin award-winning spirits by Wa

1946 - 2021

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the role of

BREWING in distilled spirits production

B

eer and whiskey trace their earliest roots to whole grains. Spe cifically ancestors of wheat and barley, that are mostly made up of starch, an aggregate of polysaccharides (in fact poly-glucose) that needs to be broken down to enable conventional raw materials to be converted into a fermentable extract. The need to release fermentability from whole cereals irrevocably binds the production of conventional beer and cereal-based spirits. It is therefore not surprising that many distillers start their life as brewers and that the still can be thought of as an extension of a brand portfolio to capture the “essence” of beer.

As early as 1690-1691, Thomas Tryon,1 ironically a British ad vocate of temperance, published his text “A New Art of Brewing Beer…” (as was usually the practice at the time, book titles were more like paragraphs than sentences), insisting that evaporative losses during wort boiling should be minimized so as to restrict the loss of the “essence” of beer.

Given that this was pre-industrial revolution, Paracelsian con cepts such as this were very much in vogue at the time, although brewers know today that there is a need for appreciable evaporative losses during boiling. This helps to manage the flavor as well as the physical and microbial stability of beer, not least to convert hop acids into their more bitter iso-α-acid counterparts, evaporate and transform hop volatiles, and to precipitate excess proteins and tannins. In defense of Tryon, though, it should be noted that hops were by no means universal in Brit ish beer brewing at this time, so

WRITTEN BY PAUL HUGHES, PH.D. there was indeed no need for hop volatile evaporation or α-acid isomerization in hop-free beer.

To a first approximation, beer and whiskey brewhouse operations require similar collections of upstream processes and equipment to convert grains into a fermentable extract, although they are not identical. Certainly milling, mashing and wort separation2 are op erations needed for both whiskey and beer production. Neverthe less, when establishing a whiskey distillery, a less capital-intensive start-up model is to buy unhopped wort from a local brewery rather than take on additional financing for a brewhouse. This can be a more affordable approach for a new-build distillery and a model that has been employed world-wide.

As hops are not part of conventional whiskey production, the boiling requirement, at least for hop acid isomerization, is not nec essary, simplifying the whiskey brewhouse. But what of the other effects of wort boiling? The requirement for sterilization is there, at least in principle, and anyone who has ever investigated the microflora on barley and malted barley will be familiar with the micro-organism “zoo” that is typically present.

One approach to dealing with these potential fermantitive con taminants is to increase pitching rate of the desired fermentation organism, typically Saccharomyces cerevisiae, to bully and overrun other microorganisms and to become the dominant fermentative species. Fermenting at higher temperatures also tends to favor the future dominance of S. cerevisiae, and so almost miracu lously wort boiling for the purpose of sterilization of the wort can be avoided. Brewers amongst the readership will recall that wort boiling is also an important part of color development in beer production. Not so for whiskeys, as color does not distill under typical distillation con ditions. (Color in final spirits comes from three main sources: deliberate addition, adventitious

1 As well as an advocate of temperance, Thomas Tryon was an aesthete and an early adopter of vegetarianism.

2 This assumes that whole grains are processed. There are additional options such as purchasing pre-milled malt or even working with unhopped malt extracts but these are less common.

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introduction post-distillation and, rarely, the leaching of eroded condenser copper to give a blue hue to the new make spirit.) However, the non-enzymic browning reactions that cause color change can also generate volatile flavor compounds, which are responsible for many of the cooked, caramel, roasted and charred flavors in many foods and beverages. These volatiles can carry over in the still to flavor the final spirit.

A consequence of no wort boiling for whiskey production is that enzyme activity from the mash is substantially preserved and is present during fermentation. This blurs the edges of what is fermentation and what is mashing, as saccharification of non-fermentable residual dextrins continues during fermentation, releasing additional fermentability due to the activities not only of the heavy hydrolytic lifters α- and β-amylase but also the more thermally labile debranching enzymes such as pullulanase. These enzymes tend to have less activity than α- and β-amylase and indeed fermentation temperatures are lower than mashing. It is helpful to recall that in terms of activity we are not comparing like with like.

A 48-hour fermentation at 30 degrees C is more than an order of magnitude longer than a typical infusion mashing regime at, say, 62 degrees C for around 90 minutes. So if we apply the rule of thumb that a reaction rate doubles with every 10 degrees C temperature increase, then comparing the rates of reaction at 30 degrees C and 60 degrees C also implies a 23 or eight-fold increase in rate, which we can approximate to an order of magnitude. So from a purely chemical perspective the temperature and time required for mashing and fermentation imply a crude equivalence of what can be considered to be “reaction opportunity,” i.e. 10*y=1*10y.

Not only does this additional activity typically increase extract fermentability by around 10 percent from close to 80 percent to around 87 percent, but it also utilizes dextrins that give many beers mouthfeel and body. (In fact, for the production of light beers, it is common practice to add back exogenous enzymes to hydrolyze residual dextrins so that the resulting fermentable carbohydrates can be converted into alcohol in the usual way and reduce the caloric content of the resulting beer.)

Residual dextrins, though, have no relevance for the quality of the final whiskey. Dextrins are not volatile and therefore if they are not converted to fermentable extract, they are lost in the pot ale of the first stripping run. Dextrins can also increase the risk of burnon, especially when the fermented extract is not preheated. As mentioned above though, non-volatiles may result in volatiles from non-enzymic browning, which may not be universally desirable.

There is however a common practice in fermentation that the brewer benefits from. Often, but not always, brewers manage fermentation temperatures lower than typical distilling fermentations. This of course slows the rate of fermentation, but also

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manages the levels of higher alcohols and esters. In contrast, the more rapid, higher-temperature fermentations typically seen in distilleries means that there is often a need to “cure” the composition of the fermented extract by judicious management of the subsequent distillation.

One other aspect of beer fermentation is worth considering.

Green beer is usually left on residual yeast to reduce diacetyl (2,3-butanedione) to acetoin (3-hydroxy-2-butanone) and 2,3-butanediol. The former can result in a potent butterscotch flavor (undesired in many beers, especially if lighter in style), whilst the two latter have little impact at their resulting concentrations. The relevance here is that the distillation properties of diacetyl and ethanol in a pot still are rather similar, so that it can be difficult to “cure” excessive diacetyl levels in spirit using conventional distilling processes.

Generally in beer brewing, the opportunities for removal of undesired components are more limited than in distilling, with spent grain removal, evaporative losses, and the use of various sorbents and enzymes (e.g. silica gel to remove haze-active proteins) together with diacetyl being the most notable examples. In contrast, for whiskey, non-volatile compounds, with the exception of any minerals present in dilution water to proof final product, do not find their way into the final product unless accidentally introduced. It is such arguments that lead to confusion about whether gluten appears in whiskey.

As a final thought, the traditional difference in philosophy between brewers and whiskey distillers can be generalized as follows: Brewers often revere their selected yeast strains, of which there are many. In contrast, the range of yeasts used by whiskey distillers for fermentations has been more limited. Similarly, large-scale brewers arguably apply a wider range of raw material specifications on which to base their selection decisions. The same can also be said of whiskey distillers, although more often than not extract yield and therefore alcohol yields per ton is considered to be the most critical factor. The impact of the craft movement here has arguably stimulated a rethink of raw materials, yeast and fermentation conditions across the distilling sector. In principle, this may expand the product map of whiskey further (without recourse to added fruits and botanicals) and potentially enhance our whiskey enjoyment even further. As a good friend of mine, Ian Buxton, is fond of saying: “If you don’t like whiskey, you haven’t tried the right one yet.” I’ll drink to that!

Paul Hughes, Ph.D. is assistant professor of food science and technology at Oregon State University in Corvallis, OR. For more information visit www. oregonstate.edu or call (541) 737-4595.

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SOUTHERN COMFORTS Twelve 33 Distillery of Little River, South Carolina WRITTEN AND PHOTOGRAPHED BY CARRIE DOW

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W

hen COVID-19 caused US industries to shut down and hand sanitizer to disappear from store shelves last spring, Twelve 33 Head Distiller Kevin Osborn had 1,600 gallons of bourbon mash ready to run.

“There’s only two manufacturers that can make hand sanitizer — pharmaceutical companies and distilleries,” he said while taking a break from preparing to distill his current batch of bourbon mash. “The pharmaceutical companies obviously got gutted when the pandemic happened. They couldn’t make it fast enough. To support the local community, we’d all have to chip in.”

That’s when Osborn made the difficult decision to turn all 1,600 gallons of his heirloom grain bourbon mash in 160-proof hand sanitizer.

“We made hand sanitizer for about three months,” he said.

“In the first three weeks we donated about $50,000 worth to our community. We gave it away to first responders and health workers. Because bottles were backordered, we put out on social media that we would give away hand sanitizer to anyone who brought in their own bottle. The next morning, they were lined up on the sidewalk. When [sanitizer] came back on the shelf, we were more than happy to switch back.”

Switching back to spirits production for Osborn means crafting more than 11 different products. That may seem like a lot for

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TWELVE 33 DISTILLERY CO-OWNERS REBECCA & KEVIN OSBORN

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a relatively new distillery; however, Osborn’s experience with producing alcohol goes back decades. He and his co-owner Rebecca Osborn, who is also his wife, began with craft beer back in the 1990s.

“I started home brewing in college when all the microbreweries popped up — Pete’s Wicked, Sierra Nevada, Sam Adams,” he reminisced. “When I graduated, the whole craft beer renaissance was happening.” Their love of everything craft grew as they moved around the country.

“I came from the corporate world and moved with my company through seven states in 25 years,” he said. After moving to California in 2003, the couple and some new friends, including one who was a winemaker, started a wine collecting group. They quickly went from tasting wines to making wines.

“We pooled our money, built a production facility, and created a co-op,” he explained. “We were doing between 500-700 cases a year. It wasn’t a full-scale winery, but big enough that we got into the science and made some really good wines.” The group dissipated when two members left to form their own winery about the same time the Osborn’s developed an affinity for craft spirits.

“Two of our best friends [Mark and Mandy Moseler of Northern Latitudes] owned a distillery in northern Michigan,” he continued. “We loved what they were doing.

That’s when Rebecca and I toyed with the idea of hitting the cycle — to use a baseball metaphor — and do craft spirits.”

While researching locales in Northern California, Osborn’s company was sold. No longer tied to a geographical area, they began scouring the country to find the best location to open a new distillery. They first looked at Scottsdale, Arizona, and Colorado. Having family in the Carolinas drew them east, where they learned South Carolina only had 17 craft distilleries at the time. They settled on the laid-back tourist area of the state’s northern coast called The Grand Strand, which includes the seaside city of Myrtle Beach.

“We were the first and currently only production distillery in The Grand Strand and the only distillery from Wilmington (North Carolina) to Charleston (South Carolina). It’s a virgin market,” declared Osborn.

Twelve 33 gets its name from when the appeal of Prohibition was ratified, December 1933, and the distillery’s atmosphere and spirit names all have a Prohibition-era theme. Osborn sources almost all his ingredients from South Carolina, including heirloom grains from a Horry County farm and molasses from Fort Mill. His barrels come from a South Carolina cooperage, Black Water Barrels.

Osborn ages his brown spirits for three years, even though TTB requirements allow for straight bourbon to be aged only two. He also increases the oak profile and accelerates part of the aging process

PHOTO COURTESY OF TWELVE 33 DISTILLERY

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by adding 10 pounds of No. 4 charred oak staves to every barrel. Both techniques help create his ideal whiskey.

“I won’t release any whiskey until they are three years old because I don’t personally believe they’re of age yet. That said, once you get past three years, the law of diminishing returns applies. Generally, the older the whiskey is, the better — a five-year is better than a three, a ten-year is better than a five — but it becomes much less noticeable. Even an untrained palate can pick up the difference between a two-year and three-year.”

While aging and ingredients are vital to his spirits, Osborn also wants to appeal to his adopted state by offering distinctly Southern products. The distillery’s Sweet Tea Vodka is a southern classic made with an infusion of local tea extract and cane sugar.

“I did not design it,” Osborn noted. “As you can tell from my nasally Midwest accent, I did not grow up sitting on grandma’s front porch drinking sweet tea, but my staff did. Most of them were born and raised here, so I let them do it.”

Osborn’s 2021 plans involve experimenting with new products, such as agave.

“I was reluctant to do it,” he said, “because you can’t call it tequila, and how many consumers know what an ‘American agave spirit’ is? We’ll probably not put it in distribution.” Instead, he will use it for the tasting room’s cocktail menu since this beach community’s most popular drink is the margarita. “We settled on releasing a blanco and, if that does well, we’ll go right to an añejo because that’s in keeping with our whiskey.”

He said Rebecca is responsible for the distillery’s Santa’s Little Helper, a holiday cream liqueur flavored with chocolate and peppermint that flew off the shelves last holiday season.

“I didn’t even want to make that,” Osborn said, laughing. “My wife insisted. I have to say she was absolutely right.” The liqueur proved so popular they experimented with tropical flavors like coconut to create a summer version called Toasted Republic to be released in March.

Osborn expects to continue the growth they had before the pandemic hit.

“We’re already in 67 bars and restaurants on The Grand Strand,” he notes, “and in all the large liquor stores. For being as relatively new as we are, the community has really embraced us.”

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Twelve 33 Distillery is located in Little River, South Carolina.

For more information visit www.twelve33distillery.com or call (843) 663-3344.

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Legumes Good for you, good for vodka, good for the planet

WRITTEN BY GABE TOTH

“E

at your peas, they’re good for you” was a common refrain we were told as kids. Well, thanks to Arbikie Highland Estate Distillery, that’s become, “Drink your peas. They’re good for the planet.”

In the past year, Arbikie, located in eastern Scotland, has released two spirits — a gin and a vodka — that were developed to be carbon-negative, or resulting in a net carbon footprint of less than zero.

Their Nàdar gin and vodka (Nàdar meaning “nature” in Gaelic) were developed by tapping into the environmentally friendly aspects of peas. Kirsty Black, master distiller at Arbikie, worked as a member of the research team as part of her Ph.D. studies in legumes and their potential role in sustainable food and drink. (She’s also released separate research on the process feasibility and consumer acceptance of fava beans as a brewing adjunct to replace part of a malted barley grain bill.)

The research team worked with life cycle assessment experts to determine the footprint of gin made from peas compared to wheat, and included the cultivation of crops, processing (dehulling peas and milling wheat), distillery operations, bottling and packaging, usage of pot ale and solids, credits for avoided fertilizer and animal feed production, and avoided land use change. The production and transportation of materials and energy inputs was accounted for, but infrastructure and capital equipment were not.

Because legumes pull inert nitrogen from the atmosphere and fix it into the soil, they require no nitrogen fertilizer, of which crops only absorb about 50 percent. The remainder gets washed into runoff that is harmful to the environment, creating effects such as the hypoxic dead zone in the Gulf of Mexico.

Because of this nitrogen-fixing ability, the crop also improves soil quality and offsets the need for synthetic fertilizer in subsequent crops. Stillage from pea spirit production is rich in protein, reducing the need for imported soybean-based animal feed that is often grown on cleared rainforest or cerrado (tropical savannah).

For 12 of 14 impact categories the team identified, the peas outperformed wheat. Categories where peas were less impactful than wheat included global warming, resource depletion, human toxicity, environmental acidification, and terrestrial eutrophication.

Considerable additional greenhouse gasses were eliminated when the animal feed co-product — and the corresponding de-

crease in clearing land, cultivation, processing, and transporting feed — was taken into account. “For pea gin, this mitigation effect exceeds emissions from gin production and packaging, so that each L of bottled pea gin avoids 2.2 kg CO2 eq.,” according to the research paper.

The reduction of nitrogen fertilizer required for crops that follow peas in the rotation was not calculated, but represents an opportunity to further improve the performance of a rotation that incorporates legumes.

“Integrating peas into cereal-dominated rotations would change cropping sequences, and may lead to opportunities for sequence optimisation and yield improvements in following cereal crops that could somewhat offset lower pea yields,” the report notes.

There are opportunities for intercropping legumes with cereals, where both may be grown on the same field at the same time, Black said in an email.

The life cycle assessment found that the pea spirit had a larger “land footprint” compared to gin made from wheat.

One liter of finished gin required 2.42kg of peas, compared to 1.43kg of wheat. Black said the peas yield about 325 liters of pure alcohol (LPA) per metric ton, well below wheat’s potential yield of about 450 LPA per metric ton. “For us it is still a sufficient yield and we feel any losses are balanced with the environmental benefits growing peas bring,” she added.

The yield per acre of peas is also “well below their agronomic potential,” with significant room for improvement. While the yield and starch content are lower than wheat, peas offer the opportunity to diversify Scotland’s crop rotation, increase biodiversity, and help to premium-ize legumes as a crop.

She said that different legumes can require different processing, but they chose peas because they grow well in the Scottish climate.

The study used whole peas that are dried in the field, as traditional grains are. This allows them to be handled in the same way that grain is. The peas are then hammer-milled to a fine flour for processing.

Mashing is similar to processing for grain spirits: a gelatinization step to make the starches accessible, liquefaction with an alpha-amylase, then saccharification using a glucoamylase. The mash is fermented with all of the solids, as a grain-in spirit would be, stripped into low wines, then distilled into neutral spirit.

The complete research paper can be found here: www.sciencedirect.com/science/article/pii/S0160412019308773 122

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A broader mission The quest to turn salad vegetables into spirits isn’t an isolated project but part of a broad goal at Arbikie to be more responsible for their environmental impact. For distilled spirits, this impact is largely a result of grain agriculture (including synthetic fertilizers), production of glass packaging, and distribution. Because Arbikie is an operating farm as well as a distillery, according to Black, “the term ‘production’ includes every step from sowing the seed through to putting each bottle of spirit into its shipping case. This allows us to understand, account for and control all inputs and decisions we make.”

A variety of native tree and hedge species have been reintroduced on the property to bring back bees and pollinators. The distillery has also planted thousands of juniper plants across the farm and built a polytunnel to grow their more exotic botanical ingredients on-site and installed solar panels to power the farm and distillery.

They’ve altered the way that crops are rotated at the farm to focus on long-term soil health. The soil quality, biodiversity, and reduced need for fertilizers that peas help provide are an aspect of their regenerative approach to farming. As much as possible, waste products are recycled as cattle feed or fertilizer. They’re also experimenting with heritage crops to look at their efficiency in a low-input farming system and their resilience to changing weather conditions.

“Without understanding the relationship between the land, environment, and production we are simply ticking a box and not making a fundamental difference,” Black wrote. “Soil management, understanding the environment and the growing climate are fundamentals that have been lost over time with the race to increase yield through intensive farming having a potentially catastrophic impact on our planet.”

Gabe Toth is lead distiller at The Family Jones Distillery in Denver and Loveland, CO. A former craft brewer, his passion for fermenting and transforming ingredients also extends to sausage and meat curing, cheesemaking, and pickling. He can be found up in the mountains or at gabetoth@hotmail.com.

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the

SIN of CINNAMON in GIN & BEYOND

WRITTEN BY GEORGE B. CATALLO

A

fter nearly a decade of evaluating spirits professionally in a variety of capacities ranging from a spirits buyer to judging in competitions, I’ve come to the conclusion that the most overused botanical in spirits is cinnamon. Don’t get me wrong, I don’t think it should be done away with. I love cinnamon. It just needs to be very carefully added into a spirit, as it can quickly become too overpowering. In competition, I have been on panels that have docked significant points off of scores due to an unbalance of cinnamon. You can bet consumers have similar feelings about it, too.

A CLASH OF TREES

Remember, cinnamon is derived from a tree bark. If your spirit sees time in barrel, the cinnamon and the oak will often clash with one another. This is most prominently seen as an issue in barreled gin. Many distilleries take their regular gin and throw it in barrels, often used bourbon barrels. That may be simple, easy, and fun to see how the regular release evolves — but the results can prove to be disastrous. Oak on its own can impart spice notes that can border on being cinnamony, add in any baking spice notes from a rye component in a bourbon and you’re looking at three layers of spice flavors mashing together. It can come across as heavy-handed and brutish. If you’re going to barrel age a spirit, I would highly recommend reducing or removing the amount of cinnamon you use. The result will be much more balanced.

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BARK HAS LESS BITE

Cinnamon is a hallmark of American contemporary gin. So if you’re making such a style, you’re probably using it. A common cause of overly prominent cinnamon notes is using it in its ground form during infusion or maceration. The issue with using ground cinnamon is the surface area to spirit/vapor ratio.

Way too much of the cinnamon is in contact with the fluid, thus imparting maximum flavor. Leaving cinnamon in chunks of the bark will allow for a more metered absorption of the flavor into the resulting spirit. Another thing to consider is your method of addition. Direct maceration and vapor infusion will yield wildly different results.

UNWANTED INTERACTION

Some other botanicals don’t get along with cinnamon too well either. The biggest offender I have experienced has been anise. Anise and cinnamon combine to make a very bitter and astringent flavor that can be very off-putting. This can present in gin but also especially absinthe. The stronger the anise is, the harder it is affected by the cinnamon. I would recommend reducing or removing cinnamon in your absinthe, if you even use cinnamon in the first place, if you feel like you need to adjust its flavor. That’s a very good place to start.

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Distillation is an art that falls somewhere between advanced chemistry and high-end culinary. The best practice to take with crafting your recipe is to look at it as a food dish.

Think of how your ingredients are used in cooking.

Cinnamon is almost always balanced out by something immensely opposite in flavor. Even if you’re just having cinnamon on apple slices, you’re still cutting the cinnamon with a significant amount of sugar. The sweet balances the bitter.

Cinnamon works best as an accent and not the main attraction. Keep it reigned in and balanced and it will be much better received. Less is often more.

Subtle, nuanced spirits with layers of complexity are what the market wants in many cases. Make sure that you keep that in mind as you put your best foot forward.

George B. Catallo is the “Whiskey Guy” and Floor/Social Media Manager at Parkway Wine and Liquor in Rochester, NY. He has been in the beverage industry since he turned twenty-one and has worked as the Bar Operations Manager of a wine bar, an Assistant Distiller and Supplier Rep for a craft distillery, and has even hosted a spirits review web series on YouTube under the moniker 'Just One Dram.'

WWW.ART ISANSP IRITMAG.COM

125

ADVERTISER index AGAVE RESOURCES The Tierra Group

25

BARREL WAREHOUSING White Dog Trading & Storage, LLC

DESIGN, BRANDING, & MERCHANDISING

INGREDIENTS

CF Napa Brand Design

Briess Malt & Ingredients Co.

2&7

EBBING Branding + Design

35

BSG Distilling

Flowdesign

28

Kent Corporation

6 & 11 32

Prairie Malt

4

21

105

DISTILLING EQUIPMENT ARCHON Industries, Inc.

BARRELS Independent Stave Co.

7&9

123

Bavarian Breweries & Distilleries Cage & Sons Distilling Systems

31 6 & 15

LABELS Fort Dearborn Company Niagara Label

BARWARE

Rudolph Research Analytical

123

Boelter

125

Specific Mechanical Systems

23

PACKAGING

Thousand Oaks Barrel Co.

113

Vendome Copper & Brass Works

68

Liquor Bottle Packaging

Loggerhead Deco

125

BOTTLE MANUFACTURERS & SUPPLIERS

DISCUS Academy

44

Moonshine University

8 & 26

Still Talking Podcast

125

12

Imperial Packaging

61

ENZYMES & YEAST

Phoenix Packaging

39

Ferm Solutions

30

Fermentis

73

Lallemand

5&7

8 & 128

CANNING SERVICES Iron Heart Canning Company

105

EQUIPMENT LEASING North Star Leasing

111

COMPLIANCE & BACK OFFICE MANAGEMENT American Spirits Exchange Ltd.

6

116

CONTRACT DISTILLATION 8

CORKS & CLOSURES Tapi USA

REFRIGERATION & CHILLERS

Southern Distilling Co. 8 & 127

42

RETAILERS Total Wine & More

8

SPIRITS COMPETITIONS American Distilling Institute

76

Great American Intl. Spirits Competition

86

Spokane Industries

65

TRADE ORGANIZATIONS

GNS & BULK SPIRITS SUPPLIERS Rum Central

113

TOTES & TANKS

FLAVORING Mother Murphy's

Southern Distilling Co.

McFinn Technologies

G&D Chillers

Brad-Pak Enterprises

Saverglass

87

PUMPS

EDUCATION

BOTTLE & GLASS DECORATING

7 121

111 19

Distilled Spirits Council Responsibility.org

7 & 84 17

Spirits United

121

WHOLESALERS Southern Glazer’s Wine & Spirits

27

ARTISAN SPIRIT sponsors

126

WWW.ART ISANSPI RI TMAG.CO M

BOTANIC SWING TOP

WE ARE DOING CARTWHEELS OVER BOTANIC! The POP collection beckons to spirits with a powerful identity. Strong design elements and mechanical capping promote reuse. Give your bottles a second life with the POP collection!

Saverglass Inc. | www.saverglass.com | Haute Couture Glass 2950 Cordelia Road, Fairfield (CA)94534 : (707) 259-2930 | East Coast (NJ) : (201) 825-7100 Pacific North West (OR) : (707) 337-1479 | Mid West (KY): (502) 365-2333