TeN YeArS OF CrAFT SPIrITS

Adapting to Growth

Last year, Black Button Distilling celebrated ten years of crafting grainto-glass craft spirits. This year, we embark on the next decade of our craft spirits journey with the opening of a new and expanded tasting room and distillery, which will more than quadruple our physical space from 5,000 sq. ft. to 28,000 sq. ft. With our upcoming expansion, our average annual spirits production will increase from 1,000 barrels of spirits per year to as much as 4,500 barrels in the first few years. And our retail tasting room space will grow from 700 sq. ft. to 4,900 sq., allowing for significantly increased seating capacity, private event space and expanded hours of operation for the public.

As the size, scale, and scope of our operations has increased dramatically, we have had to learn and adapt to changes in the way we work.

Getting to this point — a decade of not only survival, but growth — in the craft spirits industry hasn’t always been easy. Here are some of the challenges we’ve faced, how we’ve adapted to them, and what we look forward to in the next ten years...

SCALING A BuSINeSS: We have experienced a huge amount of growth in ten years — not only in production, but in staff. What works for three people does not work for 15 and doesn’t work again for 50. We now have 87 staff members. A lot of the processes that we used when we were small are now a contributing source of a lot of stress. And we are growing so fast that often by the time we iron out a process we have to start to update it again because something else has changed. This can range from how we order grain, to how we train salespeople to how we recruit. At 87 staffers, it’s a whole different situation.

The same goes for maintaining quality in production while scaling, from storage tanks to spent mash, with growth comes change and new challenges in spirits equipment and processes. For example, we now have seven 6,000-gallon storage tanks. They can’t just be dropped into any building. They have to go into a containment room so if they spill, the sewer isn’t flooded. The fire suppression system has to be foam and the training for the staff has to be airtight because the consequences are even more dire than it was at a small scale. At this scale, steam jackets are no longer effective, so we need steam injection which has upstream implications with stainless steel boilers and clean steam instead of cast iron.

ONGOING eDuCATION: Interestingly, because of the size of our new boilers our staff now have to be certified boiler engineers due to local ordinances. The process, while unexpected, was fairly easy. We bought the two distillers who took this on the book The Best Boiler Operator Exam Prep Course: Get Your Boiler Operator License in 30 Days (Boiler Plant Prep) by Dan Ringo and gave them time off to study. The test is offered by our city quarterly and pretty soon they were certified. But that took time away from production and was a hurdle we had to overcome.

KeePING Our VISION IN mIND: Another challenge I often face is “can we vs. should we?” For a long time, if we could do it, we did. But now that we have 45 products we are straining under the weight of all our ideas. Trying to keep 87 people on the same page when you have so many products just leads to lots of confusion. So, going forward I am trying to be more judicious about how and where we dedicate our time and efforts. I’m constantly asking, “How does this help our vision?” And I’m putting more emphasis on “should we do it,” not just “ can we.”

Our expansion also provided us with the opportunity to make exciting changes that realign with our vision and improve our workflow. I think one of the worst things I have done as a CEO was move the offices out of the plant. For the last few years, we had production in one space, and everyone else in another office. I never could have foreseen how complex it would be — even just having our office 500 feet down the road from the production plant — but it really impacted workflow and has made communication, trust, and team planning so much more difficult. It’s the same challenge we have with working from home now. Conversations that would happen if you could just pop your head over the cubicle wall don’t necessarily happen in the same way (or at all) if we’re not in the same location. What about the spontaneous conversations in a hallway that result in great ideas? They don’t exist if our team is split up.

Now, for the very first time, we will all be in a space large enough to have everything except barrel storage on one site. By combining four smaller facilities into one, our staff will be much more efficient and cohesive. Being together is an important part of any team framework and building a culture.

A CASH-INTeNSIVe BuSINeSS: As everyone in the whiskey world knows, it’s hard to grow a brand where the product has to be made four to six years before it comes to market. This is always a struggle.

To adapt to this, as we gain a lot more warehouse space with our move, we can now buy larger amounts of raw goods to get better prices and make our supply chain more efficient. And, the increased production has resulted in cost savings, as well. Prior to the move, our total cost to make a barrel was about 40 percent direct inputs and 60 percent overhead. But when you increase production by five times while the fixed costs only rise about three times, each unit gets cheaper. So now it's 60 percent/40 percent the other way and we’re saving more than 30 percent on every barrel we make. Meaning: the same cash can make 30 percent more whiskey. Not only did the input costs go down by a bit since we can now buy in bulk but with the same labor we can now make a lot more barrels, which means we can start to compete for larger contracts.

Another exciting development for us is that technology has evolved over the past decade. Ten years ago, there were very few providers of craft scale continuous whiskey stills. Now that this technology has advanced, we’re able to get a still that will make in an hour what our two original stills make in an entire shift.

But, this increased volume has resulted in a byproduct we have to address: spent mash production. The volume of spent mash we produce has increased from 1,500 gallons per day to 6,000. At this scale, the same technology no longer works. We’re testing to see if we can send our spent mash across a screw press and take most of the water out, then convey it to drop the damp grain directly to 18-wheelers to be hauled away. Assuming we get our moisture content right, we may be able to sell it rather than pay to have it hauled away. Though even then it barely breaks even, but it’s an important part of our business. In fact, we will likely spend more on our mash dewatering equipment than our still. It will be a seven- to 10-year payback, but it’s the right way to do it. And in the long run, it’s more environmentally friendly.

Finally, one of the most exciting things for me, and I’ll geek out a bit here — is that the tanks are just so big. Seriously, they are like 22 feet tall. How is it that my little company at just 11 years old is now making whiskey at this scale? The day we open our new facility we will be the largest independent bourbon production site in New York — and we can triple this facility as we grow. We used to make 20 barrels each week. And not too long ago it’s what we made in a month. Now we will be able to do that each day.

To see this dream become a reality is just so incredibly exciting.

To see this dream become a reality is just so incredibly exciting. Over the years as Black Button Distilling has grown, one thing has remained constant: we have been blessed with great support from the community and fantastic employees. And none of these exciting changes would be possible without them.

Jason Barrett is the Founder/Master Distiller of Black Button Distilling, the first craft distillery in Rochester, NY since Prohibition. This summer, Black Button Distilling is celebrating a decade of crafting grain-to-glass craft spirits. A New York State Farm Distillery, Black Button Distilling is the first distillery in New York to obtain the New York State Grown and Certified status for commitment to locally sourced ingredients and high standards of quality. Named New York Distillery of the Year (2016 & 2021) at The New York International Spirits Competition, Black Button Distilling has produced more than million bottles of spirits and has been named to the Inc. 5,000 list of fastest growing privately owned companies four times. To learn more about Black Button Distilling, visit www.blackbuttondistilling.com.