Artisan Spirit: Winter 2024 by Artisan Spirit Magazine

Winter 2024

SOMETHING TO

sniff ABOUT

CAPITAL with a TWIST FROM STILL TO SPREADSHEET WHITE OAK

woes

PORTABLE POTABLES

DRINK WITH YOUR EYES ®

TABLE of CONTENTS A LETTER FROM THE EDITOR

QUARTERLY GUILD & INDUSTRY REPORTS

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

THE PATH TO REDEMPTION

LABEL UP!

LOCAL COLLABORATIONS

ENGAGING A HELPING HAND

Bottle sales in California are about to get more expensive!

With the inclusion of wine and spirits, California’s updated bottle bill is a preview of what’s to come

Playing a different game — Part 2

BOOZE ON THE BRAIN

THE SINGULARITY OF SINGLE MALT

THE PAST IS INDEED PROLOGUE

WE ALL SCREAM FOR (BOOZY) ICE CREAM!

Boss Molly showcases the strength of women who whiskey

The dream job’s unspoken cost

SETTING THE STAGE FOR GROWTH FOR SONOMA DISTILLING CO. Brand Buzz with David Schuemann

LIKE BOSSES

America’s soon-to-be-newest whiskey category

The history and future use of bacteria in rum fermentations

Hardscoop Distillery of Charleston, South Carolina

SOMETHING TO SNIFF ABOUT 92 How we relate the structure of molecules to their perceived aroma

THE POWER OF PIXIE

MAINTAINING LIFE SAFETY SYSTEMS

102

A GOOD SPIRIT, BAR NONE

104

CLASS IS IN SESSION

107

WHAT THE FUTURE HOLDS FOR OUR WHITE OAK FORESTS 58

TALES OF THE COCKTAIL 2023 The annual event was more than big parties from big brands

109

A potential catastrophe awaits an industry's key component

ALTERNATIVE FINANCING STRATEGIES 62

LESSONS FROM SCALING UP A DISTILLERY 100X

112

ADVERTISER INDEX

114

Contract distilling

TO-GO COCKTAILS 44 The evolution and impact of portable potables

CHICAGO CANE COOPERATIVE Beyond the Bottom Line

Entrepreneur Paula ‘Pixie’ Dezzutti on building an empire and going global

Fire and Life Safety Corner

January Spirits moves forward from an intriguing place

THE GIN THAT IS A PERFUME Sylvan Mist Gin

Attending a 40-year-old alcohol school

Unique ways to raise capital for your distillery

TUTHILLTOWN SPIRITS: CHANGING THE GAME A pioneer of craft spirits turns 20

Systems thinking, future-focused strategies, and more

HOW TO VALUE INVENTORY DISTILLED IN-HOUSE 68 From still to spreadsheet

from the COVER The Family Jones Spirit House in Denver, Colorado. Image by Amanda Joy Christensen.

One-Stop-Shop for All Your Packaging Needs Glass & Plastic Bottles Aluminum Cans Closures & Capsules In-Stock & Custom Solutions Secondary Packaging Decoration

ISSUE 45 /// Winter 2024 PUBLISHER & EDITOR Brian Christensen CREATIVE DIRECTOR Amanda Joy Christensen SENIOR WRITERS Carrie Dow Reade A. Huddleston, MSc.

Rich Manning Gabe Toth, MSc.

CONTRIBUTORS

Jason Barrett Corey Day Max Fujii Joe Girgash Sailor Guevara Doug Hall Susan Johnson Sydney Jones Aaron Knoll

Alexis K. Mason Jeff Quint Michael T. Reardon, P.E. David Schuemann Gary Spedding, Ph.D. Brett Steigerwaldt John P. Thomas, II Mark A. Vierthaler

PHOTOGRAPHERS Amanda Joy Christensen Owen Donovan Carrie Dow Cory Fontenot Quaker City Mercantile

Michael T. Reardon, P.E. Bryan Tarnowski Chris Vultaggio Joy Yagid

SALES & MARKETING Ashley Monroe ARTISAN SPIRIT is a quarterly publication by Artisan Spirit Media.

www.artisanspiritmag.com facebook.com/ArtisanSpiritMagazine ArtisanSpiritM General Inquiries (509) 944-5919 Advertising (509) 991-8112 PO Box 31494, Spokane, WA 99223 All contents ©2024. 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.

BerlinPackaging.com • 1.800.2.BERLIN

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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THANK YOU TO ALL OUR SPONSORS. 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.

For nearly 50 years, CF Napa Brand Design has set the standard for alcohol beverage branding. Led by Owner & Creative Principal David Schuemann for the past 22 years, we focus on translating brand ethos visually, never using a one size fits all approach for projects. The result is a bespoke solution rooted in strategy and, most importantly, a design that sells. CF Napa’s expertise lies in the intricacies of our process — from project conception to conclusion, our team brings a strategic yet thoughtful eye to every detail. We understand the market and target audiences on a global stage. We balance listening with leading to execute a design that the client loves, and the consumer buys again and again. 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.

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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.

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.

Standing out in a crowded marketplace is an ongoing challenge for wine and spirits producers today. MCC’s experienced team of label engineers take a consultative approach, helping guide your project from inception to finished label. Whether it's an existing design, or a highly embellished new project, we are poised to give your brand the look it deserves. Housing many different printing technologies under one roof allows us to match our passion and expertise to your project, each and every time, without compromise. This ensures that your final packaging always achieves the desired look. With MCC and Fort Dearborn recently joining forces, we are poised to provide all spirits customers with amazing service and quality products.

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 U.S. by opening an ultra-modern bottle manufacturing and decorating plant in North America.

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Stave & Thief Society was founded in 2014, and is the first bourbon certification program recognized by the bourbon industry and the only to be recognized by the Kentucky Distillers Association as its “Official Bourbon Education Course.” The programs were developed by professional distilling and spirits educators and advised by a panel of experts in the bourbon and hospitality industries to provide a premium, standardized bourbon education that is accessible and holds real value.

Southern Distilling Company is one of the largest artisan distilleries in the nation. We offer product development, contract distilling (standard and custom mash bill whiskeys, rum, and agave spirits), barrel warehouse aging, batching, blending, bottling, and co-packaging of award-winning products. We also keep an extensive inventory of aged bourbon and rye whiskey available year-round. Our spirits are distilled in top-of-the-line Vendome Copper & Brass Works continuous column stills. Our product development services include working with you to perfect an existing recipe and consultations to help you create your own recipe. We can barrel and warehouse age your product to meet both short and long-term goals. At Southern Distilling Company, you get standout spirits that make brands unforgettable.

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.

Founded in 1999 in Thousand Oaks, California, the Thousand Oaks Barrel Co. manufactures a wide selection of products for distillery gift shops. We work with large and small distilleries and wineries, marketing and catalog companies, retailers, and web-based e-tailers. Our craftsmen provide made to order products or distilleries can select from our tried-and-true products such barrel heads, quarter barrels, flasks, and barrel key chains, to name a few, each with your distillery logo and branding. We look forward to providing you some of the best promotional products on the market and are sure they will be top sellers in your product line.

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: The winter issue of Artisan Spirit Magazine may mark the end of 2023, but it also highlights the start of several new projects and evolutions for ASM. However, let's first celebrate some of what's in this issue. Brett Steigerwaldt, who was a reader of ASM even before joining the distilling industry, makes his debut in the publication writing about bacteria in rum fermentation. It’s a dense and exceptional piece. We also have not one, but two articles covering the topic of new bottle bills impacting states like California. From a business perspective we have articles on scaling your distilling operation, and an incredibly in-depth article on how to value the liquid you distill. That only teases a few of the articles you can find, not mentioned are other incredible pieces on mental health, distilling science, as well as sales and marketing. Outside these pages, ASM has been busy with several projects including the return of our much loved “Industry Events Calendar.” Honestly, I got tired of searching for the dates of upcoming conferences and finally broke down and consolidated everything for myself, and now for you, too! You can plan ahead for distilling workshops, webinars, spirits competitions, and conventions. Next up, the Society of Spirit has been busy growing as a place for the distilling community to gather, support, and educate. Check out the Discord group to learn about weekly online happy hours and education symposiums. Lastly, on a personal note, we have been helping to organize a fundraising event for a very dear friend and fellow distiller, Rob Masters. Rob and his family are fighting the good fight against the BS that is cancer. Rob would never ask for help, so the least we can do is do it for him. Join us for a comedy show, dinner, and drinks this February 25, 2024 in Denver, Colorado. You can buy tickets here: robandheathersbash.com To close out, I know the industry continues to feel the impact of the economy and the squeeze of inflation. I know the next year may be hard on a lot of the distilling industry, but as I’ve said before, none of us are ever alone in this industry. I love all my distilling family, and if you need us, just reach out. Thank you for your support. We have your backs.

With greatest appreciation,

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

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Yeasts, Nutrients, Enzymes and Bacteria

Our single source philosophy provides the highest quality ingredients, tailored technical service and education, and industry leading experience to support your needs. Your spirits are our passion, your needs are our motivation. www.lallemanddistilling.com www.lbds.com distilledspirits@lallemand.com

WHERE SCIENCE MEETS ART

QUARTERLY REPORTS U P DATES FR O M G U I L D S AN D A SSOC IATION S WI T H I N S TAT E S , A C ROSS TH E N AT I O N , AN D B E Y O N D !

QUARTERLY

GUILD & INDUSTRY REPORTS

Legislatively, the close of 2023 highlighted strong wins in states like Louisiana and Maryland, while Califonia had more mixed success with hopeful progress on extending DTC while losing out on a new recycling tax hitting the state’s producers. The winter season also sees an uptick in guild events like the The Rye Revival in Maryland, the Minnesota Distillers Guild Tasting Event scheduled for early next year, and a multitude of craft branded events for New York. Finally, several guilds have expanded their executive teams with professional help including new directors and more support staff to help organize and grow their efforts moving into 2024. Brian Christensen Editor, Artisan Spirit Magazine

AMERICAN CRAFT SPIRITS ASSOCIATION The final quarter of American Craft Spirits Association’s 10th anniversary year has been a busy one for the organization. In October we hosted the American Craft Spirits Festival, our first-ever consumer-focused event. Hundreds of consumers, as well as select members of the trade, converged on Binny’s Beverage Depot in Chicago to sample a wide range of spirits from 50 of America’s top craft producers. In addition to the tasting session, the event featured a series of educational panels spotlighting key product categories within craft

spirits, including whiskey, brandy, gin, and distilled specialty spirits. ACSA’s editorial team published a cocktail book featuring recipes from many of the participating distilleries, which all attendees received with their ticket. We’d like to express our gratitude to all of the participating distilleries, sponsors, presenters, and attendees who helped make the festival’s inaugural outing a huge success. Extra special thanks to Binny’s for generously hosting the event, as well as to Promark Distributing, Skeptic Distillery, 13

and Playpen Vodka for much of the logistical heavy lifting involved in putting on a spirits festival of this magnitude. Also in October we began accepting submissions for the fourth annual Craft Spirits Packaging Awards, which we’ll present at our convention in February. We are grateful for the very kind support of the Glass Packaging Institute, which is sponsoring the Craft Spirits Packaging Awards for the fourth straight year. Speaking of awards, we’re pleased to announce that we’ve also opened the call for submissions for our biggest competition, our annual Judging of Craft Spirits. A team

of expert judges will convene in Denver in January to rigorously evaluate hundreds of entries across all spirits categories. In November, many in our craft spirits community will join us on Capitol Hill for our first in-person Legislative Fly-In since 2019. Craft distillers will once again demonstrate what a force we are as advocates for small business as we meet with members of Congress and officials from TTB to address the critical issues that impact everyone in our dynamic industry. Finally, we are eagerly looking forward to our 11th annual Distillers’ Convention

and Vendor Trade Show, February 26-28 in Denver. In addition to the awards ceremonies for the two aforementioned competitions, you can expect more than 30 hours of education for all skill levels and across multiple professional functions within the spirits industry. Attendees will also get to explore the latest in state-of-the-art equipment, packaging solutions, ingredients, operations technology, marketing tools, and more on the trade show floor. And there will be ample opportunities to network and share a drink or two. I can’t wait to meet you there. Cheers! Gina Holman Founding Partner, J. Carver Distillery President, American Craft Spirits Association Board of Directors

AMERICAN DISTILLING INSTITUTE The American Distilling Institute (ADI) celebrated a wildly successful 20th anniversary conference in Las Vegas earlier this year with more than 1,800 attendees. It was terrific to see old and new friends, learn from industry luminaries, and taste some incredible craft spirits. Thanks to everyone who was able to join us at The Mirage, and for those who couldn’t make it, it’s time to mark your calendars for ADI 2024 in Baltimore, Maryland, on August 27-28. Until then, there are several new ways to get engaged with ADI, level up your skills, learn something new, and get inspired. We recently launched a brand-new podcast and video series called Voices of Distilling highlighting

inspiring leaders, makers, and legends in the distilling industry. You can subscribe wherever you get podcasts, or check out ADI’s YouTube channel for episodes. We’ve also got a ton of educational opportunities coming up. This December we’re holding another session of the perennially popular Blending and Maturation workshop taught by Nancy Fraley in Denison, Texas. We’ve also launched a free twice-monthly webinar series covering topics from grainto-glass liqueurs to how to sell your distillery. Visit our website to sign up for classes and subscribe to our weekly newsletter, The Heartbeat, to stay in the loop. Registration for ADI’s 18th annual

International Spirits Competition is now open, and early bird rates end on February 2, 2024. All entrants receive written feedback from expert judges, maximizing value for competitors. Best in Class winners will be awarded medals on stage at the 21st Craft Spirits Conference Gala in Baltimore, and be invited to schedule meetings with major retail partners like Binny’s Beverage Depot, K&L Wine Merchants, and Total Wine. Finally, we’re excited to announce that ADI has a new tagline: The Heart of Distilling. We’re honored to have been able to serve the industry for the last 20 years, and we’re looking forward to many more decades of service to come. Erik Owens President, American Distilling Institute

CRAFT MALTSTERS GUILD Earlier this year, maltsters, brewers, distillers, farmers, university researchers, and media gathered from across the globe on March 16-18 in Portland, Maine, for the annual Craft Malt Conference. The 2023 Malt Cup — the world’s only malt quality competition — received more entries than ever before and 14

awarded an unprecedented near sweep of all categories to one malthouse: Root Shoot Malting of Loveland, Colorado. Winners of the 2024 Malt Cup will be announced at the upcoming Craft Malt Conference slated for February 23-24 at the University of California, Davis. Distillers

and distilling industry professionals are encouraged to attend this educational and networking opportunity event. Registration will open in the coming weeks at craftmalting.com. W W W . ARTISANSPIRITMAG . C O M

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Under the leadership of new Executive Director Alice Blayne-Allard, the Craft Maltsters Guild seeks to expand the Craft Malt Certified™ seal program to augment the marketability of craft malt in craft beer and artisanal spirits, as well as to educate consumers

about the sustainability of purchasing beverages crafted with locally grown and malted grains. Blayne-Allard brings with her a life long passion for local sourcing and a breadth of malt-relevant knowledge from agricultural marketing to cooperage. Most importantly,

her extensive non-profit leadership and administration experience will be instrumental in supporting the craft malt community in its next big push for market share.

Alice Blayne-Allard Executive Director, Craft Maltsters Guild

DISTILLED SPIRITS COUNCIL OF THE UNITED STATES DISCUS Moves into New Capitol Hill Office at 101 Constitution Ave.

EPA Launches Energy Performance Indicator for Distilleries

Coinciding with our 50th anniversary, we have officially opened the doors of our new headquarters at 101 Constitution Avenue on Capitol Hill. We are beyond excited to be in our brand-new office and in such a prime location overlooking the U.S. Capitol. This modern, one-of-a-kind office will greatly support our mission to be effective and strong advocates for the spirits sector and its consumers well into the future. The new headquarters pays homage to the rich history of the spirits industry and takes guests on a journey into the world of spirits with design elements highlighting the heritage, craftsmanship, and agricultural foundations of spirits products. Guests have an opportunity to view rare historical artifacts in the reception area, including a letter penned by George Washington in 1799 about his successful distillery operation at Mount Vernon, and a 1776 Continental Army Commissary List, which detailed liquor accounts for General George Washington and several other Continental officers. Special spirits-related themes are featured throughout the office: Illustrations of agriculture, stills, barrels, and aging warehouses depict the distillation process from field to glass, and a wall showcasing a wide-range of jobs from farmers to distillers to bartenders underscores the spirits industry’s significant economic contributions. To symbolize the transition from distilling to the consumer cocktail experience, guests walk through an archway shaped like a spirits bottle leading to a spacious entertaining area with a 30-foot tiled bar complemented with stools, cocktail booths, and lounge seating.

We worked with the Environmental Protection Agency (EPA), Duke University, and a team of DISCUS members and other distilleries participating in the EPA’s ENERGY STAR program to help the EPA launch a new Energy Performance Indicator (EPI) tool developed specifically for distilleries to help measure and reduce their energy usage. The EPI compares a distillery’s energy efficiency to other distilleries with similar characteristics, and can be used to help distilleries benchmark and improve their energy efficiency, and seek special ENERGY STAR certification recognizing distilleries that are best in class for energy efficiency. The distilled spirits sector is the first in the beverage alcohol industry to have its own EPI and have the ability to apply for ENERGY STAR certification of its U.S. and Canadian distilleries. U.S. and Canadian distilleries that score a 75 or higher can apply to earn ENERGY STAR certification. The U.S. application materials are available at www.energystar.gov/ plants and must be submitted by November 30 to qualify for 2023 ENERGY STAR certiApply to earn fication. The Canadian ENERGY STAR certification distillery application will be available soon — for more information please consult the Canadian Energy Star for Industry website.

Cheers! Campaign Launches in India

DISCUS' Market Access Program (MAP) launched a Cheers! Spirits from the USA campaign in India, starting with an American

whiskey tasting event held in Mumbai. The event was attended by leading retailers, trade representatives, media personalities, and influencers, along with Ms. Rhiannon Elm, senior agricultural attache for the USDA Foreign Agricultural Service (FAS) Mumbai, and other members of the FAS. The Cheers! campaigns, organized by DISCUS, enlist in-country consultants and/or ambassadors to raise awareness and preference for U.S. distilled spirits among adult-consumers, media outlets, and trade representatives. The efforts may include instore promotions, trade show representation, social media influencers, specialty interest forums, targeted media outlets, seminars, Learn more about the DISCUS Export and hospitality training Promotion Program sessions. DISCUS will release additional details and registration for its MAP 2024 in mid-November. For more information about the DISCUS Export Promotion Program, please contact Charles McEntee at Charles.McEntee@distilledspirits.org. Ask, Listen, Learn Showcases the Power of Conversations with New Infographic

Responsibility.org’s Ask, Listen, Learn: Kids and Alcohol Don’t Learn more about Mix is celebrating its Ask, Listen, Learn: 20th anniversary of Kids and Alcohol providing free preDon’t Mix vention education resources to parents and educators. As part of the anniversary campaign, the Ask, Listen, W W W . ARTISANSPIRITMAG . C O M

Learn program encourDownload new ages caregivers to start Ask, Listen, Learn infographic conversations with their kids early and often and has published a new infographic on the power of conversations. Parents are the number one influence on their kids’ decision to drink or not to drink alcohol, and these prevention education resources

empower parents to engage in conversations to keep kids alcohol free. Spirits United

As expected, 2024 promises to be another pivotal year for the distilled spirits industry at-large. Our grassroots platform, Spirits United, works to add your voice and reach important legislators and decision makers in our communities, states, and federal governments, and secure a more modern and accessible market for adult spirits consumers.

Important issues facing the industry include ready-to-drink cocktails, direct-to-consumer shipping, seven-day Visit Spirits United's sales, and taxation just action center to name a few. Check out our action center to see how you can engage with your state and federal representatives. Chris R. Swonger President & CEO, Distilled Spirits Council of the United States

AMERICAN STATE GUILDS CALIFORNIA CALIFORNIA DISTILLERS ASSOCIATION

We are happy to announce the hiring of a new executive director. Lynette Sonne came on board November 1, and has a great set of skills to help grow the California Distillers Association (CDA). Her work with the Paso Robles Distillery Trail and numerous farm groups will tie CDA to the roots of the distilling industry. After many years of volunteer management, CDA hopes to bring in Lynette Sonne Consulting (LSC) to unify and grow

the membership. It has been a tough year to be a DSP in California, again. Our legislative program was under funded and yet able to get a number of bills passed. AB 1088 Rubio extended DTC to the end of 2024, but is the abbreviated hope to have a permanent DTC bill done. We hope to see a permanent change in 2024. Beverage containers (recycling) SB 353 Dodd was signed by the governor and is effective January 1, 2024. There is a lot of information and training coming out on recycling bottles and cans. The CalRecycle

program is predicted to be a heavy burden on DSP’s due to new fees and labeling along with the administrative overhead associated with the program. SB 269 Laird focused on allowing a winery/distillery to share a tasting room under one roof with a single retail sales location. This will simplify the guest experience and save the previous added complication of having two distinct operations at the same location. California Alcohol Beverage Control (CA ABC) named Joseph McCullough as director in September 2023. Cris Steller

Executive Director, California Distillers Association

LOUISIANA LOUISIANA DISTILLERS GUILD

The 2023 spring legislative session marked the first major statewide victory for Louisiana's booming craft spirits industry. Signed into law in August, Acts 127 and 129 are our first steps toward the modernization of the extremely restrictive and outdated legislation that burdens our budding industry within the state. Act 127 permits manufacturing facilities that produce less than four thousand gallons annually to distribute their distilled inhouse spirits directly to eligible retailers and 18

restaurants/bars within the state of Louisiana. Though still limited in its scope, passing any form of self-distribution is a major accomplishment, and in particular amongst the southern states. Not only will this help our smallest producers grow their businesses and bring more investment into our rural communities, but also will give us a platform by which we can expand into the traditional distribution model and help us compete in a marketplace that is particularly dominated by big brands and bigger distributors. Act 129 allows manufacturing distillers the ability to sell and serve their products directly to consumers at farmers markets

and similar venues, an allowance that has long been available to local wine producers. With Louisiana being a veritable cornucopia of agricultural products, this law will give local distillers greater means to promote their products and the locally-sourced ingredients used in those spirits. All of our state’s rum producers, 14 of the 23 active members of the Louisiana Distillers Guild, source molasses, raw sugar, and/or cane juice from eight of the state’s 11 sugar mills currently in operation, and many work directly with cane farmers in Ascension, Pointe Coupée, Vermillion, and Lafayette parishes. In addition to sugarcane, the guild’s members work with a variety of W W W . ARTISANSPIRITMAG . C O M

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local farms to source their raw materials, including rice from Vermillion Parish, strawberries from Tangipahoa Parish, blueberries from Washington parish, oranges from Plaquemines parish, and pecans from Tensas parish, among others. Being able to sell at

farmers markets was the logical next step for highlighting these great local resources. The Louisiana Distillers’ Guild is a non-profit trade association that represents the state’s craft spirits distilleries. The guild’s mission is to promote the growth and development of

the craft spirits industry in Louisiana. The guild was founded in 2018 and includes 23 actively producing members out of 31 producers across the state. For more information regarding the Louisiana Distillers Guild and its membership, visit louisianadistilled.org. Andrew Lohfeld President, Louisiana Distillers Guild Roulaison Distilling Co.

MARYLAND MARYLAND DISTILLERS GUILD

The Maryland Distillers Guild proudly hosts 43 members and has been active in advancing the legislative agenda in 2023. The industry had several major legislative wins for the year including: > Designating rye whiskey as the official

state spirit of Maryland > Extending the ability of distilleries to sell,

deliver, and ship their spirits within the state through June 2024 > Create a state specialist position for

value-added agriculture > Approve the use of alcoholic bever-

ages for educational purposes while participating in specific classes for the University of Maryland’s new Fermentation Sciences Major The guild also elected a new board that

included Eli Breitburg-Smith (Baltimore Spirits Company) as president, Jennifer Yang (Covalent Spirits) as vice president, Braeden Bumpers (McClintock Distilling) as treasurer, and Lee Rosebush (Rosie Cheeks Distilling) as secretary. Finally, the guild is putting on a signature event, The Rye Revival, which will celebrate the heritage of the state whiskey with renowned speakers, education sessions, and tastings. Eli Breitburg-Smith Head Distiller/Co-Owner, Baltimore Spirits Company President, Maryland Distillers Guild

MINNESOTA MINNESOTA DISTILLERS GUILD

Minnesota Distillers Guild members hosted a booth at the Minnesota State Fair, one of the largest in the country with a total of 1,835,826 attending the “Great Minnesota Get-together.” Our booth had an incredible display highlighting 30 of our craft distilling belonging to the Minnesota Distillers Guild. Our members worked the booth for 10 days, talking with craft spirits enthusiasts and sharing information about the craft spirits

industry. Distillers were able to talk about their craft spirits, production, where their grains are grown in Minnesota, and collaborations with local farmers and barrel companies. A special thanks to The Barrel Mill in Avon for collaborating with our guild to build a beautiful display so our members could talk about bourbon, rye, American Single Malt, and the aging process for our Minnesota whiskies. Members successfully sold MN Distillery Passports, encouraging craft spirits enthusiasts to visit our member distilleries

across the state. The funds we received from selling the passports will help with legislative and marketing efforts in the coming year. Our Events and Marketing Committee is thrilled to announce the return of our MN Distillers Guild Tasting Event in February 2024 highlighting our members award-winning craft spirits. Attendees get the chance to meet the member owners and distillers, taste locally-distilled craft spirits, and enjoy samples of craft cocktails featured in cocktail rooms across Minnesota. Gina M. Holman J. Carver Distillery, Founding Partner Minnesota Distillers Guild, VP

NEW YORK NEW YORK STATE DISTILLERS GUILD

The New York State Distillers Guild launched a new marketing program aimed at expanding the NYDistilled brand and providing a one-stop shop for event organizers looking to tap into the potential of the New York craft distilling movement. 20

As the New York market has matured, the guild has seen a pronounced uptick in events using the “craft spirits” and “local” monikers while promoting brands that are neither. The guild sees an opportunity to be the voice of the craft spirits industry in marketing, consumer education, and outreach, while expanding on its advocacy efforts on the public policy side.

The guild is working to help identify events that promote the industry and allow for opportunities for fair market access. By harnessing the power of the distilling community, the guild and its members can identify events that can deliver meaningful impact to distilleries, educate consumers, and ultimately propel our public policy agenda. For its first endeavor, the guild is working W W W . ARTISANSPIRITMAG . C O M

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with Tommy Brunett, founder of Iron Smoke Distillery, on the first-ever Hoochenanny Whiskey Festival this fall in Upstate New York’s spectacular Finger Lakes region. Iron Smoke is working with event and marketing consultants Art of Impact on the event. Through this partnership, the guild is providing financial support to help cover member distillers’ participation, and organizational support to the event by recruiting participants and helping to organize logistics. The Hoochenanny promises to deliver an amazing lineup of music and an even better lineup of distillers. Its Rickhouse Rendezvous experience offers consumers “a one-of-a kind

educational whiskey tasting experience” that they say will “deliver programming that invigorates the spirit and tantalizes the palate.” The guild is also hosting an educational talk, “The Whiskey History of New York,” featuring Celina Perez of Great Jones Distilling and Brian MacKenzie of Finger Lakes Distilling and moderated by Daric Schlesselman of Van Brunt Stillhouse. The guild will have a presence at the event and has developed materials to help identify the organization as the source for consumers on truly craft NYDistilled products. The materials will also engage consumers to get active on direct-to-consumer shipping, which the

guild will continue to lobby for in 2024. The guild believes consumers are key to enacting the legislative change, just as they were when wine shipping was legalized two decades ago. To further build NYDistilled brand awareness, the guild is investing in a branded tent, signage, and other materials to help the organization gain visibility at statewide marketing, agricultural, and public policy events. The guild looks forward to helping its members compete on a more level playing field with large well-funded brands through supporting homegrown events like The Hoochenanny that truly represent the craft distillers that are NYDistilled. Teresa Casey Executive Director, New York State Distillers Guild

PENNSYLVANIA PENNSYLVANIA DISTILLERS GUILD New Blood at the Pennsylvania Distillers Guild

The Pennsylvania Distillers Guild is pleased to announce the hiring of Arthur Etchells and Anthony M. Brichta to support our role in the growing Pennsylvania distilled spirits industry. Etchells will spearhead a drive to recruit new members from the increasing number of distilleries in Pennsylvania and to help the growing group organize its priorities in the dynamic distilling business. This will give Pennsylvania distilleries better representation and communication about important issues to policy makers and stakeholders inside and outside the state. Etchells has a good deal of experience in our industry, having served as Philadelphia manager for Manatawny Still Works in Pottstown and most recently helping small and larger distillers alike to connect to customers at Pennsylvania Libations in the Reading

Terminal Market. He will be working with the ongoing support of Signature Communications Philadelphia, which will continue to provide brand marketing and communications on behalf of the PADG and its members. Brichta will assist the guild as general counsel by providing legal advice, updates, and analysis of the issues, laws, and regulations that affect distilleries in Pennsylvania. Additionally, he plans to hold a quarterly legal call with members to address specific industry concerns and attend guild meetings. Brichta is an attorney at Norris McLaughlin’s Allentown office, practicing in the firm’s Liquor Law, Licensing, Manufacturing, and Distribution Practice Group, as well as the firm’s Business Law Practice Group. In addition, he is uniquely suited to this role as he has owned and operated a craft distillery in the Lehigh Valley since 2014 and has taught distillation and

craft distillery operations as part of Northampton County Community College’s Hospitality Management and Craft Beverage Programs. “Pennsylvania has a strong history of whiskey and distilled spirits production and is now home to more than two hundred distilleries across its sixty-seven counties,” said Etchells. “Now more than ever, distilleries are a vital part of Pennsylvania’s growing economy by purchasing local ingredients and providing jobs in their communities. I am happy to see the PA Distillers Guild take these important steps to continue and expand its work on behalf of distilleries in Pennsylvania.” Arthur Etchells Project Manager, Pennsylvania Distillers Guild

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SETTING THE STAGE FOR GROWTH

FOR SONOMA DISTILLING CO. A packaging redesign case study.

BEFORE

n 2020, Corning & Company made the decision to revamp the packaging for their line of whiskeys under the Sonoma Distilling Co. brand. The brand had recently undergone a packaging redesign with another agency, however, as they grew into a larger-scale facility and expanded their product line to specialty products, the necessity for developing a flexible packaging system became clear. In addition, their brand wordmark was used inconsistently across the range of products. On some spirits the full “Sonoma Distilling Co.” wordmark was used

AFTER

while on others it was simply “Sonoma Bourbon” or “Sonoma Rye.” The goal of the redesign was to position the brand for continued growth with a nimble packaging system and strong, consistent brand messaging that would create a billboard effect when products were placed together. Special attention needed to be given to establishing a clear system that allowed for product expansion from their core tier into their specialty, single barrel, and cream liqueur tiers. A custom glass bottle was designed with cartouches of the Sonoma Distilling Co. logo. To honor the brand’s Sonoma County wine country roots, the bottle was inspired by the shape of a traditional

LABEL SIZING:

SHAPE OF BOTTLE:

Consistent label sizing translated to cost savings and ﬂexibility in SKU extensions.

Honored the brand’s Sonoma County wine country roots.

LOGO: Consistent use of logo created a brand billboard effect.

CUSTOM BOTTLE: Allowed for control of supply chain and reinforced Sonoma Distilling Co. branding.

COLOR:

GOLD FOIL:

Color coding allowed for easy product differentiation.

Utilized to designate higher tier spirits.

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wine bottle, including an elegant neck and an exaggerated punt in the bottom of the bottle. The transition from a stock bottle to a custom bottle had the added benefit of giving the brand control over their glass supply chain. The craft spirits boom significantly increased the demand for glass bottles, making them harder to acquire. Sonoma Distilling Co.’s custom bottle allows for a consistent, exclusive line of supply. We pulled the product name out of the existing logo lock-up and utilized one “Sonoma Distilling Co.” brand mark across the range. A double-label system was developed with the main label prominently displaying the wordmark and messaging supporting their status as a Sonoma County, locally produced brand. The label panel devoted to the logo increased

visibility from a back bar. The secondary strip label made products easily discernible by organizing the product name and SKU-specific information in one location across all spirits. A color-coding system was developed to aid in product recognition across SKUs. Like food and other beverage products, color-coding can be a strong communicator of flavor or style of product for the consumer. When utilized for Sonoma Distilling’s line of products, it gave consumers the ability to quickly scan across the portfolio and identify similar product types. For instance, all bourbons use a maroon color, all rye products a green hue, the wheat whiskey a yellow, etc. This classification system also encourages intra-brand trial by asserting product familiarity — "I like this maroon bourbon so I'll probably like this

other maroon bourbon as well!" To elevate the more premium offerings, like the cherrywood smoked whiskeys and black truffle rye, the wordmark was stamped in a gold foil to clearly set these spirits apart from the core SKUs. The new design started to hit the market in the summer of 2022 with select products and was fully launched by Q1 2023. The new look received an overwhelmingly positive response. In less than one year of the new design in the market, the new look had won gold in the prestigious Global Spirits Design Master competition hosted by the Spirits Business and it won gold for Best Relaunch/ Redesign in the World Whiskies Awards.

David Schuemann is the owner and creative director of CF Napa Brand Design. For more information, visit www.cfnapa.com or call (707) 265-1891.

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THE PATH TO REDEMPTION Bottle Sales in California are About to Get More Expensive!

t’s likely not a surprise that, even though you may not have facilities in one state, when you sell any of your spirits there you do so subject to its laws. Accordingly, it’s necessary to keep up with changes to the law that affect your operations and sales. Unfortunately, the Golden State is looking for more gold. Effective January 1, 2024, California’s bottle bill will require your distillery to take additional administrative steps, potentially change labels, and make payments to CalRecycle. See below for a helpful explainer covering the broad strokes of this new regulation.

What is a “bottle bill”? Generally, a “bottle bill” is a set of state laws that promotes recycling beverage containers. This is done by implementing a system of deposits, refunds, and processing fees on consumers, retailers/redemption centers, and manufacturers/distributors. Under a bottle bill, a consumer pays a deposit upon buying a beverage container and is paid a refund for returning the beverage for recycling. How the bottle bills implement the deposits, refunds, fees, and unredeemed deposits with respect to retailers/redemption centers, manufacturers/retailers, and state recycling agencies varies by state.

Does California’s bottle bill apply to distilled spirits? As of January 1, 2024, yes! California’s bottle bill will apply to distilled spirits in any container including box, bladder or pouch or other material, excluding refillable containers.

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Does California’s bottle bill even apply to out of state distilleries shipping into California? As of January 1, 2024, yes! California’s bottle bill will apply to distilled spirits that are sold into California, including from distilleries located outside of California through a distributor. A beverage manufacturer that is covered by California bottle bill is any person who bottles, cans, or otherwise fills beverage containers, or imports filled beverage containers, for sale to distributors, dealers, or consumers in California. Note that distilleries located outside of California are not currently allowed to make DTC sales to California consumers.

How does California’s bottle bill operate? California’s bottle bill operates differently than other states. In California, distributors that sell eligible beverage containers to retailers must make redemption payments to CalRecycle per beverage sold to retailers, and, in the case of sales to retailers, the cost of these payments is passed on to consumers at the point of sale. Consumers are paid a refund when they return the empty beverage container to a certified recycling center. CalRecycle retains redemption payments that are not ultimately paid out as refunds. In addition, a processing fee is assessed on beverage manufacturers whose beverage containers cost more to recycle than they are worth as scrap value when recycled.

What other requirements are there under California’s bottle bill? Other requirements under the California bottle include the following: Registration: Beverage manufacturers and distributors must register with CalRecycle online. Labeling: No later than July 1, 2025, beverage manufacturers shall 29

clearly indicate on all beverage containers sold in California “CA CRV” or similar messages. The label must meet other specifications and be approved by CalRecycle. Redemption amount: 25¢ for each distilled spirits container less 1.5% for the distributor’s administrative cost. Processing Fees: Are required by beverage manufacturers. They vary by container type, and the fee per container amounts are set forth on the CalRecycle website. Unredeemed Deposits: Become property of the program and are used for program administration. Reporting and Recordkeeping: Manufacturer and distributor reports are submitted online. In addition to reporting and maintaining processing fees, manufacturers must keep records of transactions with container manufacturers, disposition of rejected containers, and sales and transfers of beverage containers by beverage manufacturer. Penalties: Civil penalties may be imposed for each violation of California’s bottle bill. CalRecycle can assess civil penalties of up to $10,000 per violation for intentional or negligent violations. CalRecycle can assess up to $5,000 civil penalties pursuant to a more informal notice of violation and informal hearing process, but can assess beyond $5,000 civil penalties pursuant to more formal notice and hearing procedures.

Conclusion These changes, while not excessively complex, are a bit convoluted and can take a bit to unwind. And the consequence for failing to comply can be pricey. Accordingly, it’s always wise to check with an attorney for compliance purposes. 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.

Susan Johnson is an alcohol beverage partner at Stoel Rives LLP and can be reached via email at susan.johnson@stoel.com or by phone at (206) 386-7684. Max Fujii is an alcohol beverage attorney at Stoel Rives LLP and can be reached via email at max.fujii@stoel.com or by phone at (916) 319-4658. Corey Day is an alcohol beverage attorney and litigator at Stoel Rives LLP and can be reached via email at corey.day@stoel.com or by phone at (916) 319-4670. This article is not legal advice, and it does not create an attorneyclient relationship.

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our customer sipped the last of that special With the inclusion of wine and bourbon you released last year and is excitedspirits, California’s updated ly awaiting your next special release, but what do bottle bill is a preview of they do with your empty bottle? If your customer lives in Smith not only believes California, or one of nine other states with ‘bottle bills,’ that what’s to come. that other states will bottle has a greater chance of being recycled because of an update their programs, update to California’s bottle-return program. he says DISCUS is “It’s an important message we need to get out there,” said on board with these Adam Smith, vice president of state policy for DISCUS. reports changes. Commonly called bottle bills, several states like California that less than “The Distilled Spirits have laws that govern statewide beverage container recycling 10 percent of glass Council and our memprograms (BCRPs). In these states, consumers pay a small gets recycled because it’s ber companies want to fee (anywhere from two to 15 cents per container depending a more difficult material to be good environmental on size) when they purchase aluminum cans and plasprocess for several reasons. stewards and for our tic or glass bottles of beverages like soda, water, One is that glass is heavy. It consumers [to have] and beer. After consuming, the customer takes weighs 10 times as much as the ability to be able to recycle our the empty containers to a recycling center to plastic making it much more products and make sure they are being used for get that fee back thus providing a monetary carbon-intensive to produce a clean stream of ‘cullet,’ which is what they make reincentive to encourage recycling. Wine and transport. However, the cycled glass bottles from.” and spirits packaging was exempt from main reason is the rise of sinCalifornia’s program until the passage gle-stream recycling across of SB1013 in 2022. Starting in 2024 the country. Single-stream wine and spirits packaging — most recycling — where all recycommonly glass bottles — will now be clables go into one bin — included in California’s BCRP. “Spirits means glass is easily contamand wine containers in California will inated with paper and plastic officially be redeemable for a 10-cent (and vice versa) making all deposit,” Smith explained. “The conproducts more difficult to sumer pays that 10 cents at the time process. To make new glass of purchase and if they return the confrom old, the recycled matetainer to a recycling center, they get rial — crushed glass pieces that 10 cents back.” Wine and spirits called cullet — must be pure, will be included in Oregon’s BCRP in meaning no paper, metals, or Written by Carrie Dow 2025. other contaminants. According to the National ConSingle-stream collecting ference on State Legislatures, 10 US requires large amounts of Glass is the dominant beverage container material in the disstates and one territory (California, labor and energy to remove tilling industry; however, the rise of ready-to-drink cocktails Connecticut, Hawaii, Iowa, Maine, contaminants before glass means aluminum can use is increasing, and some multinational Michigan, Massachusetts, New York, can be reused and municipal spirits brands use plastic containers. And while all these maOregon, Vermont, and Guam) have budgets simply don’t have terials can be recycled, different states have different methods these deposit return programs in place the money to pay for that. for doing so. Even with state-run recycling programs, recycling and according to the Sierra Club, these Many cities and counties levels in the US are far below what they should be. Over the last states have beverage container recyacross the country stopped few decades several states created BCRPs to increase recycling, cling rates of 66 percent compared to accepting glass in municipal but originally exempted wine and spirits (beer, with its majoronly 24 percent in states without such recycling programs back in ity single-serving containers, was included). Smith says that as programs. In California, that rate is 70 2018 when China stopped levels of pollution continue to rise — especially in states with percent. (Note: ready-to-drink cockaccepting US trash for recysignificant shorelines like California and Michigan — these tails usually found in aluminum cle sorting. These issues keep programs will require the spirits industry’s full participation. cans are already includglass recycling less profitIdeally, every bottle of single malt a customer finishes ed in most states’ able compared to aluminum, should get recycled into another bottle for another distillbottle bills.) making it difficult to fund the er to fill with carefully crafted gin or barrel-aged rum. The recycling of it, thus creating a reality is that’s not happening. The Sierra Club vicious cycle.

L ABEL

U P!

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“To make glass recycling profitable,” according to the Sierra Club, “the volume recycled would have to increase, which is unlikely to happen unless more deposit laws are passed.” This is a shame because, like aluminum, glass is infinitely recyclable. Once made, glass can be crushed, melted, and reformed back into glass repeatedly without loss of integrity. Hopefully, California’s new bottle bill will help. “This law goes into effect January 1, 2024,” said DISCUS’ Smith and will have two significant changes for distilleries. One is bottle labeling.

“It’s our hope the cumulative burden justifies the intended societal benefits. Only time will tell.”

“If you’ve seen a spirits bottle that is nationally available,” Smith explained, “on the back of the label it will say Iowa 10 cents or Michigan 10 cents. Those are called indices.” Producers will now have to have one for California on their labels if they want to continue selling in or to California. Fortunately, Smith says distilleries will have plenty of time to adjust. “There’ll be a California specific one required by July 1, 2025, so it does give producers, even though their products are in the recycling program, it gives producers some leeway to get that label.” He also notes that the new marks need to be approved by the state’s recycler, CalRecycle, by that date. This start date will also give producers time to go through their existing products. “Anything that’s in the bottle prior to July 1, 2024, does not have to have any labeling requirements because many of our products, whether it be

— MIKE BROWN, Cantara Cellars and Distillery and Flat Fish Brewing Company

from small producers or large, it could be seen on the shelf for two years, especially if it has a high dollar value, or they can be in a stock room or warehouse for some time before they move to a retailer, so there won’t be any requirement for labeling anything in a bottle prior to July 1, 2024.” “Also, there is a very minimal fee,” he added. “It’s called the Producer Manufacturing Fee (PMF) that must be paid to CalRecycle for every bottle that’s shipped into the state. The fee equals about five cents per 9 L case.” The fee helps to offset the lower cost of the raw material (cullet) from the higher cost of sorting and processing. According to CalRecycle, this cost averaged out to $0.00417 per bottle in 2021. So what do California producers think about all this? Mike Brown of Cantara Cellars and Distillery and Flat Fish Brewing Company in Camarillo said that while it’s important to incentivize and fund recycling, wine and spirits producers need to pay attention to the costs involved. He’s worried that “heavy,

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bulky wine and spirit bottles are unlikely to be redeemed at the same high rate as light, compact plastic and aluminum containers. Thus, we expect California consumers will pay in considerable recycling fees that will never be reclaimed.” “Collecting fees, new labeling, and administering the CRV (California Redemption Value) program will be an additional burden on our small business(es),” he added. “It’s our hope the cumulative burden justifies the intended societal benefits. Only time will tell.” Cris Sellers of Dry Diggings and Amador Distillery in El Dorado Hills also says that spirits producers in the state and those that sell to California need to prepare for the upcoming changes now. “If you’re a small producer, the costs will affect you. Today, distilleries order their bottles pre-labeled and order a year’s worth at a time. [Distillers] will need to plan ahead.”

Updates to the California Beverage Container Recycling Program (BCRP) for distilleries from CalRecycle.com

Smith recommends distillers or distributors visit SB 1013, approved by Governor Newsom CalRecycle.org. “Sign up on September 27, 2022, became effective on January 1, 2023. and every distilled spirits manufacturer will get a designat> Brings wine and distilled spirits into the ed case worker through CalRecycle California Beverage Container Recycling where they can ask questions and go Program starting January 1, 2024. through the process.” > Requires a California-specific It’s one more step in greening up our BCRP label on all beverage industry, an industry that already takes trecontainers sold in California. mendous pride in our sustainability from waMust be approved by CalRecycle ter conservation initiatives to controlling carbon and on container labels emissions. starting July 1, 2025. “I think it’s better for our industry,” noted Smith, > Requires a Producer “not only environmentally, but also fiscally to go into Manufacturing Fee (PMF) a bottle bill and to work with the regulators, to know paid to CalRecycle for every what the costs are going to be. There’s some financial bottle. Fee equals about five planning that can go into that and also a guarantee that cents per 9 L case and will your products are getting recycled.”

help to offset the cost of processing raw materials.

Visit CalRecycle's home page at calrecycle.ca.gov/BevContainer or their wine and spirits page at calrecycle.ca.gov/bevcontainer/wine-spirits for more information.

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LOCAL COLLABORATIONS

Part two of three

e m a G t n e r e f f i D A P l ay i n g

or the big producers, operating on a national or international scale can create barriers and other challenges that make it difficult to collaborate with other brands to develop new products for co-marketing efforts. As a craft distillery, we have the ability to be more nimble, sometimes more experimental, and more collaborative because many of those barriers simply don’t exist for us. Over the years, we have sold our barrels to a local brewery to release collaborative barrel aged beers and ciders. We have worked with a gardening club who used our spent gin botanicals in gardens to repel unwanted pests. We’ve partnered with a local chocolatier to make infused ganaches and chocolate bonbons. Strategic collaborations aren’t just fun, they’re good for business as they present opportunities to reach new and different audiences — and to make a real connection with them. These partnerships can be a great point of differentiation. If you’re new to creating innovative partnerships for co-marketing, here are some important points to keep in mind:

Pick the right partner

We spend a lot of time and money trying to gather our audience. When you collaborate with another brand, you’re also lending out your audience to them — and borrowing theirs. This is why picking the right partner is so important. The result of the collaborative product can positively or negatively impact your brand.

Elevate both brands

Finding the right partner means partnering for fit, not necessarily scale. Remember: they need you as much as you need them. Choose partners that are at your level and in a situation where both parties bring equal value. If there are three breweries in your town and one is a massive, state-wide operation that has been around for 50 years and the other two are five-year old breweries with a similar scale and social media presence as your distillery, approach the two that are the same size as you. It’s easier to begin a collaboration working owner-to-owner and, in theory, you have similar capabilities with someone of that size. If you attempt to partner with a brand larger than yours, you may have to navigate a complex marketing department and they will have to work the collaboration into their marketing plan. This could take a lot of time. On the other hand, if the potential partner is too small, consider what they bring to the table and how much they will help you reach new audiences. We try to work with partners that are the same size, and often run in similar circles. W W W . ARTISANSPIRITMAG . C O M

Think local

According to the Annual Craft Spirits Economic Briefing (December 2022), medium-sized craft producers do the majority of their business in their home state; and 92 percent of the business of small craft producers takes place in the home states. Local producers often have a strong and loyal local consumer base. Tap into that by partnering with other businesses right there in your home state. Think local with your collaborations.

Get it in writing

Once you know who you’re going to partner with and have developed an idea for your collaborative product, get a written understanding of what you’re both going to do. Set expectations upfront and be aware that it probably won’t be perfect. Consider details like pricing, production, launch date, promotion details and more. Write down due dates, delivery dates and other tasks. Once this is written down it becomes much easier to execute because both partners know what to do and can hold each other accountable. Putting details in writing will also allow you to consider the smaller details that might be easily overlooked and review expectations you have with your partner to avoid surprises. We set the parameters and ask our partners to do the same as us.

Space out partnerships in similar categories

Recognize that you can work with more than one brewery or cidery, but you want to space out the launch of new products to avoid releasing competitive products in the same month. Attempt to drive partners to create different collaborative products. For example, one can do a stout, another a brown ale, etc. Consider reaching out to a partner in the next city over so you can bring your brand to that market and avoid having too many local partnerships in the same category.

Create a sense of excitement and urgency

Not every great partnership has to be offered year-round. Consider timing and ways you can create a sense of excitement for the release of the collaborative product. One of our most successful partnerships has been with a cheesecake shop. They make a bourbon cream cheesecake with our product that is only released for Mother’s Day and Christmas. It’s a very popular item and we could sell it year-round, but we limit it to those two holidays to create demand for the rest of the year. This builds anticipation and helps us sell 100 additional bottles of bourbon cream per year to families who take it to their family event. 37

A successful collaboration is an opportunity to elevate both brands

Written by Jason Barrett

the value collaborative partnerships bring is so much more than the dollars we get that day. 38

This partnership has exponential marketing benefits, as well. I estimate that 1,500 people per year try our product during those two holidays. Our brand is there, inside their house and a part of their family celebration. Our partnership with this cheesecake shop helps to build positive memories and positive associations with our brand. It’s great for us and for our partner who sells an extra 200 cheesecakes each year. It costs us almost nothing to execute. Now this partnership is on autopilot annually.

Keep track of your progress and partnerships — and replicate them

Write down what works and what doesn’t. Create a process so that six months from now you have a playbook to follow or hand off to your marketing team. A written guide is much easier for an employee to execute than simply asking them to go do it. Once they’ve done it, measure success. And, if it goes well, consider ways that it can be replicated again next year.

Think (creatively) about ROI

The only way to measure the ROI of these partnerships is when they directly sell a product. But the value collaborative partnerships bring is so much more than the dollars we get that day. It’s about the exposure to new markets and the positive brand sentiment co-marketing can help create for your brand. It really is about the family at Christmas dinner eating cheesecake, drinking bourbon cream and talking about Black Button Distilling. I can’t buy an ad on their Christmas table; but a successful partnership can help get your product to that table, and your customers will be your advocates. Our next article will talk about how to handle public relations for your new collaboration and more. 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. SOURCE: www.americancraftspirits.org/wp-content/ uploads/2017/02/12-12FinalCSDP.pdf W W W . ARTISANSPIRITMAG . C O M

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The

SECOND EDITION

of the peer-reviewed Journal of Distilling Science has arrived.

journaldistilling.com

Peer-reviewed, original scientific papers • Reporting significant research • Technical reports • Applicable analytical techniques and methods • Reviews

Scientific and technical disciplines applied to the distilling of high-quality, potable alcoholic beverages

International board members, contributors, and audience

• Biology/microbiology • Chemistry/ biochemistry

• Universities and colleges • Research institutes and industrial laboratories

• Molecular biology • Physics and engineering

SPECIAL THANKS TO THE SPONSORS MAKING THIS POSSIBLE

• Distilleries • Raw materials producers • Allied industries supporting the testing and quality control functions of distilling operations

Written by Alexis K. Mason & John P. Thomas, II

ENGAGING A HELPING HAND

contract distilling

magine the following scenario: You’ve finally decided to turn your passion for distilled spirits into a business. You’ve spent time studying different formulas and combinations of ingredients to find the perfect recipe for your new product. You’ve thought through the name, the label, and the logo for your new venture, but then you’re faced with the stark reality that setting up a distillery is expensive. Between the cost of the facility, the equipment, the ingredients, and the staffing, this venture will prove to be a massive funding challenge. This realization is not uncommon, which is why many new distilled spirits brands often turn to contract distilling. A new product can reach the market through contract distilling faster while avoiding the initial capital outlays that would burden most startups in their infancy. Contract distilling is a relationship through which a non-distiller (at times referred to as “the client” in this article) pays a contract distillery to produce spirits for them. This arrangement is particularly useful for entities that want to make distilled spirits products but don’t have the necessary capital, capacity, or permits. Through contract distilling, new market entrants can avoid undertaking all of these action items and instead engage an existing contract distillery to produce the new

market entrants’ distilled spirits products. Contract distilling offers a low-risk system where the client can test a product and brand, allowing more companies to bring their product to market. Under a contract distilling arrangement, the contract distillery typically is solely responsible for distilling the spirituous product, maintaining all of the distilling records, labeling the product using its name and address, obtaining necessary COLAs, obtaining a formula approval for the product, and paying the tax associated with removing the spirits from the distillery. The client would provide the recipes for its product to the contract distillery for production. The title to the distilled spirits would remain with the contract distillery until the tax is paid or the distilled spirits are removed from the distillery. Alcohol beverage regulators typically consider this arrangement an ordinary commercial business relationship. The structure of the operations under a contract distilling arrangement, as well as the requirement for each participant in the arrangement to obtain an alcohol beverage license, will depend on federal and applicable state alcohol beverage laws. Under federal alcohol beverage law, if the client will be responsible for distributing the product, it will be required to obtain a federal

Contract distilling is a relationship through which a non-distiller pays a contract distillery to produce spirits for them. W W W . ARTISANSPIRITMAG . C O M

wholesaler permit from the Alcohol and Tobacco Tax and Trade Bureau. In this structure, the client can purchase the finished distilled spirits product from the contract distillery and sell the product to licensed distributors as desired. The preceding is typically the best structure when the client wants to be involved in the supply or distribution process, receive proceeds from the sale of alcohol, and have its own distribution agreements. Notably, there are other structures for consideration through which the client would not have to obtain a federal wholesaler permit. For example, the contract with the distillery may be structured as a licensing arrangement through which the client is not involved and does not receive proceeds from the supply or distribution of the product. Rather, the client would license its intellectual property, including the recipe, brand name, and other elements, to the contract distillery and receive a licensing fee based on the use of the intellectual property. Otherwise, the contract distillery would be entirely responsible for distributing the product through its network of distributors. 41

As noted, it is also important to determine whether the state where the parties operate places any restrictions on contract distilling. The majority of state alcohol beverage laws are silent on whether contract distilling arrangements are allowed; however, these arrangements exist in most states. Much like federal law, the client’s desired role in the supply and distribution of the finished product under a contract distilling arrangement will affect the (i) state alcohol beverage laws and licensure requirements that are implicated and (ii) structure selected for a contract distilling arrangement. For example, suppose the client will be responsible for distributing the product and receiving proceeds from the sale of the product. In that case, it will likely be required to obtain a state alcohol beverage permit. In Montana, a brand owner with a Montana manufacturing-type license may enter into a contract distilling arrangement with a contract distillery. In this arrangement, the brand owner has to buy the product from the contract distillery and sell it through the three-tier system from that point forward. Perhaps the client does not have or want to obtain an alcohol beverage license and prefers to be uninvolved in the supply and distribution process. In that case, review the state law to ensure securing an intellectual property licensing structure or other alternative structure can be achieved. This type of arrangement would not be permissible in New York because the New York State Liquor Authority only allows contract distilling if both parties are licensed manufacturers in the state and otherwise provides that an unlicensed brand owner cannot enter into these arrangements. Ultimately, the structure of a contract distilling arrangement will vary depending on the law of the state in which the contract distillery is located. Drafting and negotiating a contract distilling agreement is something that requires thorough consideration, and it is advisable to review the following factors.

The majority of state alcohol beverage laws are silent on whether contract distilling arrangements are allowed; however, these arrangements exist in most states. First, the client must find a contract distillery that meets its needs. Certain contract distilleries can offer a range of services from recipe development and production to branding, aging, bottling, labeling, and bonded storage. The client should have a well-drafted agreement with its contract distillery that addresses the services to be provided by the contract distillery and, among other topics, intellectual property rights, ownership of the recipe for the product, excise tax payment responsibilities, record keeping and reporting responsibilities, and federal and state permitting requirements. Second, the client must find a contract distillery that will allow the client to be as involved as it would like (subject to compliance with applicable alcohol beverage law) in the sale of alcohol to a distributor after the product’s manufacturing. It is important to note that a contract distilling arrangement results in intertwined operations for the client and contract distiller — mainly because the distilled spirits products technically are owned by the contract distillery before and immediately after production. There is some risk that a distributor of the contract distillery could claim that (A)(i) a broad definition of distributed “products” or (ii) a “successor provision,” in each case under its distribution agreement with the contract distillery; or (B) a successor provision under spirits franchise laws (if any) grants the distributor the right to distribute the client’s distilled spirits products. Consider this risk when choosing a contract distillery. Finally, contract distilling does have potential disadvantages. For example, in contrast to the client owning and operating a distillery, the client will not have day-to-day

A contract distilling arrangement results in intertwined operations for the client and contract distiller — mainly because the distilled spirits products technically are owned by the contract distillery before and immediately after production. 42

control of the distilling operations in a contract distilling relationship. Further, the profit margins are generally smaller for the client in this arrangement, and the client may run into licensing, labeling, and reporting problems if the contract distillery is unexpectedly unable to continue production for the client. Nonetheless, as noted above, a contract distilling arrangement has various benefits for new market entrants and smaller entities looking to expand production. Notably, regardless of whether you’re an existing distiller with an interest in expanding your brand portfolio through a contract distilling arrangement or a new market entrant with an interest in engaging a contract distillery to handle the production of your product, you should speak with experienced alcohol beverage counsel before approaching prospective contract distilleries.

John P. Thomas, II is an associate in the GrayRobinson Tampa office and a member of the GrayRobinson national Alcohol Law Team. He works with all three tiers and all three segments of the alcohol industry, including substantial work experience with distillers. Prior to joining GrayRobinson and while in law school, John served as a Senior Judicial Intern at the U.S. District Court for the Middle District of Florida for the Honorable Amanda Arnold Sansone. Subsequently, he became a Gubernatorial Fellow for the Florida Gubernatorial Fellows Program where he served within the Department of Management Services. For more information call (813) 273-5046 or email john.thomas@gray-robinson.com. Alexis K. Mason is a senior associate with the GrayRobinson national Alcohol Law Team practicing trade regulation and compliance guidance associated with mergers and acquisitions in the alcohol industry. Alexis’ experience includes work on multi-billion dollar beverage industry mergers, combining her Corporate Law and Alcohol Law acumen. Before joining the firm, she gained experience as in-house counsel for REEF Technology. While at REEF Technology, she conducted research to determine regulations applicable to certain business models in various jurisdictions and advised stakeholders regarding such regulations. Email alexis.mason@gray-robinson.com for more info.

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ROB & HEATHER’S BASH Rob and Heather Masters were hit with a double-cancer whammy so weʼre pulling out all the stops to gather family and friends to celebrate our love for them

e and rais p l e h funds to their h them wit expenses Join us for food, drinks and a comedy show featuring Josh Blue

p, runner u , t n e l a T t Go ing America’s Last Comic Stand ow f h o S r winne e Tonight n h T n o d e r y Fallo and featu with Jimm When:

Tickets go

Tickets and more info at robandheathersbash.com

Where:

Sunday, February 25, 2024

Ophelia’s Electric Soapbox

6pm to 11pm the weekend

Denver, Colorado

ention before AC SA’s Conv in Denver

on s

12/15/23ale

the coolest venue in

TO-GO COCKTAILS W R I TTEN B Y SAI L OR GUEVARA PH O TO S PR O VI D ED B Y H EADF RAME SPI RI T S

uring the COVID-19 period of restrictions for bars and restaurants, to-go cocktails became a lifeline for many, including distillery bars and tasting rooms. Approximately thirty-nine states issued temporary measures to legalize the sale of to-go alcohol from on-premise locations, with around twenty-one, including the District of Columbia, making the sale of cocktails to-go permanently legal. Realizing how critical these measures were for the life of on-premise locations during the pandemic, I wished to explore how to-go cocktails still benefit these locations 44

and what the demand looks like today. For businesses like bars and tasting rooms that rely more heavily on alcohol sales than food, this was an obvious need. And during the shutdown of food establishments, it was quickly evident that many restaurants generated more significant profit margins in alcohol than food. “Being able to sell cocktails with takeout food was critical to us while our restaurant was shut down for inside dining,” said Jennifer Neston, who owns a popular bistro in Washington State. “We sold more cocktails through our to-go

cocktail program than before the pandemic, and that demand for cocktails continues today.” During the pandemic, I was a brand manager for an emerging whiskey brand, so I saw to-go cocktails as necessary to save my accounts and job. One of the most significant issues I identified is that most restaurants were staffed by an owner and a chef or a very small skeleton screw to handle take-out orders, none of whom were bartenders. So they were not equipped to make cocktails. “This is where we leaned into our brands, and it turned out that W W W . ARTISANSPIRITMAG . C O M

it was the smaller craft brands and local distilleries who were offering us recipes and to-go cocktail vessels first,” explained Neston. “It just seemed like they had togo cocktail programs figured out first. Yes, we could have purchased canned cocktails from major brands, and we did, but they did not sell as well as the to-go cocktails that we made in the restaurant.” In speaking with Amber Pollock of Backwards Distilling in Wyoming, I learned that during the pandemic, they began with a DIY cocktail kit model after the first few weeks they were closed. Pollock explained that it was mostly to keep people employed while having some sort of revenue stream coming in. Once the State of Wyoming legalized the sale of ready-topour cocktails, they quickly shifted away from the kits and focused on the ready-topour model. I also spoke with Courtney McKee of Headframe Spirits in Montana, where to-go cocktails are permanently legal. Additionally, the state has an open container law. During the pandemic, Headframe had a portable bar set up in the entryway of their tasting room and sold cocktails to go and cocktail kits and bottles of their spirits, which helped generate revenue. While it's evident that to-go cocktails sold well during the pandemic, since restaurants and bars have reopened, twenty-one states have permanently legalized to-go cocktails showing a long-term demand. However, passing this legislation was not easy in many states. Liquor store lobbyists have opposed the W W W . ARTISANSPIRITMAG . C O M

legislation from the start, citing the competition as harmful to their bottle business and potential underage liability concerns. Such arguments prevented many state’s legislation from passing successfully. It should be noted that many liquor stores sell some form of ready-to-drink cocktail. Allowing carryout cocktails is one of the most significant changes to liquor laws since the end of Prohibition. These changes could have taken another five to ten years without the pandemic creating this spark. The number of states that have responded to the demand is incredible. McKee shares that their to-go cocktail sales are now around five percent of their total sales. However, McKee sees it as a benefit to the community and, with an open container law in their state, it just makes sense. “We serve two audiences; one audience likes to take the cocktail with them when there are activities nearby like an art walk or a festival. Our open container option is a big tourist boon because most states don’t allow you to walk around with a cocktail.” McKee further explained, “Some people want to take cocktails home ready to pour and drink so that they don’t have to make cocktails themselves.” Each state has defined restrictions on the sales of to-go cocktails, such as citing how many can be sold at one time or how large they can be, how they must be packaged, whether you can have a cup with a straw in it, if the vessels must be sealed, and where a driver should place the cocktail while driving. Safety is a prominent theme in McKee’s approach to cocktails

to-go for Headframe Spirits’ tasting room. For McKee, responsible consumption is vital. In Butte, Montana, there are limitations on how many cocktails their tasting room can sell from their bar: two cocktails per person per day. “There is ambiguity in whether the consumer can have a straw in the to-go cup in the car or whether it has to be far away from the driver, for example,” she said. Most important to McKee is having a voice in how rules get interpreted. “We have a great relationship with local law enforcement, and in the end, I believe businesses should be able to generate revenue in any way that makes sense for them.” For those on-premise businesses that can legally sell to-go cocktails and have chosen to make them permanent offerings, most of whom I spoke to explained that there had to be a solid program to offer to-go and sit-down options simultaneously. As Pollock explained, “If the cocktails to-go take too long to make, it defeats the purpose. The guest might as well sit there and drink it, so we decided that draft cocktails would work best for us.” “There was a big shift away from to-go cocktails when we reopened fully,” she added. “However, the demand has stabilized to cocktails to-go, about 10 percent of our total cocktails sales, and that’s substantial.” They have four draft cocktails on tap at any given time and rotate them seasonally. “Draft cocktails will never leave our model. It’s a win-win for us. Batching cocktails 45

has reduced costs in many ways,” said Pollock. “This format is relevant. To sell more of my spirits, I need both bottle sales and consumers drinking my cocktails, whether at my bar, home, or on-premise accounts. To-go cocktails help improve overall sales.” I polled more than ten different distillery owners who cited similar themes as Pollock. The addition of to-go cocktail programs for their on-premise accounts has been notable for on-premise sales. Some explained that investing in frozen drink machines and providing batch recipes for their on-premise accounts tripled their case sales to those locations that opted into the program. “The cocktail is made for volume because you just pour it from the machine. They can serve more cocktails faster, and it’s a fantastic option for to-go cocktails,” explained Philip Rawleigh of Distillery 291. This legislation has also affected the decision to open distillery tasting rooms or bars to families (where states allow it). Many distillery owners said they wish to keep their bars from being a family-friendly space. They want to remain over-21, so to-go cocktails become an excellent way for families to enjoy their favorite spirits in cocktail form at home and a great way to retain customers who now have small children. When it came to canned or bottled ready-to-drink (RTD) products, distillers found that these options are more shelf-stable and have a greater chance for sales outside the distillery, but they differ from a bar-made cocktail. Many consumers purchase RTD canned cocktails, for example, for outdoor activities, camping, boating, and visiting the beach. When they are home and don’t feel like drinking in a bar, knowing they can pick up their favorite cocktail from a neighborhood bar and drink it at home is enticing to consumers. Quality is also a motivation for today’s consumers when it comes to cocktails. I was surprised to hear that almost all the accounts I spoke to are still using the to-go programs today and say that the source of revenue is enough to continue to invest in it. They all spoke of how the programs have helped with staffing issues, stating that they ask their bartenders and servers to suggest the batched cocktails if they are short on staff. Even non-experienced staff members can jump behind the bar and successfully pour and serve high-quality cocktails. The consensus of the people I spoke with is that if your state allows to-go cocktail service, it should be considered by either offering to-go cocktails from your distillery or supporting your on-premise accounts. Additionally, if your state is still struggling to pass this type of legislation, supporting state guild efforts to pass the legislation may be fruitful. 46

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Here are some tips for successful to-go cocktail programs: > Presentation: The cocktail should look as good as it tastes. However, avoid making consumers work hard when they get home to garnish the cocktail. > Less Is More: You don’t need a ton of to-go cocktail options. Four options is the sweet spot if you don’t want to offer all of your cocktails to go. > Batching: Batching cocktails is ideal for reducing labor demand, and quicker to-go service for the guests makes these options convenient and successful. It is important to note that state laws on batched cocktails can vary. Some allow cocktails to be batched without the alcohol while some have no restrictions. Be sure to check local laws. > Production Impact: Take stock of how creating and holding a larger volume of cocktails may affect your distillery processes. Will you need additional fridge space to package cocktails and buckets for batching? Where will you store the backstock of the packaging? Space is already an issue in most small distilleries. You will also need to consider how this may change your labor needs, and you may need to create a different shift for batching and require less labor during open bar times. > The Menu: To-go cocktails should reflect the cocktails on your bar menu. For efficiency and low costs, the cocktails on your to-go menu should be the same or reflective of the cocktails on your regular menu. > Simplify: Identify crowd-pleasers and avoid over-complicated cocktails that may translate poorly in a to-go format. Making the cocktails easy to pour and enjoy is best.

> Packaging: The right packaging is critical. Many distilleries have succeeded with pre-filled grab-and-go options for bartenders to serve. They serve their cocktails in PET bottles and refrigerate them, which is also helpful for states with strict laws on to-go cocktail packing. In addition, where legal, you can offer multiple sizes. Pollock explained they offer a few different sizes including a 64-ounce container, which is very popular for parties and gatherings during the holidays and summer. At Headframe Spirits, McKee added that all their packaging for to-go cocktails, including the straws, is compostable. > Last Call: To-go cocktail options are great for people who wish to continue enjoying cocktails at home after the last call, especially in states where the last call must happen earlier in the evening, depending on your license. > On-Premise Support: Consider discussing to-go cocktail options with your on-premise accounts in states where it is legal. Pollock said, “Educating your on-premise locations and offering support can greatly boost sales. Work on recipes together, or purchase the to-go vessels and labels for them. Communicate the value. If they have a batching program, you instantly sell more bottles to them, and it’s in their best interest to sell that product.” Pollock added, “As a small brand, I can afford to give some of my accounts to-go vessels and packaging. I normally cannot compete with large brands, giving cash to the bars or discounts where legal. However, I can give my creativity as support. This approach is affordable for small brands to support their accounts competitively.”

> Mixology: If you don’t have an experienced mixologist on staff, hire an outside consultant who can work with you on menu creation and a batching program. Reach out to one of your on-premise accounts to find a talented mixologist looking for extra work. Or lean into your supporting organizations for assistance, like your local United States Bartenders Guild (USBG) chapter. Quality cocktails focusing on low waste, popular flavors, and efficiency are essential for the success of your program. > Safety: Last but not least, everyone I spoke with underlined the importance of understanding the legislation and definitions. As McKee suggested, “Reach out to local law enforcement if necessary. Make sure you have a great understanding of the legalities involved with to-go cocktails.” Work within your comfort zone and ensure all your staff is meticulously adhering to the rules. As McKee said, “Safety is job security.” “I think all states should be pushing for permanently legalizing to-go cocktails. We have proof of concept now. Differentiating the difference between an open container and taking it home to enjoy can be a helpful distinction for hesitant state legislatures.” Pollock said, “The world didn’t end because of to-go cocktails. We have an opportunity to create an experience beyond the distillery with to-go cocktails. Associating my spirits with good cocktails is critical to the success of my brand.”

Sailor Guevara, a veteran of the spirits and hospitality industry, the 2020 winner of the World of Whiskey Icon award and an author and contributor to several spirits publications. As acclaimed podcast host and published mixologist Sailor enjoys sharing her passion for spirits and music with the world. W W W . ARTISANSPIRITMAG . C O M

BEYOND

the

BOTTOM

LINE

CHICAGO CANE COOPERATIVE CHICAGO DISTILLERY EXPERIMENTS WITH DEMOCRACY Written by Gabe Toth

///

Photos provided by Chicago Cane Cooperative

he Chicago Cane Cooperative is more than just rum. It’s a statement of principles, a Caribbean-tinged taste of the potential of democratic collectivism in the historical heart of America’s labor movement. Rooted in the long friendship of Daniel Andre Regueira Santos and Sean Ellis Hussey, the business is built on a mutual love of spirits, creativity, and worker equality. They spent years hanging out and making beer, then moving on to infusing spirits, and eventually to distilling, Regueira Santos said. “I had read a book called Bacardi and the Long Fight for Cuba, and it’s basically about the history of Cuba through the lens of the rum industry,” he said. “When I read that, hobby-body that I am, I said, ‘This sounds fun. Let me try that out’.” Over time, they refined a recipe, fermentation parameters, and distilling methods, and began to shape the type of company they wanted the distillery to be. The history of the rum industry, coupled with his Cuban roots, had a big impact on their choices. “A big part of the brand for us in the beginning was that in both the rum industry and the spirits industry writ large, some brands will mention the horrific history of slavery, and go on to talk about how the rum industry and the sugar cane industry is built on that,” he said. “Then in the modern sense they don’t really address the fact that people clock in, clock out, for crap pay, and aren’t really involved in the way their workplace is run to any significant degree. We wanted to at least start having the conversation addressing this with our brand, our cooperative.” Being a part of the Chicago scene — organizing and working on behalf of union and socialist causes — gave them an appreciation for those workers rights and worker involvement. The city was a foundational part of the American labor movement, feeding the international labor movement to a degree. It was home to the Haymarket affair, a pivotal moment in the struggle for workers’ rights in the late 1800s, leading to the creation of Labor

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“We have to be aware of our history and comment on it in a way that can make things better in some way, that can help bring worker equity into the equation.” — Sean Ellis Hussey

Day and May Day (or International Workers Day). Living with an awareness of that context, Hussey said that Santos approached him about the distillery concept, and he found it curious that it required so much digging into the history of rum to understand how intertwined it had been with the slave trade. “It felt strange that people weren’t being up front about that history,” Hussey said. “From that moment, I was like, ‘If we’re going to do

this, we have to do this right.’ We have to be aware of our history and comment on it in a way that can make things better in some way, that can help bring worker equity into the equation.” In January 2020, Regueira Santos said, “fortuitously, serendipitously, fatefully, by happenstance,” the State of Illinois created a designation for worker cooperatives under the law for LLCs. “When we saw that was going to pass, we went, ‘This is the time. We’ll

EDITOR’S NOTE Following his interview for this piece, Regueira Santos was struck on his motorcycle by a careless driver, leaving him paralyzed from the waist down. His GoFundMe campaign can be found here: https://www.gofundme.com/f/support-daniels-motorcycle-injury-recovery, and Hussey provided a statement that read, in part: “This is inspiring us to look deeply into our ableism biases and to create accessibility on all fronts of Chicago Cane Cooperative. It goes without saying that being a cooperative business requires accessibility, it's about creating equity amongst all voices in the room. But we are only now beginning to recognize the potential depth of this reality when it comes to disability, as well as see firsthand the deficit that exists in our current cultural understanding and support of people with disabilities. This is something that is unfolding for us more and more every day. It is our hope to turn this emotional turmoil into action.”

be one of the first worker cooperatives under this law in Illinois’,” he said. “We knew that if we were going to do it, we wanted it to be a worker cooperative, to first and foremost live our values and put our money where our mouth is.” They enlisted Sarah Kaplan, a lawyer who had been part of the coalition to get the law passed, to help navigate the law and ensure that their bylaws fit the model. The company was incorporated as an LWCA — Limited Worker Cooperative Association — rather than an LLC. Legally, that means that at least 51 percent ownership has to rest with worker-owners. The remainder could be owned by workers, investors, or other classes of membership. “We came up with what we call a founders share, a hybrid of the two, since we’re putting in money and/or sweat equity,” Santos said.

Tapping into backgrounds in copywriting, marketing, and graphic design, they had already created the brand script near the end of 2019. “We were in this limerent dreamscape about this,” Hussey said. “It just kind of took off from there, until something happened in March of 2020 and we had to take a little break. We put it down for a while, and then picked it back up later in the year.” The company incorporated in June 2021, received their distilling permits in May 2022,

and launched in 2023. The rum, currently made at Two Eagles Distillery, is a full-bodied spirit using first-strike Guatemalan molasses — “fancy” molasses as defined by regulations in Canada, where it’s imported from — and fermented to a moderately high acid content over two to four weeks using a portion of stillage and a variety of estery yeasts from a local lab, Omega Yeast. Regueira Santos is particularly excited about a new acquisition, schitzosaccharomyces pombeii, that they’re

“We knew that if we were going to do it, we wanted it to be a worker cooperative, to first and foremost live our values and put our money where our mouth is.” — Daniel Andre Regueira Santos

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banking with Omega. “I’m super pumped for that, just based on the pombeii rums that I’ve had,” he said. The spirit is released unaged for their silver, aged with the solera method for their gold, and a blend of the two has recently been released as their Founders Blend. Hussey said the Chicago Rum Club, a big supporter of the project, came out last summer to help with a blind tasting for the Founders. “They helped us pick which one to go with, which blend has the best proportions. It was very fun, we got to be super nerdy and talk about all of the different tasting notes of each one,” he said. The cooperative is able to self-distribute within the state, but they’ll need a distributor to go out-of-state. As the Chicago Cane Cooperative grows from Regueira Santos, Hussey, and a third founding partner, Guarav Jain, who helps with the business operations, new employees will have a one-year trial period, Santos said. “We will then, if we approve, offer that person a worker-membership share, which entitles them to being a fellow worker-member and voting on how the company is run,” he said. “Not only that, but there is a profit-sharing model as well. We get dividends as worker-owners, and we get to vote on how much of those profits we want as dividends, or not.” They’ve recently hired a salesperson, and as they add more staff, it will increase the

Chicago Cane Cooperative founders (left to right) Sean Ellis Hussey, Daniel Andre Regueira Santos, and Guarav Jain.

need to educate those workers on the business model, Hussey said. “We’re running a business together, and we’re not saying ‘I’m making a decision that you have to follow.’ We’re saying, ‘Hey, what decision do we need to make together?’ How can we all go forward comfortable with the decisions that we’re making?’ he said. “Dan and I have talked about it for a while, and increasingly as we’ve started this business, we don’t have models for how democracy functions in our everyday [life]. My understanding of democracy growing up was politicking,

was running for office, but that’s not really what democracy is. That’s a part of it.” At the same time, as the distillery grows, decision-making will only get more complicated. As they see it, though, that’s a feature, not a bug, Santos said. They’re learning how to be democratic and figuring out what that looks like as they go. “We’re basically teaching people how to do democracy in the workplace as we take them on, which is a learning process. Even we are not familiar with it in a functioning, real-world way, and we’re learning it as we go,” he said. “We’re learning how to be super-communicative amongst ourselves, and how to do this in a method that’s really communicative and we’re all being heard and speaking up on what we want to be heard and speak up on.” They attributed a variety of problems — environmental degradation, international

“We’re basically teaching people how to do democracy in the workplace as we take them on, which is a learning process. Even we are not familiar with it in a functioning, real-world way, and we’re learning it as we go.” — Daniel Andre Regueira Santos W W W . ARTISANSPIRITMAG . C O M

disputes, labor strife — to a lack of democracy, the inability or inopportunity for thoughtful, informed decision-making that reflects the common will. Hussey said the educational portion is essential so that employees, as future owners, understand why the business is structured the way it is and why it’s important. “Worker cooperatives end up not being successful when the workers don’t have buyin to the model,” he said. “Because it’s all about the workers and everyone working together, and if there’s not enough understanding about how that democratic process works, people aren’t going to be invested in it. Even though it’s a harder way of doing things, we believe that ultimately it’s better, perhaps because it’s harder in those ways.” They’ve both had experience with bad jobs, especially in the service industry, but Hussey said his background and context had left a particularly profound impression. “Being a queer man has been totally fundamental in my work experience,” he said. “It is a foundation that all of our ideas and all of our

“It doesn’t have to be that hard to have a supportive work environment that makes money, that has revenue and profit and is able to sustain itself, that has people who feel sustained, who feel taken care of, who feel inspired to do the work that they’re doing and also to have personal lives.” — Sean Ellis Hussey perspectives are respected. I just didn’t realize that there was a lot of dismissing of me and who I am in other work environments, and that has become a huge passion in the last year. I want to provide this for everyone, because there should just be space for everyone to exist and have their ideas respected. They might not come to fruition, and none of our ideas should come to fruition exactly how we imagine them, but we can do it together and we’ll get really close, and it’s probably going to be better if we do it together and collaborate.”

He said COVID-19 brought a lot of worker dissatisfaction to the surface, and it’s continuing to play out. Employees are responding more to the problems they have with their workplaces and the way they’re treated, or mistreated. “It doesn’t have to be that hard to have a supportive work environment that makes money, that has revenue and profit and is able to sustain itself, that has people who feel sustained, who feel taken care of, who feel inspired to do the work that they’re doing and

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also to have personal lives,” he said. “I just don’t think it’s an impossible formula, and the way that we culturally accept that doesn’t do it for either of us.” For Regueira Santos, it has a sense of history repeating itself. He learned that his grandfather, who lived in Cuba before immigrating to the United States in 1969 and was very involved in Regueira Santos’ life, had worked at a major Cuban brewery, Cristal. “He was one of the main union organizers at the factory. In hindsight, I look back on that and I’m like, damn, am I influenced by that at all?” he asked. They know that what they’re doing is a long play, though. They’re currently trying to raise more money, build brand awareness, and hoping to find distribution partners, with their own facility still a dreamt-of possibility on the horizon. It’s a long way from the societal shift that they hope to inspire. “We really want to envision a different model,” Hussey said. “We’re talking about super aspirational, like the end of our lifetime if

we’re lucky, we’ll start to see some of the benefits of what we’re planting. But that’s great. I’d so much rather have a model for something that could be good for the future.” Regueira Santos, also, looks at their approach as a model for approaching problems in the workplace and in society at large. “The world is a certain way,” he said, “and we want to do our best to model what we think is frankly a better way of doing things, in a way that will help solve a lot of issues at

its root, which we believe is a lack of democracy. Frankly, if we can inspire people to do the same thing, if we can help other people to do the same thing, that is, we think, moving the ball in the right direction. For us it is very much a ‘Be the change you want to see in the world’ kind of thing, first and foremost.” Chicago Cane Cooperative is located in Chicago, Illinois. For more info visit www.chicagocane.com or call (312) 715-8532.

Generations of naturally crafting the perfect blend.

800-849-1277 MOTHERMURPHYS.COM W W W . ARTISANSPIRITMAG . C O M

Written by AARON KNOLL Photography by QUAKER CITY MERCANTILE

THE GIN THAT IS A

bartender reaches for an atomizer to spritz on the final touches to a cocktail they’ve just prepared. Then they reach for that same atomizer to spritz themself. This is the world created by New Hampshirebased Tamworth Distilling. In 2023, they launched Sylvan Mist, a gin designed to be drinkable and wearable. First conceptualized by Tamworth founder Steven Grasse, the gin took two years to formulate and develop. Distiller and organic chemist Matt Power, who oversaw the product’s development, described its beginning. “Steve's a big history guru, and kind of researcher of spirits and liquor, and he really appreciated the balance of qualities and history between perfume production and spirits production. So, he thought it was a natural blend.”

Perfume

A small selection of perfumes with gin like Aromas1 Guilty Pour Homme Parfum by Gucci

Top notes of juniper, lemon, and lavender. Mid notes of orange blossom, labdanum, and nutmeg. Low notes of patchouli, wood, and musk.

Gin and Tonic Cologne by Art de Parfum

Top notes of juniper, lemon, cucumber, and grapefruit. Low notes of vetiver, white musk, ambergris, cedar, and incense.

Gentle Fluidity Silver by Maison Francis Kurkdjian

Notes of juniper, musk, amber, woodsy notes, coriander, nutmeg, and vanilla.

Sylvan Mist Gin by Tamworth Garden

Notes of boronia, grass, violet, kiwi, melon, balsam fir, lemon, and chamomile.

Perfume and gin both use distillation to isolate aromatic molecules from botanicals. Further, both use alcohol as a base to suspend and hold those molecules. However, the biggest difference in composition might be the most obvious one — many common perfume ingredients aren’t approved for consumption in food and drinks. “We tried to use Osmanthus,” Power recounted, “but we couldn't get that through the TTB.”

Concentration Good gins and good perfumes both strike balance in their botanical composition. Both can be described as having “top notes,” which are those first, bright, light volatiles that burst when a gin is first poured or a perfume is first sprayed. They each have “heart” or “middle” notes, and “base” or “low” notes, which linger on the palate and provide a backdrop for the rest. While gin is uniquely assessed, sipped on its own or mixed in cocktails, a successful perfume is also assessed in some unique ways. Perfume needs to last on the skin when sprayed. It needs to project into the air around the wearer and behind them as they move. Common perfume descriptors Longevity

The amount of time that a perfume is detectable for.

Sillage

The trail of scent left behind a wearer as they move.

Projection

The scent that radiates off a wearer when standing still in their presence.

Power outlined the shift in mindset he and the team needed to adopt designing a perfume, with considerations such as longevity, sillage, and projection. “It means it needs to have a lot of concentration of aromatics,” he said. The concentration would affect the way it would be consumed as well. Rather than sipped neat or as a base gin in a martini, it was going to be 1

Aroma notes excerpted from https://www.fragrantica.com W W W . ARTISANSPIRITMAG . C O M

used in very small quantities. Perhaps as an atomized mist on top of the cocktail or as a rinse inside the glass. As a gin distiller, Power began to tackle this as he would any other set of botanicals. He attempted maceration and distillation, however, the resulting distillates weren’t concentrated enough. “A lot of the materials were so bulky in their pure form, then you start to add up what you could collect for volume out of a large infusion by traditional tactics, even some creative reinfusion recirculating kind of tactics. And it just became a numbers game,” he said. “The more material you put in, the less liquid you get out, so you have to scale everything up. And then, you end up with this huge amount of loss of both aromatics and alcohol… We are a scratch facility. We make our alcohol from grain, so, our NGS supplies that we use are pretty precious, and it's frustrating for me on my end to get a really poor yield.” To move forward, Power and the team at Tamworth worked as perfumers often do. “For this project, it was nice to employ oils, which was a requirement just by trying to get the concentrations required for this kind of thing ... It's easy to get stuck in producing your distillates, trying to refine them, go back, and get the concentration up, but this really allowed us to kind of focus more on the composition.”

Composition The tension of designing for aroma and taste at the same time posed a challenge to Power. “In a lot of cases, those resins that are so interesting in smell, if you put them into a spirit in a large component, they can be a little bit overwhelming on the palate. So, this was an interesting project to kind of explore those things and just shade [those] things in small amounts.” In describing the vision for its aroma and flavor, Power said, “This one particularly kind of takes some of the more citrusy notes of the northeastern boreal forests, and combines it with some more meadowy kind of characters too. So, we tried to bring in a little sense of the New England place to it.” Some of the botanicals in Sylvan Mist gin include balsam fir, violet leaf, chamomile flower, citrus, and boronia flowers.

Selected Absolutes in Sylvan Mist Gin and Aromatic/Flavor Profiles2 Boronia Absolute

Balsam Fir Absolute

Aroma: Floral, fruity, honey, green and herbal Flavor: At 10.00 ppm fruity, citrus, tutti-frutti, pulpy and honey Aroma: Sweet, woody, pine, green, floral with minty nuances Flavor: At 30.00 ppm woody, pine, floral, mossy, with herbal nuances

Aroma: Green, melon, earthy, waxy, fresh, vegetative with Violet Leaf floral nuances Absolute Flavor: At 10.00 ppm green, melon, floral, fresh, waxy, grassy, and leafy

“It had to have a character that really transcended a lot of classic gin architecture. So, I wasn't afraid to put in lots of really deep low [notes] from balsam fir.” Power describes the ways that designing Sylvan Mist engaged him in creative and new ways, “I could get away with lots of things without disrupting the balance of the whole dram.” In constructing the composition, Power also designed it as most perfumes are made — by blending the ingredients. However, in some cases he used distillation to transform them and modify individual ingredients’ aromatic profiles to fit the team’s vision. “For example, the Boronia Absolute that we sourced had a huge amount, a huge component like this really heavy oil that it acts as a fixative,” he said. “It's not very aromatic when you dissolve it in any proof of spirit ... What was interesting about it is we could tell there is aroma in there, but it wasn't expressing the same way that you would expect it to. I knew, from what I had read, there was this depth, and I knew that it was going to have a really long dilution of power. But I just wasn't experiencing that.” He dissolved it in high-proof ethanol before redistilling it on their rotary evaporator at a decreased temperature so as not to degrade its qualities. After adding water, Power distilled it again, taking it right through the whole steam phase, bringing across all the top aromatics of the base, including the ionones derived from beta-carotene, which he said didn’t come over till very late in the run. 2

Source: http://www.thegoodscentscompany.com

“In a lot of cases, those resins that are so interesting in smell, if you put them into a spirit in a large component, they can be a little bit overwhelming on the palate.” — MATT POWER

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Key Aromatic Ketones in Boronia Absolute Ketone

Percentage3

β-ionone

15%

7,8-dihydro-β-ionone

1.3%

7,8-dihydro-β-ionol

0.6%

Character4 Aroma: Woody, sweet, fruity, berry-like with a green berry background Flavor: At 10.00 ppm woody, berry, floral, green and fruity Aroma: At 1.00 % woody cedar, berry seedy, oily, raspberry with floral, tea and leafy nuances Flavor: At 5.00 ppm woody, seedy, berry raspberry, with leafy, spicy nuances Aroma: At 100.00 % woody floral amber odor and/or flavor

“So, it was a really wonderful example of being excited about the ingredient, ordering it, being disappointed by it, and then kind of using our system to clean it up and re-instill hope,” he said. However, the sensory evaluation process was more challenging for Sylvan Mist than it is for other gins. “It was so much harder because of the intensity of the aromas,” Power recounted, “And the way I taste gin and just kind of evaluate and compose it on my palate was completely unreasonable for this because it was so intense to drink.” Instead he tested potential blends by spraying it on things. “I was going around the distillery, the tasting room, and spraying sweatshirts and other random things … and I was trying to see how the blends 3 Source: Weyerstahl, Peter, et al. "Megastigmanes and other constituents of the absolute of Boronia megastigma from Tasmania." Liebigs Annalen der Chemie 1994.10 (1994): 1043-1047. 4

Source: http://www.thegoodscentscompany.com

worked out and evolved a little bit. It was not the most straightforward process because it's easy to get overwhelmed olfactorily like that, much more than the palate. And you can cleanse your palate more easily with a cracker … but the nose, it has a memory,” he said. Not only did Power’s approach reduce fatigue, but he was able to test out other important facets of a well-constructed perfume. He could see how long it would last and how the scent evolved over time.

Learning from the World of Perfume The Chemistry of Fragrances defined a fixative as “a property of some perfume components, usually the higher boiling ones, which enables them to fix or hold back the more volatile notes so that they do not evaporate so quickly.” 5 The idea that some botanicals’ essential oils have 5 Sell, C. S. (2006). Chemistry of Fragrances: From Perfumer to Consumer. Cambridge: Royal Society of Chemistry.

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“The world of perfume is such an interesting world.”

components within them that can slow the evapoare muted, they still add something to the gin’s flaration of other components is common in perfume vor profile. and has extended to the world of distilling and to gin Power shares another lesson he learned from in particular. In fact, three common gin botanicals blending and thinking like a perfumer. He laughs — MATT POWER are listed as having fixative properties in The Perfume describing how they only “just finished blending Handbook: Coriander, orris root, and angelica.6 The out” a bad batch of gin they made ten years ago. latter two are commonly thought of as having a fixative property in gin. “[We] put it in a barrel and found a way, kind of like a perfumist, to … “Angelica and some of the orris-type things,” Power explained, “those lay it down, let it evaporate, do its thing. And then we would put anyhave some nice fixative notes that kind of double as flavor and aromatic where from five to 10 gallons into like a 100-gallon batch every year. It notes, and they distill over in the course of a gin run.” However, the worked out great in small amounts.” concentration of aromatic molecules in a traditional distilled gin (less Power thinks distillers can learn a thing or two from the perfume than .01 percent)7 are nowhere near the quantities present in a perfume industry. “The world of perfume is such an interesting world,” he said. (two to 18 percent, depending on strength).8 Therefore, there isn’t a “Take a look at the perfumers’ flavor wheel — or aroma wheel rather clear indication that gins would exhibit the same properties as a per— a lot of them [sound] pretty unsavory when they list them out, the fume, even if using the same ingredients. Sylvan Mist with its emphasis descriptions for these notes, but that kind of speaks to the beauty of on concentration may be the exception. Distillers working with orris perfume in that it's an art form, and much like a painting, a great masroot and angelica root, as Power pointed out, may also choose to do so ter’s painting — it's got the vivid reds, and the most putrid of greens for their aromatic and flavor qualities. Even if their fixative properties and browns — the way that they infuse together is what creates the mystic qualities. And there's so much that we can learn for serious production from this world of mixing the good and the bad.” 6

Groom, Nigel. (1992). The Perfume Handbook. London: Springer.

7 Calculated from findings in Riu-Aumatell, M., Vichi, S., Mora-Pons, M., López-Tamames, E., & Buxaderas, S. (2008). Sensory Characterization of Dry Gins with Different Volatile Profiles. Journal of Food Science, 73(6). 8 Salvador, A., Chisvert, A., & Salvador, A. (2017). Analysis of Cosmetic Products (Second Edition). Elsevier Science.

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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.

What the Future Holds for Our White Oak Forests A Potential Catastrophe Awaits an Industry's Key Component WRITTEN BY GABE TOTH

here’s a coming supply crunch that will impact American distillers of all sizes, and addressing it will require a commitment to long-term, multi-generational thinking. After several decades of providing bountiful supplies of wood for barrel staves, flooring, and other uses, the nation’s white oak forests have been rapidly aging over the last 20 years. Those stands of trees, which range through most of the eastern United States and into southern Canada, are reaching the end of a 100-year cycle. There won’t be a shortage of barrel oak next year, nor in five or even ten years. Penn State Assistant Professor of Forestry Calvin Norman said the current cycle began in the 1920s with forest management policies that benefited white oak trees, and continued into the Great Depression as farms were abandoned and oaks moved into the sunny and semi-shady space that was suddenly available. As a result, there remains a large population of oak currently available, but the stocks of young oak as a proportion of the greater population are rapidly declining. Norman said an ideal mix of forest would be about 20 percent young, 60 percent mature, and 20 percent old growth, but the current mix is 7/90/3. White oaks generally live to 100-120 years, potentially up to 150 years. Most of that current mature stock is in the 80- to 100-year range, prime for harvesting. In another 20 years, that population will move into the “old growth” category, and there will be very little to replace it. 58

Until a couple of decades ago, there was plenty of old stock and not much room to replant, “but we’re getting to the point where we need to start creating new forests, young forests,” he said. “We’re on the back side of the bell curve. The young forests don’t stay young long. You never get to turn back the clock.” As a result, the oak supply chain is heading towards “a huge population collapse. It’s going to be a bad time,” he said. “If we take all of the oak saplings that are in the ground today and put them into the future, that’s a 77 percent decline from the oaks that we have today. And a stave-quality oak, that’s the NFL. You’re looking for the top one percent of the top one percent, so it’s going to be really bad. You’re not buying common-stock white oak, this is the high-quality shit.” The recent decline in young oak is largely a matter of forest management, he said. Clear-cutting has gone out of vogue because it seemed more impactful to the forest, but the practice was actually beneficial to regenerating oak forests. “Folks used to be a lot more aggressive in their forest management,” Norman said. “What people want to do now is to go in and just cut one, two, three oaks from the forest, because it makes them feel like, ‘I’m still making money, I’m still cutting, but I still have a forest.’ But that’s not what oaks want.” Prescribed burns are another crucial tool that has been under-utilized in much of the white oak range. Some areas, including a lot of the core oak population in Kentucky, Missouri, and Tennessee, have continued the practice, so they’re less impacted than other areas. “Once you get north of the Mason-Dixon line, there’s just not a culture of burning,” he said. “Outside of that core, both of the bourbon industry and the white oak range, the decline is much more apparent.” He said the country’s forests had been actively managed to support oak and other species for thousands of years. Native American populations understood the forest’s natural successional process. Shortlived shade-intolerant species such as aspen, poplar, and birch would initially grow into open areas. Once those populations began to die off, then the medium shade-tolerant species such as oak, hickory, and — prior to a catastrophic blight that wiped out billions of trees in the 20th century — chestnut, would populate a stand for 100 to 150 years. Following that, the forest would transition into maple and hemlock. “The first nations in this area managed for those nut-bearing trees. They burned and harvested, and intentionally managed large swaths of the country for oak, hickory, chestnut,” Norman said. “With some of the environmental movements, that doesn’t feel like what we should be doing, but historically that’s what the oaks want. Oaks like to be handled roughly. They like when there’s fire in the woods, they like when there’s grazing. They like when there’s pretty aggressive harvesting.” Adding to the shift in forest management practices is the pressure of invasive species. He said there are 140 invasive plant species in Pennsylvania alone, including a whole suite of nonnative plants and insects that can stunt or destroy an oak forest. Plants like Chinese and European privet, buckthorne, or tree of heaven can quickly overgrow a space and crowd out other plants. W W W . ARTISANSPIRITMAG . C O M

Spongy moths are another growing threat. They can rapidly defoliate and kill entire forests; Norman describes being in a stand where he first thought it was raining, but it turned out to be a constant flow of frass — caterpillar poop. He saw the forest go from exhibiting some damage that first morning to denuded two days later. The spongy moths are getting worse as the climate shifts, as well; a virus and a fungus that both keep the pest in check benefit from cool, moist springs, which have been growing less frequent in the northeast. “We had a bad year last year, and a bad year this year. I’ve seen at least two mountainsides that were totally defoliated,” Norman said. “I could take you to a number of forests that have had complete regeneration failures.” While Kentucky and other core areas have been luckier in terms of invasive species, they still have fewer saplings in the ground than ideal. It’s much worse in states such as Pennsylvania, New York, and Wisconsin, and those forests have also become a source for barrel-quality oak as craft whiskey production grows and distillers look to tap into more local resources. Norman said different mills will accept different ages of wood, with some taking white oak at 50 years, others waiting for 80 to 100 years. Oak from different regions will grow differently and have varying levels of tannin and other secondary compounds, making regional choices largely a preference question. “You could probably talk to a cooper, and he would tell you that he only buys milled from Bourbon County because that’s the only place that good wood comes from. You’ll have other folks who go, ‘Nah, that’s not really a big deal,’” he said. “This is really a heritage product. We have some preconceived notions about it. Kentucky has had most of the cooperages for the bourbon industry, because that’s where bourbon is from, so they’re used to working with oaks that are from Kentucky. Pennsylvania might grow a little different.” He said that there’s definitely a difference in grade when looking at oak from further north, and Richard Hobbs at The Barrel Mill in Minnesota, agreed. “We get all we can from Minnesota. We like it to be from as far north as possible. Sometimes we get a little bit from northern Missouri, we get some from Wisconsin, but we like the northern growth, slow growth, tight grain,” he said. “With the brutal growing seasons, the cold weather, that’s just what we prefer for a sweeter wood. More vanillins and almost a coconut note.” There’s also an economic aspect to using local oak. “Being here physically, it doesn’t make sense for us to buy logs from Virginia and truck them all the way here. We’d be way out of whack competitively,” Hobbs said. “There’s great barrels being made from all over where oak is available. This is what works for us and our customers seem to like it.” W W W . ARTISANSPIRITMAG . C O M

“There’s plenty of oak trees. Right now, I’m not worried in my lifetime,but it’s something that we all need to take a look at so that down the road there’s going to be plenty of healthy trees out there.” — RICHARD HOBBS He said that the cooThe Barrel Mill perage is rebounding post-pandemic, though it “damn near wiped us out,” so the barrel shortages of a couple years ago are largely in the past. Prices remain high and supplies low, but it’s less acute than before. The oak supply remains strong and steady, he said. “There’s plenty of oak trees,” he said. “Right now, I’m not worried in my lifetime, but it’s something that we all need to take a look at so that down the road there’s going to be plenty of healthy trees out there.” Part of that is an educational piece for the industry and for landowners who might want to harvest timber. “Say a farmer has a couple hundred acres, let’s give them the knowledge on how to best manage that with the canopy and make sure there’s plenty of room for them to thrive along with other species,” Hobbs said. “If you can just give them a little more knowledge they can do minor things to manage their forest a little better, make incremental improvements over the years and things can be better off for the next generations.” He looks at Napoleonic France, in the early 1800s, as a model of forestry that has survived until today. “Napoleon understood the importance of keeping the underbrush clear,” he said. “You can drive a golf cart in the forests in France. It’s beautiful. You’ve got these giant oak trees, straight as hell. They used them for ships. They learned that, if we want to have the best trees, this is what we need to do to keep them healthy and give them plenty of room.” 59

He noted the economic incentives for supporting white oak forest regeneration, including the high economic value for white oak. “The eastern half of the country, white oak is consistently in the highest bracket of economic value, so the states are highly incentivized to manage the forests properly,” he said. “There’s also national efforts by the spirits industry to lobby for the long-term sustainability of white oak. Without white oak, there’s no bourbon.” One of the biggest coordinated efforts is the White Oak Initiative (WOI). Originally springing from a meeting that included University of Kentucky staff, the American Forest Foundation, and Brown-Forman, the initiative brought together additional stakeholders, including the state and federal government, conservation groups, nonprofits, mills, and cooperages. In 2019 they published a conservation and assessment plan that laid out the problem and identified solutions, “basically it’s the one-stop shop of how we can fix this,” WOI Executive Director Jason Meyer said. Then COVID-19 hit. “All the work that was being planned on the ground through some federal grants came to a grinding halt because state government wasn’t working, nobody was going to work, all that stuff,” he said. Coming out of the pandemic, they decided that there needed to be a more active future for the coalition than just coming up with the plan. The group is now in the process of lobbying Capitol Hill for more forest management support in the federal farm bill in the form of HR 5582, the White Oak Resiliency Act. It’s part of a stepped approach that the initiative has laid out; their three strategic goals are to increase awareness and education, remove barriers (such as financial ones), and drive progress there to support on-the-ground work. “We get the money coming, now we have to get out to the landowners and say, ‘Here’s why it’s important to manage your forest, and here’s the technical tools to do it,’” Meyer said. “It’s easy for us to sit up here and say, ‘There’s a problem, there’s a problem, there’s a problem.’ But if we’re not actually doing anything on the ground then we’re not successful in moving the ball forward on this.” Looking forward, he said, they want to build out a robust network of backers and contacts to help disseminate information to foresters, loggers, and landowners. Supporters have been enthusiastic, and they’re in the process of creating a system where people can donate. “I’ve never worked for a nonprofit where I walk in the door and people are like, ‘We’ve been trying to give you money. We’re so glad you’re here so you can take it,’” he said. He was quick to note that, while this 60

is an organization that includes some of the distilling industry giants, small producers are part of the supply chain, as well, and have a place in the conversation. “It started with the big ones, Sazerac’s at the table, Brown-Forman’s at the table, mainly because they were the first ones to jump in with the money to get it off the ground,” Meyer said. “Now that the whole idea of a steering committee has morphed into an official board of directors, where those people have a seat for a certain amount of time then they’re out, that’s where other organizations can start to step in and say, ‘Hey, we’re interested in this.’ We’ve got some working committees out there where folks can get involved, whether it’s helping to do the education and outreach, for some people it’s how are we getting foresters out on the ground to do this work. All these things, we need people to help to actually do that.” While he noted that white oak is not anywhere near the point of extinction, and he said he feels good about working from a proactive place where there are still healthy populations, the pressing question is how much stave-quality oak will be available in a couple of generations. He echoed Norman in laying a good portion of the blame on recent shifts in forest management. “If you think like we dropped the ball on this over the last 30 years, which is how we ended up with the skewed graph, 30 years ago was when we started to see resistance to timber harvesting, resistance to active management,” Meyer said. “It’s when we start to see the introduction of invasive species, when we started to put forest fires out, all of those things that white oak needs to regenerate.” Beyond the financial and educational priorities, he noted that the fields of logging and forestry are both experiencing a rapidly aging workforce. “I was talking to some folks from the Kentucky Woodland Owners Association. They’re like, ‘Yeah, we want to do all this work, but there are no foresters who can come help us,’” he said. The initiative might work to get more money into the Natural Resources Conservation Service to get more trained foresters available, but he added that there was a lack of qualified workforce coming out of the universities. “I went to forestry school so I’d be out in the woods and never have to talk to people. That was my goal in life,” he said. “When I went to college for this, we had a pretty small class at a Big 10 university, and I’m probably one of three that were in my class that are still in the field of natural resources.” Alongside, or possibly as a result of, the low level of interest in forestry careers, he said there’s been a shift in the educational programs that colleges are offering, towards more natural resources management or a broader view of forest management. Then there’s the simple fact that students are pursuing more lucrative avenues. “When I graduated college, the starting pay for a forester was $18,000 a year,” he said. “I was seeing other people leaving college with $60,000-a-year jobs, doing things equally as fun and having weekends off.” Hobbs said there had been a labor crunch in the upper midwest that is largely solving itself through market forces, at least in the near term. Loggers had been able to get more money for timber that was shipping overseas — less work and less processing compared to making barrel W W W . ARTISANSPIRITMAG . C O M

staves and stacking them to age. Prices and a process,” he said. “Having that have risen but are stabilizing as labor knowledge base is not something your is responding and becoming more average landowner has, or should be available. expected to have. I don’t know how “People are expanding; We’ve into fix the circuit breakers at my house. creased our output by about 15 percent I know how to flip them when they go in the last year, trying to find ways each out, but I can’t rewire the house.” day to continue to grow and meet the After all that, it’s another 70 years of demand,” he said. “We have some availwaiting as they grow. It’s an investment ability, but for the next several years, in the future, putting back into an actwo, three, four, five years, I don’t see that count that is beginning to get overdrawn. there’s going to be an excess of barrels “These systems have been an afteravailable on the market.” thought and no one has wanted to put In the northeast, a shortage of foresters money into the systems, or people have ex— CALVIN NORMAN Penn State Assistant Professor of Forestry and loggers is coming quickly, Norman said. pected the forests to pay for themselves and put “In Pennsylvania, the average consulting forester their kids through college, and they can’t do that is in their mid-60s. The average logger is in about the same place,” any more,” Norman said. “We’re going to have to put a bit of money he said. “Logging is not a profitable business. It’s a dangerous and into the system, and it’ll pay you back in a hundred years. You reaped expensive job.” the rewards of someone else’s work, and now you have to put the Including foresters in any efforts to harvest timber is a key part of money in.” managing the supply of white oak, though. He describes a ten-year He acknowledges that it’s a terrible business plan, but it’s the only process to properly regenerate an oak forest. choice for supporting the oak supply. There are opportunities to proThe first step is to manage any invasive species that may be on the vide grant money through the USDA and NRCS, and getting homesite prior to harvesting, which he said costs at least $145 an acre. The owners to stop planting non native species would save on mitigation. space also has to have at least 30 percent oak in the forest’s overcanEducation is essential, and stands that are already white oak need to opy. “If you don’t have a lot of oak, you’re never going to have an oak be preserved and regenerated. forest in the future. That site just wants to be something different, “I’m not saying every forest should be white oak. Other species are and you can’t compete with nature,” he said. also good and important and should be managed for, but if you have After harvesting, the competing vegetation on the forest floor a site that currently has white oak, we should try to keep white oak has to be mitigated, and then oak seedlings can go in the ground. there,” he said. “It’s an overused concept and an overused term, but Multiple rounds of thinning out competing species over about seven white oak are a keystone species. They’re very important. They feed years will result in a young oak forest that can compete with otheverything in the woods from caterpillars to black bears. It’s tough er tree species that might sprout at that point. “About year seven, to overstate their importance to the forests and ecosystems on the post-disturbance, that is when your overstory is set,” Norman said. east coast.” “If you don’t help oaks to win in those first seven years, they’re never Norman said it’s a solvable problem. It just takes time, thought, going to win. They’re just going to die.” energy, and money. A billion dollars wouldn’t bring the gap from 77 He said those first years are essential for oak, because they spend percent down to zero, but it’s closable. “I think we could get down to their initial years establishing a robust root system that will act as 10, 20 percent decline,” he said. a reservoir of health belowground in the event of a fire or other The solution just requires thinking like a forester. “Every forestdisturbance. er is judging the work that the person not before them, but two or “That’s why they’re slower to get established. That’s why you have three foresters before them, did,” he said. “If you’re not thinking to establish oak regeneration before you do a harvest, which is diffiabout what’s going to happen 100 years from now, you’re wasting cult to get across to most landowners,” he said. “Most other trees, your time.” they grow their main stem straight up, and then they grow their root system. You can burn an oak seedling at two years old, and it’ll surGabe Toth, M.Sc. is lead distiller at The Family Jones’ production facility in vive, whereas if you burn a maple seedling at two years old, it’ll die. Loveland, Colorado and an industry writer focusing on the beer and spirits The oak’s just gonna pop back from that root system.” worlds. With a background in journalism, he has written books on floor malting and fermented food, as well as numerous articles for Artisan Spirit, The The ten-year process of regenerating oak in a properly harvested New Brewer, Brewer and Distiller International, and several other publicaarea is not going to be common knowledge. The average landowner tions. He holds brewing and distilling certificates from the IBD and a master’s isn’t going to know how to do it, and loggers are uneven in their apfrom the Rochester Institute of Technology, where his graduate studies cenproach to proper management. tered on supply chain localization and sustainability. When not distilling or “You want to have someone who is working for the landowner writing, he can be found gardening, messing around in the kitchen, or relaxing in the mountains. He can be reached at gabetoth@hotmail.com. and is representing their interests over ten years. It’s a relationship

“Every forester is judging the work that the person not before them, but two or three foresters before them, did. If you’re not thinking about what’s going to happen 100 years from now, you’re wasting your time.”

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UNIQUE WAYS TO RAISE CAPITAL FOR YOUR DISTILLERY

WRITTEN BY RICH MANNING

ALTERNATIVE FINANCING STRATEGIES I

t takes money to make distilled spirits. Equipment must be purchased. Grains must be secured. Buildings must be either acquired or built and then maintained. If you’re foregoing the production of unaged spirits and headed straight into whiskey, it will take years for these elements to be available to bring to market. This last step can make securing the cash needed a challenge. The nature of distilling — particularly the “hurry up and wait” nature of distilling aged spirits — can make obtaining a traditional bank loan difficult. This hurdle can compel distillers needing help to start or even grow their business to turn to alternative funding strategies.

A UNIQUE ISSUE A fresh-faced distillery may technically be a small business, but it’s hard to convince a bank to finance whiskey through small business loans. The hurdle is the whiskey, but not because financial institutions are temples of temperance. If you have dreams of producing bourbon, rye, or single-malt barrels, you’re asking banks to put their weight behind a product that will become tangible in the future. This can cause confusion among banks, which prefer more immediate results. “We have a business case that’s not easily understood,” explained Natasha DeHart, co-founder of Bendt Distillery in Lewisville, Texas. “Imagine that you’re going to start a T-shirt business. You go to the bank and tell them you need a loan to start your business so you can rent space, buy equipment, and purchase materials. Then, you let them know that the first T-shirt will be available to the public four years from now. That’s what you’re telling banks when whiskey’s involved.” This confusion can make plenty of banks reluctant to provide financing for distillers lacking capital or collateral. Alternative financing strategies can circumvent this issue, and there are several methods to choose from. Picking the right one requires careful consideration and an evaluation of current and future needs.

EARLY STAGE FINANCING Distillery financing is split into two distinct categories: Dreams and reality. “The first round of financing is based on pure ideation,” said Colin Spoelman, co-founder and distiller for Kings County Distilling in Brooklyn, NY. “The second round will offer proof of concept.” 62

This division makes seeking out alternative financing strategies advantageous for a distillery. The traditional small business loan may not be open to fund distilleries at the ideation phase, because banks tend to struggle understanding whiskey as a future asset. Alternate methods can be utilized at various stages of a distillery’s life cycle, although some may be better suited at specific times than others. That said, this doesn’t mean banks are completely off-limits at the ideation stage. In recent years, banks like the Wilmington, North Carolina-based Live Oak Bank have rolled out barrel financing services that recognize aging whiskeys as current collateral instead of a future commodity. The valuation-driven program allows distillers to borrow against the barrels as the juice matures, which can provide distillers the cash infusion they need to keep operations steady. Bendt and Kings County have used Live Oak’s services as part of their strategy; according to Bendt’s other co-founder, and Natasha’s husband, Ryan DeHart, the service indicates a potential growth in understanding how whiskey works. “I’m not sure [Live Oak] would have done a service like this in 2015,” Ryan said. “Now, there’s a lot more data out there, so Live Oak can invest in people that understand whiskey valuation.” Of course, turning to friends and family is an old-school method of funding ideation. It will never be an obsolete option, and it can be powerful and effective. At the same time, this grassroots search for investment dollars contains potential pitfalls. “The main challenge is to find people that are truly serious about providing money,” Spoelman said. “For us, the ratio was finding one serious person for every twenty non-serious persons, and we felt lucky to have that ratio.”

ESTABLISHED STAGE FINANCING Reaching out to the masses can also be beneficial for an established distillery via resourced crowdfunding. The concept is not designed to be a design-based platform like GoFundMe. Rather, it’s a highly regulated and audited system that allows anyone to invest in an organization by funding, albeit with some limitations. Its design yields palpable financial benefits — distilleries can utilize the concept to raise capital without taking on debt. Moreover, it gives distillery fans the opportunity to invest in the distillery’s growth. In other words, it can allow existing customers to be directly involved in helping a brand they love grow. This involvement can also yield other dividends, such as a likely increase in sales among investors. “A resourced crowdfunder isn’t going to be a capital investor looking for a quick return on investment,” explained Jason Parker, president and co-Founder of Copperworks Distilling in Seattle, Washington. “They’re going to be a passionate fan that’s willing to support the brand through events. They’ll ask about the benefits of investing in the brand like rewards or special discounts and not about dividends. These people will end up becoming brand ambassadors for life.” Copperworks Distilling has initiated three separate regulated crowdfunding sessions since 2020. This volume may suggest an easy efficiency W W W . ARTISANSPIRITMAG . C O M

to their utilization, but the parameters surrounding the concept can make executing the campaigns an arduous affair. “It’s not an easy task,” noted Copperworks co-owner and vice president Jeff Kanor. “Running a campaign is like taking on another full-time job.” At the same time, Kanor noted the support that comes from courting fans of the brand and not fans of ROIs make the effort worthwhile. “We don’t have to act like a public company beholden to shareholders,” he said. “This is different. Our investors aren’t investing because of the money. They’re investing because they like what they’re doing

2024

JUST A LITTLE HELP Not all alternative financial strategies focus on massive cash infusions. In Napa, California, Legacy Barrel Services focuses on helping distilleries streamline management of their barrel assets within the distillery’s financial framework. This is done through several processes: connecting distilleries with coopers, removing barrels after usage, and helping new distilleries seeking to expedite market presence find the right sourcing partners. The services are designed to improve operational efficiency and cash flow but can also help newer distilleries get familiar with the business of the barrel. “We’re able to bring an educational perspective to our clients through our services,” explained Legacy Barrel Services’ Co-Founder, President, and Partner Ken Seymour. “We’ll never tell them what barrel to buy, but we help give them the information they need to ask the coopers the right questions. Ultimately, we want to help them navigate the field so they can make the decisions that are best for their distillery.”

NIMBLE IN NATURE Alternative financial strategies aren’t necessarily built to last. What worked when the whiskey was in the barrel may not suffice when the juice is in bottles. This is especially true if the distillery possesses ambitious plans like expanding production, market penetration into new states, and opportunities to bring new products to market. When a growth spurt is imminent, it’s wise for a distillery to take a step back and determine what financial strategies may best align with their plans as they expand. That said, the right alternative financial strategy deployed at the right time can provide the distillery with the right results. They aren’t one-size-fits-all strategies, and it may take some research and extra toil to make sure the strategy you’re considering is the strategy you truly need. Considering what can be achieved through the proper strategy, it can be worth the effort. 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. W W W . ARTISANSPIRITMAG . C O M

Since 2007, ADI has upheld the highest standards in the industry by giving our judges the freedom to only award the very best, and being the first competition to provide written feedback for every entry. We accept entries in all classes and categories of distilled spirits, RTDs, cocktail bitters, no/low spirits, mixers, aperitifs & fortified wines.

Deadlines Deadline for Earlybird Registration: February 2, 2024 Deadline to apply for COLA Waiver for International Spirits: February 9, 2024 Deadline for Spirits Registration: March 1, 2024 Deadline for Receiving Entries: March 8, 2024

We don’t give away participation trophies! Best in class winners get to meet with some of the best US retailers. For details visit www.distilling.com/adi-isc

TUTHILLTOWN SPIRITS:

CHANGING THE GAME A Pioneer of Craft Spirits — and the Craft Movement — Turns 20

PHOTO BY PROVIDED BY TUTHILLTOWN SPIRITS DISTILLERY

WRITTEN BY RICH MANNING /// PHOTOS BY CHRIS VULTAGGIO

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uthilltown Spirits Distillery — the distillery that produces Hudson Whiskey — turns 20 years old in 2023. It’s a nice, round number, and it signifies longevity in an industry sector that spirits aficionados rally around. But it’s a significant anniversary that deserves context's full appreciation. We’re spoiled with choice in the craft sector these days. There’s a craft producer in every state now. These intrepid producers are the envelope pushers, experimenting, innovating, and providing the proof of concept needed for the big brands to follow suit and further bring new ideas to the mainstream. These brands pepper the shelves of knowing on-premise accounts and geeky home bars. When Ralph Erenzo and Brian Lee officially started Tuthilltown Spirits Distillery in Gardiner, New York in 2003, things were different. There were hardly any craft distilleries to form a sector. Few people drank rye. Erenzo and Lee couldn’t even fully realize the distillery’s current mission of exclusively using New York-sourced ingredients. “It wasn’t possible when we first started,” explained Jacob Tschetter, Tuthilltown’s Visitor Experiential Manager. “There wasn’t enough barley in the state.” Times have changed, and it’s fair to say that Tuthilltown and specifically Erenzo helped push the hands forward. His efforts to leverage an obscure New York distilling law to create what would be known as the 2007 Farm Distillery Act helped light the fuse behind the craft sector’s explosion. This is ultimately what makes Tuthilltown’s 20th anniversary noteworthy. It’s not so much about the juice. It’s what that juice represents.

EMPIRE BUILDERS Lee and Erenzo were unlikely champions of craft. The former was an electrical engineer, while the latter was a professional rock climber. Erenzo’s initial intention for the Tuthilltown site wasn’t even whiskey. He intended to turn it into a ranch-like campground for rock climbers. His neighbors rebuffed and Erenzo pivoted toward modern distilling history. Erenzo’s discovery of a 2000 state law reducing a microdistillery’s licensing fee from $65,000 to $1,500 gave him and Lee the entry point to start making booze. It also gave Erenzo the impetus to ask for more. His persistence worked: The 2007 Farm Distillery Act made it possible for distillers in New York’s burgeoning craft spirits industry to conduct tours, hold tastings, and sell directly to customers. Other states soon enacted similar legislation. “The template for other states to get involved with craft distilling was born on this site,” said Brendan O’Rourke, Tuthilltown’s site lead. “It is absolutely incredible what they did after falling into the whiskey business.” In 2015, Erenzo joined with five other members of the state distilling scene he helped build to create Empire Rye; a state-specific classification designed to provide a distinctive character and a sense of terroir to New York’s rye whiskey. The W W W . ARTISANSPIRITMAG . C O M

PHOTO BY PROVIDED BY TUTHILLTOWN SPIRITS DISTILLERY

category’s existence reflects how the work of Erenzo — who created the state’s first post-Prohibition rye — influenced state agriculture. “When we started out, there was around 50 acres of rye in the state,” O’Rourke said. “Today, it’s around 5,000 acres.”

A CONFLUENCE OF CREATIVITY Tuthilltown’s official 2003 start date came midway between the opening of Sasha Petraske’s New York City bar Milk & Honey on New Year’s Eve 1999 and Audrey Saunders’ bar Pegu Club, also in New York City, in 2005. These two game-changing establishments mark crucial tentpoles in the craft cocktail movement that eventually spread nationwide over the following decade. This cross-country proliferation of bars gave Tuthilltown Distilling and their craft colleagues more outlets for public outreach, as curious bartenders and mixologists began seeking new expressions to experiment with in old cocktail recipes. “The early wave of bartenders was an important part of the history of craft distilling. Without them, I don’t think we would have the explosion that we

did,” Tschetter explained. “I don’t know if they championed us specifically as much as they championed craft distilling as a new, emerging movement. But that did help us because it promoted interest in craft and specific spirits like rye.” The concept of craft also transcended booze and bars at the time. The modern farm-to-table movement exploded in the early 2000s, with restaurants like Blue Hill — roughly a 16-minute subway ride from Milk & Honey — being one of its prime movers. This further enhanced the growing movement of focusing on craft and artisanal, where people became increasingly curious about locally made, locally sourced ingredients and how these elements connected to community. The way O’Rourke sees it, this multi-faceted interest in craft coming in such a concentrated burst is ultimately responsible for the current zeitgeist of all three industries. “It was the perfect confluence,” he said. “If we space the craft spirits, cocktail, and food movements out by even a few months, we probably wouldn’t have the same craft landscape that we do today.”

“The early wave of bartenders was an important part of the history of craft distilling. Without them, I don’t think we would have the explosion that we did.” — JACOB TSCHETTER, Tuthilltown’s Visitor Experiential Manager

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THEY LOVE (ALL OF) NEW YORK As Tuthilltown’s visitor experiential manager, Tschetter aims to create experiences that are distinctively New York. This doesn’t mean the city — the sprawling facility stands about 80 miles north of Grand Central Station. But that’s the point. He utilizes the distillery’s property to promote the history and creative nature of Hudson Valley, integrating these stories with interactive programming like cocktail classes. Some of this is organic: The distillery’s property includes Tuthilltown gristmill, which was built in 1788 and serves as a symbol that this was, and still is, where things are made. Tschetter’s impetus behind this strategy is to perpetuate the sense of togetherness that permeated the region back when the gristmill was at its heyday. In a sense, it’s not unlike the vision Erenzo had for his ill-fated rock climbing ranch. “I want to use the distillery to build community, like it was back in the day when the area used to be a central hub,” he said. “We don’t ever want to treat the distillery like a bottle shop. We have the chance to leave a lasting mark on people, where they leave happy. This is why everybody that works here is so excited to come to work every day.”

A LASTING IMPRESSION A lot has happened since Tuthilltown Distillery started. There were zero distilleries in New York State back then. Today, the state boasts about 210 registered distilled spirits producer (DSP) licenses. In 2010, William Grant & Sons added Hudson Whiskey to their portfolio, five years after the distillery produced its first bottles, and purchased the remainder of the operation in 2017. A 2020 rebranding of both spirit names and labeling gives the bottles a distinctive New York City aesthetic. These changes pinpoint elements that are expected in today’s craft sector — industry growth, acquisitions and mergers, and evolved marketing savvy. Enough time has passed to take these elements for granted. This, along with the concurrent proliferation of craft within the on-premise sector, is why Tuthilltown hitting the 20-year milestone feels important to note. It’s an anniversary that, in retrospect, is marked by surprise. “I don’t think anyone could have imagined where we’d be now in 2003,” O’Rourke said. “If you would have told Ralph and Brian about what Hudson Whiskey’s legacy could become back then, they may have told you that you were better off buying lottery tickets.”

Tuthilltown Spirits Distillery is located in Gardiner, New York. For more information visit www.hudsonwhiskey.com or call (845) 419-2964. W W W . ARTISANSPIRITMAG . C O M

E U L A V O T HOW D E L L I T S I D INVENTORY IN-HOUSE Written by Jeff Qu

int

Why is proper inventory valuation so important?

stablishing an appropriate valuation for the liquid you distill at your own plant is not a topic you see much written about. Part of the reason for this may be the difficulty of laying out this process in a simple manner — it can quickly get complicated. The information provided below is an attempt to cover the basics and enlighten the reader to the point where they can attempt

ABC Distilling Co.

to do this without spending a fortune on outside resources. Of course, your bank may very well require an audit or review by an independent outside firm. So, no matter what approach you take to valuing your distillate, maturing barrels, finished goods, etc., you will want to work through this with that independent outside firm to ensure there won’t be any unpleasant surprises come audit time.

Table 1

Cost of Goods Sold Direct Expenditures Payroll Raw Materials Bottles Corks & Capsules Labels All Other Packaging Federal & State Excise Tax Total Direct Expenditures Indirect Expenditures Additives & Agents Utilities - Distillery Parts & Supplies Repairs & Maintenance Stillage Waste Removal Misc Distillery Expenses Rent - Distillery Depreciation Exp - Distillery Total Indirect Expenditures Total Distillery Expenditures Inventoried Distillery Costs Total Net Distillery Costs 68

2024 Budget

Notes

$ 150,000 $ 200,000 $ 180,000 $ 40,000 $ 40,000 $ 20,000 $ 95,000 $ 725,000

(2)

$ 30,000 $ 40,000 $ 10,000 $ 25,000 $ 20,000 $ 10,000 $ 150,000 $ 150,000 $ 435,000 $ 1,160,000 $ (410,000) $ 750,000

(5)

(3)

(4)

(6)

(7) (8) (9)

(1)

Every proof gallon of distillate you produce ends up on your balance sheet, as inventory, until it is sold. If you’re a whiskey distiller, that inventory may sit on your balance sheet for many years. If you’re valuing it too low, you may find it difficult to generate positive margins and earnings in the near term, as the dollars you aren’t putting in inventory (on the balance sheet) are forced to run through your profit and loss (P&L). Conversely, if you’re valuing this inventory too high, you may appear to be generating better margins and earnings than is actually the case, which will eventually catch up with you as this inventory gets sold later and its excessive value is forced through the P&L as you sell it.

Inventoried within: Finished Out-ofDistillate Goods bond FG's $ 100,000 $ 200,000 $ $ $ $ $ $ 300,000

$ $ $ $ $ $ $ $

50,000 180,000 40,000 40,000 20,000 330,000

$ $ $ $ $ $ $ $

95,000 95,000

$ 30,000 $ 36,000 $ 9,000 $ 20,000 $ 20,000 $ 8,000 $ 140,000 $ 140,000 $ 403,000 $ 703,000 $ (360,000) $ 343,000

$ $ 4,000 $ 1,000 $ 5,000 $ $ 2,000 $ 10,000 $ 10,000 $ 32,000 $ 362,000 $ (50,000) $ 312,000

$ $ $ $ $ $ $ $ $ $ $ $

95,000 95,000

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sidebar Some readers here may still be in a mode where they are operating purely on investor financing. Others, those who have begun to generate sufficient sales and operating results, may be running on bank financing. In any common banking relationship, the bank is going to require that certain covenants be maintained. These bank covenants generally address two things: first, some form of debt service coverage ratio where your P&L generates sufficient income (or EBITDA, which was addressed in previous articles) to cover debt service (bank payments) with some room to spare, and second, some form of balance sheet ratios, such as debt to equity, sufficient to make the bank comfortable that you don’t become over-leveraged. So, one covenant is often tied to the P&L or operating results while another covenant looks at your balance sheet to ensure the equity of the owners provides a safe cushion for them when compared to their loan risk. Banks exist to loan money. But they will only loan out what they are quite certain their client can repay. When you look at it this way, you should see that your interests are perfectly aligned with your bank. Your concerns should be the same as theirs. You shouldn’t want your ratios to get into a danger zone any more than they do. And when you look at the balance sheet of a true distillery, everything is usually very straightforward (e.g. accounts receivable, fixed assets, accounts payable, bank debt, equity), with the only item of significant valuation risk being your inventory valuations. So putting your distilled spirits inventory on your balance sheet at the proper value is the critical factor when it comes to preparing accurate financial statements.

How do we properly value the distillate we create in-house? To establish a value for the product we distill in-house, we’ll need to look at and isolate several things, including our cash expenditures on direct production inputs, our labor and indirect overhead costs, and our production output. In its simplest terms, the value we would assign to the proof gallons of spirits we produce in a given period would equal the total cost of the inputs (including labor and indirect operating costs) divided by the number of proof gallons produced. But these computations can quickly become complicated. So, let’s set up a sample scenario here and take a closer look. The first thing we’ll want to do is take a look at a typical P&L excerpt for a distiller as it relates to the Cost of Goods Sold (COGS) section. When we refer to COGS, we’re talking only about those costs that are considered part of the costs of actually producing the distillate. So, it would exclude any selling costs and any overhead costs that are more of a general and administrative (G&A) nature. An example of this, related to labor costs, would be that the salary and benefits of a production director (the person in charge of the actual distilling and barreling process) would likely be included in the overall cost of this distillate, while the costs of the CEO or president of the company (a G&A function), would be excluded from the cost of the distillate. Reference sidebar for observations/clarifications regarding Table 1. Now that we’ve addressed the rationale for what is included in these cost computations, let’s turn our attention to the right side of Table 1, which addresses a hypothetical application of these costs to the resulting inventory produced. W W W . ARTISANSPIRITMAG . C O M

Observations/clarifications regarding Table 1:

(1) INVENTORIED DISTILLERY COSTS.

There are two ways to manage the relationship between the P&L and the balance sheet as it relates to inventory valuations in a production environment: (a) post all related production expenditures onto the balance sheet and then expense off only the “standard cost” of the inventory that was sold, or (b) hit the P&L with all these expenditures and then back out those that represent the increase in inventory each month to the balance sheet. In Table 1, you’ll see we are using the second methodology for this example, where the $410,000 at the bottom of the table represents the budgeted increase in inventory during the year (i.e. those expenditures that have been used to create an increase in inventory and therefore should not yet be expended to the P&L). Either method is acceptable, but we believe the second method is easier to grasp for this exercise. Any growing whiskey distillery will find it necessary to grow inventory at an accelerated pace as the inventory it produces one year will probably be the inventory it sells 3-6 years from now. In this example, then, the company intends to spend $703,000 on the creation of new distillate that will be added to inventory on the balance sheet, while using up or selling off $343,000 of distillate that was previously in inventory on the balance sheet, resulting in a net increase of $360,000 to distillate inventory during this budget year. (2) PAYROLL.

This payroll number is a bit over-simplified for this example. In reality it should include not just direct pay for all those involved in the production activities of the Company, but also the associated payroll burden that goes with that pay, such as SS/ FICA, FUTA, SUTA, vacation pay, 401k match, company portion of health benefits and possibly workers compensation related to these employees. This “burden” can range anywhere from about 12-20 percent on top of regular wages. Further, as you’ll see on the right side of this table, some of this payroll is involved in the production of distillate (brewers, distillers, barrelers) while the remainder is only involved in the bottling side of the production process. In a more complex scenario, all of these variables would be broken out into their own P&L categories. (3) RAW MATERIALS.

This account includes mostly grains for a distiller. It could also include molasses/ sugar for a rum distiller, etc. In this simplified example, it also includes any related shipping and transportation costs, which can often be quite significant. (4) LIQUOR EXCISE TAXES.

Technically, federal and state liquor excise taxes are generally shown as a reduction of revenues (i.e. the ultimate sale price of a case of spirits is shown net of

any excise taxes related to that case), but ignoring them as a cost of creating spirits can be dangerous. So, for this example, we are showing them in the cost section. When official financial statements are later prepared for review by external parties, these costs can quickly and easily be reclassified to revenues, resulting in a “net revenue” number that won’t have any impact on your bottom line. (5) ADDITIVES & AGENTS.

These are things like yeast, enzymes, nutrients, anti-foam, pH adjusters, etc. They can be significant and should not be ignored when calculating the ultimate cost of your distillate. (6) UTILITIES.

In any true distillery, the bulk of the company’s utility costs are going to be related to production. But the company will generally also have selling and G&A space and retail space, so the utility bills (gas, electric) should be broken down accordingly. Further, in most states, the portion of utilities consumed to produce the final product (including the bottling process) will not be subject to sales tax, so most companies should know what this breakdown is. (7) STILLAGE WASTE REMOVAL.

This is a topic that doesn’t get much attention, but getting rid of high BOD waste can be a very significant expense. As your distillery grows, it will get more and more attention from local authorities, who may want you to address this waste issue directly rather than passing it on to local municipalities, for instance. Thus, its cost should be factored into the final cost/value of the distillate you produce. (8) RENT.

Most distilleries pay significant rents, either to a third party or to the owners of the distillery, as a separate transaction. If a distillery actually owns its property inside the company, then this rent cost would simply be replaced by added interest expense, property taxes, etc. As the distillery grows, most of the property will be covered in rickhouses and bottling and storage space, thus applying the majority of the rent costs to production. Accordingly, it’s fair and accurate to factor this cost into the final cost of the distillate and the finished product. (9) DEPRECIATION EXPENSE.

In a typical distillery, the vast majority of the capital investment will be centered on the production of spirits and the storage/ bottling/handling of spirits. Therefore, applying this depreciation cost to the cost/value of the production output is fair and accurate. Some smaller companies may be putting all depreciation costs “below the line” and not including it in their inventory valuation. For valuation purposes, these costs should be included in the overall computation of the total value of the output.

The first major step in whiskey production is the creation of distillate. Once this distillate is produced, it may sit on the company’s balance sheet for years, as it matures. So, we have to first capture the costs associated with this step in the process. Then, years later, we will take this distillate (a portion of which has evaporated, further complicating the accounting) and package it. During this portion of the process, we need to transfer in the distillate costs and then add the bottling/packaging costs. Lastly, there can also be situations where our product has been removed from bond (e.g., shipped to a control state where it remains our inventory under their “bailment” process), so now we need to tack on the federal excise tax (and possibly shipping costs) to the carrying cost of this inventory.

ABC Distilling Co.

The end result is that, at the end of any reporting period, we will have inventories of: > Raw materials (grains, mash, yeast, etc.) > Unused packaging (bottles, labels, corks, case

boxes, etc.) > Distillate (including alpha distillate and distil-

lates from several different years all of which are being carried at different costs) > Finished goods still in bond (cased product

that has not yet left the premises) > Finished goods held outside of bond, at various

control state warehouses Accurate accounting is important for all of these inventory categories, but we’ll return our focus specifically to costing of distillate for now. As you can see on Table 1, the company is expecting its costs for creating distillate during the upcoming year to be $703,000 in total. If you turn your attention to Table 2, we can see how

Table 2

Brewing Computations

Pounds

Mash Bill - Per Mashing Corn 700 Malted Barley - 2 Row 100 Rye 200 Yeast/Enzyme/Acid/Antifoam ("additives & agents") Material Cost per Mashing Mashings per day Material costs per day

Whiskey Price/Lbs $ $ $

Volume Produced Daily Gallons 440 x SG/Brix/Alc Conversion Factor Estimated Total Proof Gallons Created Wash Still Loss (heads plus any tails not re-used) PG's transferred to Finishing Finishing Run Loss (heads plus any tails not re-used) PG's transferred to Barreling Barrel Aging Loss (evaporation) PG's transferred to Bottling Bottling/Sampling Loss PG's Ultimately Available For Sale Material Cost per Proof Gallon to Barreling Material Cost per Proof Gallon Ultimately Available for Sale 70

$ 958.33 /

Extended

0.105 0.345 0.293

$ 73.50 $ 34.50 $ 58.67 $ 25.00 $ 191.67 5 $ 958.33

5 =

= =

2,200 19% 418.0 10% 376.2 16% 316.0 20% 252.8 2% 247.8

316.0 = $

3.03

3.87

= =

these costs begin to get applied to distillate creation and, eventually, get added to inventory. Table 2 is an example of how to calculate the material costs (in this case, grains plus the additives and agents that get directly applied with the grains to each mash) for a simple whiskey operation that runs five mashes per day, five days per week, 48 weeks per year (allowing one week of shutdown per quarter for maintenance). Each day, 2,200 gallons of mash is created that ultimately yields (after two distillations) 316 proof gallons of raw whiskey ready to go into barrels. Over the course of a year, then, the company is expecting to produce 75,842 proof gallons of distillate. You can see in the table that the company is estimating its cost per proof gallon on this distillate to be $3.03 related just to the direct materials (grain, in this case) including additives and agents. If this company were making multiple products with different formulae, it would be more apparent why additives and agents are factored in at this level rather than later in the process, which will be addressed next. Side note: You can further see that, after accounting for estimated evaporation loss and filtration and sampling losses, the company estimates they will ultimately end up with about 59,460 proof gallons eventually available for sale from this year’s production. If they bottle their whiskey at 100 proof and achieve a wholesale price of, say, $240 per 9L case, they can expect

Annual material costs including additives & agents x 240 days = $ 230,000

Proof gallons created annually x 240 days = 75,842

Future saleable proof gallons

x 240 days = 59,460 W W W . ARTISANSPIRITMAG . C O M

Table 3

ABC Distilling Co. to eventually achieve sales of Total Captured in Remaining Total Distillate (59,460*3.785/9*$240=) Distillate Material Costs to $6 million from this year’s Expenditures costs Apply Expenditures production. Direct Expenditures One of the primary purposPayroll $ 100,000 $ $ 100,000 es of the work done in Table Raw Materials $ 200,000 $ 200,000 $ 2 is to get a handle on how Bottles $ $ $ many proof gallons you plan Corks & Capsules $ $ $ to, or are able to, create. The Labels $ $ $ key during this portion of the calculations is to stay within All Other Packaging $ $ $ the boundaries of your proFederal & State Excise Tax $ $ $ duction capacity in terms of Total Direct Expenditures $ 300,000 $ 200,000 $ 100,000 mashing vessels, fermenters, Indirect Expenditures stills and storage space. Once Additives & Agents $ 30,000 $ 30,000 $ we have the materials costs Utilities - Distillery $ 36,000 $ $ 36,000 captured and know about how Parts & Supplies $ 9,000 $ $ 9,000 much whiskey we expect to produce, we can easily develop Repairs & Maintenance $ 20,000 $ $ 20,000 the more complete cost analyStillage Waste Removal $ 20,000 $ $ 20,000 sis by adding in the remaining Misc Distillery Expenses $ 8,000 $ $ 8,000 direct costs as can be seen in Rent - Distillery $ 140,000 $ $ 140,000 Table 3. Depreciation Exp Distillery $ 140,000 $ $ 140,000 You can see on Table 3 that Total Indirect Expenditures $ 403,000 $ 30,000 $ 373,000 this company’s total expectTotal Distillery Expenditures $ 703,000 $ 230,000 $ 473,000 ed cost (i.e. inventory valuation) for each proof gallon of Divided by Proof Gallons Created 75,842 75,842 $ 75,842 distillate to be produced this Cost per Proof Gallon Created $ 9.27 $ 3.03 $ 6.24 year is $9.27 (before factoring in any federal or state excise taxes or shipping out costs, at a value of $8.58 per proof gallon as can in the case of some of the industry’s biggest which will not be expended until the product be traced to Table 5. producers, daily, to better account for variable leaves its bonded warehouse). This consists of input costs, such as fluctuating grain prices. > When the distillate from four years ago the $3.03 of direct materials consumed plus These changes can be easily addressed once was dumped for processing, 20 percent $6.24 of indirect costs. So, unless something the basic model and process is in place. of it had evaporated and another two drastically changes, such as grain costs going percent was lost from filtration efforts, way above what was anticipated, the company yielding 78 percent of the original diswill spend the entire year putting the cost of tillate that ended up in bottles available each proof gallon of distillate it creates into Thus far, we have only completed our reto be sold. So, 78 percent of the original inventory on its balance sheet at $9.27. view of the distillate costs. We haven’t yet fi40,000 proof gallons equals 31,200 As you get this basic process in place, you nalized our finished goods valuation. This will PGs to be bottled. If they bottle into will see that these computations can easily bebe necessary in order to then wrap up with a 750ml bottles at 100 proof, they will fill come more elaborate as you begin to produce quick look at inventory on the balance sheet. (31,200X3.785/.750=) 157,456 bottles. many different products, all of which have difTo finalize the year’s direct cost per bottle As you can see on Table 4, when the comfering grain bills, differing additives, differing of finished goods (i.e. per bottle of whiskey), pany captures the original cost of this distillabor activities and use differing amounts of we just need a few more pieces of informalate from 2020 (the $343,000 from Table 5) energy (utilities) and capital (depreciable astion, as follows: and adds in their bottling costs for this year sets). But this gives us a good start on putting > For simplicity of illustration, the compa(the $362,000 seen on both Tables 1 and 4), this necessary computation together. ny expects to bottle (and hopefully sell) they’ve properly valued their finished goods Also, this example sets one value on distilduring the year all of the whiskey it profor the year at $4.48 per bottle ($343,000 late inventory for the entire year. For a small duced four years ago. Four years ago, the + 362,000 = $705,000 / 157,456 bottles = producer, this may be sufficient. But this related distillate was put into inventory $4.48). value can be changed quarterly, monthly or,

Finished Goods

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Out of Bond Finished Goods and Excise Taxes

bonded warehouse, the federal excise tax on these goods is due. When they are simply transferred, though, to a state warehouse in most control states (“held in bailment”), you would want to capture those taxes and add them to the value of the inventory being held at the state(s). That inventory remains yours, and so it remains on your balance sheet. The related excise taxes shouldn’t

For simplicity, we’re assuming in this example that the company had the same amount of inventory in state bailments at both the beginning and end of the year. But, to be clear, as finished goods leave your

ABC Distilling Co.

Table 4

Total Finished Goods Expenditures

Direct Expenditures Payroll Raw Materials Bottles Corks & Capsules Labels All Other Packaging Federal & State Excise Tax Total Direct Expenditures Indirect Expenditures Additives & Agents Utilities - Distillery Parts & Supplies Repairs & Maintenance Stillage Waste Removal Misc Distillery Expenses Rent - Distillery Depreciation Exp - Distillery Total Indirect Expenditures Total Finished Goods Expenditures Divided by Bottles Filled Finishing Cost per Bottle Filled Plus : Distillate Cost, From 2020 Net of Evaporation/Filtration/ Sampling Loss Distillate Cost per Proof Gallon, at Bottling Percent of PG in Each Bottle, at 100 Proof Distillate Cost per Bottle

Total Finished Goods Expenditures

$ $ $ $ $ $ $ $

50,000 180,000 40,000 40,000 20,000 330,000

$ $ $ $ $ $ $ $ $

4,000 1,000 5,000 2,000 10,000 10,000 32,000

362,000

157,456 2.30

8.58

22%

11.00

2 .18

Total Carrying Cost of Finished Bottles, in Bond 72

Presentation of Inventory on the Balance Sheet

$ 2.30

19.8% $

flush through your P&L until you actually recognize the final sale of the goods. On a typical 9L case of 100 proof whiskey, the federal excise tax would only be $6.42 per case, or $.54 per bottle, with the reduced FET that smaller craft distillers are now paying ($2.70/PG vs. $13/50/PG). And as previously mentioned, excise taxes should ultimately be shown on your external financial statements not as a cost, but as a reduction of revenues. This can easily be managed with a journal entry to reclassify these costs into some sort of contra-revenue account before publishing your financial statements to outsiders.

$ 2 .18 $ 4.48

To wrap up our review of the inventory valuation process, we’ll take a quick look at what this company’s inventory section may look like on its balance sheet, as shown in Table 5. You can see here that the company’s distillate has separate valuations for each year’s production, based on the computations it makes each year to value that year’s distillate (see Tables 2 and 3). While finished goods inventory is also computed in a manner similar to distillate (see Table 4), it would be unusual for it to carry significant amounts of old finished goods from previous years, like it would with distillate, so this example doesn’t lay those values out year by year. The rest of its inventory is simply being carried at cost. You’ll further note that distillate went up in value by $360,000 during the year (the company makes more distillate each year than in the prior year in order to support its future sales growth without reducing the average age of the distillate) and that finished goods went up by $50,000 during the year. This equals a total inventory increase during the year of $410,000, which ties out to the second-to-last line on Table 1 from the P&L. So, looking further into Table 1, you can see that the company expended $1,160,000 during the year to support its distilling operations, but $410,000 of this amount is for the benefit of future years’ sales, leaving only $750,000 of the costs it incurred to remain on the P&L. This net amount of $750,000 would represent the costs directly associated with what actually got sold during the year.

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Table 5

Inventory Section of Balance Sheet Proof Gallons Qty Price

Distillate 2020 Distillate 40,000 $ 8.58 2021 Distillate 50,000 $ 8.70 2022 Distillate 60,000 $ 9.00 2023 Distillate 70,000 $ 9.10 2024 Distillate 75,842 $ 9.27 Total Distillate Finished Goods: Bottled/Cased/Palletized Whiskey Whiskey at State, in Bailment Total Finished Goods Packaging : Glass Corks Capsules Case Boxes Total Packaging Total Inventory Increase in Inventory During the Year

Other Considerations

Barrel Costs. We did not address

the cost of barrels in this exercise. If you are primarily in the business of filling barrels and then selling these barrels to other distilleries or rectifiers, you would likely need to factor the cost of a barrel directly into your inventoried costs. But, for those of you making your own distillate and eventually selling the bulk of your whiskey by the bottle, there’s a strong case for capitalizing the cost of the barrels, where they’d end up in your fixed assets to be depreciated. This would be especially applicable in a case where you may use the barrel more than once, making it difficult to tie the barrel cost to a specific item of inventory. This latter scenario is assumed in our example here, and the cost of the barrel is reflected in depreciation. Just use caution not to assign a very long useful life to this barrel or you could run into financial issues later when the barrel is spent but has only been partially depreciated.

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Beginning of year

End of year

$ $ $ $ $ $

343,000 435,000 540,000 637,000 1,955,000

$ $ 435,000 $ 540,000 $ 637,000 $ 703,000 $ 2,315,000

$ $ $

150,000 10,000 160,000

$ $ $

$ 75,000 $ 10,000 $ 5,000 $ 5,000 $ 95,000 $ 2,210,000

200,000 10,000 210,000

$ 75,000 $ 10,000 $ 5,000 $ 5,000 $ 95,000 $ 2,210,000 $

410,000

Carrying Costs. Many of you may be

aging your liquid for many years. It may seem strange to keep that inventory on the balance sheet at the same value for all these years. One refinement that could be made to the example we just covered would be to add some “carrying costs” to the value of the distillate inventory each year. Examples of these carrying costs could be rent, utilities and maintenance of the rickhouses within which this distillate is aging. If these costs become significant/material, it could be appropriate to add these costs to the carrying value of the associated distillate each year.

Lower of Cost or Market. Don’t

forget, all inventory should always be valued at the lower of its cost or its market value. This article only addresses its cost. If you have any inventory that has become of questionable value to you (e.g. glass bottles you have but are no longer using for your bottled goods), you would be obligated to lower the value of these goods to their estimated liquidation value, charging the difference off to the P&L.

Sold during 2024

Produced during 2024

Disclaimer. The information provided here, while simplified as much as possible, is complex and subject to dozens of variables. It is provided as a basic illustration of the process of assigning value to the inventory you create in-house. Your valuation could vary significantly from this illustration. At a minimum, you should provide your own computations to your external accountants for them to review. Our goal here is simply to help you get started with the process and understand it at a basic level.

Summary Any banker or auditor that is tasked with a review or study of your financial statements will quickly see that the most risky number on a distiller’s balance sheet is its inventory valuation. Hopefully, you can see by this example that the manner by which you value your inventory has a very direct effect not just on your balance sheet, but equally on your P&L. Detailed and relevant costing procedures are imperative to the accuracy of the information you provide. And these costing computations need to be in place as part of your annual budgeting process in order to put together a reliable budget. Compare the illustrations provided here with your current method of valuing inventory. Hopefully, you’ll take away something that can help you improve your own cost accounting practices.

Jeff Quint is the founder and CEO of Cedar Ridge Distillery in Swisher, Iowa. He was previously a CPA. 73

LIKE BOSSES Boss Molly Showcases the Strength of Women who Whiskey Written by Rich Manning Photography by Owen Donovan

ome brands have an origin story that feels predestined. Boss Molly bourbon is one of those brands. It all started with a group of whiskey-loving women at a poker table. For six years, co-founders Brandi Bowles, Victoria Horn, and Katie Rosante were part of a monthly women-only group that gathered to play poker and geek out about bourbon. Over time, discussions about appreciating the juice they sipped between sessions evolved into thoughts of making their own. These thoughts would turn into action, and, eventually, a bourbon with a mission that goes beyond tippling was born.

A BOLD STEP INTO A NEW INDUSTRY The notion of a bourbon hatched around a poker game is a cool story that organically ties into whiskey’s Wild West romanticism. However, it’s just a blip in Boss Molly’s narrative. “We probably don’t lean into this story enough,” Bowles stated. “There is a gambling metaphor tied to this brand.” The journey from idea to bottle was a roll of the dice. While Bowles grew up around grain, none of the women had any industry experience. They were outsiders who never made whiskey before, aiming to bring a women-owned bourbon to a market that, despite game-changers like Peggy Noe Stevens, Nicole Austin, and Becky Harris, sometimes still falls into the trap of treating female whiskey drinkers as a novelty. They make no bones about it being a daunting task: On the Boss Molly website, they admit that bringing the juice from idea to market “scared the shit of us.” 74

Despite the lack of experience, the trio possessed sharp palates, confidence in knowing exactly what they liked, and a drive to absorb as much as they could about making whiskey and the spirits industry. Research, distillery tours, and whiskey tasting ensued. Sometimes, their R&D happened in unique environments. “We were visiting Louisville and Brandi introduced us to her grandparents,” Horn said. “Her grandmother pulled us aside and said, ‘let me pour you my favorite new whiskey.’ It was a bottle from the Collaborative Series between Bardstown and Copper & Kings — I think it was around 110 proof. We really liked the uniqueness of the flavor profile.” Copper & Kings would turn into a key component of their finished product, literally. After copious amounts of experimentation, they landed on producing a wheated bourbon finished W W W . ARTISANSPIRITMAG . C O M

Boss Molly founders (left to right) Victoria Horn, Kate Rosante, and Brandi Bowles.

with Copper & Kings brandy barrel staves. “We did lots of research on staving, and we were impressed by how you can really bring out the vanillins when you toast the staves on all four sides,” stated Bowles. “It’s nerve wracking. When we were doing early experiments in mason jars, we found out that leaving them in too long would over-oak the whiskey. But they made such a huge impact when done right, we had to use them.” The women work closely with a distilling partner to ensure the staves’ influence plays well with the bourbon, which is aged in American oak for four years. The result of their work is a 90-proof bourbon that’s garnered plenty of positive press since the first bottle dropped in 2022 — not to mention plenty of professional encouragement.

“When we were at Bar Convent Brooklyn earlier this year, we had someone approach Brandi and me and tell us, ‘You have a pair of balls’,” Horn said with a laugh. “We’ve been absolutely blown away by the level of industry support we’ve received.”

BY WOMEN, FOR EVERYBODY There’s a Rosie the Riveter-type quality to the woman on Boss Molly’s label. Rugged yet feminine, she strikes a confident, angular pose, a harvester’s scythe clutched in her hands. It’s a figure that proclaims that she’s here and she belongs. The label is an homage to the women who have been a part of the spirits industry

“The marketing has always skewed heavily toward men. We wanted our label to stand out as an ideal representation — BRANDI BOWLES Co-founder, Boss Molly of a woman that drinks.” W W W . ARTISANSPIRITMAG . C O M

PHOTO BY JOY YAGID

throughout its history, from 19th century pioneers like Louisa Nelson to modern-day legends like Dr. Joy Spence. It’s also a response to the heavy masculine labeling on the bottles that Bowles, Horn, and Rosante would share during those inspirational poker games. “The marketing has always skewed heavily toward men,” Horn stated. “We wanted our label to stand out as an ideal representation of a woman that drinks.” This was a delicate strategy. While they were proud of being a women-owned whiskey, they wanted to steer clear of the notion that their whiskey was only for women, due to the antiquated and misguided implications that could arise from such an association. “We wanted to make sure that our whiskey was not looked at as a gimmick,” Bowles said. “We remembered the backlash that happened around Jane Walker. We knew we had to be very careful.” The bourbon itself helps them avoid this pitfall. In Boss Molly’s case, the bourbon 75

happens to be a bit nerdy and experimental — the kind of elements that check the boxes of spirits geeks regardless of their gender or identification. This gives the women confidence about their product. “I think men would be equally thrilled to enjoy a bottle of whiskey with a woman on it if it’s good,” Horn stated.

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When Bowles, Horn, and Rosante started Boss Molly, they wanted to make something good. They also wanted to do something just as good in the process. To do so, they turned their attention to a valuable commodity — wood. “When we started Boss Molly, we were a little fearful about the wood involved,” Horn said. “Once we got started, we quickly realized the importance of preservation.” They’ve since formed a partnership with the National Forest Foundation, a nonprofit organization dedicated to tree sustainability within the country’s forests. The foundation plants a tree for every bottle of Boss Molly sold, an action that promotes sustainability while also acknowledging whiskey’s reliance on single-use barrels. “We originally knew we wanted to give back to a cause,” Horn said. “Partnering with the National Forest Foundation felt like a natural connection.” The partnership is a solid response to a lesson learned. In a way, this has defined Boss Molly’s journey from the moment the notion of making whiskey was floated at a poker game. “When we started, we didn’t know what we didn’t know until we knew it,” Horn stated. “But whenever we’re faced with a situation like that, we’ve always figured out how to navigate around it.” And about that monthly poker game. It hasn’t happened in a while, but as Horn sees it, that’s okay. “All those nights winning and losing hands of Texas Hold ‘Em was worth it because our whiskey came out of it,” she said. “Now, we’re all in on this gamble.”

Visit www.bossmolly.com for more information. 76

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BOOZE ON THE BRAIN Written by Sydney Jones

he conversation is always the same. I’m traveling for a series of whiskey-related work functions. The few days I’ve been in this new city have been peppered with sampling events, cocktail hours, and scheduled dinners. The people I’ve encountered are friendly and gracious, and naturally curious about my job. “You make whiskey for a living?” Yes, I do. “Oh, that must be so much fun!” Yes, it can be. I love it very much. “So you get paid to drink all day?” Not exactly, is my reply, as I stand before this person, holding a halfsipped drink in hand. They regard me skeptically, amusedly. I smile and participate in the standard joke; yes, of course, I’m a professional alcohol sampler. It’s not a bad gig; it’s easy, really. At the end of this exchange, I’ll subtly leave the cocktail in an obscure corner of the bar. I try not to finish drinks while I’m working. And yet, despite my best efforts, a shot of bourbon is handed to me. The group surrounding me waits expectantly with glasses in hand, and I toss it back while simultaneously reaching for my water. What I don’t talk about with consumers is the mental toll these conversations take. In retrospect, I’ve never talked about it much in general. There is guilt that floats in the air, like a balloon on a string. Sometimes, it feels as if the string is tied around my neck, and with each deprecating comment I make about my job, the knot tightens a little more. Some days I do drink for a living, and it feels ridiculous to complain. Most days I make whiskey, which could potentially contribute to a person’s alcoholism. The guilt balloon continues to bob over my head. My alarm rings at 5 a.m. the following morning, and I groggily pull myself out of the W W W . ARTISANSPIRITMAG . C O M

hotel’s bed to prepare for a much-too-early flight. The headache this morning is noticeable and familiar, the same throbbing that comes standard issue with the dehydration and sleep deprivation that characterizes traveling. As I brush my teeth half asleep, one of my distillers calls me with a work emergency, and the anxiety hits my chest like a baseball bat. The problem is talked through to the best of my ability on the phone, and a few minutes later I’m in the lobby of my hotel, glassy eyes staring through the front doors searching for my predestined Uber. As I wait, the intrusive thoughts start coming, fueled by my tiredness. I can’t fix everything, but I feel like I should be able to, even from afar. Do I even deserve to be head distiller, anyway? I deeply love distilling alcohol. I truly believe that this is the calling I was meant for in this life. Distillation is equal parts science, mystery, and magic, and it brings me inordinate joy. And yet, my passion for my job sometimes comes at a price: depression, anxiety, burn-out. Imposter Syndrome, alcoholism, and a skewed work/life balance. Long, isolated working hours, coupled with very little pay, for many. These are all commonly reported symptoms of the much larger issue of mental healthcare within the distilling operations world. Problems that have been shared with me by industry peers, and which I have personally experienced over my career. If I tell any of my friends and family this, one of three things will happen: They will scoff, they will dismiss, or they will overreact. Maybe they’ll even question why I do this work; Is it really worth it? In a former life, before discovering the wonder of making whiskey, I was on a set path to

The Dream Job’s Unspoken Cost become a social worker. My degree is in psychology, and my life goal for many years was to work in the mental healthcare field. For years now, politicians and the media have been halfheartedly raising the alarm in regards to the mental health crisis our country is currently facing. A tragedy splashes across the headlines and the easy scapegoat is always “mental illness,” without galvanizing any meaningful problem-solving. A global pandemic and recent socioeconomic conditions have created a perfect cocktail of circumstances that have significantly spiked reported rates of depression and anxiety. The alcohol industry is far from immune to this phenomenon. With my educational background and my own personal mental health struggles, I’ve been wondering: Why are we, as distillers, not talking about these issues more? It’s no secret that alcohol is a depressant. Depression, anxiety, poor sleep patterns, and judgment lapses are all symptoms of chronic alcoholism, all of which can create a stressful and dangerous work environment for a distiller. When the boiler breaks or the still is acting up, the urge to reach for a shot of booze to calm frazzled nerves can be as tempting as a snake offering an apple. Oftentimes, we as alcohol professionals don’t even realize the potential cost of this type of crutch. I’ve had the privilege of being active in a new organization called The Society of Spirit, which is aimed at providing peer-reviewed education, resources, and community to distilling professionals. Within the society’s Discord server, I created a channel for mental health conversations, a place where one could commiserate with others over the mental strain that comes from running a craft distillery. In the relatively short period of time that it’s been active, the responses have been overwhelmingly positive. Not only are distillers acknowledging that there’s a mental health 77

MENTAL HEALTH RESOURCES The Mental Health Emergency Hotline: 988 National Alliance on Mental Illness (NAMI) HelpLine: 1-800-950-NAMI, or text “HELPLINE” to 62640. Both services available 10 a.m. and 10 p.m. ET, Monday–Friday National Suicide Prevention Lifeline: 1-800-273-TALK (8255) Crisis Text Line: Text REASON to 741741 (free, confidential and 24/7). In English and Spanish. Self-Harm Hotline: 1-800-DONT CUT (1-800-366-8288) National Council on Alcoholism & Drug Dependency: 1-800-622-2255

The perception that sharing our struggles is a sign of weakness is an outdated belief that needs to be banished once and for all. crisis within our profession, but they are eager to talk about it. The industry no longer wants to remain silent on this issue; It’s ready to face it head on. Today is another day at work, and a notoriously difficult piece of our equipment has broken down again. I get Slack notifications from my coworkers in the early morning, and I reluctantly drag myself out of bed, still sleepy from the late shift I worked the night before. As a result, my anxiety is throwing itself a parade; each confetti-filled float is a negative thought cruising through my brain. I head into work, to find that my co-manager, despite having the day off, has beaten me to the scene of the crime and is waiting in the distillery’s alleyway. He gives me the rundown on the situation, and we brainstorm the rest of the day’s production. We smile, we commiserate, we vent our frustrations. We may not solve everything, but there is real, tangible comfort in community. The work isn’t easy, but we’re here, we’re invested, and we have each other. The anxiety parade

in my head downgrades to a mildly nervous traffic jam. There are no easy solutions for the mental health challenges the distilling industry faces. Tackling such a widespread and complicated problem is nothing short of an uphill battle. What I do know, however, is that talking helps. Openness is key. Acknowledging the elephant in the room, but also realizing the elephant isn’t even an elephant at all, but a dragon to be slayed, and no single person can do it by themselves. The perception that sharing our struggles is a sign of weakness is an outdated belief that needs to be banished once and for all. We are stronger and better through empathy. No need for dramatic declarations or rooftop shouting. The path toward creating a healthier alcohol industry can be as simple as: Hi. My name is Sydney. I’m a distiller who has struggled with depression and continues to struggle with anxiety. And you can talk to me about it if you’re struggling, too.

Sydney Jones is currently the head distiller for FEW Spirits in Evanston, Illinois, where she specializes in gin and whiskey production, as well as spirits education. She is the proud parent of a very cute dog and a very devilish cat, both of whom she adores.

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The Singularity of Single Malt

America’s Soon-to-Be-Newest Whiskey Category Written by MARK A. VIERTHALER Photos provided by THE AMERICAN SINGLE MALT WHISKEY COMMISSION

It’s not bourbon. It’s not rye. It’s not Scotch, either. It’s American Single Malt Whiskey.

And it's officially the newest kid on the American Whiskey block. Maybe. Because as of this writing it isn’t official yet. After all, more than a year after the Alcohol and Tobacco Tax and Trade Bureau (TTB) announced they were soliciting public opinion for the first new spirits category in more than a decade, American Single Malt Whiskey producers can be forgiven for being a bit eager to see the official designation come through. At the end of July 2022, the regulatory body for all spirits within the United States announced that they were soliciting public feedback on officially adopting the first official, legal recognition of American Single Malt Whiskey. Under our proposal, to be labeled American single malt whisky, the product must be distilled entirely at one US distillery, and must be mashed, distilled, aged in the United States. The product also must be sourced from a fermented mash of 100% malted barley, at a distillation proof of 160° or less, and stored in oak barrels not exceeding 700 liters. In addition, allowable coloring, flavoring, and blending materials would be permitted. In the brief, the TTB announced that they were making the proposal in direct response to the petitions and comments submitted by a number of distilleries — and at the urging of the American Single Malt Whiskey Commission. The proposed TTB changes have taken the better part of a decade to even get this far. So, what is it?

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Founding Members of the American Single Malt Whiskey Commission Balcones Distilling Waco, TX

Copperworks Distilling Seattle, WA

Few Spirits Evanston, IL

Headframe Spirits Butte, MT

Santa Fe Spirits Santa Fe, NM

What Makes American Single Malt Whiskey, American Single Malt Whiskey

American Single Malt Whiskey has been an unofficial category for decades. After all, McCarthy’s Oregon Single Malt Whiskey began its life almost three decades ago when Clear Creek Distillery founder Steve McCarthy returned from a trip to Ireland and set about crafting his own single malt. However work towards an official designation began in earnest in 2016 when nine craft distilleries combined their powers like a mighty, malted barley Voltron. The resulting

organization — the American Single Malt Whiskey Commission (ASWC) — immediately got to work crafting an agreed upon definition of the category. And the even longer process of getting it recognized. “We knew this wouldn’t be a quick process,” said Steve Hawley, President of the ASWC. “Has it taken longer than expected? Yes. But the good news is that the obstacles we have faced aren’t at all related to contention in the industry or shortcomings in our proposed definition.” The support is there. What it comes down to, Hawley said, is the glacial pace of the government’s ability to get the designation finalized. “Delays are related to constantly shifting

Triple Eight Distillery Nantucket, MA

Virginia Distillery Co. Lovingston, VA

Westland Distillery Seattle, WA

“Has it taken longer than expected? Yes. But the good news is that the obstacles we have faced aren’t at all related to contention in the industry or shortcomings in our proposed definition.” — STEVE HAWLEY President, American Single Malt Whiskey Commission

Westward Distillery Portland, OR

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priorities in Washington, TTB staffing and bandwidth, and other mostly administrative factors,” he said. “Strong support for establishing a definition for American Single Malt and widespread consensus for that definition remains.” And yet (at least at the time of this writing) nothing has happened. What’s the holdup? “The only update, I’m afraid, is that we’re still waiting on a final ruling from TTB,” Hawley said. Since the initial proposal in July 2022 and the public comment period in September 2022, TTB has been reviewing those comments to determine whether or not they’ll amend any details of the proposed definition in the final ruling. “In recent conversations with their office, they've assured me that defining American Single Malt Whiskey is still a priority,” he said. “And now with some other initiatives that have taken precedence behind them (namely the Craft Beverage Modernization Act), the deck should be clear for them to return their focus to reviewing comments and hopefully publish a ruling very soon.” So, while we wait for official government recognition — What makes American Single Malt Whiskey worthy of a new designation? And what can consumers expect from American Single Malt Whiskey beyond the quick and dirty guidelines?

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Defying Expectations, In the Best Way Possible

Cards on the table and in full interest of disclosure — I’m the Head Distiller at Whiskey Del Bac in Tucson, Arizona. We have a dog in this fight. For us at Whiskey Del Bac, an official designation means a lot. Official designation means legitimization of the work we’ve been doing for more than a decade. An official designation means that American Single Malt is just as distinctive and desirable as rye. As wheat whiskey. As bourbon. And the best part? Within those four

beautiful, simple ingredients — malted barley, water, yeast, barrel — the possibilities are endless. Some may call the lack of a defined flavor profile a shortcoming. We’d argue it’s American Single Malt’s greatest asset. “There already exists so much regional variation in the world of American single malts,” Stephen Paul, co-founder of Whiskey Del Bac, told me. “In the Pacific Northwest, we all know of the influence of craft brewing and regional peat and oak species for barrels. But that’s what that specific region is known for.” Paul pointed to similar focuses on regionality and leaning into the “terroir” of the American single malts — no matter how much it may rankle some aficionados to recognize that there is terroir — at least within the more popular understanding of the world vs the technical focus on the impact of soil. Distilleries are leaning on things like utilizing the smoke of hickory. The use of cherrywood. A nigh-on endless array of woods for smoking and cooperage. For us at Whiskey Del Bac, it's the use of native mesquite to smoke our house malt as opposed to peat that gives us a distinct flavor. We’ve leaned into the challenges and opportunities of massive diurnal shifts in temperature to maximize extraction in smaller format barrels. The result is bolder, heavier spirits that we believe are love letters to the Sonoran Desert. For Murphy Quint, head distiller and director of operations for Cedar Ridge Winery and Distillery in Swisher, Iowa, the distillery’s

“An American voice in the global conversation of single malt is overdue and a formal definition to validate will be a significant, and crucial, achievement.” — STEVE HAWLEY President, American Single Malt Whiskey Commission

clarity of vision around their American Single Malt Whiskey program came into focus over multiple years of tinkering. “We were a much smaller business in 2009 and only distributed locally, so there was no reason to make significant quantities of single malt or anything else for that matter,” he said. “It wasn't until late 2017 that we really started to take our single malt program seriously. That's when we started laying down significant quantities of it, and shortly thereafter, we rebranded from Cedar Ridge Single Malt to QuintEssential American Single Malt.” Realizing that having a consistent and clear focus was key to establishing the brand’s single malt within the category, Quint put an emphasis on an expansive cask finishing program. The majority of their single malts begin their lives in ex-bourbon barrels before migrating into a wide variety of secondary casks. “The key word is variety,” Quint said. “Our goal is to have as many different casks on the property as possible. The more casks, the wider the range of flavor profiles we have access to. And the more flavor profiles we have, the more creative we can get.” Quint compared the finishing barrels in the

same light as a painter's palette. “The painter starts out with three primary colors on their palette,” he said, “But then they blend some of them together to create a handful of secondary colors. And then they create tertiary colors, and so on and so forth.”

Where Do We Go From Here?

Quick recap — TTB is actively working towards bringing a new designation,the greater whiskey community is paying attention to the category (see the wide variety of articles both foreign and domestic talking about the category). We’re all nerds here. What about bringing the Gospel of ASMW to the wider public? “Our biggest uphill battle with American Single Malt is consumer education,” Quint said. “The average consumer is still very confused by what the category is. They are much more likely to stick to bourbon than explore a category that they don't know, especially when American Single Malt usually sits at a higher price point than bourbon.”

Quint says that once the category becomes official, retailers finally create American Single Malt sections within their stores, and bars have American Single Malt listed as a separate category on their menus, the acolytes will grow and follow. And for all of us within the industry — perhaps especially for those of us who have hung our hats on the ASMW category — this designation is long overdue. “An American voice in the global conversation of single malt is overdue and a formal definition to validate will be a significant, and crucial, achievement,” Hawley said. “But I think this is a seminal moment not only for American Single Malt but American Whiskey as a whole. Whiskey in this country is about more than just Bourbon and has been for decades.” “For most of the life of Whiskey Del Bac, our focus has been American Single Malt,” Paul said. “We only recently added a sourced and finished rye product. It’s what we’ve built our name on.” Those years of work are finally paying off. “The rise of American Single Malt is a prime example of how American whiskey is really stretching its wings,” said Hawley.

Mark A. Vierthaler is the Head Distiller at Hamilton Distillers Group, Inc. in Tucson, Arizona — the makers of international-award-winning Whiskey Del Bac American Single Malt Whiskey. He lives just outside Tucson on the edge of Saguaro National Park with his wife Jennifer, their Silver Labrador Moose, Standard Issue Cat Rump Roast, and any random javelinas, bobcats, roadrunners, tarantulas and other assorted fauna that roam through their backyard. He is on the Board of Directors for the American Craft Spirits Association, and also serves on their Education, Guild, and Government Affairs Committees. He occasionally writes for Artisan Spirit Magazine when he doesn’t miss his deadlines. He also loves to chat about all things distilling and can be reached at mark@whiskeydelbac.com.

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THE PAST IS INDEED PROLOGUE The history and future use of bacteria in rum fermentations

Written by BRETT STEIGERWALDT

um is a globally popular sugarcane-based spirit, produced with an incredible range of organoleptic characteristics. It is delicious as an aged or unaged expression and forms the base of a wide variety of liqueurs. Given this versatility, it's truly exciting to see so many consumers and aficionados of all types gravitating toward this spirit category, with some products even achieving similar cult-like statuses to certain hard-to-find Kentucky bourbons. As a distiller, this spirit category can be intimidating given its raw ingredient diversity ("sugarcane or its derivatives," i.e., fresh sugarcane juice, cane syrup, cane sugar, or cane molasses). However, it's not as scary as it seems, and that vast distillate sensory range can be achieved more easily than ever before. Recent developments by Lallemand, Fermentis, and others, have given us another tool for our flavor arsenal: bacteria! Some distillers may be thinking, “What?! I'm trying to keep bacteria out of my fermentations!" But hear me out. Not long ago it was quite common to purposefully work with these microbes to yield incredibly complex

rums, with Jamaica being an excellent current and historic example. Luckily for us, several examples of these fermentation practices exist. However, before we dive deep into the technical details, a short history lesson is needed to provide more context on this fascinating new (old) world. In Jamaica from 1890 to 1920, our understanding of the rum fermentation environment improved, and a divide began to emerge within the research community, each side having valid points that current and future distillers would be wise to heed. Pairault and several contemporaries advocated for pure fermentations, using known yeast strains, and a low presence of bacteria [1]. Others like Allan and Ashby advocated that bacteria play a beneficial role in the complex organoleptic profiles of heavy rums [2, 3]. If you are new to this industry, the method that Pairault advocates is a great starting point. Once you determine your starting gravity, boil your rum wash, cool it to target temperature and pitch your desired yeast, fermentation will begin. Over time, you’ll learn how that yeast strain performs under sanitary

TABLE 1. Early 20th century Jamaican rum styles and descriptions from Cousins [5, 6]. Ester Content (g/hLAA)

Rum Style

Description

Common clean

Light rum, with principal aroma of ethyl acetate, and trace amounts of higher acid esters and aromatic higher alcohols

90-300

UK Home trade

Produced from slow fermentation. Medium bodied rum, mainly esters of higher molecular weight acids originating from bacteria.

300-500

Tea rum

Pot distilled medium bodied rum, primarily to enrich afternoon tea.

400-700

Flavored/German

Heavy rum from highly acidic long fermentation (15-21 days), utilizing fission yeasts. Primarily for blending.

700-1600

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conditions, various pitch rates, whether you’ll need yeast nutrients, etc., and you’ll determine your preferred distillation cut points. Once you’ve mastered these steps, you’re ready to explore the world that Allan and Ashby advocated — a non-sanitary rum wash with a naturally higher bacteria presence — and how it performs under similar fermentation conditions. Once you’ve determined your pitch rates and cut points, you’ll then be able to compare each distillate to determine your preferences. Remember, this is only for a single yeast, under specific conditions, and doesn’t necessarily translate to different rum washes. I could stop the article here for many rum-curious distillers and they’d be off to the races. However, let’s continue this journey through history. With the above fermentation concepts in mind, a variety of different rum marques/ styles were produced in Jamaica from 1890– 1920, and Cousins summarized them neatly (Table 1). On the technical/production side, Ashby defined many of the contemporary terms (Table 2) and provided three historical examples of Jamaican rum fermentation techniques: two types of common clean rum (CCR1 and CCR2, with ester contents of 100 g/hLAA and 1,000 g/hLAA), and a heavier bodied “flavored” rum (up to 1,600 g/hLAA) [4]. Process diagrams for each style can be seen in Figure 1. Two species of yeasts were commonly found in these fermentations (1) Saccharomyces spp. was most prevalent in the faster fermenting CCR1 and (2) Schizosaccharomyces spp. was most prevalent in the slower fermenting CCR2 and “flavored” rums, particularly as wash acidity and bacteria presence significantly increased [2, 4]. 83

As seen in Figure 1, fermentation complexity (via addition of specific natural acids) was the main driver of rum ester content. The addition of these acidic components (cane acid, dunder, and muck) combined with the longer fermentation and pre-distillation rest times, allowed the necessary bacterial reactions to take place, and thus seeded the wash with copious amounts of acids and ester precursors [4, 7]. This was particularly true for “flavored” rum production, whose incredibly complex fermentations produced remarkably high ester rums, primarily for the German export market. These fermentations

FIGURE 1. Fermentation process for three styles of Jamaican rum, two versions of common clean, and one version of flavored/German rum. This process diagram is based on descriptions by Ashby [4]. Skimmings (fresh) Purpose: sugar source Amount: 1/3 of wash

weren’t wholly beneficial to overall distillery operational efficiency, as most common clean rums that used dunder, sourced it from the very same source used by the flavored rum process. Over the production year, this became increasingly acidic and was therefore quite detrimental to overall production yields. Always remember that like many things in life, fermentation is a tradeoff, such that as the complexity and acidity of a rum fermentation increases, the overall alcohol yield will decrease, and that subsequent product will therefore command a significantly higher price than standard rum marques. Cousins developed a high ester rum production process to alleviate the efficiency losses of traditional flavored rum production and to deal with the high

Dunder (spent wash from still) Purpose: acids, sugars, nitrogen Amount: 1/3 of wash

TABLE 2. Early 20th century Jamaican rum fermentation components and definitions from Ashby [4]. Component

Description

Skimmings

The solid-liquid slurry skimmed from the surface of the sugarcane juice clarifiers, typically with a brix range of 10-20 brix.

Dunder

Spent rum wash leftover in the still after distillation is finished. Rich in acids and typically with a brix range of 10-25 brix.

Acid (Cane vinegar)

Soured skimmings or cane juice, rich in acetic acid.

Muck (flavor)

A liquid/sludge, rich in butyric and other higher acids, produced via a slow, controlled, putrefactive fermentation process of the liquid and solid portions of dunder, wash bottoms (dead yeast), spent stillage (low or high wines), and cane trash.

Molasses Purpose: acids, sugars, nutrients Amount: Enough to reach target SG

Water Purpose: dilution to target SG, highly dependent on dunder brix

Common clean rum wash example 1 Starting gravity: 16 brix Ending gravity: 3 – 4 brix Fermentation time: 4 days Rest period pre-distillation: not stated

Skimmings (fresh) Purpose: sugar source Amount: 1/3 of wash

Acid (cane vinegar) Purpose: acetic acid Amount: 1/10 – 1/3 of wash

Dunder (spent wash from still) Purpose: acids, sugars, nitrogen Amount: 1/2 – 1/3 of wash

Molasses Purpose: acids, sugars, nutrients Amount: 1/15 – 1/10 of wash

Water Purpose: dilution to target SG, highly dependent on dunder brix

Common clean rum wash example 2 Starting gravity: 1 – 24 brix Ending gravity: not stated Fermentation time: 5 – 9 days Rest period pre-distillation: 2 – 3 days

Skimmings (fresh) Purpose: sugar source Amount: 1/3 of wash

Acid (cane vinegar) Purpose: acetic acid Amount: 1/10 – 1/3 of wash

Dunder (spent wash from still) Purpose: acids, sugars, nitrogen Amount: 1/2 – 1/3 of wash

Molasses Purpose: acids, sugars, nutrients Amount: 1/10 of wash

Flavored/German rum wash example Starting gravity: 25 brix Ending gravity: 12 brix Fermentation time: 9 – 10 days Rest period pre-distillation: 3 – 4 days

Muck (aka “flavor”) Purpose: butyric & other higher fatty acids Amount: 1/9 of wash

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FIGURE 2. The legendary “Cousins Process” for producing very high ester rums used for blending. This process diagram is based on the description by Cousins [5].

import tariffs of the German market [8]. Scale implementation of this process allowed any estate to produce common clean variants or high ester rum with relative ease and without the detrimental effects of using highly acidic dunder [5]. The “Cousins Process” can be seen as a process diagram in Figure 2. This enabled distilleries to produce rums with ester contents up to 4,000-6,000 g/hLAA, designed primarily for blending use in the German market and to combat the rise of rum verschnitt [5, 8]. Thirty years later, significant backlash by the Jamaican rum industry against these products led to the establishment of a maximum ester content of 1,600 g/hLAA [9, 10]. Cousins wasn’t alone in looking for methods of streamlining aromatic rum production. In Puerto Rico throughout the 1940s, extensive investigations were conducted by Arroyo to determine commercially viable means to use cultured strains of yeast and bacteria in a controlled fermentation environment to produce heavy rums [11, 12]. In 1945, Arroyo patented his production process wherein Schizosaccharomyces pombé Lindner was used alongside Clostridium saccharobutyricum or Propionibacterium technicum to produce heavy rum from treated molasses, and this can be seen in Figure 3 [11, 12]. Since then, several others (including myself) have investigated the effects of bacteria during the fermentation process, including their use as a novel means of adding organoleptic complexity without significantly increasing process complexity. Lehtonen and Soumalainen [13] determined that aromatic rums are best produced by fermentation temperature control (up to 30 degrees Celsius) and a pH range of 5.55.8, or a pH of 5.0 or greater for mixed fermentations using yeast and bacteria. Fahrasmane and Ganou-Parfait [14] investigated the role of bacteria in rum fermentation, showing bacteria origins, location in the production cycle, optimum temperature and pH, fermentation features, and positive and/ or negative effects on fermentation and distillate quality. This major work should be the starting point for any distiller seeking to incorporate bacteria into their fermentation program(s). W W W . ARTISANSPIRITMAG . C O M

Low wines retort Spent low wines, rich in volatile acids.

Lime Calcium hydroxide

F l eet and Green [15] investigated the microbiology and biotechnology of rum production Sulfuric acid and found several species To liberate fatty acids of Clostridium, Bacillus, Zymomonas, lactic acid bacteria, and propionic bacteria and found that higher pH fermentation (i.e., > 5.5) offered the best chance for their contribution. Duarte et al. [16] investigated the effects of co-inoculation of Saccharomyces cerevisiae and Lactobacillus fermentum on the quality of cachaça and found that co-inoculation yielded cachaça with significant increases in the amount of organoleptic compounds compared to cachaça produced by yeast alone. Green [17] systematically investigated the microbial ecology of rum production at the Bundaberg Distilling Company in Australia, including the contributions of bacteria during fermentation, the microbial ecology of dunder (fresh and aged) and its effect on fermentation and rum organoleptic qualities. She found that mixed fermentation of S. cerevisiae & L. fermentum trial produced significantly greater concentrations of organoleptic compounds in the fermentation and the resulting distillate. Hill et al. [18] characterized the microbiology of dunder at a Scottish distillery, and assessed its effect on fermentation and organoleptic characteristics when added to a controlled 96-hour molasses-based fermentation. Their dunder additions caused significant increases in the amounts of organoleptic compounds in the resulting distillate. Steigerwaldt [19] as part of an ADI grant and Heriot-Watt MSc dissertation, investigated the effects of co-inoculation of a common yeast (Lalvin EC-1118™), and three commercial bacteria strains (DistilaBact® LP, EnoFerm Alpha™, SafSour LP 652™), on the organoleptic properties of un-aged, pot distilled rum, in a commercial setting. Co-inoculation fermentations produced significant increases in the amounts of organoleptic

High wines retort Spent high wines, rich in volatile acids.

Non-reactive container Retorts are drained and lime added to cause acid precipitation.

Evaporative heating Process

Solid “lime salts” calcium caprylate calcium caprate 48 hour mixing process

High wines

Filtration

Supercharged high wines Rich in acids, ready for distillation. Distillation Pot still with two retorts. High wines retort charged with supercharged wines. High ester rum Ester content significantly higher, regardless of fermentation style. Predominantly for flavored rum.

compounds in the resulting distillate, and a trained sensory panel preferred them to their respective controls. The results suggest co-inoculation of yeast and lactic acid bacteria offer a viable means of improving organoleptic characteristics without additional process complexity or yield loss. As we’ve seen, there has been a small but concerted effort by several intrepid researchers to better understand the contributions of bacteria to rum organoleptic characteristics. My research was the first to use newly available commercial distillers active dried (DAD) products to add organoleptic complexity to pot distilled rum. The last part of this article will briefly expand on my findings, before diving into the exciting long-term possibilities of working with bacteria. 85

FIGURE 3. Process diagrams showing Arroyo’s molasses treatment and heavy rum production methods. These were created based on description by Arroyo [12]. Hot water Purpose: bring molasses brix to 45 – 55°

Molasses

Milk of lime Purpose: precipitation of impurities

Starting gravity: Yeast amount: Yeast strain: pH: Temperature: Agitation: Monitoring: Cooling:

Mixing vessel Temperature: 70 – 0 °C Mixing time: 30 minutes Agitation: constant Centrifuge filtration Purpose: remove impurities Ammonium sulphate Calcium superphosphate Purpose: improve nitrogen and phosphoric acid content

Mixing vessel Temperature: 35 – 40 °C Mixing time: not stated Agitation: constant

Strong sulfuric acid Purpose: bring molasses pH to 5.0 – 5.6

Centrifuge filtration Purpose: remove impurities

The Lallemand (DistilaBact® LP, EnoFerm Alpha™) and Fermentis (SafSour LP 652™) products were used as co-inoculants and delivered the advertised significant roundness, enhanced creaminess, and tropical/citrus/sweet notes. Thanks to these added characteristics, the sensory panel preferred at least one trial to their respective control. The fact that each bacteria strain was designed for different alcoholic beverage categories (distilling, wine, and beer, respectively) and still worked well, shows promise for our industry. It means we should not limit ourselves to options designed for distilling only when searching for new tools with which to add more character to our spirits. That said, determining how best to use them for your distilling programs will require several iterations to dial in your production process. So, once you’ve nailed your fermentation process, whether that means using these products via co-inoculation with your chosen yeast strain(s), or via sequential additions (bacteria before yeast or yeast before bacteria), their ultimate effects will depend on your distillation process (batch vs. continuous) and subsequent cut points. 86

Treated molasses

Water

Fermentation 12.4 brix 10% of wash volume Schizosaccharomyces pombé 5.5 – 5.8 30 – 32 °C mechanical/CO2 gas temperature & pH (every 2 hours) external coils

After 6 hours, if, 3.5% < ABV < 4.0% & °Brix < 5.9

Bacteria addition (ratio 1:5 to yeast) Bacteria amount: 2% of wash volume Bacteria strain: Clostridium saccharobutyricum pH (of culture): 5.5 – 5.8 Temperature: 30 °C

Treated molasses Rich in liberated fatty acids and free of impurities.

Effects of bacteria on final distillate quality

Propagated yeast (first to enter fermenter)

Fermentation proceeds to finish pH range: 5.0 – 5.8 Temperature: 30 °C

Effects of distillation on final distillate quality

Post-fermentation rest period 12 – 24 hours

As we know, cut points can truly make or break a Batch distillation Pre-distillation with/ without Heavy rum filtration via distilling program. Many of reflux centrifuge the heavier, acid-based esters come over late in the distillation process, therefore, when working with these bacteria products it is begin to expand your collection range. In advisable to perform stripping runs down either case, great attention to detail and to two to five percent ABV and, if you are extensive note taking will be required to planning to mature this product for some ensure repeated success and actionable time, to expand your hearts cut further information. into the tails section than you might preIt's also worth noting that your still confer. In this way, the effects of these bacteria denser will play a role in distillate quality. products will be more pronounced. Then, Shell-and-tube condensers tend to proonce you understand the resulting distilduce spirits with less sulfur compounds late, you can experiment with your spirit and slightly lighter body when compared run cut points to determine the best colto more traditional worm tub condensers. lection range for your final desired prodThe latter styles are known to produce spiruct. If your unaged rum product forms the its with heavier bodies and increased sulfur basis of all your other products, I will caunotes. Maturation will also play a major tion you to start with a tight hearts cut and role in final product quality and here is then, once you understand your distillate, where we tie in all that we’ve learned so far. W W W . ARTISANSPIRITMAG . C O M

FIGURE 4. Decision tree for determining optimum performance of yeast and bacteria fermentations. Fermentation compatibility (at all stages) is the most important factor for deciding which strain(s) of yeast and bacteria to use for your fermentation process. Even with compatibility, this will be an iterative process

Effects of maturation

Bacteria 1

Bacteria 2

You’ve followed the above advice, dialed in your fermentation and distillation processes to really utilize the enhanced organoleptic characteristics created by these bacteria products and now, you want to Fermentation No determine what barrel(s) would be best to express your vision. conditions compatible? Think of your base ingredients as the background tonal colors you first put down to add depth and some initial contrast. Next, your yeast and bacteria additions will add color highlights and shading to help elevate the background layers off the page and to help create the story or essence of the work. The fermentation and distillation process helps to Change #2 or use Yes further refine this. Finally, the barrel(s) will add the necessary softening, #1 only sharpening, and contrast needed throughout the work to create your masterpiece. The type of oak, toast/char level, size, and status (new vs used), will further enhance or detract from your work, and this will require time and several iterations to perfect. But believe me, this is where Change yeast(s) the fun begins, and another article could easily be written! For myself, or bacteria(s) until No using the DistilaBact® LP with Lalvin EC-1118™ or a nice ale yeast, pot compatibility is found. distillation, primary maturation in a used bourbon barrel, and then finishing in a cognac barrel would lead to a truly remarkable and layered sipping rum, i.e., the kind about which poetry could be written. That said, I can’t wait to see what you create! Yes As we wrap up this article, I want to leave you with a product formula, decision table (Table 3), and process diagram (Figure 4) to further simplify using these incredible tools at your facility. Remember: always begin with the final product’s Controlled Fermentation desired organoleptic profile in mind! The formula is below: [Yeast(s)+Bacteria(s)]* + Distillation ± Maturation = Organoleptically complex rum

Time

Yeast 1

Yeast 2

Fermentation conditions compatible?

Change #2 or use #1 only

Yes

Fermentation conditions compatible?

Yeast or bacteria addition?

Yes

Note: The above (*) indicates that their combination can only take place when fermentation conditions are similar/allow, and that it doesn’t matter whether the yeast/bacteria are added sequentially or as co-inoculants.

TABLE 3. Decision table for determining optimum performance of yeast and bacteria fermentations. Bacteria Inoculation Time

Change yeast, bacteria, or wait until compatible conditions are found.

Advantages & Disadvantages

Sequential (Bacteria before yeast). Up to 48 hours before, or when yeast fermentation conditions are met.

1. Allows bacteria more time to acidify wash. 2. Must be timed with yeast pitching/activity requirements, otherwise wash could be too acidic and/or lack proper nutrition. 3. Lack of written manufacturer guidance in this area. Contact suppliers for guidance before implementing this at scale. 4. Requires experimentation and documentation to determine optimum timeframe.

Co-inoculation

Allows yeast and bacteria equal time to jointly dominate fermentation environment. Fermentation compatibility is necessary for success.

Sequential (Yeast before bacteria). Up to 72 hours later, or when bacteria fermentation conditions are met.

1. Allows yeast more time to dominate the wash. 2. Must be timed with bacteria pitching/activity requirements, otherwise wash could be too alcoholic/hostile or lack proper nutrition for optimum bacteria performance. 3. Some written manufacturer guidance in this area. Contact suppliers for guidance before implementing this at scale. 4. Requires experimentation and documentation to determine optimum timeframe.

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Fermentation conditions compatible?

Time Distillation Organoleptically complex distillate

Summary This is truly an exciting time to be a distiller. Several suppliers are developing, or soon to be releasing, a distiller’s active dried yeast (DADY) version of S. pombé that will be easy to rehydrate and use. This means distillers can begin experimenting with more acidic washes, like the historic and current Jamaican practices. More importantly, a larger conversation within the industry has begun, and within the next 5-10 years I can see these suppliers offering DAD yeast-bacteria “starters” to further simplify the process and make the creation of organoleptically complex rums significantly easier. Further on the horizon, I can see a world where these companies also develop tailored bacteria strains

to simplify the development of cane vinegar, dunder, and/or muck programs. For those of you intrepid enough to experiment with the currently available DAD bacteria products or with these soon-to-arrive DADY products, I implore you to be open about your findings, whether successful or not. The more that we openly share our findings and have wider conversations with colleagues across the American rum industry, the more connected we’ll be and the better our rums will become. If we truly want American rum to be recognized abroad and become globally popular, we all must do our part to help this industry grow. Transparency and honesty will be key. Lastly, I’m putting together a group of dedicated rum professionals to further advance

the state of American rum. The group will be composed of rum distillers, scientists, microbiologists, chemists, and other professionals, with the goal of openly sharing research, fermentation data, and other knowledge regarding novel rum production techniques (including cane vinegar, dunder, and/or muck programs). In this open-source way, we hope to improve the image of American rum domestically and internationally by eventually publishing our results in industry magazines, trade publications, and professional journals. If you are interested, or know folks who might be, please don’t hesitate to contact me!

Brett Steigerwaldt is the head distiller for Windon Distilling Company, the home of Lyon Rum, in St Michaels, Maryland. He is committed to exploring how distilling can solve real world problems and strengthen communities, such as his volunteer work with DomSetCo in Dominica. He holds a BSc and MSc in mechanical engineering and an MSc in brewing and distilling (Heriot-Watt 2023), where he investigated novel fermentation techniques to create organoleptically complex rums with minimal additional process complexity.

REFERENCES 1. Pairault, M.E.A., Le rhum et sa fabrication. 1903, Paris: Gauthier-Villars. 2. Allan, C., Report on the Manufacture of Jamaica Rum, in Report on the Experimental Work of the Sugar Experiment Station For the Year 1905, H.H. Cousins, Editor. 1905, Jamaica Board of Agriculture Kingston. p. 119-140. 3. Ashby, S.F., The study of fermentations in the manufacture of Jamaica rum. International Sugar Journal 1909. 11: p. p. 243-251, 300-307. 4. Ashby, S.F., Report on the Study of Fermentations in the Manufacture of Jamaica Rums, in Third Report on the Experimental Work of the Sugar Experiment Station For the Years 1908, 1909, and 1910, H.H. Cousins, Editor. 1911: Kingston. p. 108-129.

5. Cousins, H.H., Instructions for Making HighEther Rum. 1906, Kingston: The Educational Supply Company. 20. 6. Cousins, H.H., Jamaica Rum. Journal of the Imperial Department of Agriculture for the West Indies, 1907. 8: p. 120-128. 7. Allan, C., Lectures on Fermentation in Relation to Jamaica Rum, as Delivered at the course for distillers at the Government laboratory in 1906, in Second Report on The Experimental Work of The Sugar Experiment Station For the Years 1906 and 1907 H.H. Cousins, Editor. 1906, Jamaica Board of Agriculture: Kingston. p. 137-159. 8. Pietrek, M. and C. Smith, Modern Caribbean Rum: A Contemporary Reference to the Region's Essential Spirit. 2022, USA: Wonk Press. 850. 9. Jamaica, G.o., The Rum (Ether) Control Order. 1935: Jamaica.

10. Pietrek, M. Why Does Jamaica Limit Its Rum to 1600 Esters? 2022 [cited 2023 18 June 2023]; Available from: https:// www.rumwonk.com/p/whydoes-jamaica-limit-its-rum-to. 11. Arroyo, R., Production of Heavy Rums, U.S.P. Office, Editor. 1945. 12. Arroyo, R., Studies on Rum. 1945: University of Puerto Rico, Agricultural Experiment Station. 272. 13. Lehtonen, M. and H. Soumalainen, Rum, in Economic Microbiology, A.H. Rose, Editor. 1977, Academic Press: London. p. pp. 595-633. 14. Fahrasmane and GanouParfait, Microbial flora of rum fermentation media. Journal of Applied Microbiology, 1998. 84(6): p. 921-928. 15. Fleet, G.H. and V. Green, The microbiology and biotechnology of rum production, in Distilled spirits : new horizons : energy, environmental and enlightenment, G.M. Walker and P.S. Hughes, Editors. 2010, Nottingham University Press: Nottingham. p. 87-94.

16. Duarte, W.F., et al., Effect of CoInoculation of Saccharomyces cerevisiae and Lactobacillus fermentum on the Quality of the Distilled Sugar Cane Beverage Cachaça. Journal of Food Science, 2011. 76(9): p. 1307-1318. 17. Green, V., The microbial ecology of a rum production process, in School of Chemical Sciences and Engineering. 2015, University of New South Wales: Sydney. 18. Hill, A.E., O. Salvesen, and G. Russell, Deciphering dunder: an examination of rum fermentation, in Worldwide Distilled Spirits Conference Poster & Proceedings, H.-W. University, Editor. 2017: Glasgow. 19. Steigerwaldt, B. Distilling Research Grant Report: Bacteria in Rum Fermentations. 2023 [cited 2023 26 Sep 2023]; Available from: https:// distilling.com/distillermagazine/bacterial-fermentations-in-rum/.

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WE ALL SCREAM z y ) o o ( FOR B ICE CREAM! Hardscoop Distillery in Charleston, South Carolina, makes boozy ice cream dreams come true. WRITTEN AND PHOTOGRAPHED BY CARRIE DOW

razy ideas are often the best ideas. But getting an idea off the vision board and into people’s hands is where most fade into obscurity. Society calls those who turn crazy ideas into reality geniuses. I consider Jason Kirby and his partners at Hardscoop Distillery to be geniuses. Their momentous achievement? Combining the rich, decadent ice cream of our childhood with the decidedly adult tastes of booze. Is there a Nobel Prize for desserts? “We thought it was a simple, straightforward sort of thing to do,” said Kirby of the decision to start an ice cream distillery, “and we thought it was a good idea.” Good idea, yes. Simple to do, not so much. That’s because alcohol doesn’t freeze at the same temperature ice cream does. “We started working on the science behind that and came up with something,” Kirby said. As those who distill already know, the higher the proof of the alcohol, the lower the freezing point, making spirits difficult to freeze. That is unless your home freezer can get down to -173.2 F (-114 C), the freezing point of a bottle of 190 proof Everclear. Distilled wine, with its higher water content and lower alcohol levels, can freeze at about 20 F (-6.7 C). A pint of grape-based spirit Hardscoop is at eight percent ABV. “We feel like that’s a good gold zone,” Kirby said about their ABV sweet spot. “You have something that is not just a novelty. It has some kick to it.”

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While there are several brands of boozy ice creams on the market today, most companies buy the alcohol they put into their ice cream from somewhere else. Hardscoop, founded by Kirby, Rachel Solomon, and Chris Ledbetter, is, as far as we know, the only licensed distillery in the country making the booze that goes directly into their ice cream. Another thing they do differently is to make the ice cream with as much care as the alcohol. “We always say that we try to make an ultra-premium product,” explained Kirby. “We really wanted to make a good ice cream and a good sorbet to start with. You have to have good ingredients, especially when you’re trying to combine alcohol. You can’t skimp or it won’t work.” The company makes ice cream with 14 percent butter fat and then adds high-quality ingredients like Madagascar vanilla, locally roasted coffee beans, and fresh fruit from South Carolina farms, which means their ice cream will hold its own against a pint of Ben & Jerry’s or Haagen-Dazs any day. Then they add the booze, making it even better. In the beginning the trio spent a year doing endless testing and tasting — must have been rough eating all that ice cream — before they came upon a formula they liked. They then sold their first pints

“ You have to have good ingredients,

especially when you’re trying to combine alcohol. You can’t skimp or it won’t work.” — JASON KIRBY, Hardscoop Distillery

of vanilla, chocolate, and cold brew coffee ice cream flavors in 2017 in a single liquor store called Bottles in Mount Pleasant, South Carolina. At the time Kirby and his partners weren’t sure about what would become of their product. “We thought we were going to have to go into liquor stores at first,” he said. “The laws for North and South Carolina were such that the way that they regulate the product that we have, is sort of [in] a weird gray area. They had a few rules on the [state] books pertaining to popsicles from years ago, and that allowed us to go into grocery stores.” Wanting to offer a dairy free, fat free, gluten free alternative, fruit sorbets were quickly added into the product lineup. Kirby says today they’re in a few hundred grocery and specialty stores, including Lowe’s and Harris Teeter, throughout North and South Carolina. Like many businesses, COVID-19 threw them a curve ball, but it also allowed them to make some important additions. For one, it sped up their timeline for adding online sales. “That’s a tougher space than people realize,” he noted. “The work that’s involved in setting all that up. We set out to do that and it’s been fun trying to grow that and it’s been a learning process in a huge way.” Making that extra effort has paid off for Hardscoop because they are based in a city known for its culinary culture; a city filled with vibrant restaurants, wineries, and famous chefs. Visitors from around the country flock to Charleston for that reason and have formed an important fan base. Kirby says that’s because visitors will try their product and love it so much, they order it online as soon as they return home. Kirby adds that their overall sales, despite a pandemic hiccup, have steadily grown each year.

Another post-pandemic addition was a collaboration with Charleston-based Pusser’s Rum to make a Painkiller cocktail ice cream. The Painkiller, considered a legendary Caribbean rum cocktail, was originally created in the 1970s at the Soggy Dollar Bar in Jost van Dyke, an island in the British Virgin Islands. Full disclosure, it’s my favorite cocktail and what originally brought my attention to Hardscoop. Made with real orange juice, pineapple juice, and coconut extract, Painkiller ice cream was so successful that both Hardscoop and Pusser’s decided to turn it into a canned cocktail, which has also become a best-seller. “That was really cool,” said Kirby when talking about working with Pusser’s. “You work in the industry and you meet other people and before you know it, you’re exchanging ideas, tips and tricks, and all kinds of stuff. Then before you know it, you’re friends. We’ve had so many opportunities to do collaborations because our product is interesting, but so many times those don’t go past the first stage because of things like regulations. It never goes anywhere. But this one just worked.” He mentions that only a month ago the canned Painkiller cocktail made with 3-year aged Pusser’s rum won gold at the World Wine and Spirits competition in San Francisco. It had won silver the year before. I ask if they’ve ever thought about making just the ice cream without the booze. Kirby laughs and answers with an anecdote instead.

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“Right across the street is a kids’ gymnastics center so the parents will come over here before or after and the kids will come in thinking they’re getting some ice cream,” he said with a grin. “I wish I had a camera set up that shows the disappointment on the kids’ faces.” I take that as a ‘no.’ He also adds that in their advertising, they focus on the distillery part of the business. They want to be abundantly clear this product is for adults only. The future for Hardscoop continues to look delicious. Along with their three original flavors, seasonal flavors like eggnog and chocolate peppermint have been big hits, as is the Carolina peach sorbet. Kirby says new ice cream flavors are in the works and they are also working on their next canned cocktail. “We were doing a pumpkin spice [ice cream], but we think that’s run its course,” Kirby stated. “We’re always looking to innovate and looking for ways to be more efficient. Taking a lot of our success that we had with flavor creation with the ice cream and translating those same principles to the canned cocktails. We’re seeing success there. Good things are coming, so we’re going to keep going.” So how do they put together booze and ice cream, I ask. “That’s proprietary,” he said. Guess I won’t be getting that ‘scoop’ anytime soon. “But I’ll let you try some,” he offered. That’s a scoop I’ll take any day.

In the Spirit of Partnership

Hardscoop Distillery is located in Charleston, South Carolina. For more information visit www.hardscoop.com or call (843) 936-3626.

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Something to sniff about How we relate the structure of molecules to their perceived aroma.

WRITTEN BY GARY SPEDDING, PH.D.

s for any major journey, it begins with a mapped route leading to a full understanding of the topic at hand. A principal odor map unifies diverse tasks in olfactory perception — this being the title of a key paper dealing with how we might better interpret and understand our distilled spirit sensory flavor profiles [1]. The authors of that paper then note that the mapping of molecular structure to odor perception has been a key challenge in olfaction. An op-ed piece had noted a little earlier that scientists at UC San Francisco had created an impressive molecular-level, 3D picture of how an odor molecule activates a human odorant receptor and describing this as a crucial step in deciphering the sense of smell [www.ucsf.edu/news/2023/03/424956/makingsense-scents]. That paper, published in 2023, was significant for the perfume/fragrance and food sciences industries [2] as well as the brewing and distilling businesses. In principle, the mapping of the interactions of thousands of molecules with the several hundred postulated odorant receptors should then lead to the design of molecules while, furthermore, allowing predictions as to what they would smell like. With the new publication it is argued that we might now be realizing that goal or are indeed closing in upon it [1]. The idea is not to get bogged down here in the intricate math and big-data analysis involved with this complex biological and chemical program, but rather to point out a few of the scientific features, and to try to integrate the story into an appreciation of our distilled spirits and their flavor properties and profiles.

Sight, Sound and Aroma In providing some background into olfactory issues, it is to be noted that neuroscientists were, and are currently, engaged in the mapping of the physical properties of a stimulus to the perceptual characteristics. Compared to an understanding of aroma signals and perception, this problem was easier to resolve for vision based on wavelength of energy mapping to color and sound based on vibrational energy frequency mapping to pitch [1]. The issue with olfactory perception relies on mapping from chemical structures to the firing of the olfactory receptors and the complex brain activity required in perceptions and interpretation. The aroma/flavor label itself does not reside with the molecule per se but rather in how the brain interprets that stimulus or “quality.” The concentration of the molecule being inhaled, along with dozens to hundreds of other components in the inhaled air can also affect the final interpretation of the odor percept for a particular component. However, the structural features of the molecule are also important in that overall perception as will be 92

seen later. In totality, the formation of “flavor” depends on the integration of information coming not only from the taste stimuli themselves, but also from the visual information of the food, the tactile stimuli of the mouth or the texture of food, and to the larger extent, from aroma volatiles, especially those that are released into the oral cavity when consuming food [3]. An earlier model proposed, as for enzyme and substrate interactions, a simple “lock and key” concept — a molecule’s shape would fit a specific receptor and “open the gate to the pathway” to its perception. That model though is too simple to account for this animal/ human sense. Some molecules are known to activate the firing of some receptors and/or to switch off others. For our purposes I recommend reading a neat little book — Smellosophy by Ann Barwich [4] and other works by her as author or coauthor for much more on this [5, www.thebsps.org/ auxhyp/making-sense-of-scents-the-scienceof-smell-ann-sophie-barwich/ and Barwich, Ann-Sophie. “The Cinderella of the Senses: Smell as a Window into Mind and Brain.” iCog Blog (2018): n. pag. Print.]. Besides the detection/olfaction problem, lexicons of olfactory terms may have large or small impacts on sensory assessments. Thus

additionally, language, culture, and biology impact our global perceptions of olfaction — English speaking peoples argue that there are few terms for odors, but other cultures entertain more “smell talk” and odor naming is easier [6, 7]. Western subjects are stated to give a true response when labeling their perceptions only 30-50 percent of the time, with wide variation in those subject responses [7]. Supposing that a model where each smell should correspond to only one label is wrong, yet this is often what we teach in sensory training, at least after an initial free-choice profiling exercise. The above discussion, and a little more on the keynote paper [1] will, as seen later in the text, lead us into sensory evaluation and how to start looking at the profiles, and the desirable and undesirable aroma/flavor notes in our products, while also taking into account gustatory responses, clarity, color, sounds (carbonation release for any such effervescent products) and trigeminal nerve stimulation (cooling, warming, spiciness, heat, and irritation — mouthfeel/touch/tactile properties, astringency, viscosity and so on). An understanding of the trigeminal response — nasal perception of odorants and airflow — is also seeing renewed research interest of late [8, 9]. W W W . ARTISANSPIRITMAG . C O M

listed in supplementary materials for

Figure 1. Word cloud map of 140 odorant molecules as

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Caramelic

Powdery

Jasmin Lactonic

Cooling

Hyacinth

Musty

Winey

Herbal

Chocolate

Geranium

Nutty

Melon

Orangeflower

Spicy

Leafy

Cooked

Alcoholic Sweaty Banana

Apricot

Orris

Tropical Orange Solvent

Sharp

Chamomile

Sour

Hay

Peach

Cortex

Pear

Pine

Lemon Radish

Apple

Meaty

Fruity Burnt

Fermented Anisic

Lavender

Plum

Berry

Clove

Tea

Metallic

Cocoa

Woody

Muguet

Cucumber

Amber

Earthy

Onion

Pungent

Milky GrassyStrawberry Sandalwood

Brandy

Honey Buttery Floral

Cognac

Fishy

Ethereal

Ripe

Almond

Camphoraceous

A further set of review notes are covered below that deal with the principal odor map paper of Lee et al., [1]. First, however, an earlier paper deserves mention here as it proposed olfactory perception as a compass for olfactory neural maps such as was denoted by its title [10]. This work describes the olfactory bulb and an important issue in chemical structure — enantiomeric forms of the same compound. [Enantiomers are a pair of molecules — optical or stereoisomers — that exist in two forms that are mirror images of one another but cannot be superimposed one upon the other.] “Despite their similarity, pairs of enantiomers can elicit distinguishable odor quality.” “The combination of dissociable odor perception with nearly identical chemical properties renders enantiomers as a crucial tool for understanding olfactory perception [10].” The issues of enantiomer discriminaCheesy tion are covered nicely Pineapple with examples in this Terpenic latter work. As a case in Smoky Gassy point, the compound carvone presents in R-carvone labels Rose Coffee as spearmint, whereas S-carvone is labeled as caraway. Odor receptor coding is also discussed and diagrammed elsewhere [11]. All this work follows on as described by Lee et al., [1] from the research of others, including that of C. S. Sell, a well-known perfume chemist [12]. Lee et al., describe the riddle of discontinuities in structure vs. odor perception by describing Sell’s triplets ( more on this later). Consider three molecules of which a structurally similar pair, within the three, is not a perceptually similar congruent pair, bearing in mind this statement is somewhat confusing. For the structurally similar pair, one is perceived as odorless, while the other smells of muguet — lily of the valley (fresh, sweet, and floral). A structurally dissimilar pair are, however, perceptually similar (muguet, fresh, floral, sweet and muguet, fresh, floral, and rosy) in character or labels [1]. Other cases and the effects

Hawthorn

details.

with the ultimate goal of machine-aided predictions of odor from molecular Sweet structures. The information on aroma/ Popcorn flavor notes is derived from databases Grapefruit known as the Good Scents and Leffingwell directories. The distiller, faced with an unBlackcurrant usual sounding chemical name rather than Musk Potato its correct (IUPAC) systematic naming conRaspberry vention (nomenclature), could at one time Ketonic look up its aroma and flavor characteristics — if Mushroom Fresh Hazelnut known — from these directories. As an examBeefy Cinnamon ple, isoamyl acetate (aka isopentyl acetate) is an organic compound that is the ester formed from Citrus isoamyl alcohol and acetic acid and — it has the Cabbage Soapy odor of banana and pear essences. Sometimes a Sulfurous Cedar CAS (chemical registry) number can be used to Tomato Vegetable Leathery Celery find information about a molecule from such Dairy sites. The Leffingwell program is, however, Radish Alliaceous limited access without a subscription to the Mint Fruit skin full directory and the GoodScents site Aldehydic Odorless might not be readily available. Other Grassy Medicinal Warm sites are, however, available on Lily Coumarinic the web for reliable strucTobacco Oily Waxy ture, naming, and sensory Grape Malty property information, Aromatic Creamy Phenolic including most moleJuicy Bitter Vanilla cules that the reader Rummy will find in relation to Roasted Green descriptors of distilled Animal Dry Garlic spirits aromas/flavors. Clean Coconut Violet These describe listings Weedy Vetiver Natural of “aroma sensations” and Savory taste, but in the end the toBergamot tality of flavor is related to both olfaction and gustation (and the other senses noted below and in the Addendum) with olfaction the dominant player in both of structural modifications were examined by orthonasal and retronasal transport routes of Sell [12] and other sets covered by Lee et al., volatiles to the olfactory bulb and the brain [1]. Those chemical group modifications that circuitry that interprets and controls such show up as remarkably interesting changes in sensory perceptions. the aroma labeling lead us to the term, SAR The transport routes — a topic unto it— structure-activity-relationships. Other auself — deal with the volatility of molecular thors have also recently addressed this topic, species and if and how they enter the air (or with details to be found in several publicaheadspace for a spirit in glass): their non-voltions [13-17]. The subject also bears upon atile and hydrophilic properties related to the findings of Lee et al., and other authors as penetrating the mucous layer outside the olseen below. factory surface, their hydrophobic properties Following on to the main thrust of the Lee to enable entry and binding in an olfactory et al., paper, some notes of corroboration receptor site, and finally the ability to actifrom other recent studies need to be includvate at least one olfactory receptor [18]. Such ed. The dissertation directive of Lee et al., is routes, and the dimensionality of odor spaces to explain the mapping of data sets containing being discussed in depth elsewhere [19-27] five thousand semantically labeled molecules Balsamic Fatty Cherry

More on the Main Course

used in sensory training. See text for

Ozone

General odorant terms that might be

Reference 1.

Table 1. Summaries of key details or questions iding posed in or via a series of articles prov the information on the olfactory system and 19-27] s rence [Refe es. spac odor of dimensionality [Reference No.] Text summary of paper and additional commentary. [19] Detailing a need for us to understand underlying bio processes, and even questions how simple two odor component systems work together let alone how many more components work together and are detected as in such cases as in a spirit matrix. [20] Detailed guide to molecular recognition in olfaction — with earlier competing theories discussed! [21] Physics — of dilution — Volatility, vapor pressure, gas laws, partition coefficients and fluid dynamics. What is the odor landscape? And what constitutes the “olfactory cocktail party?” — Mixtures of odorants complexity. [22] Another detailing of the prediction of olfactory perception via activity of odorant receptors. Discusses if many receptors can detect an odorant but that only one or a few convey the concept. [23] Considers that olfaction as a “distance sense” in comparison to gustation (taste) which operates by “direct contact” — i.e., “touch” must be combined into a single sense — a combination of all chemosensory modalities (spatial and molecular perspectives) signaling the overall communication of partaking of the food, the beverage, or the breath of air. This team attempts to unify a theory of ligand and receptor relationships. This involves gustatory, olfactory, and trigeminal/chemesthetic sensations — molecules detected by multiple chemosensory systems. That is one singular mode of chemical communication called “chemosensation.” If the reader chooses only a few articles to delve into this should be one of them from the perspective of high readability even for the non-scientist. See also Refs. 26, 44. [24] Discusses how a known agonist of one sensory receptor can be an antagonist of another. Complicating an idea of a simple additive code for sensory perception, the thought is about “how the brain deciphers the notes that are not being played [out]” here. [25] A highly detailed account of odorant recognition by a human odorant receptor. Includes genetic and protein sequences, models of ligand: receptor binding and concentration binding curves. [26] A nice short account on olfaction. [27] Another short succinct account of things. High sensitivity and low thresholds (some super low) of detection compared to taste thresholds discussed. Suggesting more than 20,000 odors are detected and that each odor activates a different sequence of spatial patterns (assumed from only 400-500 different receptors). [Others suggest 350+ receptors in the human olfactory system.] References that provide background details on olfactory systems and molecular recognition systems. Also detailing how our different sensory systems may work together. References 13-17 also provide details with respect to the overall picture of odor spaces and their dimension, and how we navigate in the sensory sphere or aroma cloud around us — the physics, chemistry, and biochemistry of how we receive, perceive, detect, and interpret odors.

with brief summary notes on each publication noted, can be found in Table 1. Coffee has more than eight hundred volatile components, therefore your spirit most certainly has several hundred, maybe more. That such mixtures of odors do not necessarily elicit a simple sum of responses to individual components of the blend is eloquently covered by Xu et al. [28]. Again, agonism (positive or activating stimulatory activity) and antagonism (negative inhibitory activity or preventing or slowing down an activity or event) are shown to be in play. And likely all of us realize that when assessing whiskey, gin, etc., it is common to perceive one odor dominating another. These are stimulus energy inputs at work. With sensory training and avoiding biases we tend to learn to look for other notes, both positive and off-flavors — that is “seeking” stimulus energy changes, to better describe the product in glass! Thus, pattern recognition and not simple additive combinatorial codes might be involved in building up an overall perception [28]. In addition to the above complexity, a consideration of genetic variation related to olfactory receptors and odor perception amongst individuals needs to be accounted for [29]. That such variations may be impacted by odor molecules that may be agonists or antagonists affecting olfactory receptor firings are now being posited by many authors cited herein. Receptor gene expression activity may also play into this. The recent COVID-19 pandemic has led to a lot of research into olfactory and gustatory sensory mechanisms and why such normally active senses were lost in totality during infection in some people but not others. And sometimes that loss was permanent. See Zazhytska et al., for further details on this subtopic [30, 31] A deeper question to ask here is whether there is a set of primary odors as there is for colors? [29] This problem is compounded by the fact that the number of estimated odorous molecules far outweighs the number of olfactory receptors (some estimates posit 400-500 in humans, more so in dogs. Note: others suggest ca. 350+ in humans) [18]. Moreover, it is estimated that only 0.000003 percent of all potential volatiles have so far had an impact on sensory studies! Will the details in the paper of Lee et al., also help address such questions? Read on.

Well, it ain’t over until the Lee paper sings — though others were involved in the chorus There has been much ado about this Lee et al., paper, however, in view of the plethora of new papers on this topic a few others must be noted to complete the picture. The idea behind this review is not to get bogged down in details of algorithm generation/computer programming, stats, or mathematics as that much is beyond me in that realm. The main point is to deal with aroma, along with a bit about taste/ tastants (gustation) and a bit about irritation (trigeminal-touch sensations). In summing up the details in the Lee et al., paper, several related publications need to be mentioned in context as things are not built by one team nor in a vacuum, as scientists like to say. So, big data programs, processes, sensory information gained, and descriptors or relevance to distillers and sensory program teams are noted in several references as summarized in Table 2 [32-45]. These references help to provide a more complete understanding of the overall picture discussed by Lee et al. [1]. In furtherance of the mission to convey useful information to sensory evaluation teams at distilleries, two papers from the Scottish whisky industry will also be referenced before moving on to the finale. As to how molecules are either held or retained within a particular ethanol-water spirit concentration, or released into the headspace for perception in the olfactory port, is yet another topic unto itself but has also received much attention of late. See Shuttleworth et al., [46, and references contained therein for more on this story]. A highly detailed examination, in and of itself, into this related subject matter. With mention of a recently introduced term — the “aroma cloud” — representing all the molecules in the headspace of a cup of liquid or glass of whisky or gin, etc., that can be perceived by the human olfactory system and with the perception of the entire flavor profile then built up by the complex sensory-brain-wiring circuitry. As another aside, with a little respite here — are you wishing to learn how to assess Scotch whisky? (Or other spirits of course.) Scottish whisky researchers also show how to best assess the flavor of such spirits [47]. Important reading for all distillers.

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Table 2. Summaries of key references on modeling and sensory knowledge. [References 32-45]

Finally, to a summation of the Lee et al., paper! The web is alive currently with the news — “In a major breakthrough, scientists have built a tool to predict the odor profile of a molecule, just based on its structure. It can identify molecules that look different but smell the same, as well as molecules that look remarkably similar but smell totally different. The research was published in Science.” As noted above (or in cited works from the references noted herein) many teams have worked on this topic for decades. As already noted, the idea is not to get bogged down in mathematics of all this, but some key points will help show how the research group of Lee et al., unraveled this olfactory mystery. A principal odor map (POM) was constructed based on four hundred out-of-sample odorants and their model was cited as being as reliable as a human in describing odor quality and dealing with other odor prediction tasks. As noted in other papers (see Tables 1 and 2), each atom and molecule have been investigated based on their physical properties. Studies have also looked at the activation or lighting up of neural networks in support of understanding olfactory perception as has been used in resolving other physical systems. Using a defined set of five thousand molecules, understood based on multiple odor-label assignments and information gained from key flavor and fragrance databases led Lee et al. to view odorant perceptual distances and hierarchies and generate a map of structure-odor relationships. As also noted above, earlier works were reconsidered with respect to molecules with similar structures, as well as different odor labels and structurally different molecules with similar percepts [12]. First and second principal components of odorants led to “cluster” maps showing distinct floral, meaty, and ethereal regionalities. While physicists and analytical chemists will better understand the approaches, we can set those aside for now and take home the following messages: Following the initial success in the generation of high-fidelity maps showing true perceptual distances tagged as floral and meaty (beefy) odorants (i.e., mapping of known perceptual relationships), the approach was extended to look at novel odorants. The model was built upon human-trained sensory panel data — group-averaged odor ratings (to account for variability in perception by individuals) and based on four hundred novel odorants. Such molecules were chosen based on structurally

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[Reference No.] Text summary of paper and additional commentary. [32] Big data mining looking at descriptive structure-odor relationships — linking the perception of smells to chemistry of the odorants. Exploring issues of fruity vs. floral notes etc. A database of 1689 odorants and physicochemical properties and olfactory qualities. A validation of rules linking chemistry and perception was suggested — with descriptive and predictive modeling a possibility. A neat word cloud of the main seventy-four studied olfactory qualities is presented in this work. See: journals.plos.org/ploscompbiol/article/figure?id=10.1371/journal.pcbi.1006945.g002 for a copy. Fruity, floral, woody, camphor, earthy, spicy, and fatty noted as better known olfactory assessment attributes. The structure — linear, cyclic, and molecular “flexibility” and hydrophobic/-philic properties noted for floral, camphor and woody notes in particular. And modelling of sulfuraceous, vanillin, phenolic, musk, sandalwood, almond, orange-blossom jasmine, hay, tarry, and smoky aromas so qualified. The paper finishes with a discussion of aroma databases, rules for evaluation and the relevance of such to optimization of product formulations. GS Commentary: To me this relates to a possible memory and visual issue. Could looking at a banana illicit the aroma in the brain based simply on memory? This topic covered under the article reference [23] perhaps. Phantom limb syndrome comes to mind here — a condition in which patients experience sensations, whether painful or otherwise, in a limb that does not exist. Could synesthesia also play a role here? This is a neuropsychological trait in which the stimulation of one sense causes the automatic experience of another sense. Synesthesia is a genetically linked trait estimated to affect from 2 to 5 percent of the general population. At this point we leave it at that as a note for future reflection.

[33] While not peer reviewed, this review article also covers a database of 112 scents with an aim of determining structure-scent relationships. And deals with an example ripe for machine-learning. An examination of the manipulation of esters (largely fruity associated components) is covered, as well as further details on modeling the concepts we are discussing here. A term used is of interest — counterfactual analysis. Providing insights into which structural groups on a specific molecule may influence its corresponding scent (aroma). Of interest here for distillers is how short to medium chain acids (cheesy, rancid, goaty labeled aromas) combine with alcohols (solventy, harsh, ethereal) to form fruity and floral percepts (notes). With structural changes, including a shortening of carbon chain length in fatty acids leading to a loss of their fatty scent quality. A neat table explains aroma qualities for several “flavors” based on which chemical groups or substituents are present or absent on molecules. Included: alcoholic, apple, fatty, fruity, meaty, popcorn, roasted and sulfurous. Meaty, popcorn, roasted and other “cooked” notes generated during the Maillard reaction — a key feature of beer and spirits production. Correlations were not always perfect re specific groups and say apple qualities in many different molecules but useful information for the models and data sets, nonetheless. Artificial intelligence methods at play as also discussed by others (Achebouche et al., [34]). A full supplemental information set extends the scent term label list to qualifying chemical structural features. [34] Conveys recent details on the application of artificial intelligence to decipher/decode the relationships between odor perception via interactions of small molecules and receptors. The team cluster odor notes into categories such as woody, fruity, spicy etc. Which provides another nice lexicon for sensory training purposes — a grouping of odor notes in categories having a similar perceptual space. More structural features are described associated with aroma/flavor impressions. An important conclusion ...“an odor results from the perception of a mixture of molecules, which give more complexity in such classification.” [35] A paper showing that metabolic activity organizes olfactory representations and deals with principal odor maps (POM). Of interest to gin producers here is the data set of 214 molecules found in over 300 essential oils expressed as pairwise POM distance values. Respective pairs of compounds isolated from rose oil and orange oil with dissimilar structures showed similar odor label qualities. Why this is the case is discussed with respect to POM mapping and to relationships of metabolic generation within the terpenoid biosynthetic pathways. This is the same research group as for Reference 1. [36] In looking at data sets and two-class prediction pairs; odor/no odor, fruity/no odor, floral/ no odor, and woody/no odor and the quaternary set, fruity/flowery/woody/no odor, three kinds of prediction models were able to robustly predict molecular odors. Once again it is noted that an artificial intelligence prediction model showed that molecular charge, weight, composition, shape, surface interaction and hydrophobic interactions are closely related to molecular odor characteristics. Such data models could be used to identify molecules with specific odors for application in the food flavor, cosmetic fragrance, and material preparations business. [37] Another paper of note for this topic. [Title page only viewed thus far.] [38] Human perceptual ratings revealed data patterns and ratings from which the derived data were then used to train several machine learning algorithms for odor-structure predictions. Issues of perception by untrained human subjects and the effects of biases in the study are highlighted. The paper-worthy of a look based on misclassification of test compounds and semantic descriptors reported for odorants labeled as sweet and musky, respectively. Learned behavior, familiarity, biases in perception and activation of receptors by odorants clearly not a simple issue or concept to defend in terms of a holistic story. The use of trained vs. untrained subjects could make big differences in the working algorithms generated using more subjective or objective data sets.

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Table 2 continued... [Reference No.] Text summary of paper and additional commentary. [39] Another linear classification algorithm for the prediction of a molecule’s odor is called Olfactory Weighted Sum (OWSum). One cannot help but see the pun in that abbreviation. This model allowed for a review of an analysis of ninety-seven odor molecules that belonged to eleven olfactory descriptors: aromatic, floral, fragrant, heavy, light, medicinal, sickening, sweet, woody, resinous, fruity (other than citrus and perfumery). A third of the molecules have labels that fit more than one of these “classes.” The cross-label relationships are shown in a colorful chord diagram. An important number of the molecules connect with fragrant, aromatic, and sweet. {Author notes: Vanillin is not sweet in taste but conveys a sweet aromatic impression based on our association with it in ice cream, deserts, custards etc.}

See Keller and Voshall Human Olfactory psychophysics [44] for more on this “perception” of sweetness based on the aroma as opposed to actual taste. Based on their initial descriptor overlap notes Schicker et al., dropped down to a set of sixty-four molecules belonging to the clades: floral, medicinal, woody, resinous, sickening, fruity (other than citrus and perfumery). As for other studies, various structural features, substituents, bonds, and physicochemical properties of molecules proved congruent with specific odor labels. One interesting point is that “the main group of fruity odorants are esters, but esters are neither a necessary, nor sufficient criterion for a molecule to smell fruity.” 40] Category clustering of odorants is considered to simplify structure-odor-relationship (SOR) machine learning algorithms and models. This method of structure odor prediction counters the limited application of gas chromatography /olfactometry methods whereby subjects sniff-assess an “out-gassing” aroma note while the GC records the peak corresponding to that odor label. The authors indicate that the human nose has over 400 olfactory receptors, the dimensionality of odor perception is only around 20 or less. Thus arguably 20 categories would be reasonable to understand the biology olfaction perception space. Nineteen cluster groups are presented with, for example, Cluster 1: butter, fishy, ammoniacal, cheese, sour, rancid sweaty and cheesy labels assigned, cluster 19: warm, cinnamon, cassia, deep, clove, carnation, root, bay, and ginger. For sensory evaluation purposes, and further understanding of this topic the reader should view the other cluster-information labels. www.biorxiv.org/content/10.1101/2022.04.20.488973v1 [41] Provides an overview of earlier human olfactory research whereby machine-learned methods were used and the typical problems that were being analyzed. Such issues included, (1) Physiology of pattern-based odor detection and recognition, (2) Pattern recognition in olfactory phenotypes, (3) Olfactory acuity as a diagnostic biomarker (clinical diagnoses), (4) Odor recognition (Electronic noses), and (5) Knowledge discovery in publicly available big databases. [42] An interesting study in how subjects navigate and encounter smells in a natural environment and make predictions on yet-to-been-encountered aromas. Such might pertain to an approach to analyze a new glass of a known spirit type. Seeking out components underneath the initial impressions perhaps. While this is a survivalist perspective, navigating to a desired food source for example might be applicable to evaluation of our beverages. Degrees of separation of odors? Who is on first, next, who is strongest, weakest? Though grid space takes it beyond this simple level. [43] A newer paper on grid-like representations or responses in the brain during the taking on of spatial and non-spatial tasks. Spatial mapping in sensory perception and taking perception to cognition — attention, memory, reasoning, and knowledge. What do those detected volatiles tell you about the product before you? Are you now looking for more positive attributes, off-notes etc. Is the product harmonious or disjointed? Some say high amplitude for a product of high desirable quality. [44] A superb short, and to the point — must read note — on the psychophysics of human olfaction. Covers details of semantic odor quality descriptors, and thresholds including a means of odor threshold detection using a model known as the single-staircase method. Some earlier important references are also cited within. Very readable and a highly recommended article for the scientist/sensory expert and novice alike. [45] Describes olfactory testing, smell dysfunction, odor-specific intensity, and olfactory experience. Human sensitivity to odorants can vary quite significantly and some are “odor/smell blind” (anosmic) to some or many compounds (www.nidcd.nih.gov/health/smell-disorders). This affects the reliability in testing, training and (speculatively on my part) dealing with artificial intelligence model development. The article also hints at an interesting situation in that single component testing for threshold determination is not always as dependable as when a mixture of components is presented to the test subject. The chemical complexity of odors increases reliability of olfactory threshold testing. This might have something to do with multiple receptor activations and synergism (see for example Barwich for more on this [4]). This table of references dealing with key publications highlights information, contained within each, that corroborates, is complementary to, or adds to the tenets and arguments made by the authors of the Lee et al., paper [1]. And provides further background information on the topic including details of use for sensory panel team leaders/experts, and those wishing to learn more about the flavors/aromas they might detect or expect to find in their favorite distilled spirits. Artificial intelligence models and the prediction algorithms and experimental details are provided within many of these references. Also seen will be details of predictive algorithms and model approaches that are different from the system(s) described by Lee et al., [1]. Advantages, disadvantages and limitations to the models and data collected, plus extended details of the molecular biology and chemistry of olfaction included. This group of up-to-date articles thus represents, as best as can be seen, a more complete picture related to “big-data collection programs” — and to the building up of a principal odor map and to a more comprehensive understanding of olfaction — the sense of smell.

distinct differences that covered as wide a range as possible in terms of odor labels and, moreover, were structurally or perceptually distinct from any earlier used or typical training samples. Thus, both humans and machines (algorithms) were seeking new needles in the haystacks and “pinpointing” the structural features important in the perceptions. The set of four hundred novel odorants was reduced to 320 (down by 80) for final model validation based on various considered reasons for their rejection. Math and statistics were described in the paper; however,the results were remarkably impressive. And, as they discussed, more so based on a distinct difference in the approaches — human panelists actually smell the respective sample odorants whereas the model’s predictions are based on the molecular structural features/data. The model fared well for most labels except for musk. The model apparently performed very well for sulfur-containing (e.g., “garlic”) molecules and amines (“fishy”) based on these two structural “substituent” features (S, or -NH2). Molecules carrying the musk label fared poorly, and this was attributed to the fact that this clade of molecules can be highly varied in structure and substituent features. Compared to the model, the human nose and brain associate various odorant smells to common food aromas and the machine model cannot do this. Familiarity breeds comparative strength for some classes of odorants. It’s a feature to be aware of in subsequent modeling studies and comparisons of human and machine performance (see Addendum]. Genetic variability can lead to weak assignments on some odorants which is why panelists are assessed on odorant nomenclature as well as threshold determinations (see 29 and 44 for details on such issues). Machine learning can now also come to terms with respect to threshold evaluations — seeking stimulus energy changes. (This is my interpretation of notes from within the Lee et al., article and their supplementary materials [1].) Human and model performance also depends on repeated exposure to odorants, odorant classes, or to data — this bears on training of panels outside this topic of discussion and how the data from the human panel and the predictive model are compared and contrasted for congruence and reliability. The purity W W W . ARTISANSPIRITMAG . C O M

of components used for training must also be accounted for (an extremely low concentration of a very low threshold of detection component can severely affect — swamp out — the detection/determination of the dominant molecule in the training or standard test sample solution). A cautionary warning here then for sensory panel leaders when choosing stocks and suppliers of reliable test compounds to use for training. Several companies supply encapsulated pure compounds useful for training purposes. Two notable contaminant cases mentioned in the article included an undesirable note in beer and spirits — diacetyl! Such anomalies affect the congruence of model and human data percepts. As such the group removed twenty-six molecules from further predictive model building. Neat and useful, spatial maps of odorants based on model correlation with human panelist mean data values are presented for fifty-five odor labels (in nineteen of what I will call clades or group labels). Further work included forty-one sets of triplet components (an anchor as a known odorant, and one structurally similar and one structurally dissimilar component and with the dissimilar odorant predicted to be perceptually more similar to the anchor than the other). The results are best viewed in the original paper because there are, or can be, some counterintuitive explanations based upon other program algorithms and interpretations. The authors explain this issue and conclude that “the POM (system) overcomes discontinuities in the structure-odor relationship.” Similar odors show up as having a small perceptual distance, while dissimilar odors exhibit much larger distance separation. Perceptual similarity followed the model predictions, not so for structural similarity. Moreover, this corroborates the earlier findings of Sell [12] with respect to a trio of molecules — a pair of them structurally similar molecules (one exhibiting an odor response, the other odorless) and a perceptually similar pair (different structural configuration with both showing similar odor descriptors). Supplementary materials W W W . ARTISANSPIRITMAG . C O M

for the reference of Lee et al., [1] cover several other examples. The model they have built can take odor science a great leap further to predicting the odor properties of molecules that are theoretically possible and that are still to be synthesized or discovered. Their model is self-described as comparable, or even superior, in performance to other models that have been used in many laboratories to characterize these features of odor (see Table 2 for references to other models and research efforts in this arena). This includes notes as to how information from these works can be applied to distillery sensory panel evaluations and for assessing or judging distilled spirit qualities. That is until these machines take over! The POM model is at least as good now as the “median human panelist” [1]. The paper [1] ends with some clues to further advance traditional human sensory perception programs, and, I suggest, an extension of the use of non-human sensory machines to seek out contaminants/ adulterants in beverages and to assess shelf-life deterioration or off-flavors that might increase over time. The supplementary documents to the paper include a training data set of 140 odorant molecules derived from two databases (Good Scents and Leffingwell). These terms have been incorporated into a word cloud map as shown in Figure 1. In addition, principal component mappings are shown for odorants under what I now propose as the term clades — 24 clades or classes — with the terms (alphabetically): Bitter, Chocolate, Dairy, Earthy, Farm, Fatty, Fermented, Floral, Fresh, Green, Herbal, Imperial, Meaty, Medicinal, Miscellaneous, Nutty, Powdery, Pungent, Spicy, Sulfurous, Sweet Fruity, Tart Fruity, Warm, and Woody. Each clade is linked to a respective subset of related odor labels (representing a total of 118 aroma/taste/flavor labels). Moreover, for the sensory panel leader fifty-five aroma references are detailed based on the key lexicon terms, useful for training purposes. Finally, a full account of sensory evaluation practices is provided. Invaluable!

Summary Olfaction has been noted as a sense without a map (unlike vision and hearing) which is why there is so much excitement over the paper by Lee, et al., [1]. The interaction between the odorant molecule and the olfactory receptor(s) induces a percept called “odor.” Large database sets and molecular and mathematical modeling have led to a greater understanding of aroma evaluation, and we now have some clues as to how to create a more involved and detailed sensory training and evaluation program for our complex spirit aroma/flavor profiles. The power of big data mining and the field of Omics (presented in Artisan Spirit Issue #44, 2023) has proven relevant to understanding such a complex topic as olfactory perception. A choice to outline the details of this paper by Lee et al., [1], and many related papers will hopefully prove invaluable from the perspective of educating us all to the power of sensory perception, and applying the details learned towards a better sensory evaluation practice. The expanded knowledge of the sense of smell, via a combination of different sources of data (Sensomics) from chemical biology (proteome-transcriptome — the molecular receptor story) and human perception with computational approaches (statistics and mathematical modeling — big data sets), has moved us forward in the furtherance of identifying the complete olfactory repertoire associated with human smell perception. That certainly is nothing to sniff at.

Addendum As is always the case, there is often more to discover and report upon just as an article is wrapped. I discovered several papers that could add to the story presented herein. A current example dealing with crossmodal sensory issues is considered worthy of addition at this late stage [48]. This principle deals with the fact that we exist within, or are exploring in our glass of whisky, a rich multisensory environment, whereby we experience a continuous stream of sensory information coming from different sensory modalities — vision, sound, smell, touch, and taste. Crossmodal correspondence refers to the tendency for normal observers to match distinct features or dimensions of experience across different sensory modalities — consistent associations between stimulus features from within our various sensory organs — and including touch or visual cognition

— soft fabrics associated with (expected) laundry detergent-derived aromas as an example. This was addressed briefly within the text and tables above and via some of the cited references and via my speculations as seen in Table 2/Ref. 32. From within this newfound paper written by Ward et al., [48] the authors first note that the nature and origin of olfactory crossmodal correspondences are an often-overlooked aspect of olfactory perception studies. Furthermore,

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they suggest that physicochemical features of molecules can partially explain these olfactory crossmodal correspondences. A brief reading shows coverage of numerous terms applicable to sensory evaluation, and the use of electronic noses, and moreover, provides key details useful for those building olfactory mapping devices and prediction models. The pleasantness of aromas, and their complexity and intensity, will impact both our and machine sensory

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(20) Horsfield, A. P.; Haase, A.; Turin, L. Molecular recognition in olfaction. Advances in Physics: X 2017, 2 (3), 937-977. DOI: 10.1080/23746149.2017.1378594. (21) Pannunzi, M.; Nowotny, T. Odor Stimuli: Not Just Chemical Identity. Front Physiol 2019, 10, 1428. DOI: 10.3389/fphys.2019.01428. (22) Kowalewski, J.; Ray, A.

Predicting Human Olfactory Perception from Activities of Odorant Receptors. iScience 2020, 23 (8), 101361. DOI: 10.1016/j. isci.2020.101361. (23) Mollo, E.; Boero, F.; Peñuelas, J.; Fontana, A.; Garson, M. J.; Roussis, V.; Cerrano, C.; Polese, G.; Cattaneo, A. M.; Mudianta, I. W.; et al. Taste and Smell: A Unifying Chemosensory Theory. The Quarterly Review of Biology 2022, 97 (2), 69-94. DOI: 10.1086/720097. (24) Xu, L.; Zou, D.-J.; Firestein, S. Odor mixtures: A chord with silent notes. Frontiers in Ecology and Evolution 2023, 11, 1135486. DOI: 10.3389/fevo.2023.1135486. (25) Billesbølle, C. B.; de March, C. A.; van der Velden, W. J. C.; Ma, N.; Tewari, J.; del Torrent, C. L.; Li, L.; Faust, B.; Vaidehi, N.; Matsunami, H.; Manglik, A. Structural basis of odorant recognition by a human odorant receptor. Nature 2023, 615 (7953), 742-749. DOI: 10.1038/ s41586-023-05798-y. (26) Menini, A.; Lagostena, L.; Boccaccio, A. Olfaction: From Odorant Molecules to the Olfactory Cortex. Physiology 2004, 19 (3), 101104. DOI: 10.1152/nips.1507.2003. (27) Nef, P. How We Smell: The Molecular and Cellular Bases of Olfaction. Physiology 1998, 13 (1), 1-5. DOI: 10.1152/ physiologyonline.1998.13.1.1. (28) Xu, L.; Li, W.; Voleti, V.; Zou, D. J.; Hillman, E. M. C.; Firestein, S. Widespread receptor-driven modulation in peripheral olfactory coding. Science 2020, 368 (6487). DOI: 10.1126/science.aaz5390. (29) Trimmer, C.; Keller, A.; Murphy, N. R.; Snyder, L. L.; Willer, J. R.; Nagai, M. H.; Katsanis, N.; Vosshall, L. B.; Matsunami, H.; Mainland, J. D. Genetic variation across the human olfactory receptor repertoire alters odor perception. Proc Natl Acad Sci U S A 2019, 116 (19), 9475-9480. DOI: 10.1073/ pnas.1804106115. (30) Zazhytska, M.; Kodra, A.; Hoagland, D. A.; Frere, J.; Fullard, J. F.; Shayya, H.; McArthur, N. G.; Moeller, R.; Uhl, S.; Omer, A. D.; et al. Non-cell-autonomous disruption of nuclear architecture as a potential cause of COVID-19induced anosmia. Cell 2022, 185 (6), 1052-1064.e1012. DOI: 10.1016/j. cell.2022.01.024. (31) Finlay, J. B.; Brann, D. H.; Abi Hachem, R.; Jang, D. W.; Oliva, A. D.; Ko, T.; Gupta, R.; Wellford,

evaluations, therefore this paper becomes an important contribution to the literature and to the topic we have covered in this current review. With that said, back to our glass of whiskey, gin, cognac… Gary Spedding, Ph.D. is a brewing, distilling, and sensory analytical chemist, and owner of Brewing and Distilling Analytical Services, LLC in Lexington, KY.

S. A.; Moseman, E. A.; Jang, S. S.; et al. Persistent post–COVID-19 smell loss is associated with immune cell infiltration and altered gene expression in olfactory epithelium. Science Translational Medicine 2022, 14 (676), eadd0484. DOI: doi:10.1126/ scitranslmed.add0484. (32) Licon, C. C.; Bosc, G.; Sabri, M.; Mantel, M.; Fournel, A.; Bushdid, C.; Golebiowski, J.; Robardet, C.; Plantevit, M.; Kaytoue, M.; Bensafi, M. Chemical features mining provides new descriptive structure-odor relationships. PLOS Computational Biology 2019, 15 (4), e1006945. DOI: 10.1371/journal. pcbi.1006945. (33) Seshadri A,; Gandhi HA,; Wellawatte GP,; White AD. Why does that molecule smell? ChemRxiv. Cambridge: Cambridge Open Engage; 2022. [This content is a preprint and has not been peer-reviewed.] (34) Achebouche, R.; Tromelin, A.; Audouze, K.; Taboureau, O. Application of artificial intelligence to decode the relationships between smell, olfactory receptors and small molecules. Scientific Reports 2022, 12 (1), 18817. DOI: 10.1038/ s41598-022-23176-y. (35) Qian, W. W.; Wei, J. N.; Sanchez-Lengeling, B.; Lee, B. K.; Luo, Y.; Vlot, M.; Dechering, K.; Peng, J.; Gerkin, R. C.; Wiltschko, A. B. Metabolic activity organizes olfactory representations. eLife 2023, 12, e82502. DOI: 10.7554/eLife.82502. (36) Bo, W.; Yu, Y.; He, R.; Qin, D.; Zheng, X.; Wang, Y.; Ding, B.; Liang, G. Insight into the StructureOdor Relationship of Molecules: A Computational Study Based on Deep Learning. Foods 2022, 11 (14). DOI: 10.3390/foods11142033. (37) Ravia, A.; Snitz, K.; Honigstein, D.; Finkel, M.; Zirler, R.; Perl, O.; Secundo, L.; Laudamiel, C.; Harel, D.; Sobel, N. A measure of smell enables the creation of olfactory metamers. Nature 2020, 588 (7836), 118-123. DOI: 10.1038/ s41586-020-2891-7. (38) Chacko, R.; Jain, D.; Patwardhan, M.; Puri, A.; Karande, S.; Rai, B. Data based predictive models for odor perception. Scientific Reports 2020, 10 (1), 17136. DOI: 10.1038/s41598-020-73978-1. (39) Schicker, D.; Singh, S.; Freiherr, J.; Grasskamp, A. T. OWSum: algorithmic odor prediction and insight into structure-odor relationships. Journal of Cheminformatics 2023, 15 (1), 51. DOI: 10.1186/

s13321-023-00722-y. (40) Liang, S.; Chuanjun, L.; Fengzhen, T.; Bin, C.; Lianqing, L.; Kenshi, H. Machine-LearningBased Olfactometry: Odor Descriptor Clustering Analysis for Olfactory Perception Prediction of Odorant Molecules. bioRxiv 2022, 2022.2004.2020.488973. DOI: 10.1101/2022.04.20.488973. (41) Lötsch, J.; Kringel, D.; Hummel, T. Machine Learning in Human Olfactory Research. Chem Senses 2019, 44 (1), 11-22. DOI: 10.1093/chemse/bjy067. (42) Bao, X.; Gjorgieva, E.; Shanahan, L. K.; Howard, J. D.; Kahnt, T.; Gottfried, J. A. Grid-like Neural Representations Support Olfactory Navigation of a TwoDimensional Odor Space. Neuron 2019, 102 (5), 1066-1075.e1065. DOI: 10.1016/j.neuron.2019.03.034. (43) Chen, Z. S.; Zhang, X.; Long, X.; Zhang, S. J. Are Grid-Like Representations a Component of All Perception and Cognition? Front Neural Circuits 2022, 16, 924016. DOI: 10.3389/fncir.2022.924016. (44) Keller, A.; Vosshall, L. B. Human olfactory psychophysics. Curr Biol 2004, 14 (20), R875-878. DOI: 10.1016/j.cub.2004.09.066. (45) Hsieh, J. W.; Keller, A.; Wong, M.; Jiang, R.-S.; Vosshall, L. B. SMELL-S and SMELL-R: Olfactory tests not influenced by odor-specific insensitivity or prior olfactory experience. Proceedings of the National Academy of Sciences 2017, 114 (43), 11275-11284. DOI: 10.1073/ pnas.1711415114. (46) Shuttleworth, E. E.; Apóstolo, R. F. G.; Camp, P. J.; Conner, J. M.; Harrison, B.; Jack, F.; Clark-Nicolas, J. Molecular dynamics simulations of flavour molecules in Scotch whisky. Journal of Molecular Liquids 2023, 383, 122152. DOI: 10.1016/j. molliq.2023.122152. (47) Daute, M.; Jack, F.; Baxter, I.; Harrison, B.; Grigor, J.; Walker, G. Comparison of Three Approaches to Assess the Flavour Characteristics of Scotch Whisky Spirit. Appl. Sci. 2021, 11, 1410. DOI: 10.3390/ app11041410. (48) Ward, R. J.; Wuerger, S. M.; Ashraf, M.; Marshall, A. Physicochemical features partially explain olfactory crossmodal correspondences. Scientific Reports 2023, 13 (1), 10590. DOI: 10.1038/ s41598-023-37770-1. W W W . ARTISANSPIRITMAG . C O M

WRITTEN AND PHOTOGRAPHED BY CARRIE DOW

THE

POWER OF

PIXIE Entrepreneur Paula ‘Pixie’ Dezzutti has built a spirits and entertainment empire in Charleston, South Carolina. She’s about to go global.

“W

e are market leaders in all categories of spirits, but I know I’m not on this planet to sell vodka,” announced Paula ‘Pixie’ Dezzutti inside the tasting room of one of her many business ventures, Striped Pig Distillery in Charleston, South Carolina. “My goal is to take a trillion-dollar industry and turn it into a philanthropic, give-back initiative, where we exchange brand loyalty for the consumers’ dollars, and we support their own initiatives.”

PHOTO PROVIDED BY STRIPED PIG DISTILLERY

Fifteen minutes earlier, I was perusing the distillery’s merchandise waiting for her to arrive when she entered talking on a cell phone. She waved hello while walking past and still talking on the phone went into the distillery area to check in with two of her sons who work alongside her — one a distiller and operations manager and the other the tasting room and retail manager. Returning to the tasting room she ends the call and asks, “Are you the writer?” I answered yes, but before I could formally introduce myself or ask

a single question, she jumped right in. And never stopped. “Oh, my book on NFTs just came out. It went for pre-release on my birthday, June 3, which is also [Striped Pig’s] 10th anniversary. We took our trillion-dollar industry to the blockchain by formally launching, minting, and creating the first NFT opportunity in our space around 111 individual NFTs represented by the first barrel of bourbon ever made in South Carolina. Now everybody is talking about NFTs in the beverage space. And with my book …” she paused glancing at the digital recorder in my hand. “Well, there’s a lot. I hope you’re recording.”

MEET PIXIE: A ONE-WOMAN POWER STATION A 60-year-old petite blond with a sparkling smile, Dezzutti is a single mother of nine adult children and grandmother of ten. She could easily be mistaken for your kid’s grade school W W W . ARTISANSPIRITMAG . C O M

teacher, but inside beats the heart of a lion with the stubbornness of a bulldog. She moves fast and talks faster. If you can’t keep up, too bad because she doesn’t have the time or inclination to explain things twice or wait for permission. She’s too busy building an empire. After 20 years in the financial and real estate sectors, Dezzutti was already a successful businesswoman when she first entered the spirits industry in 2009 as an investor, consultant, and executive marketing director for Terressentia Corporation, a contract distillery in North Charleston. Shortly thereafter, Terressentia bought a distillery in Owensboro, Kentucky, called OZ Tyler, a defunct distillery that hadn’t made a bourbon since 1992, but did have a claim to fame for being Kentucky’s 10th licensed distillery first issued in 1885. After changing the distillery’s name back to its original — Green River — the distillery put out a bourbon that quickly developed a following before

getting bought by Bardstown Bourbon Company for an undisclosed amount. “We just had a big exit to the Bardstown acquisition,” said Dezzutti telling me what she could about one of several eye-popping distillery sales in 2022. “Along the way I realized that I didn’t just want to be contract manufacturing and I didn’t want to be a rectifier. I saw where the breakdown was and what those spreads and margins were and the difference in laws between being a manufacturer and what you could do as a distiller and how you could interact with people.”

ONLY SO MANY CLOONEYS Taking what she’d learned at Terressentia, she founded Local Choice Spirits in 2011 to create boutique and celebrity spirit brands and combine it with a philanthropy program she created called Sip & Share. The program gives back two dollars of every bottle sold as part of a fundraiser through charity partners. The boutique vodka Gold Star has brought in over $40,000 for military veterans. She says, however, that the celebrity spirits market is not for the faint of heart. “I’m looking at 38 brands

100

that came across my desk in the first year … and 99 percent of those brands were not around a year later. [Startups spend] three to five million dollars, and less than one percent of those are really going to be successful. How many Clooneys? How many Casamigos, right?” Some of the celebrity brands Local Choice has developed include Gentry Bourbon (from the reality TV show Southern Charm which is filmed in Charleston), Gas Monkey Cinnamon Tequila from Fast ‘N Loud’s Richard Rawlings, Dwight Eubanks and his Eubanks Gin Collection, rapper Boosie Badazz’s Boosie Juice Vodka, and Trina Braxton’s Bar Chixx Bourbon. Specialty brands include The Legendary Hatfield & McCoy Family Whiskey and Shine 24K Gold Vodka — made with edible gold flakes. These diverse brands have won Local Choice more than 70 awards in spirits competitions. However, she doesn’t get starstruck or take her celebrity partnerships lightly. She vets potential clients as much, if not more so, than they vet her. “You will pay me if you want to have a Clooney brand,” she stated. “I tell them this is what it’s going to cost and I give them a 30-page worksheet to fill out and make sure, do you really want to be in the alcohol

business? Because we can see how many celebrity brands don’t make it. If you think you’re going to be the next Patron, why do you want a hundred thousand dollar signing bonus? What do you think your brand is worth? ‘Oh, I’ll be worth a billion dollars’,” she mimicked. “Ok great, I’ll give you half of that. Do you want a signing bonus, or do you want to own half a billion with me? That’s our filter and then we go 50/50. We provide the team, the licensing, the distillery. Our home becomes your home; our family is your family. It’s a true incubator model.” Sensing another opportunity, she bought Striped Pig Distillery in 2018. The distillery, organized by a group of distillers and brewers in 2013 as Charleston’s first legal distillery since Prohibition, was already successful when Dezzutti took over, but using her Pixie power, she’s taking things to the next level with a twostage expansion. First, she scaled up the bottling line and created Charleston’s first bottled-inbond bourbon. Now, she’s developing 24,000 square feet of the property into an indoor/outdoor entertainment venue. “This is in the middle of a five-million-dollar remodeling [project],” she says, showing me the space. “The whole project

was 10 million dollars, five to acquire this industrial park and another five for construction.” “This area will be a performing stage for outside,” she said of the warehouse’s former truck docks. “Think of this as a big amphitheater in the future.” She said gesturing to what is now a grass parking lot that she imagines will one day be filled with a thousand people attending music festivals. She said the inside will be a flexible space designed to host weddings, receptions, and other social events. “Pretty much where you see all that stuff stored right now is where the brewery is going to go,” she said pointing to boxes in a corner. She’s talking about Ghost Monkey Brewery in nearby Mount Pleasant. Dezzutti became the brewery’s majority owner last May and is in the process of opening a second location inside her warehouse with plans to franchise the brewery across the country. She then motions for me to follow her to the back of the warehouse. “I want to show you this because it’s pretty cool.” She pulls up a squeaky garage door revealing a set of railroad tracks a few feet below the platform we stand on. On the other side is a tall security fence. “A week ago, it was covered with brush. We just got W W W . ARTISANSPIRITMAG . C O M

it all cleaned out.” “This is what makes our bourbon so good,” she continued. “There is no other distillery like this, that literally sits on the train tracks. The train goes by here 10 to 12 times a day. When it does, the whole building shakes. You can feel the vibrations, which is very good for barrels. People say, ‘Why aren’t you rotating? I’m like, they’re getting sloshed around any which way.” As if on cue, a train whistle sounds. I look around, but there’s no train in sight. Dezzutti pulls her phone out of her pocket. The whistle is her phone’s ringtone.

EMPIRE BUILDING 101: GATHER BUSINESSES Another industry she entered in 2019 was publishing when she bought Charleston-based Skirt magazine, a 25-year-old women’s publication. Her other ventures include golf courses, water parks, a recording studio called Pixie Records, and in March 2022, she became CEO of Sycamore Biopharma, a company that developed patented CBD compression sleeves and other CBD products. Her business acumen led her to be named one of Forbes 50 over 50 Women in Business in May 2023. Despite all this success, she’s not resting on her laurels. “We’re [women] making progress, but we’re not quite there,” she said. “That’s why this [Forbes] feature is so helpful for me and I’m grateful for the opportunity because I don’t know what degree of women in this industry stepped into these big, big levels. I don’t want to let women down.” She wants her spirits to compete with the big brands of the W W W . ARTISANSPIRITMAG . C O M

world, but carving out her niche in the industry wasn’t, and still isn’t, easy. “How do we open the space for women in the industry?” she asked. “So many more women distillers, blenders, and women active in the space, that’s happening, but getting the resources and the tools to get 20, 30, 40 million dollars to build a big operation?” She raises her hands up before dropping them to her sides. “I’ve been told ‘no’ for over 20 years.” “The one peeve that I have about this whole thing, creating a level playing field, is having to go through the process to become a certified1 woman-owned business,” she continued. “First of all, it’s sad that it’s necessary. Second, the amount of cost for me to prove that I am a single woman doing this without any man in my history controlling my pocketbook … I don’t see any men that have to prove that they are running their business and there was no woman investing in their company.” “Forget what it costs — five or six thousand dollars and then an annual renewal fee — but it’s question after question after question,” she continued. “Did you get any credit cards this year? If you did, they need to see copies of the application because they want to make sure there’s no co-signer that’s a man. They want to make sure there’s no cross contribution of funds with any man at any layer. I’m playing the 1 Women's Business Enterprise National Council, WBENC, founded in 1997, is the largest third-party certifier of businesses owned, controlled, and operated by women in the United States. WBENC, a national 501(c)(3) non-profit, partners with 14 Regional Partner Organizations to provide its world class standard of certification to women-owned businesses throughout the country.

game, but boy are we getting a raw deal as women.” She goes on to explain that it becomes a huge catch-22 because she must certify in order to get national distributors interested in her products, but the large amounts of money and time it takes could be better spent on equipment or property development. “Right now, we want to grow,” she said. “I want to buy the lot in front of me and the lot adjacent to me. Fortunately, my lender is female and stepped forward when every other bank led by men said no. Or said you need to come up with 50 percent or 80 percent [down]. They didn’t want the risk. The challenge is we’re growing bigger than resources can allow independently because they’re so upfront capital intensive. I’ll make the money work, I mean I have for close to two decades, but if I take money from a man, I have to start [the certification process] all over again.”

EMPIRE BUILDING 102: ADD PIXIE DUST Despite the challenges, she continues to forge ahead with a dizzying array of endeavors in the spirits and entertainment realms. She has a collaboration with Indy Car on a destination distillery in Georgia called Spirit of Speedway that will work on creating spirits for motorsports enthusiasts. (Dezzutti was instrumental in getting Georgia’s Forsyth County Board of Commissioners to change zoning laws that banned distilleries.) And then there’s the gaming app she’s developing with “a major movie studio” that will feature, what else, a striped pig. She mentions another half

“So many more women distillers, blenders, and women active in the space, that’s happening, but getting the resources and the tools to get 20, 30, 40 million dollars to build a big operation? I’ve been told ‘no’ for over 20 years.” — PAULA ‘PIXIE’ DEZZUTTI

dozen projects, but I tell her I won’t have room to write about them all. “It’s better to have a podcast.” Her own podcast is called Spiritually Speaking. Did I mention she’s an ordained minister? As we walk back into the tasting room, Dezzutti’s phone whistles again. She answers while I take a seat at the bar. Over the course of the last hour, Dezzutti has done all the talking, but I’m the one who’s exhausted. “It’s so much and I want it yesterday!” she exclaims with her infectious smile when she returns. “I want to have that empire so we can truly say there’s a woman who really ran it all. It’s big vision stuff.” Go big or go home, I say. Pixie shakes her head. “Go pig or go home.”

Striped Pig Distillery and Local Choice Spirits are located in North Charleston, South Carolina. Visit www.stripedpigdistillery.com or www.localchoicespirits.com or call (843) 276-3201 for more info. 101

FIRE AND LIFE SAFETY CORNER W RI TT E N A N D P H O TO G R A P H ED BY M I C H A E L T. R EA R D O N , P.E .

MAINTAINING LIFE SAFETY SYSTEMS Y

our distillery contains a variety of critical life safety systems which require regular testing and inspections. Once life safety systems are commissioned and accepted by the Authority Having Jurisdiction (AHJ), it is now the owner’s and/or tenant’s responsibility to maintain those systems to ensure operational readiness. Depending on the design of your facility, you may have various passive and active life safety systems including: > Automatic Sprinkler Systems > Special Suppression Systems > Fire Alarm Systems > Fire Doors All of these life safety systems require visual inspections and testing at various intervals. > Fire Pump Visual inspections and some components operational testing may need to be conduct> Fire Extinguishers ed quarterly, semi-annually, and/or annually. > Vapor Monitoring Systems Full operational tests may also be required semi-annually or annually. The frequency of the inspections Once life safety systems are commissioned and tests are based and accepted by the Authority Having on standards which are adopted by your Jurisdiction, it is now the owner’s and/or local jurisdiction. tenant’s responsibility to maintain those In addition, manufacturers may have systems to ensure operational readiness. > Fire-Rated Roll-Up Doors

102

additional testing requirements. These standards typically include: > NFPA 10 Standard for Portable Fire Extinguishers > NFPA 20 Standard for the Installation of Stationary Pumps for Fire Protection > NFPA 25 Standard for the Inspection, Testing, and Maintenance of WaterBased Fire Protection Systems > NFPA 72 National Fire Alarm and Signaling Code > NFPA 80 Standard for Fire Doors and Other Opening Protectives

W W W . ARTISANSPIRITMAG . C O M

Most visual inspections and tests are required to be conducted by a qualified individual or company. Qualified person(s) have specific training in certain types of systems which require certifications or training courses. However, some visual inspections may be conducted by in-house personnel as long as the personnel have basic knowledge of the operations and conditions of the life safety systems. This may include verification that fire doors are functional and latch, the fire extinguishers are properly charged and mounted on walls, etc. Record logs should be kept on site to verify with the AHJ that the systems are being tested at the proper frequencies as depicted in the codes. It is recommended that your AHJ be contacted to verify the specific requirements for inspection, testing, and record keeping as they may have additional requirements and may require records to be submitted to the AHJ for review rather than to just be kept on site. Budgetary considerations for the frequency of the inspections and tests of these various systems are often overlooked and not realized until your distillery is in full operation. During your building design and/or budgetary analysis, you should contact various qualified inspection and testing companies to determine annual costs for all visual inspections and testing in order to avoid sticker shock once you are open for business. Costs are often higher depending on the type and/or complexity of your life safety systems. For example, the annual testing cost for a wet-pipe sprinkler system may be significantly cheaper than a dry-pipe system as the tests for dry-pipe systems require additional steps to complete, thus requiring additional labor. In addition, if your sprinkler system is fed from a fire pump, annual fire pump flow tests are also required to be conducted. Fire pump flow tests may range from $500-$1,500 annually. During the design process of your distillery, it may be best to design life safety systems with minimal components, if possible. An example would be to design your sprinkler system with large piping and/or different configurations in order to eliminate the need for a fire pump. This will prevent the need for annual fire pump tests and save on long term costs. The same concept would apply with fire alarm systems. If you design a code compliant system with minimal alarm devices and notification appliances, then you may save on “per device” inspection costs. Careful considerations should be made by your design team to not only reduce your overall construction costs, but to reduce your long term operating costs.

Mash Pumps

USE QR CODE TO SEE VIDEO Different model sizes available

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John McGinn (262)-909-7267

Michael T. Reardon, P.E. is a fire protection engineer and president of Reardon Fire Consulting, P.C. For more information visit www.RFCFireProtection.com.

W W W . ARTISANSPIRITMAG . C O M

103

WARD FROM

a good spirit, BAR NONE IR

FOR ES

Written by RICH MANNING /// Photo provided by JANUARY SPIRITS

artenders play a key role in promoting a spirit. Get a bottle of liquid deliciousness in the hands of a barkeep who is passionate about flavor complexity, curious about new cocktail builds, and eager to share their discoveries with guests, and brand awareness can organically grow. Their work is the reason why getting bottles into on-premise accounts is so crucial for a new brand. This promotional work usually ends when the bartender clocks out. However, when the bartender happens to be the person behind the distilled spirit, it amplifies beyond last call. It's a unique hustle, but it can be rewarding if the juice is well-received. Such is the case with January Spirits. Co-founded by longtime New York City barmen Lucky Pretsko and Jon Langley, their expressions have been turning heads and gathering acclaim since the first bottles hit 104

New York shelves in Spring 2023. Their background justifiably generated some of the initial buzz, there is something inherently cool about bartenders making their own juice. But the attention has stayed strong, not only because what they make is delicious, but also because of what they’re making. In addition to gin, they’re producing amaro and genepy, two cult expressions well-known for being “bartender’s handshakes” in the industry.

a long time COMING On one hand, January Spirits is a project that was years in the making. Langley and Prestko first started working together in 2009 at Daniel Boloud’s slightly punky Lower Manhattan restaurant DBGB. The former was behind the stick, while the latter was a server. A solid friendship quickly formed. So did an appreciation

for each other’s penchant for tinkering and experimentation as both were prone to making their own in-house liquids like vermouths, cordials, and amaro at their own bars. Collaborations quickly ensued. At the same time, the creation of January Spirits represents a pivot of sorts. After jointly working on a few successful bar pop-up concepts, Prestko and Langley intended to open their own permanent venue and further their creative efforts in the drink space (as much as they thought they could get away with, of course). Then the pandemic arrived. “We really didn’t want to try to open a bar when there were so many people dying,” Pretsko said. Rather than sit on the bar idea until the pandemic ended, they pushed forward in a different direction. They acquired a still and began creating elixirs outside of the bar — in Langley’s

kitchen, to be precise — which took them down intriguing if not somewhat esoteric pathways. “We were messing around with making brandies and eau de vies,” Langley said. “Then one day, we decided, ‘Let’s make Chartreuse.’” Eventually, their Chartreuse ambitions turned into them creating genepy, which wasn’t as sweet and sugary as the hard-tofind herbal liqueur traditionally made by Carthusian monks. They also created an amaro by deconstructing Langley’s original amaro formula. According to Langley, it was a surprising process. “As we were tweaking the formula, we’d take away certain flavors to make it leaner,” he said. “That led to some great discoveries.” With the gin, Pretsko and Langley didn’t want to do a light botanical or a London gin or, as Pretsko put it, “a gin that smelled like your grandma.” W W W . ARTISANSPIRITMAG . C O M

They landed on a recipe that featured five flower botanicals to set their base: chamomile, marigold, elderflower, lavender, and jasmine. They also added a touch of bee pollen, which Langley guesses was lifted from their bar right before the pandemic. “We knew what we wanted to build with our gin,” Langley stated. “When we added the bee pollen, it got us about 40 percent of the way there.” It seems obvious that January Spirits produces expressions that taste the way its makers want it to taste, but there is more in play. These spirits underscore W W W . ARTISANSPIRITMAG . C O M

Pretsko’s and Langley’s passion for hands-on tinkering and flavor manipulation. Their approach is reminiscent of how they made in-house liquids in their bars. It’s just on a much larger scale now.

both sides OF THE BAR Both men still have their toes in the waters of bartending and hospitality. Pretsko can be found slinging drinks at the amaro-centric bar Amor Y Amargo in Manhattan’s East Village neighborhood. Langley still does food and beverage consultant work. This gives them an advantage

when they’re in front of potential on-premise accounts beyond just knowing the industry language. “It’s definitely helped us sell,” Pretsko said. “When we’re coming into a place, we’re not ambassadors hawking our bottles. We’re bartenders, their colleagues, and we’re not there to give them diplomacy.” This ability to lean into their bar industry experience only goes so far. The law is the law when it comes to commercial liquor production. While they were able to streamline some production elements, the legal steps behind getting January

Spirits from idea to bottle drew out the process longer than they anticipated. According to Langley, there was plenty of bureaucracy involved. “A lot of the process was diplomacy and negotiation,” he said. “I’d say at least one-third of the process was tied up with negotiating things.” They also had to deal with a few shining examples of the industry’s puzzling legal nature, such as licensing. “We’re based in New York, but our warehousing and shipping is out of New Jersey,” Pretsko said. “We had to get two licenses just so we could cross a bridge.” 105

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January Spirits derives its name from Janus, the Roman god of time, beginnings, and endings that’s traditionally depicted with two faces looking in opposite directions. Pretsko and Langley admit they were both surprised the name was still available for them to use. It’s an ideal name because it fits in with their goal of understanding a spirit and its history while pushing it forward. “We’re making specific and admittedly very nerdy things, but there’s a reason behind doing what we’re doing,” Pretsko said. “We’re putting our stamp on them — an American spin on these traditional spirits.” While all three expressions tap into this philosophy, their genepy also taps into a different, more serendipitous type of forward-thinking. The last couple of years has seen Green Chartreuse fall into a frustrating cycle of greater appreciation and greater market scarcity — not to mention soaring price tags. Therefore fans of the herbaceous liqueur are in need of an alternative kindred spirit, making genepy ripe for discovery and giving January Spirits a unique opportunity. “People are starting to realize Chartreuse isn’t the only herbal liqueur they can enjoy,” Langley stated. “Part of that is realizing that a spirit like genepy isn’t just a band-aid because they can’t find Chartreuse; that this is a thing that they can enjoy on its own.” Judging by the positive market response, people are indeed enjoying January Spirits’ genepy and their other expressions. This early success hasn’t altered their deliberate growth strategies. While they have long-term distribution plans, they’re only distributed in New York for now, but that doesn’t mean they’re fully beholden to the Empire State. The online store they launched in the fall makes it possible for modest inroads elsewhere. “Our goal with the online store is to at least get our bottles into other people’s homes in other states,” said Pretsko. No matter where January Spirits’ trajectory ends up going, the relationships building the brand’s structure are poised to remain constant. This transcends the creators’ friendship; Pretsko’s wife, Diana Lang, works on branding, while Langley’s partner, Amandi Eli, handles operations. It’s a structure that grounds them. What’s more, it’s symbolic of the togetherness that a good spirit can inspire, whether it’s created in a still in someone’s kitchen or poured out of a bottle at a neighborhood bar. “We’ve known each other for a long time, and while we love this project that we’re working on together, we also appreciate the moments where we can take a break from talking business,” Langley said. “That’s the great thing about this project. I get to work with people that I enjoy hanging out with.” Visit www.januaryspirits.com for more information.

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CLASS IS IN SESSION W R I T T E N B Y R E A D E A . H U DDLESTON, M SC.

ATTENDING A 40-YEAR-OLD ALCOHOL SCHOOL

any people in distilling know the name Lallemand; the company has been a major supplier of yeast and processing aids to the industry for years. Indeed, it is sometimes hard to find a distillery, large or small, that doesn’t use at least one of their products. However, Lallemand is more than just a yeast and enzyme company. They are also educators, and through the Lallemand Alcohol School, they have been teaching distillers the art of distillation for more than 40 years now. The Lallemand Alcohol School is a weeklong education seminar that Lallemand hosts around the world at least twice a year. The locations for the school vary widely, from Vienna to Bangkok, but there is almost always one a year hosted in Montreal. This makes sense considering Lallemand was actually founded in Montreal in the early 19 Century, and it is still headquartered in the city. This past September, I had the opportunity to attend the 41st Lallemand Alcohol School in Montreal. It was a wonderful week, and I would like to share some of my experiences and takeaways from the week. The Lallemand Alcohol School has a relatively straightforward format similar to other continuing education seminars that I have attended. On the Sunday before classes began, attendees could register at the hotel, and there was a small happy hour for those that were interested. I must admit that when I checked in that evening, I was a bit surprised by the amount of items I received. I already knew that all attendees received a copy of the most UpToDate Alcohol Textbook (6th Edition in my case); however, for this conference, we also received a

large booklet of pre-printed slides from the upcoming presentations, a couple of individual laminated handouts, and a useful carrying case for us to transport everything in. This carrying case ended up being especially valuable as the Alcohol Textbook alone weighs nearly two lbs, and all together everything I received over the week had a weight of almost 10 lbs. (I won’t lie, picking up my bag on the final day with all this extra weight made me a bit concerned about meeting the airline’s strict weight limits). On Monday, classes began in earnest. For the first few presentations, attendees from both the beverage and fuel ethanol industries sat in on the same sessions. This was a great way for everyone to get to know each other and for each cohort to learn a little bit about each other’s processes and struggles. After lunch, however, the fuel ethanol cohort peeled off to another room, and the presentations began to focus more on the concerns of beverage producers. That evening we were set free to explore the city, though as is typical of most industry events, a few people never made it further than the hotel bar. Classes started at 8:30 a.m. on Tuesday and for the entirety of the day we were combined with the fuel ethanol cohort and were given presentations on topics such as the “physiology of ethanol producing yeast” and “Distillation: Practice and troubleshooting.” Although the presentations were informationally dense, I was surprised by how quickly the day moved. Dr. Graeme Walker, who moderated the presentations, did an excellent job of keeping presenters on time and the discussion informative. Regardless, after almost nine hours of intense learning, I was happy to see my bed that evening. Wednesday began slightly differently from the previous two days. In the morning we all loaded up into buses and traveled to Lallemand’s research labs at the Canadian National Research Council’s Biotechnology Institute. Once we had all checked in, we had a couple of presentations before being broken into groups and taken on a tour of some of the Lallemand research labs operating in the building. This was an eye-opening experience and really taught me about some of the difficult research that it takes to develop and propagate commercial distilling yeast. After returning that evening, Lallemand treated the attendees to a buffet and tasting where attendees and presenters could intermingle. Thursday was the last full day of the Alcohol School and it started with split sessions for the fuel and beverage cohorts. After breaking for lunch, the attendees were then loaded onto buses and were able to attend one of four facility

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tours that Lallemand had arranged. The options for the tours were: 1) Greenfield Global’s Varennes Fuel Ethanol Facility, 2) Diageo Global Supply Salaberry-de-Valleyfield, 3) Lallemand’s Prefontaine Yeast Plant, and 4) Distillerie Cote des Saints. Having never been to a fuel ethanol plant, I chose this option. The visit ended up being one of the highlights of my trip, and I cannot recommend enough to distillers a visit to a fuel ethanol production plant. There is much the two industries can teach each other. Finally, Friday was the last day of the Alcohol School. We had a few beverage-specific sessions in the morning before both cohorts combined and we had our last sessions of the school. At the end of the last session, there was a brief wrap-up ceremony and presentation of certificates, and then I and many others were whisked away by taxi so that we could make it to the airport in time to catch our flights back to the US. So, would I recommend you attend the Lallemand Alcohol School? Well, the answer is yes, with a few caveats. First off, the price to attend the event is considerably higher than most other industry events like ACSA or ADI’s annual conference. Although you are getting what you pay for in this case, it can still be a hard pill to swallow — particularly for craft distillers who are struggling just to make ends meet. Second, the information in many of the presentations is quite technical, so it may go over the heads of some new distillers. Also, although there is value in all the presentations, some of the combined sessions are aimed more toward the fuel ethanol producers than beverage ones. This can be frustrating, especially for distillers whose processes bear little similarity to fuel ethanol production. That being said though, education wasn’t the only important thing that I got out of my time in Montreal. The real value of the Lallemand Alcohol School was in the networking. True, all industry events allow for attendees to network; however, in this case, it feels like the networking is supercharged. By putting both fuel and beverage ethanol producers in the same rooms, it allows for the exchange of many exciting and interesting ideas or methods. This crossflow of philosophies was aided in no small part by Lallemand’s staff, who are gracious hosts, and they are always willing to introduce attendees to speakers, each other, or anyone else for that matter. For me, this graciousness is what made the week an enjoyable success. I can honestly say that attending the Lallemand Alcohol School was a pleasure and if I get the chance, I plan to be back. Perhaps I will see you there too. DISCLAIMER: The Reade A. Huddleston, MSc. in Brewing and Distilling, is a beverage industry consultant based in Tampa, Florida. He is fascinated with all things drinkable and is always searching for strange and forgotten spirits. If you would like to contact him about said spirits, or anything else, please email him at ReadeHuddleston@gmail.com.

author and Artisan Spirit Magazine were not compensated for the contents of this article, and the author paid to attend the class. The opinions contained in this piece are solely the author’s and do not represent the opinions or beliefs of the Lallemand Alcohol School or Artisan Spirit Magazine. W W W . ARTISANSPIRITMAG . C O M

Written by RICH MANNING Photos by CORY FONTENOT

Tales of the Cocktail

2023

The Annual Event Was More Than Big Parties from Big Brands

he best stories to emerge from Tales of the Cocktail this year involve connections, whether it’s running into an old friend or encountering a new brand. These connections were why the New Orleans fete held July 23-28 mattered so much to the craft distillers in attendance. Yes, there were some folks that came to cut loose. That’s to be expected. But plenty of attendees meant business, and not in the corporate suit and tie form. These were the professionals nerdy about spirits and modifiers both alcoholic and non-alcoholic, perpetually curious about bottles that are either new or new to them. Just like last year, Tales used the RitzCarlton New Orleans as its home base to

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host events that put brands front-and-center for these product seekers. Chief among them was Meet the Distillers, a massive tasting event where ticketed guests ranging from bartenders to distributors could roam the first floor and explore brands and their stories. For the craft brands in attendance, these events provided a chance to network differently than they do at other conferences. “There’s a whole different type of crowd at Tales compared to a spirits-industry conference like DISCUS or ADI,” explained Andrew Soltau, chief operating officer of Sugarfield Spirits in Gonzales, Louisiana. “Those conferences provide you with the 10,000-foot view of the

industry, which of course is important. Tales puts you at the level with those in the trenches — the bartenders that could be using your product to make their cocktails. To be able to get in front of bartenders from around the country and around the world is a very rare opportunity.”

OLDER and WISER Tales has been around for a while. The event turned 21 this year, and with age come signs of maturity. These sometimes manifested through programming. Tales’ Beyond the Bar program — a staple since 2018 — provided industry pros different avenues to explore the importance of

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substance abuse treatment, industry wellness, and other topics that address the challenges and dark places that lurk within the bar and spirits industry. In other cases, these signs signified a change in habits for veteran attendees. “This year, we were more strategic in our planning. We essentially picked one spot in the city and stayed there,” explained Kailee Asher, director of communication for the Phoenix-based Barter & Shake, the group behind Tales 2023 Bar of the Year, Century Grand. “As we get older, we don’t need to be at a party at night.” She and her husband, Barter & Shake co-founder Jason Asher, also observed that brand portfolios like Bacardi and EJ Gallo also adjusted their strategies to reflect a more concentrated, if not safer, approach to spirits. “Bacardi didn’t have

a big party this year like they did last year,” Kailee Asher stated. “They sacrificed a big event and worked with more bars to create smaller events. That created a more intimate experience.” “Some brands seem to realize that they’re losing audiences after 9 p.m. Half of the crowds are ‘in the bag’ at that point,” Jason Asher added. “Brands also look like they’re being more conscientious of the style difference in daytime and nighttime partying. Shit happens at night. If you throw a party during the day, liability goes down.” These smaller daytime encounters were ideal for attendees

wanting to shift away from going hard every night. In a way, they also set the dividing line between the craft and non-craft sectors. Smaller brands do not have the financial wherewithal to rent out a massive venue to throw a big blowout. However, they can collaborate with smaller venues or New Orleans bars to create cost-effective events that can potentially sharpen focus on their brand. This captured the attention of Soltau as he considered future Tales excursions. “We’ll probably expand our presence at Tales in the next couple of years,” he said. “Participating in a bar takeover would be lots of fun.”

The BAR as a BAR TOOL The Ritz Carlton New Orleans also provided a reliable centralized hub for attendees to congregate, attend seminars, and network and was relatively close to plenty of bars hosting pop-ups, takeovers, and brand activations. It was also a few blocks from French Quarter mainstay Erin Rose and their legendary frozen Irish coffees, which was important because it was impossible to walk in there during the week and not find a brand ambassador, a bartending stalwart, or a drinks journalist inside providing easy networking opportunities for craft distillers. In some cases, this even included

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networking with the bar itself. “There were a lot of great bottles that were put on my radar,” explained Andy Pratt, general manager of Dovetail Bar, an industry-friendly hotel bar just off the French Quarter. “There was one gin that was brought in, Wonderbird from Mississippi. It’s just this side of local to us, and I should have known about it, but I didn’t. It was really good, so I put it into our rotation.” Dovetail hosted multiple events in their space throughout Tales, running the gamut from smaller brand activations like Silkie Irish Whiskey to takeovers by high-profile bartenders like Shannon Mustipher. According to Pratt, these events capture the conference’s true essence. “The biggest misconception people have about Tales is that people come to party,” he said. “While the big shindigs are fun, they’re not truly representative of Tales. Even with these events, people come here to grow brands, network, and exchange knowledge.”

A Full BOUNCE BACK Last year’s Tales comeback after the elongated pandemic pause was impressive, but it also felt like a practice run. For example, the ticketing process for seminars seemed to cause confusion for attendees — but the extra year

separated from COVID-19 seemed to boost the event’s vibrancy, which permeated beyond the event itself. “This year had a different energy,” Jason Asher said. “It felt different the moment when we walked off the plane. I hadn’t felt an energy in the city like this since 2010.” Time will tell if next year brings a similar energy. However, it seems safe to assume that it will continue to bring opportunity for craft distillers who look beyond the event’s ribald reputation and see it as a chance to put their bottles in front of people that matter. “I appreciate what Tales is about quite a lot,” Soltau stated. “You have this hodgepodge of great cocktail makers from places like New York, Chicago, and Vegas looking for spirits for their programs. When they like something, they’ll bring over other bartenders to try what they had. It’s just a really cool experience.”

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O S N S S E FROM SCALING L A DISTI P U L L E RY 1 0 0 X

LL G HA DOU ASH Y B G R TTEN JOE GI WRI &

ver the past few years my partner, Joe Girgash, and I have lived the adventure of scaling up production a hundredfold as Noble Oak Bourbon sales expanded across the USA. Yes, it’s been exciting. And yes, it has also brought on major stress and frustrations.

Here are a few lessons we have learned during our rapid growth: LESSON 1:

94 percent of the problem is the system — six percent is the worker. This is a fundamental teaching of quality expert Dr. W. Edwards Deming. Following World War II, he taught Japanese companies like Sony and Toyota how to look at manufacturing as a system. From the start, we made a commitment to systems thinking. We sketched out our system for production and brainstormed ways to improve our quality and efficiency. Dr. Deming taught that manufacturing is a system of interconnected parts. Every change to a process has consequences. Early on we didn’t understand this fully. We would make an improvement in one area, only to create problems in another. To prevent unintended consequences, we teach our operations staff how their work interacts with others. We have a manager who floats between each department head every day making connections between one team and the next. Our interconnected approach to the "manufacturing system" goes beyond the walls of our distillery. Our equipment and dry goods vendors are very important to our system. We make purchase decisions based upon the total value we receive from vendors helping us find ways to work smarter. LESSON 2:

Commit to documenting your standard operating procedures before you need them. Dr. Deming said, “If you can’t write down how to do the work, then you don’t have a reliable system of production.” When it was just two of us, communication was easy. As we added more staff and complexity, it became much more challenging. To grow, clear documentation of the work is absolutely critical. Without documentation, you are reliant on word-of-mouth instruction. Like the “telephone game” where a message is passed from one person to another, in the end the message is changed, sometimes beyond recognition.

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LESSON 3:

Never stop asking why. We’ve found it is important to keep challenging ourselves on why we do what we do and how we do it. Girgash continuously asks employees to explain why. Why are you doing it that way? How can you do it better? The lesson to everyone is to not fall in love with how you work today. As an example, our early bottling production line was very slow. Through repeated cycles of experimentation and replacement of speed limiting components, it has gotten faster and faster. The result is our pieced together production line is nearly 80 percent as fast as our brand new and much more expensive “high speed” line. And as you would expect, we are now working to make the new line go even faster.

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LESSON 4:

Think of your growth as a series of phases into the future.

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Early on we made the mistake of planning our systems, storage, and space for doubling our volume. As a result, we made decisions that got in the way of the next doubling of volume. Today we think further into the future. We plan for doubling, quadrupling, and eightfold increases in volume. Thinking into the future has dramatically reduced the need to rework electricity, the building layout, etc.

LESSON 5:

We will never ever have enough storage. The ugly truth is between empty bottles, work in process and finished cases, the need for space continues to grow and grow. There was a time when we had to move pallets of empty bottles onto the driveway each morning and cover them with tarps to allow for production while we waited for our next building to come available. As we have grown, we have developed systems to efficiently use outside storage. To make this work, we invested in a truck, loading docks, and forklifts to make the flow of raw materials run efficiently.

New employees are taught about the process of being proactive problem solvers. By adopting this way of working, employees feel empowered to share ideas, they feel they are being heard and can make a difference. The result is a culture of people that are fully engaged, and this engagement by everyone, everyday is how we are scaling up our distillery. Doug Hall is the co-founder and CEO of Brain Brew Custom WHISKeY, WoodCraft Bourbon Blender Franchising and founder/chairman of the Eureka! Ranch. He has spent 40+ years creating and commercializing innovations for companies such as Nike, Walt Disney, Diageo and over the past 22 years The Macallan of Scotland. Joe Girgash is President of the Brain Brew Distillery. Prior to co-founding the distillery he helped create and open multiple restaurant concepts. He’s an expert in developing reliable and reproducible systems for operations. W W W . ARTISANSPIRITMAG . C O M

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