Beverage Media - Emerging Distilleries

industry trend

The distillery and workers from Tuthilltown Spirits, Gardiner, NY

small is

beautiful by jack robertiello

photographs courtesy of Ben Stechschulte

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alph Erenzo and Brian Lee don’t have to dodge swarms of bees anymore when they make apple vodka in New York’s Hudson Valley. In a micro-distiller’s world, that’s a sign of progress. The two founders of Tuthilltown Spirits are just a few of those riding the American craft wave. Now more than 155 strong, these indie distillers have been spurred by consumer thirst for handmade products, the classic cocktail trend, an easing of restrictions on in-store sampling, self-distribution and sales of their own wares and even by the “locavore” movement. This new generation of artisans has been building buzz and a market by making moonshine, absinthe, gin and rye–anything invention and innovation allows.

The stills at Clear Creek Distillery, Portland, OR

So today there’s whiskey coming from Colorado (Stranahan’s), Iowa (Templeton) and Virginia (Wasmund’s); gin made in Idaho (Bardenay), Oregon (Aviation), Kentucky (Corsair Artisan) and Pennsylvania (Bluecoat); rum from Massachusetts (Triple Eight) and Tennessee (Prichards); and vodka, it seems, from everywhere. Only recently has micro-distiller success story Tito’s Handmade from Texas exploded, surpassing 250,000 cases in 2008, up from only 58,000 in 2004, according to Beverage Information Group data. Most small distillers put out only a fraction of Tito’s volume, but the possibilities, say observers, are unlimited. It’s been a hard road since Prohibition and Repeal. Twenty-some years ago, only a handful of modern craft distillers, like Jorg Rupf at St. George Spirits and Ansley Coale and Hubert Germain-Robin at GermainRobin, were taking their chances at the still. As Clear Creek’s Stephen McCarthy, who followed soon after, remembers, “We just came out of the bushes then, inspired in my case by the little Oregon wineries that were showing such promise. I thought if they could do it, so could I.” Rupf and Coale went on to jointly create Hangar One’s widely respected flavored vodkas, while the Germain-Robin California brandies are still considered equal or superior to many more expensive Cognacs. McCarthy’s Oregon-made pear eau de vie and liqueurs are served at many fine dining restaurants. But aside from Fritz Maytag, the pioneer Anchor Steam craft brewer who started making his own gin and whiskey in 1993, few new distillers jumped on board. Yet in the last few years, the same impulse that gave rise to the start–up of small production American wines in the 1970s and micro-brewers in the 1980s has encouraged start–up distillers. In some cases they convinced legislatures to lower the entry barriers for them, and soon the race was on.

The Real Thing As some of these distillers started up, numerous entrepreneurs simultaneously eyed the vodka market and figured they could do better. Some buy bulk vodka and redistill or add flavor, while others have their recipes custom- made by industrial distillers. To Kevin Settles, owner of the three-unit Idaho restaurant-distillery Bardenay, they don’t

count as craft distillers. “For someone who’s rectifying by saying their product is handcrafted is a bunch of hooey – that’s like saying you made a scratch cake that came from a Betty Crocker box,” he points out. Settles has a point, but good products can come from neutral grain spirit produced

In the last few years, the same impulse that gave rise to the startup of small production American wines in the 1970s and micro-brewers in the 1980s has encouraged start-up distillers.

elsewhere – for instance, by law all gin makers in England must start with someone else’s distilled spirit. And some say the attention entrepreneurs have attracted helps small distillers. As long as the products are well made, it will only continue to do so. Either way, for retailers, carrying at least some of the new handmade products is a nobrainer, says Stephanie Moreno, spirit buyer for Astor Wines & Spirits in Manhattan, which has expanded its range of artisan products. “We’re happy to promote and support them,” notes Moreno. “They’re a bit of a hand sell, but in some cases they already have a following. I think perhaps some of the ‘buy local’ movement is sinking in and some people like to support an American distiller that doesn’t have the dollar of the big guys.” Retailers depend on Internet sales and whatever local following the products have established, but all the better if distillers travel and promote their own product, she says.

In Their Best Interest Hudson Four Grain Bourbon combines New York corn, rye, wheat and mulled barley

Making a consumer connection is essential to success, say industry veterans. “Major industrial players can put out million dollar advertising campaigns which the smaller guys obviously can’t,” says Scott Leopold of Colorado-based Leopold Brothers. “But if you can open a bottle in front of someone from a craft distiller that they may not have tried before you’re lowering the barrier and creating a level playing field. They otherwise may not be willing to spend $35 on a bottle from a distiller they never heard of before.” For Tuthilltown, its products are currently sold in seven states and Europe, and “everything we put in a bottle gets sold,” says Gable Erenzo, distiller and brand ambassador for the company. Hudson Baby Bourbon, made from local heirloom corn

industry trend

Fifty-eight varieties of brandy, grappa and eau de vie, all created by small American craft distilleries, wait to be judged in the private bar at St. George Spirits/Hangar One Vodka, during the 2009 American Distilling Institute’s annual conference.

Philadelphia Distilling’s Bluecoat Gin was named best gin at the 2009 San Francisco International Spirits Competition

get lost, even if they are with one of the giant distributors.” That poses a special problem for Leopold, whose line includes Silver Tree vodka and Leopold’s Gin. The brothers expect to move about 8,000 cases in 2009, and when they reach their 11th state, will be aiming for 12,000 next year. Yet they recently lost their rep in New York. “Anytime you narrow competition in one market area, the smaller players are going to be eased out. If you go to a state with two choices and don’t fit into their portfolio, you’re done,” he laments. Things may be changing. McCarthy recently had a pleasant experience with a large distributor. “I said to him, ‘If you want a line of weird, expensive, hard-tosell products, I’m your guy,’ and he said, ‘Yes, actually I do." n

photograph on right courtesy of Bill Owens

and the first from New York, is its leading seller, and the line also includes rye and rum. Altogether, Tuthilltown bottled 4,000 gallons of spirits in 2008, about 3,500 cases of 375ml bottles. Similarly, 65% of spirits sold at Bardenay locations are housemade, and between the restaurants and Idaho state stores, Settles sells out. “For years the state stores could sell more than we can make, and we just recently caught up to demand,” he says. But the learning curve can be treacherous. “When we first opened (in 2001), it took seven years for us to feel comfortable with our vodka. Originally I thought it would be cool to make a European-style vodka. But I could tell by their faces my customers didn’t think it was cool,” he continues. And it’s not just placements and sales that are increasing. Many of the products from small distilleries are starting to take awards at national competitions. At the 2009 San Francisco International Spirits Competition, Bluecoat from Philadelphia Distilling was named best gin, while the best fruit liqueur was Leopold Brother’s, New England Cranberry Liqueur. Making the right “cuts” while distilling—removing the first and last portion of distillate to eliminate methanol, fusel oils and other unwelcome ingredients—is a skill, and while most modern industrial producers have high-tech systems to keep hangover-inducing ingredients out of their products, small distilleries have to rely on the human touch in many cases. Small distillers also face distribution issues, says Moreno: “They tend to