Let a thousand distilleries Bloom

Let a thousand distilleries Bloom

A recent buy-out suggests that the American micro-distillery revolution means business. Charles K. Cowdery reports

Places | 23 Jul 2010 | Issue 89 | By Charles Cowdery

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If someone ever writes a history of American craft distilling it may well begin with June 4, 2010. That’s when the movement was acknowledged by the larger distilled spirits world with the highest form of recognition any industry can bestow – a buyout.

On that day William Grant & Sons, makers of Grant’s Scotch and single malts Glenfiddich and The Balvenie, acquired the Hudson Whiskey line from Tuthilltown Spirits, a New York craft distiller. Grant bought the brand and contracted Tuthilltown to produce it.

Hudson’s flagship is Hudson Baby Bourbon, an all-corn (maize) spirit aged for all of three months. It sells for about $40 per 375ml bottle and is found on the smartest back bars in New York City. Grant intends to distribute it, and the rest of the Hudson range, all over the world.

Recognition of another kind came earlier this year from the Distilled Spirits Council (DISCUS), the trade organisation of major spirits producers doing business in the United States, which includes Diageo, Pernod, Bacardi, Beam Global, and the rest of the giants. In February, DISCUS created a Craft Distiller Affiliate Membership programme for companies which produce fewer than 40,000 cases a year.

Small distilleries are nothing new in the United States. San Francisco’s Anchor Distillery, maker of Old Potrero rye whiskey, is almost 20 years old. Some of California’s artisan brandy distilleries are older than that.

But the national explosion of small distilleries, making everything from vodka to bourbon, has happened in the last 10 years, and expanded the number of such facilities from perhaps a dozen to several hundred, with new ones opening every day, it seems.

In 2002, Bill Owens launched the American Distilling Institute (ADI), the self-described “collective voice of a new generation of progressive artisan craft distillers.” It was lost on no one that Owens had been one of the pioneers of the American micro-brewery movement several decades before.

Many brewers long to take that next step into whiskey-making and many of the new craft distillers have brewing backgrounds.

Today, ADI claims 1,200 members. Among its activities is an annual conference, which alternates between northern California and southern Indiana, the later chosen for its proximity to Kentucky’s bourbon producers.

In those even-numbered years the emphasis is on whiskey and at the last two (2008 and 2010) there has been a craft whiskey competition. Your humble correspondent was on both judging panels.

American Craft whiskey still has a long way to go. Its biggest problem, not surprisingly, is its youth. Laying whiskey down to age for several years takes a heavy financial toll. Consequently, to say the craft whiskeys tasted in both contests were rough would be an understatement. The good news is that in 2010 they were much improved over 2008.

Although the dominant forms of American whiskey are bourbon and its sibling, Tennessee whiskey, which are characterised by corn-heavy mash and aging in new, charred oak for four years or more, most American craft whiskeys are malt-based and lightly wooded if aged at all.

Like any young movement, American craft distilling has had growing pains. The often dysfunctional ADI let big distilleries enter its 2008 competition and they naturally won most of the awards. An attempt to change that for 2010 failed when poorly written rules allowed craft distillers to enter products they didn’t make but, rather, sourced from the big guys. Again, the non-craft products won many of the top honours.

Yet even with these hiccups, there are many genuinely small distillers selling products they made from scratch, including several whiskeys.

In addition to Tuthilltown’s Hudson, other established and widely-distributed craft-distilled whiskeys include Stranahan’s from Colorado, McCarthy’s from Oregon, and Wasmunds from Virginia. All three are malts, aged a few years in charred new wood, which have moved past novelties to become established products with a following among consumers and purveyors.

Not all craft distillers thumb their noses at traditional American styles. Great Lakes in Wisconsin, Garrison Brothers in Texas, and Finger Lakes in New York have all had limited bourbon releases, with more on the way as soon as the maturation gods allow.

“Bourbon whiskey-based spirits are all we will ever make,” says Dan Garrison, who sold out of his first 1,500 bottles of Texas Bourbon Whiskey in a few hours last Texas Independence Day (March 2).

“Of all our products, we feel our whiskies require the highest level of craft,” says Brian McKenzie, president of Finger Lakes Distilling, “because we are taking raw grain all the way to the bottle.”

He also likes the whiskey drinker as a customer. “Whiskey drinkers are interested in trying new products and, in particular, small batch creations,” he says.

Traditionally in the distilled spirits trade, new products have been built indirectly. Excite bartenders about your product and they will introduce it to their patrons, who will then ask for it at the store. Most craft distillers follow this tried and true strategy.

“We would like to be the preferred choice in spirits in all local bars and restaurants,” says McKenzie of Finger Lakes.

“A big part of our business model is meeting the need for local spirits in a growing wine tourism region.”

New York State’s wine country attracts more than a million visitors a year, an in general tourism, including direct sales to distillery visitors, is a big part of the business model for most American craft distilleries.

“We have a range of products; currently 16, but growing,” says McKenzie, “mainly to offer choices to our onsite visitors.”

While a craft distillery might not be a travel destination, it is a good drop-by for tourists who are already in the area, especially if they are predisposed to beverage alcohol. Garrison Brothers is located among the wineries of the Texas Hill Country and very near the LBJ Ranch. Great Lakes in Milwaukee has the Harley-Davidson Museum for a neighbor. High West in Utah is on a ski hill.

Both Finger Lakes and Tuthilltown are licensed as New York State Farm Distilleries. New York is one of several states which permit craft distilleries only if they use primarily fruit and grain produced by local farmers. According to Ralph Erenzo, one of the owners, Tuthilltown is developing a “comprehensive program linking local farms to spirits production to create stronger, more cash-rich crop opportunities for our local farmers, and keep the fields in agriculture rather than building lots.”

Despite the deal with Grant, neither Tuthilltown nor most of the other craft distillers want to become giants like Diageo, even years down the road. Garrison Brothers, for example, has no plans to sell its bourbon outside Texas.

“We’ll be a slightly larger micro-distillery” in five years, says Great Lakes Distillery president Guy Rehorst, still making mostly white spirits and maybe 10 barrels of whiskey per month.

Jess Graber, president of Stranahan’s Colorado Whiskey, at least wants to be distributed in all 50 states. “We are 13 months into our new facility and are making 12 to 18 barrels a week. Our goal, in late 2011, is to purchase two new wash stills and a second spirit still from Vendome to boost our capacity to about 50 barrels per week.”

They say a rising tide raises all boats and if the distilled spirits business continues to be as robust as it has been recently, a good number of these new craft distilleries may still be around in a few years. Some will follow Tuthilltown and at least affiliate themselves with a major. We may see consolidation, and the formation of a craft distillery conglomerate.

To get there, the whiskeys will need to improve, as they inevitably will if producers can find the courage, and financing, for longer aging. All good things take time.

But if you have been waiting for the craft whiskey movement to mature a little bit more before dipping in, it may be about time to pay attention.


Info



Distilled Spirits Council Craft Distillers Advisory Council

The Craft Distiller Affiliate Membership is headed by a 13-member Advisory Council of distillers chaired by Fritz Maytag of San Francisco’s Anchor Distilling. As a leadership body, its role is to coordinate communications with the Distilled Spirits Council policy teams, and engage small distillers in their respective regions.

Craft Distiller Advisory Council Members include:
Anchor Distilling (CA)
Catoctin Creek Distilling Company (VA)
Charbay Distillery (CA)
Copper Fox Distillery (VA)
Finger Lakes Distilling (NY)
Great Lakes Distillery (WI)
Huber Starlight Distillery (IN)
Philadelphia Distilling (PA)
Prichards’ Distillery (TN)
Rogue Spirits (OR)
St. George Spirits (CA)
Stranahan’s Colorado Whiskey (CO)
Templeton Rye (IA)

Other Affiliate Members include:
Bardenay, Inc. (ID)
Corsair Artisan Distillery (TN)
Dry Fly Distilling (WA)
Garrison Brothers Distillery (TX)
High West Distillery (UT)
Louisville Distilling Company (KY)
Osocalis Distillery (CA)
Peak Spirits (CO)
Temperance Distilling Company (MI)
Thirteenth Colony Distilleries (GA)
Treasure Island Distillery (CA)
Vermont Spirits Distilling Co. (VT)
Warwick Valley Distillery (NY)
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