Profit from the Craft Distilling Boom

Profiting from the Craft Distilling Boom
Photo Credit: RJ Sangosti 

Stocking your backbar with the same brands of spirits as your competitors is an expedient way to lose business and lull your staff to sleep. To the contrary, success in the on-premise beverage business is predicated on offering consumers what they want and can’t get from the competitors around the corner. In the past, beverage operators had few options when it came to what brands of spirits they could carry, but that’s no longer the case.

Today, in nearly every marketplace in the country, there is a cadre of small distillers handcrafting artisanal gins, vodkas, rums, whiskeys and brandies. Their steadily increasing numbers mirror the meteoric growth of craft breweries of the past decade. In fact, many of these distillers got their start brewing craft beers.

The popularity of craft distilled spirits presents operators with a bankable trend. According to the American Distilling Institute (ADI), craft distilled spirits are “products of an independently owned distillery with maximum annual sales of 52,000 cases where the product is physically distilled and bottled on-site.”

Although this burgeoning sector only accounts for 1% of the total volume of spirits sold in the U.S, suppliers of conventional distilled spirits have taken notice. The number of new craft distilleries has increased every year since 2007 bringing the current total to 636. Compare this to the 24 craft distilleries operating in 2000 and you’ll get a sense of the segment’s tremendous growth.

So what’s the appeal? Craft distilled spirits enjoy several attractive marketing propositions that most high volume spirit brands can’t duplicate.

The first of these is the difference in perception between handmade and mass produced. While distilling in small batches doesn’t necessarily ensure higher quality ingredients are used, it’s easy for consumers to presume that’s the case. Then there’s the appeal of drinking a spirit distilled locally from locally obtained ingredients and locally sourced water. As a result, craft distillers can more legitimately claim their spirits reflect a discernible sense of place, or terroir, as it’s referred to. This dovetails perfectly with the consumer megatrend of “buying local.”

For the most part, craft distillers are more likely to produce innovative products. Unfettered by the impact of focus groups and shareholder meetings, craft distillers can better afford to be flexible in what they produce and more responsive to their clientele’s feedback. They can also alter their range of products on a regular basis, thereby taking advantage of seasonal produce. Not an option for large producers.

Perhaps the most compelling aspect behind these handcrafted spirits is passion. Typically there’s one individual who is the heart and soul of the spirit. As is often the case with most small business owners, craft distilleries represent a dream come true for someone on the team, if not the entire team. Passion for the craft seems to be the common denominator.

Caledonia Spirits

An excellent example of the allure of craft distilling is Caledonia Spirits of Hardwick, Vermont, which is on the border with Quebec, Canada. The endeavor is the brainchild of founder Todd Hardie, who has spent 49 years with honeybees, mainly as a commercial beekeeper. For Hardie it was an opportunity to encourage and support the organic production of plants and honey in Vermont and to contribute to the health, spiritual, economic and social well being of the community.

“Our family made whiskey in Edinburgh for over 100 years and J.W. Hardie continues to produce fine whiskey, so you could say distilling is in my blood,” says Hardie. “The history of distilling in this country is rooted in agriculture and providing added value to a crop. When crops are used in distilling, they’re preserved and less expensive to transport. After a half-century raising honey bees here, I’ve developed a deep relationship with the land and the crops that we’re using to make Caledonia Spirits—namely elderberries, corn, barley and rye.”

Caledonia Spirits has created a singular range of spirits, each of which are delicious and unique to the distillery. Head distiller Ryan Christiansen outfitted the operation with a custom-built pot and column still, and began making gin and vodka, both of which are distilled using raw honey.

“Raw honey is the easily recognized theme to many of our products, but it’s the distinctive ways we use the raw honey in each product that defines them,” notes Christiansen. “Our Barr Hill Vodka, for example, is made from a base of 100% raw honey. The honey is fermented and distilled twice to 190 proof. The minimal distillation allows the delicate aromatics of the honey to shine through to the finished spirit. In Barr Hill Gin, the honey is added after distillation, providing a bold, pronounced sweetness that compliments the piney, woodsy contribution of the juniper.”

Christiansen adds that Caledonia Spirits also handcrafts an exceptional Elderberry Cordial in which the raw honey and other fruit are used to soften the otherwise bitter flavor of the fresh elderberries. The blend of honey and elderberries yields a desirable balance of flavor and texture, while retaining the deep, rich color of the elderberries.

Christiansen and team have recently started distilling bourbon, rye and corn whiskey from locally grown organic grain. Distilled in a new whiskey still, the young spirits are maturing in custom made oak barrels as we speak.

Search the seven seas if you must, but you won’t find a more delectable set of spirits than the honey laced gems from Caledonia.

Who’s Who

Introducing your clientele to locally produced spirits is a sure way to secure repeat business. The fact is there’s money to be made with craft distilled spirits. To that end, here is a roster of some of our favorites. Cheers!

Bendistillery — Bendistillery was founded in 1996 by distiller Jim Bendis in Bend, OR. Over the past 18 years, Bendis has perfected a stellar line-up of gins, vodkas, and now a rye whiskey, all of which are made with volcanic rock-filtered water. Vintage-dated Crater Lake Estate Gin is created from grains and botanicals grown on site. Released each fall, the 2014 edition includes hand-harvested juniper, lime basil and lemon balm. After distillation, the 85-proof gin is briefly rested in oak.

Death’s Door — Established in 2007 in Middleton, Wisconsin by Brian Ellison, Death’s Door produces all of its handcrafted spirits from locally sourced ingredients. For example, Death’s Door Gin is made on a base of triple-distilled organic winter wheat and malted barley. Master distiller John Jeffery then infuses the spirits with only 3 botanicals—organic juniper berries, organic coriander and fennel seeds. The botanicals are placed in a chamber in the neck of the still such that the rising alcohol vapors pass through the botanicals and imprint the vivacious, 94-proof gin with their aroma and flavor.

Deep Eddy — The Deep Eddy range of vodkas has become a local favorite in hometown Austin, Texas. Founded by distillers Chad Auler and Clayton Christopher, Deep Eddy Sweet Tea Vodka is distilled 10 times in a state of the art column still using locally grown corn and essentially pure artesian water drawn from a Texas aquifer. The vodka is infused with black Indonesian tea leaves, organic honey and a touch of pure cane sugar. It is then rigorously filtered through charcoal for purity and bottled at 35% alcohol (70 proof). The lower proof allows the vodka’s flavor to luxuriate longer on the palate

Greenhook Ginsmiths — Greenhook Ginsmiths opened their doors in 2012 in Brooklyn, NY, with the release of critically acclaimed American Dry Gin. The small batch marvel is handcrafted from organic wheat and a botanical mix that includes Tuscan juniper, chamomile, Thai blue ginger, Ceylon cinnamon, orris root and elderberry. Brothers Steven and Philip DeAngelo make their 94-proof gin in a custom-made, vacuum copper pot still, which allows the gin to be distilled at low temperatures. This helps prevent the delicate aromas of the botanicals from being diminished by excessive heat of distillation.

Mad River Distillers — Appropriately enough, Mad River Distillers is situated in the Mad River Valley in the bucolic Green Mountains of Vermont. It affords an idyllic setting for distilling spirits made from organic, non-GMO products. Founder and CEO John Egan outfitted the operation with an advanced, steam-heated, copper pot still from Germany that’s specifically designed to provide maximum flavor transference. That it was a good purchase is evident in Mad River Distillers Maple Rum, a spirit distilled from local cane, matured in fresh charred American oak barrels and then finished in casks used previously to age Vermont maple syrup.

Old Tahoe Distillery — The Old Tahoe Distillery was the vision of Mark Taverniti, the founder and CEO of Spanish Peaks Brewing Company. Located in Fallon, NV, his forte is distilling rye whiskey. Small batch Old Tahoe Rye Whiskey is made entirely from premium rye and spring water drawn from the Sierra Nevadas. The fermented mash is distilled in a traditional pot still and aged for 3 years in new American white oak barrels, the staves of which are subjected to a proprietary method of charring. When Taverniti deems the whiskey has reached optimum maturity it’s bottled at 43% alcohol (86 proof).

Premiere Distillery — In 1997, vodka-maker and master distiller Gregory Feldman opened the Premiere Distillery in Gurnee, IL, which is located just outside of Chicago. His grandfather in 1905 was granted special permission from the Tsar to make vodka. Decades later, Feldman and his family immigrated to the U.S, and in 1997, he opened Premiere Distillery. Feldman’s brand—classically structured Real Russian Vodka—is made according to his grandfather’s heirloom recipe. The vodka is distilled a total of 6 times entirely from winter wheat in a copper pot still. Prior to bottling it is rigorously filtered.

Prichard’s Distillery — Phil Prichard—one of the deans of American craft distilling—comes from a line of distillers dating back to his great grandfather. Prichard’s namesake distillery opened in 1997 in Kelso, TN. There he produces some of the finest rums and whiskeys in the country. Prichard’s Fine Rum is a spot-on representation of a traditional American rum. It is handmade from sugar cane molasses sourced from Louisiana, limestone-filtered spring water and 5 times distilled in a custom copper pot still, and then aged in small oak barrels. His all-world line-up also includes Benjamin Prichard’s Tennessee Whiskey and Benjamin Prichard’s Double Barreled Bourbon.

Tuthilltown Spirits — Founded in 2003 by Ralph Erenzo and Brian Lee, Tuthilltown Spirits is a farm distillery located in Gardiner, NY, in the heart of the Hudson Valley. They converted a historic mill granary into a micro-distillery and began handcrafting gin, vodka and bourbon from locally grown grain and fruit. Their portfolio includes Hudson Baby Bourbon, the first legally produced in New York since Prohibition, and Hudson Manhattan Rye, which is distilled in a traditional copper pot still from whole grain rye and pure spring water. The whiskey is matured in new charred oak barrels for less than 4 years and bottled unfiltered.