Artisan Spirit: Winter 2017

WINTER 2017

DON’T BOTTLE

trouble

WE ARE HERE DIVERSITY WITHIN

THE DISTILLING INDUSTRY

CAN CANNABIS & CRAFT SPIRITS COEXIST

?

spirits regulations STATE-TO-STATE

AFTER THE STORM

TABLE of CONTENTS A LETTER FROM THE EDITOR

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QUARTERLY GUILD REPORT

What’s going on, state-by-state and province-by-province

GROWTH IN CRAFT SPIRITS REMAINS STRONG From the American Craft Spirits Association

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KINGSBARNS DISTILLERY

87

UNDERSTANDING SOLERAS

90

BITS AND BLOBS AND UFOS

92

CRAFTING SPIRITS WITH HONEY

99

of Kingsbarns, Fife, Scotland

Is this barrel aging method right for your product?

A hazy problem in need of a clearer solution

ALCOHOL AND TOBACCO TAX AND TRADE BUREAU

25

Winter 2017 report

As fermentation substrate or flavor component

SPIRITS REGULATIONS STATE-TO-STATE

A review of the varied laws affecting distillers in all 50 states

CRAFT BEVERAGE LAWYERS GUILD

27

102

THE SOUL OF SHOCHU

105

TO B OR NOT TO B CORP

107

of Lenexa, Kansas

45

Winter 2017 update

UNION HORSE DISTILLING

THE INTERSECTION OF SPIRITS AND MARIJUANA 46 The legal ramifications of combining the two.

Get acquainted with koji, the microbe that defines the Japanese spirit

The benefits of benefit corporations

STICK TO THE CODE

51

A cautionary tale

DOULL THE DRUGGIST’S BOOK

55

…or, how to get drunk at the pharmacy

DON’T BOTTLE TROUBLE 110 Implications of labor laws in the context of bottling parties and similar events

AIRAG 114

DISASTER RECOVERY 58 Get your distillery back to work after a storm

Something a bit more unique in the world of spirits

EXECUTING THE PLAN

116

CANNED COCKTAILS

119

Begins with procuring the right equipment

DISTILLERY-LED SOLUTIONS TOWARDS SUSTAINABLE PROCESSES

62

The parallel processes of whiskey and cheese

Getting the spirits into new contexts

CLIMBING THE MOUNTAIN

65

Wood’s High Mountain Distillery finds space to grow

MAHIA 122 Nahmias Et Fils of Yonkers, New York

2017 SPIRITS INDUSTRY MERGERS & ACQUISITION

69

MIDWEST SPIRIT

74

A BRIEF OVERVIEW OF MANUSCRIPT WRITING

124

DISTILLERY VISITOR EXPERIENCE

127

WE ARE HERE 78

BLUE GRASS & BOTANICALS

129

WITHERSPOON DISTILLERY

81

WINTER IMBIBING

132

BELTWAY BANTER WITH TOM LALLA

84

ADVERTISER INDEX

134

Year in review

45th Parallel builds a thriving distillery in the American heartland

Diversity within the distilling industry

of Lewisville, Texas

Interview between Tom Lalla and Robert Lehrman

from the COVER

Get your voice out there with scientific findings, creative thoughts, or literature reviews

Visitor Metrics & Analysis

Gin begins to assert itself in bourbon country

Some history on drinks perfect for the coldest of seasons

Union Horse Distilling in Lenexa, Kansas. Image by Amanda Joy Christensen. See their story on page 102.

Issue 21 /// Winter 2017 PUBLISHER & EDITOR Brian Christensen CREATIVE DIRECTOR Amanda Joy Christensen SENIOR WRITERS Amber G. Christensen-Smith

Margarett Waterbury

CONTRIBUTORS Luis Ayala Jessie N. Bentley, B. Sc. Shawn Bergeron Vanessa Burrows Renee Cebula Jeff Cioletti Brian B. DeFoe Carrie Dow Lisbeth Goddik Harry Haller Thomas Hogue Paul Hughes, Ph.D. Tim Knittel

Aaron Knoll Robert Lehrman Ryan Malkin John McKee Kevin O'Brien Shannon O'Neil Benjamin Peim Derrick Risner Mark Shilling Marc E. Sorini Gary Spedding, Ph.D. Gabe Toth

ILLUSTRATORS Amanda Joy Christensen Francesca Cosanti

Lanette Faulkinberry

PHOTOGRAPHERS Luis Ayala Amanda Joy Christensen

Benjamin Peim

SALES & MARKETING Ashley Monroe ARTISAN SPIRIT is the endorsed publication of the American Craft Spirits Association.

ARTISAN SPIRIT is a quarterly publication by Artisan Spirit Media. www.artisanspiritmag.com facebook.com/ArtisanSpiritMagazine

twitter.com/ArtisanSpiritM

General Inquiries (509) 944-5919 Advertising (509) 991-8112 PO Box 31494, Spokane, WA 99223 All contents © 2017. 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.

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.

ANY CONTAINER CAN HOLD YOUR SPIRIT, BUT ONLY ONE

CAN CAPTURE IT. Every spirit evokes its own, well ‌ spirit. It could be the life of a party. A toast to family and friends.

A moment over candlelight. Or a thousand other things. Whatever the essence of your brand, nothing projects it, and protects it, quite like the honest purity of glass from O-I.

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THANK YOU SPONSORS. 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.

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.

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American Craft Spirits Association exists because of real-world momentum and a perceived need for a trade association in the U.S. governed by licensed craft distillers on behalf of craft distillers. Our mission includes legislative advocacy in support of a strong business environment for distillers, and through outreach to consumers help build brands and increase consumer awareness. We welcome your ideas, suggestions and participation.

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.

Unlike other agencies that work within a blinding myriad of industries; our focus is 100% within the spirits, wine, beer and other alcohol sectors. This specialization has allowed us to become experts in the alcohol beverage category. We have an exceptional understanding of design that sells, complimented by professional project management and flawless production oversight. The result has been strategic solutions that consistently produce both critical acclaim and strong measurable return on investment for our clients.

Custom Metalcraft has manufactured stainless steel vessels and equipment for almost 40 years, designing and manufacturing equipment of the highest quality. Our product line includes storage vessels, fermenters, mash cookers and stainless stills. Most tank styles can be moved with a forklift and allow for optimal floor space and stacking capabilities. We offer a wide variety of options for our equipment. Please allow us to provide our expertise to achieve your distillation needs.

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Distillery Products is your "Go To" source for wholesale premium branded distillery merchandise for your Distillery. Specializing in custom branding and engraving on Glassware, Premium Flasks, Cocktail Tools and Insulated Tumblers and more…

Our Marketing Team will work with you to create your custom merchandise line to elevate your brand and capture your market identity. Our goal at Distillery Products is simple, have your target market think of you, your company and your brand first!

Distillery Products is your innovative partner and "Go To" source in brand development and brand identity.

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.

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Decorative label solutions…we’ve got you covered.

Fort Dearborn has the expertise and creative appreciation for development and application of labels for the spirits market. Whether your application needs cut & stack labels with specialty hot stamping and embossing, the “no label” look of pressure sensitive film labels or full body graphics using shrink sleeve labels, we have a product to meet your needs. We service brands large and small.

Contact us today to discuss your brand building objectives.

G&D Chillers is as committed to the cold as they are to their clients. They strive to build long lasting partnerships by offering on-going technical support from their team of engineers, all backed by their satisfaction guarantee. G&D Chillers offers a widerange of options from small portable chillers and heaters, to large custom chilling units. All units are ETL approved in both the U.S. and Canada. Most of their standard package chiller designs have been tested for over 20 years in the field.

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.

Live Oak Bank specializes in financing solutions for craft distilleries nationwide. As one of the largest originators of small business loans in the country, our loan options allow you to meet your customers’ demand and take your business to the next level. Our team is guided by craft experts and peers who have a combined 75+ years of lending expertise in this space. With access to a cash flow business model, industry knowledge and innovative technology, you’ll be able to grow your distillery with a committed partner. Financing can be used for expansion, equipment purchases, refinance, working capital, construction and more.

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.

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MGP is known for its mastery in formulating, fermenting, distilling and maturing world-class spirits. The company’s expertise in blending art and science to produce premium bourbons, whiskeys, gins and grain neutral spirits serves as the foundation of a lasting legacy steeped in know-how.

Customers benefit from MGP's in-depth experience, state-of-the-art capabilities, and strong penchant for developing tailored formulations and meeting precise product requirements. MGP's entire team, with distilleries in Atchison, KS, and Lawrenceburg, IN, takes great pride in delivering the highest quality results with each and every product made. For details visit mgpingredients.com/alcohol.

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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.

For over 60 years our company has produced cork stoppers and a wide variety of bottle closures.

Family-owned and operated since its inception, Tapi USA 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.

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TS OF INTEGRIT

O-I is the world's largest glass container manufacturer and the preferred partner for many leading spirits brands. O-I delivers safe, sustainable, pure, iconic, brand-building glass packaging to the growing craft spirits market.

Glass effortlessly conveys a superior image and delivers the unmatched quality that craft beer consumers expect. In addition to the wide range of bottle options offered through our Covet and Heritage collections, we also offer custom glass design and decoration expertise. Find out more at o-i.com.

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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DistilaMax

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For sales or technical support, call 1-800-583-6484.

© 2015. DistilaMax and DistilaVite are trademarks of Lallemand BioFuels & Distilled Spirits.

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A LETTER FROM THE EDITOR: The Winter 2017 edition of Artisan Spirit Magazine marks our five-year anniversary.

I’ve had a lot to say over the past 20 issues, and I think it’s about time I turned it over to the real creative and driving force behind this magazine. Take it away Ashley and Amanda!

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

Five years ago, we found ourselves getting into an industry that none of us had any experience in. We were quite literally flying blind. We made a million cold calls, asked lots of questions, listened to any bit of advice handed over, and worked to earn a place in an industry of hard working and passionate people.

From the beginning, it has been our mission to share and celebrate the art and science of craft distilling. We seek to support creativity, innovation, and integrity within this industry that we love so much. The response to Artisan Spirit Magazine has been humbling and we are truly dedicated to serving the men and women of distilling.

It is the position of this publication that diversity within our industry is a good thing. We value unique blends and new expressions in spirits and the people who make them.

This issue includes an article on diversity within the distilling industry (PAGE 78), so now seems as good of time as any to point out that Artisan Spirit Magazine is two-thirds woman-owned. It may not be immediately apparent since Brian, our editor, is more often the public face of our company, but our team is made of equals. This isn't something we've taken the time to highlight before, because honestly, we've been busy getting shit done.

For the two of us, being women within this industry has been a positive experience the majority of the time. As with any industry, there have been moments of WTF. However, overall we have been welcomed and embraced (the right way).

Here are some tips for those wanting get on our good side: 1. Be able to tell the difference between us two blonde females.

2. Keep your hands to yourself.

3. Maybe just don't be a dick.

If you are a woman looking to get into this industry, hi! We're here. There are many bad-ass women in the distilling world and there's always room for more.

Don't be afraid. In our experience the distilling industry has been incredibly warm and welcoming. For every backwards jack-ass we've met, there's 20 kind-hearted souls who have our back.

The American craft distilling industry is still in its relative infancy and the foundation is still being built. We need incredible people, of all races and genders, so come join us!

Ashley Monroe VP OF MARKETING

ashley@artisanspiritmag.com

Amanda Christensen CREATIVE DIRECTOR

amanda@artisanspiritmag.com

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ayor elected m , the newly ts n e d si re g guilds guild p ate distillin ur favorite st o t f a o th e r n e o to mind ted by et goodbye mbers. offers a re is highligh a bitterswe unding me e years, it d fo re n s th a it r s, e st e ft a g a tl an oard ng ou gulation ch from the b tion will lo rk. festivals, re eps down e organiza st th t e a h s th ft their ma A g ! on have le ple hopin .T. Wood ti o P a e , p ic O d C d e , te d a a and dedic of Salid Your time formed by members. and often rd , a d o e b iz r n e a lunte are org ted and vo all the elec to u yo k So than

ALASKA DISTILLERS GUILD OF ALASKA Since the passing of HB309 in 2014, which allowed for tasting rooms in Alaskan distilleries, the state’s distilleries have been showcasing their spirits not only with small free samples, but also through cocktails which may be purchased. However, distilleries were dealt a blow this fall when the state’s alcohol regulatory board, AMCO, reinterpreted the WWW.ARTISANSPIRITMAG.COM

tasting room statute to say that distilleries could no longer serve their spirits mixed with anything, prohibiting even the mixing of spirits with water or ice. Language in the advisory notice was later changed to allow for mixing with only things produced on-site, meaning that purchased tonics, juices and sodas are banned. Distilleries across the state, legislators who sponsored HB309 and the public are advocating to reinstate mixed drinks in the tasting room without such prohibitive regulation.

Despite the current hurdles, Alaska’s craft distilling industry is still enjoying healthy

growth. The Distiller’s Guild of Alaska has grown to eight voting members, with nine active DSPs in the state and one more on its way. We held our annual Membership Meeting in September and have a number of new participants on the Board of Directors.

Following the membership meeting, many distilleries participated in the second annual Alaska Crafted Event, where we sampled our spirits and cocktails to event-goers.

Maura Selenak & Brandon Howard Co-founders, Amalga Distillery m@amalgadistillery.com

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COLORADO COLORADO DISTILLERS GUILD It is mid-October as I write this quarter’s Colorado Guild report, and I am preparing for our Annual Meeting in Breckenridge.

It is with a bit of melancholy but a lot of excitement that I write what will be my last Colorado Guild report. After three years as President I will be resigning at the end of this term. I have decided to run for Mayor

CONNECTICUT CONNECTICUT SPIRITS GUILD The CT Spirits Trail & Guild members continue to work together to market ourselves to boost visitor-ship across the Constitution State. Recently we were featured at a Yelp event that promoted our brands and our Trail while at the same time raising money for victims of hurricanes in Florida, Puerto Rico, and Texas.

MASSACHUSETTS MASSACHUSETTS DISTILLERS ALLIANCE In the past months, the Massachusetts Distillers Alliance has been working with the state’s Alcohol Beverages Control Commission (ABCC) in its yearlong assessment of ongoing issues affecting the industry.

In 2017, the Massachusetts ABCC established this Task Force to review legal

MICHIGAN MICHIGAN CRAFT DISTILLERS ASSOCIATION In September, the Michigan Craft Distillers Association (MCDA) hosted its inaugural “Michigan Distilled” festival featuring 20

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of my adopted home town Salida and want to be sure I can focus on that job as well as the ACSA. I am very proud of the accomplishments we as a board have achieved in Colorado: We have grown to over 50 members, had numerous wins on capitol hill that have saved our members’ money and improved the business climate, we have built a reputation with the LED and our state legislator as a serious, engaged, and powerful organization that needs to be at the table, and most exciting is the launch this fall of our Colorado Distillery Trail. I wanted

to thank all the distillers in Colorado who have put their faith in me over the last three years, it has been a privilege to work on your behalf. I will continue to help with legislative affairs and be an active member of the guild.

I will also continue to serve as the ACSA VP and chair the state guild committee. I look forward to sharing another dram with all of you!

P.T. Wood

As I write this report, our Connecticut State Legislature which is grappling with putting the final agreements together to ratify our long-awaited state budget; this is the longest period of time that our state has operated without an official budget. This has continued to delay our efforts with the legislature to hopefully widen CT tasting room laws and in general make it easier for us to do business. One law change did go into effect on October 1 that promotes farmbased distilleries by reducing the cost of a

state annual manufacturer permit to $300.

The hope is that this will facilitate additional farm-based distilleries in our state. While Connecticut is a densely populated, highly urbanized state we also have our share of wonderful farmland, which produce high quality crops and could offer wonderful tourism experiences.

Cheers to a great O-N-D, everyone!

President, Colorado Distillers Guild Vice President, ACSA Chair, ACSA State Guild Committee Wood's High Mountain Distillery

Tom Dubay Hartford Flavor Company President, CT Spirits Guild/Trail

and regulatory structures. The MASSACHUSETTS DISTILLERS MDA has spent time in town hall ALLIANCE BOARD meetings along with smaller ABCC Work Groups — specifically Public Andrew Cabot Privateer Rum Health and Safety and Sales Tax. Alison DeWolfe Damnation Alley Distillery Others participating in these Matt Nuernberger GrandTen Distilling groups were manufacturers, retailers, distributors and health For more information, find us at and safety organizations. MDA concerns of a www.massdistill.com. sales tax harming Massachusetts distilleries were voiced, and a final report will be Andrew L. Cabot forwarded by year’s end from these Work President, Privateer Rum Groups to the state. members serving a variety of cocktails featuring gin, rum, whiskey, vodka and other spirits. More than 500 people were in attendance in the outdoor festival held at the historic Fulton Street Farmers Market in Grand Rapids. In addition to the distilleries, guests were treated to local barbecue and other foods, fresh brewed coffees and

live music. Founded in 2014, the MCDA currently represents more than 30 craft distilleries throughout the state. For more information, visit MiCraftSpirits.com.

Cheers!

Dianna Stampfler Executive Director Michigan Craft Distillers Association

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NEW MEXICO NEW MEXICO DISTILLERS GUILD The New Mexico Distillers Guild has grown in membership from 5 to 8 with the addition of Glencoe Distillery (near Ruidoso,

NEW YORK NEW YORK STATE DISTILLERS GUILD In the land of the lotus eaters time plays tricks on you, what was just yesterday is now tomorrow. 2017 brought with it challenges to face and many opportunities for growth.

October saw the launch of New York Rye Week and with it the premiere of the exciting new Empire Rye designation of rye whiskey.

New York Rye Week was dedicated to establishing a whiskey style for the Empire State. This whiskey is to be as distinctive, precisely crafted and held to as high a standard as any of the illustrious whiskey styles in the world. Each distiller’s bottling of Empire Rye is crafted in accordance with the same exacting specifications and yet

TENNESSEE TENNESSEE DISTILLERS GUILD In June 2017, the Tennessee Distillers Guild launched the official Tennessee Whiskey Trail, a 26-distillery tour across the state. The Trail is a joint effort by the Guild membership to highlight Tennessee whiskey and moonshine, as well as the craftsmen and women that make them. The Guild’s objective with the Tennessee Whiskey Trail is to put an international spotlight on Tennessee

UTAH DISTILLERS GUILD OF UTAH 16

NM), Still Spirits and Hollow Spirits (both in Albuquerque, NM). In September we hosted our first guild-only event in conjunction with Somos ABQ, a celebration of all things Albuquerque and New Mexican. Though the weather was a little touchy at our rooftop location on a restored downtown building we were well received and look forward to

building on the momentum for future events.

The NMDG is preparing for the upcoming legislative session when continued efforts toward state excise tax parity and retail reciprocity with craft wineries and breweries will top our agenda.

each is given ample space to express their creativity. In time, the hope is that more New York distillers will choose to produce a rye whiskey in accordance with these standards and make the category of Empire Rye known throughout the world.

This fall we were busy readying the logistics and structure for the inaugural NY Distilled Spirits Competition to be held next year.

Starting a solely New York spirits competition is something that has been on our minds for quite some time and we’re incredibly eager to begin accepting submissions starting this winter.

As we prepare for 2018 our board of directors has three seats up for election this January. This election marks the changing of the guard with the departure of a longtime board member and one of the guild’s founders, Brian McKenzie of Finger Lakes

Distilling. We look forward to welcoming new faces and fresh eyes to aid us in the challenges that face our industry here in New York and beyond.

Our collective success is proof that this new craft consumer culture that has taken hold of our nation is changing the way people think and drink. There were a few memorable moments over this last year where I was confronted with people in our industry that had completely embraced its competitive nature. They did this not through aggressive sales tactics or marketing budgets, but though their willingness to cooperate in the big picture. Each one of us, distillers and otherwise, we are much stronger together than we ever could be apart.

Cheers!

and its whiskey. So far, thousands of people from all over the world have already grabbed their passports and hit the Trail to get a taste of the Tennessee whiskey experience.

The Tennessee Whiskey Trail consists of 26 distilleries ranging from boutique-sized distilleries to large internationally-recognized operations that span from East to West Tennessee. On the Trail, visitors can get an inside look at the art of distilling Tennessee whiskey and learn about the history and culture of whiskey-making that is legendary in our state. Visitors collect stamps in a free passport booklet or check in using the

free TN Whiskey Trail app at participating distillery locations. Those who collect all 26 stamps receive a commemorative gift to mark their achievement.

The Guild announced the Trail’s launch at The Factory in Franklin, TN on June 19 amid great fanfare and will celebrate the achievements of the first Trailblazers to complete the Trail at the second annual Grains & Grits Festival on Nov. 4 in Townsend, TN. A one-year anniversary party for the Trail’s launch is also being planned for 2018. Stay tuned!

Mariko Hickerson

The guild is putting together a referral card for each distillery to direct patrons to the other distilleries in the guild. In addition, we are planning to have an annual tasting event

late spring for guild members to showcase their products.

Ethan S. Miller

Dr. Greg McAllister Algodones Distillery

Cory Muscato Lockhouse Distillery – Buffalo, NY President – New York State Distillers Guild

Founder | Huckleberry Branding

Head Distiller, Co-owner — Holystone Distilling President —Distillers Guild of Utah WWW.ARTISANSPIRITMAG.COM

PREMIUM SCOTTISH DISTILLING MALTS FROM THE HEART OF SPEYSIDE, CRISP’S GLENEAGLES MALTS ARE NOW AVAILABLE FOR THE FIRST TIME IN NORTH AMERICA, EXCLUSIVELY FROM BSG. TO LEARN MORE, VISIT BSGCRAFT.COM.

WASHINGTON WASHINGTON DISTILLERS GUILD The Washington Distillers Guild is delighted to announce that Susan Welch has accepted the position of Executive Director, beginning immediately.

Susan has been involved in the sales and marketing of malt to the brewing industry— both internationally and in the US—for

WYOMING WYOMING DISTILLERS GUILD The Wyoming Distillers Guild recently held its latest meeting on the 11th of October. We are pleased to see the industry expanding in our lightly populated state, with two new DSP members joining, bringing our Class A membership growing to soon include seven Wyoming DSPs. Welcome Chronicles Distilling (Cheyenne) and Pine Bluffs Distilling (Pine Bluffs)!

We worked hard and had a very successful 2016-17 state legislative session, where we successfully lobbied arm-in-arm with the Wyoming Liquor Division and Wyoming State Liquor Association to revamp some antiquated laws that posed serious

28 years. She is currently the 1st Vice President of the Master Brewers Association of America (MBAA), and has chaired the Education Committee for several years.

Susan has a Masters degree in International Business, and has been on boards or chaired committees on several large boards throughout her career. We’re delighted to have attracted such talent, and look forward to how the WDG can grow with Susan as ED. The WDG is also preparing to drop an omnibus bill during the short legislative

session starting January 2018. Details of the bill will be available when the full scope of it is approved by the board. Contact President@ WashingtonDistillersGuild.org for more info.

And finally, the Washington Distillery Trail Phase 1 web site is almost complete and will launch soon. The site will be available at www.washingtondistillerytrail.com.

risks for our industry. Now our focus, like most distillers’ guilds across the country, is to continue to garner support for the Craft Beverage Modernization Act. The bipartisan majority support we are seeing across the nation is encouraging, but we know there is still plenty of work to be done. As a guild and individually, we will continue to reach out to our representatives, senators, wholesalers, suppliers, farmers, and quite frankly everyone that has anything to do with our business. Our fearless leader and guild president, Amber Pollock (Backwards Distilling) traveled to Washington D.C. this summer to continue the federal legislative efforts toward eventual FET reduction.

There are still a few state laws that are inhibiting our ability for growth, so we will continue to fight the good fight. Primarily we are looking toward having the ability use our liquor license to host public events offsite from our distillery, such as Farmers’ Markets, concerts, community fundraisers, etc. This would be a very significant benefit to all of us to allow us to market more directly to our end consumer, and help generate a buzz in our communities.

Travis Goodman

Jason Parker Co-Founder/President Copperworks Distilling Co.

Secretary, Wyoming Distillers Guild Partner, Jackson Hole Still Works travis@jhstillworks.com

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GROWTH in CRAFT SPIRITS REMAINS STRONG W RITTE N BY M A RK S HILLING, PRESI DENT OF AMERI CAN CRAF T SPI RI T S ASSOCI AT I ON

I

n October 2017, the American Craft Spirits Association (ACSA) announced the excellent news that growth in craft spirits remains strong.

The latest findings in our ongoing Craft Spirits Data Project indicate continued growth in all aspects of the industry, including sales, employment, and overall capital investment. In addition to the overall economic snapshot, the study offers keen insight into the makeup of our industry and offers important feedback from our partners in the wholesale and retail tiers. The project, which began in 2015 in association with Park Street and the IWSR, relies on data collected directly from producers, wholesalers, and retailers around the country and serves to characterize the overall economic impact of craft spirits producers in the United States, as well as to create a more quantifiable picture of our industry.

From 2016 through August of 2017, the number of active craft distilleries grew by 20.8% to 1,589. California remains the state most populated with distilleries with 148 producers, followed by New York (123), Washington (106), Texas (86), and Colorado (80). The fastest growth states of New Jersey, Michigan, Maryland, North Carolina, and Pennsylvania combined for 64 new DSPs between August 2016 and August 2017 (up 40%).

In terms of overall market volume, the craft segment hit 5.8 million cases (9L) in 2016, WWW.ARTISANSPIRITMAG.COM â€

showing an increase of 18.5% over the prior year, and the value of those sales increased 25% over the same time to $3B. In addition to actual growth, craft continues to gain against the total US market with a penetration of 2.6% (up from 1% in 2011).

Likewise, our craft share of the overall market value is has grown from an estimated 1.2% in 2011 to approximately 3.8% today, further proving that craft is a clear contributor to the trend towards premiumization.

Consequent to the increased sales and volume figures, we have also contributed a total of 19,579 full-time jobs in 2017, up from only 5,708 just three years ago. The number of full-time equivalent jobs per distillery has also increased from 6.3 to 10.5 over the same period, with roughly two-thirds of those positions in the distillery itself and the remainder working out in the market.

Such growth does not occur in a vacuum, however, and in order to sustain such a rate of expansion in a young industry, considerable capital expenditures are to be expected. The Data Project shows total investment has jumped from $398 million in 2016 to $593 million through the first three quarters of 2017, a considerable 49% jump in expenditures. For the average producer, that’s a 14.6% increase from last year to $317,300.

The craft segment hit 5.8 million cases (9L) in 2016, showing an increase of 18.5% over the prior year, and the value of those sales increased 25% over the same time to $3 billion.

21

The data demonstrates a strong and vibrant craft spirits market with considerable opportunities for continued growth.

What does all this mean? The data demonstrates a strong and vibrant craft spirits market with considerable opportunities for continued growth.

Many industry professionals see the potential for craft spirits to perform in line or even better than craft beer over time. Our colleagues in craft beer own about 12% of their market, so if the predictions hold, we have plenty of runway in front of us. That being said, getting there will require solid business foundations, understanding of the market, and teamwork with our wholesale and retail partners.

Our retail partners had some suggestions on how our industry can continue to grow, and pointed to providing more resources for tastings, as well as through increased consumer pull strategies. Onpremise retailers also felt strongly that we focus on fewer products and improved quality, while offpremise respondents would like improved branding and better trained staff who can better communicate your brand story and product attributes.

Our wholesalers’ views and suggestions are arguably the some of the most important feedback we can get — and while they will push the brands that make the most business sense for themselves, they do believe

overwhelmingly that craft spirits are covering an underserved segment and that fragmentation among brands will continue to grow. Our wholesalers would like to see us much more frequently in the market, provide better sales training and branding, as well as more funding for consumer tastings.

Being successful in our industry takes drive, commitment, and passion, but it also takes the business acumen to participate in, learn from, and respond to research that can help us grow in positive and beneficial ways.

Thanks to the considerable research and analysis provided by Park Street and the IWSR, with help from TTB, National Beverage Alcohol Control Association, Wine & Spirits Wholesaler of America, American Beverage Licensees, and most importantly, the hundreds of distillers across the United States who participated in the survey, the American Craft Spirits Association is able to provide substantial industry data that is not and would not otherwise be available.

Mark Shilling is President of American Craft Spirits Association. Visit www.americancraftspirits.org for more information on ACSA and to join.

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22

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Winter 2017 report

WINTER 2017 REPORT FROM

ALCOHOL and TOBACCO TAX and TRADE BUREAU

WRITTEN BY THOMAS HOGUE

T

he beverage alcohol industry continues to experience strong growth with many new, and often small, businesses entering the market. The number of distilled spirits permittees, in particular, grew by over 100% between 2012 and 2016, with growth among small producers reaching 116% during the same period. Not surprisingly, as the industry has grown, so too have calls for the Alcohol and Tobacco Tax and Trade Bureau (TTB) to increase enforcement of prohibitions on unfair trade practices in liquor distribution, including exclusive outlets, tied house arrangements, commercial bribery, and consignment sales.

TTB’s efforts to ensure equal access to the marketplace and promote fair competition and consumer choice received a significant boost in May 2017, when Congress provided $5 million in funding specifically directed toward increased trade practice enforcement. The immediate impact was a substantial increase in the number of TTB personnel dedicated to trade practice enforcement and in TTB’s ability to conduct large-scale investigations such as the July 2017 joint operation with Florida authorities and the September 2017

joint operation with Illinois authorities. Both of these on-going investigations targeted “pay to play” schemes, also known as "slotting fees," which are an unlawful trade practice that hurts law-abiding industry members and limits consumer choice. Paying a retailer to display the product in a favorable location, or paying the retailer to begin or to continue carrying product are examples of this unlawful trade practice.

TTB anticipates initiating more trade practice investigations during Fiscal Year 2018, including additional large-scale investigations like the Florida and Illinois operations. TTB also plans to increase industry outreach and education efforts so that businesses understand their obligations and do not inadvertently violate the law.

Ensuring that consumers can continue to enjoy a wide selection of products and that industry members can compete for those consumers in a fair and open marketplace has never been more important. Individuals wishing to help identify potential trade practice violations are encouraged to email TTB at tradepractices@ttb.gov.

In May 2017, Congress provided $5 million in funding specifically directed toward increased trade practice enforcement.

Thomas Hogue is Director of the Office of Congressional and Public Affairs for the Alcohol and Tobacco Tax and Trade Bureau.

Visit www.ttb.gov for more information.

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SPIRITS

S N O I T A L U REG

STATE-TO-STATE

This year, representatives of multiple state guilds met at the American Craft Spirits Association's (ACSA) annual convention. P.T. Wood, Chair of the ACSA Guild Committee, opened the discussion to regulatory COMPIL D B advancements among the states. Voices around the tables were heard: "I can pour and sell bottles at my local farmer's market" while another table uttered, Y AMERICAN CRE AF "What? Seriously?" Piping in from across the room came "I cannot sell bottles from my tasting room!" while someone proclaimed, "Are you kidding?"

T SP IRITS ASSOC "I can use my DSP in multiple storefront locations." It became clear that state regulations were as diverse as the members in that room.

Recognizing the benefit of solid information, ACSA embarked on a journey to collect regulatory guidance from each state. ACSA commissioned a study to review the regulations, talk with administrators, and probe distillers throughout the 50 states to compile current data on spirits regulations. ACSA hopes this will prove useful as you strive to understand your own state's regulations compared to what is happening with spirits in other states.

ALABAMA

OFF-SITE DRINK SALE? No — however, a Special Events Retail License can purchase # DISTILLERIES IN STATE 12 liquor from the board to be sold operating craft distilleries at retail at a special event LICENSE CLASSES License ON-PREMISE FESTIVAL Yes — Type 200, License for with Special Events License distilling equipment OFF-PREMISE FESTIVAL Yes — 3-TIER OR CONTROL Control with Special Events License — Alabama Alcoholic Beverage Control Board SPECIAL EVENTS Yes — with Special Events Retail License PRODUCTION AND DISTRIBUTION: must designate one area FEE $500 + $50 annual filing fee within licensed premises MINIMUM PRODUCTION AMOUNT No to conduct tasting MAXIMUM PRODUCTION AMOUNT No FOR PROFIT EVENTS Yes PRODUCTION RELATED LIMITATIONS? No OTHER: SELF-DISTRIBUTION? No ALLOWED TO HOLD EVENTS ON SITE? Yes TASTING ROOM:

Yes Yes BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? Max — one 750ml bottle per person/day TASTINGS ON SITE? FEES FOR TOURS

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes LIMITS FOR ON-PREMISE SALES?

Can have tasting room and sell on-premise like a bar, but only what is produced at the distillery SWAG (T-SHIRTS, GLASSES, ETC.)? Yes FREE SOUVENIRS

Nothing of value

LIMITS ON SOUVENIRS

Nothing of value

TAXES ON SOUVENIRS State applicable sales tax PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes, restricted

process of rewriting the alcohol laws, mostly related to brewpubs, however craft distilleries are aiming to be allowed to have off premise tasting rooms. Main goal is just to maintain their current privileges

IATION

gust 15, 2017

or municipality where the tasting room will be located.

Upon approval from the city, town, or municipality, the application will then go to the TASTING ROOM: state. This is the only Arizona TASTINGS ON SITE? Yes, max liquor application which 3 ounces per person/day first is approved by the local government. This license is not FEES FOR TOURS Yes transferable (person-to-person BOTTLE SALES ON SITE Yes, or location-to-location). max 1 gallon per person # DISTILLERIES IN STATE 19 ON-PREMISE FESTIVAL The LIMITS ON BOTTLE SALES? director, subject to the approval LICENSE CLASSES 1 Gallon per person per day of the board of supervisors, may Manufacturer's License OR can ON-PREMISE CONSUMPTION issue license for events to be get craft distilling license AT DISTILLERY? Yes held in an unincorporated area 3-TIER OR CONTROL 3-Tier BOTTLE SALES AT FAIRS/FARMERS or the governing body of a city LIMITS FOR ON-PREMISE SALES? PRODUCTION AND DISTRIBUTION: MARKETS? With the permission or town for events to be held in 1 Gallon per person per day of the state or county fair a city or town, also may issue SWAG (T-SHIRTS, GLASSES, ETC.)? Yes AVG TIME TO OBTAIN Not organizers, any craft distillery up to twenty-five craft distillery more than 105 days, FREE SOUVENIRS Yes is authorized to allow sampling festival licenses for each pursuant to objections ALLOWED TO HOLD OTHER of craft distillery products on calendar year for each licensed LICENSES? Alabama Responsible LIMITS ON SOUVENIRS No MINIMUM PRODUCTION AMOUNT No the fair premises, the sale of craft distillery, for up to a total Vendor Certification, Industry TAXES ON SOUVENIRS MAXIMUM PRODUCTION AMOUNT the products for consumption of seventy-five calendar days Representative license ($15 Borough Applicable 20,000 gallons per calendar on the fair premises and the per craft distillery, authorizing annually), Warehouse license year if craft distillery sale of the products in original sampling of craft distillery PROMOTION: ($200 per site annually), containers for consumption products on the craft distillery Special Events Retail ($150) PRODUCTION RELATED LIMITATIONS? TASTINGS AT ON-PREMISE off of the fair premises at any festival premises, the sale of Note the one license for If more, must apply for LOCATIONS? Yes, max 3 sanctioned county or state fair. the products for consumption manufacturing covers all production license, and then ounces per person per day The director may establish a on the craft distillery festival types of alcohol, so distilleries loses craft distilling license TASTINGS AT OFF-PREMISE per day fee for each event for premises and the sale of the can brew beer also SELF-DISTRIBUTION? Only can LOCATIONS? No a craft distillery fair license. products in original containers % GRAIN FROM STATE No sell to wholesalers, unless BOTTLE SALES AT FAIRS/ OFF-SITE TASTING EVENTS ALLOWED? for consumption off the craft requirement produces less then 1,189 FARMERS MARKETS? No Yes, with off-sale special event distillery festival premises. gallons per calendar year SEPARATE LAWS FOR BRANDY? No The director may establish a OFF-SITE TASTING EVENTS then can self-distribute to OFF-SITE BOTTLE SALE? Yes, as per day fee for each event for a GOALS Legislative wish list ALLOWED? Only at locations on-sale & off-sale retailers long as in original container craft distillery festival license. would include the ability to with on premise serving and w/ permission of state TASTING ROOM: self-distribute and delete the and consumption license OFF-PREMISE FESTIVAL Yes or county fair organizers one bottle per person per day TASTINGS ON SITE? Yes (see above sales) at fairs & with daily off-sale OFF-SITE BOTTLE SALE? No limitation on off-premise sales special event license FEES FOR TOURS May charge SPECIAL EVENTS Yes — OFF-SITE DRINK SALE? No NOTES 25 out of 67 counties for consumption on site different types: On-sale Special OFF-SITE DRINK SALE? Remote ON-PREMISE FESTIVAL Grey are either dry or "moist" 42 Event License or Off-sale Tasting Rooms have on and BOTTLE SALES ON SITE Sale Area, No entertainment completely wet counties Special Events License off-sale retail privileges. The allowed in original containers on tasting premises licensee may serve liquor to person on site FOR PROFIT EVENTS Yes OFF-PREMISE FESTIVAL No, unless produced at the Master License LIMITS ON BOTTLE SALES? No OTHER: the festival holders have on premises for onand off-sale info— seems to be open. # DISTILLERIES IN STATE 8 premise serving license ALLOWED TO HOLD EVENTS consumption and for the Also can sell distilled spirits operating craft distilleries purpose of sampling. The liquor ON SITE? Yes SPECIAL EVENTS No produced or manufactured by sold at the remote tasting room LICENSE CLASSES Manufacturing ALLOWED TO HOLD OTHER LICENSES? other craft distilleries as long FOR PROFIT EVENTS No Distillery License, Anyone May operate one other remote as does not exceed 20% of craft must have all manufacturing taxes paid, must be serving samples must pass the OTHER: tasting and retail premises distillery's total sales by volume produced/manufactured at Alcohol Server Education Course ALLOWED TO HOLD EVENTS if only sell own product or ON-PREMISE CONSUMPTION the Master License location another craft distillery product ON SITE? No 3-TIER OR CONTROL 3-Tier AT DISTILLERY? Yes with this exception: and can only sell to persons ALLOWED TO HOLD OTHER PRODUCTION AND DISTRIBUTION: LIMITS FOR ON-PREMISE SALES? A remote tasting room may sell physically present on premises LICENSES? Yes, can hold other FEE Biennial $1000, Must be in original container products from other Master % GRAIN FROM STATE No manufacturing licenses plus $200 filing fee SWAG (T-SHIRTS, GLASSES, ETC.)? Yes Licenses of the same series requirement % GRAIN FROM STATE No not to exceed 20 percent (20%) MINIMUM PRODUCTION AMOUNT No PROMOTION: SEPARATE LAWS FOR BRANDY? No requirement of total sales by volume.

The MAXIMUM PRODUCTION AMOUNT No TASTINGS AT ON-PREMISE NOTES Amendments from SEPARATE LAWS FOR BRANDY? No Remote Tasting Room (series LOCATIONS? Yes — director PRODUCTION RELATED LIMITATIONS? No House Bill 2337 went 19) license application is first GOALS The state is in the may establish fee per day into effect August 9th submitted to the city, town SELF-DISTRIBUTION? Can self

ARIZONA

TASTINGS AT OFF-PREMISE LOCATIONS? Remote Tasting

Room – distilled spirits (series 19) allows an Arizona-licensed craft distillery to operate one tasting room. May sell distilled spirits produced at their Series 18 or 2D location. Make sales of distilled spirits produced by other series 18 or 2D licensees that does not to exceed 20% of total tasting room sales.

Sales are permitted only to customers who are physically present at the tasting room, A.R.S. §4-205.10(F)

ALASKA

to three ½ pours per person per 24 hour period

TASTINGS AT OFF-PREMISE LOCATIONS? Yes, just must

notify ABC via online portal within 7 days of tasting, then can do tastings at any license holder in the state

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? Yes,

one bottle per day per person OFF-SITE TASTING EVENTS ALLOWED? Yes — with

Special Events License Yes — with Special Events License OFF-SITE BOTTLE SALE?

WWW.ARTISANSPIRITMAG.COM

distribute to any business with a retail license for resale, but cannot ship direct to consumer in state

Current as of Au

27

ARKANSAS # DISTILLERIES IN STATE 4 licensed but only 2 produce LICENSE CLASSES Liquor Manufacture Permit 3-TIER OR CONTROL 3-Tier PRODUCTION AND DISTRIBUTION: FEE

$1,000 annually

No MAXIMUM PRODUCTION AMOUNT No

License; Type 74 (Craft Distiller's License); Type 6 (License for owning and operating a still) 3-TIER OR CONTROL 3-Tier

Liquor or 3.2% Fermented Malt Bev, Public Transportation, Wholesale, Manufacturer, Importer License Application 3-TIER OR CONTROL 3-Tier

PRODUCTION AND DISTRIBUTION:

PRODUCTION AND DISTRIBUTION:

$444 (same for craft distillery)

$600 new license, $300 year manufacturing liquor, $550 year wholesale liquor AVG TIME TO OBTAIN 30-90 days MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT No

FEE

AVG TIME TO OBTAIN

About 4 months

FEE

additional tasting license — must be free, must be manufactured on premises and shall not exceed two ounces per person per day FEES FOR TOURS No BOTTLE SALES ON SITE Yes if produce less than 25,000 gallons of alcoholic liquor in a year, can sell sealed bottles/containers manufactured product for off premise consumption LIMITS ON BOTTLE SALES? 2 bottles per person per day

per day per customer for consumption off premises* ON-PREMISE CONSUMPTION AT DISTILLERY? Yes

NOTES Allowed to use alcoholic beverages, not made by Distillery, as adjuncts for cocktails sold at distillery

LIMITS FOR ON-PREMISE SALES? No, other than

FLORIDA

the limits on bottle sales for off premise consumption

SWAG (T-SHIRTS, GLASSES, ETC.)? Can sell, on the

licensed premises, food items, MINIMUM PRODUCTION AMOUNT No souvenirs, spirit-related supplies and educational MAXIMUM PRODUCTION AMOUNT PRODUCTION RELATED material as approved by Craft Distillers can produce PRODUCTION RELATED LIMITATIONS? No the Commissioner up to 100,000 gallons of LIMITATIONS? No SELF-DISTRIBUTION? No; can distilled spirits per fiscal year FREE SOUVENIRS No ON-PREMISE CONSUMPTION SELF-DISTRIBUTION? Yes sell to wholesalers, rectifiers, AT DISTILLERY? Tastings, PRODUCTION RELATED LIMITATIONS? LIMITS ON SOUVENIRS Limited and export out of state TASTING ROOM: no mixed drinks Not on the production side to food items, souvenirs, TASTING ROOM: TASTINGS ON SITE? Yes spirit-related supplies & LIMITS FOR ON-PREMISE SELF-DISTRIBUTION? No TASTINGS ON SITE? Yes educational material SALES? Just the 2 bottles FEES FOR TOURS Yes TASTING ROOM: FEES FOR TOURS Yes SWAG (T-SHIRTS, GLASSES, ETC.)? Yes TAXES ON SOUVENIRS No BOTTLE SALES ON SITE Yes TASTINGS ON SITE? Yes, max 6 BOTTLE SALES ON SITE Yes PROMOTION: FREE SOUVENIRS Yes 1/4 ounce servings, or 1 single LIMITS ON BOTTLE SALES? No 1.5 ounce serving, mixed LIMITS ON BOTTLE TASTINGS AT ON-PREMISE LIMITS ON SOUVENIRS No ON-PREMISE CONSUMPTION drink samplings are allowed SALES? No limits LOCATIONS? Yes, pursuant AT DISTILLERY? Yes TAXES ON SOUVENIRS to spirit tastings license FEES FOR TOURS Yes ON-PREMISE CONSUMPTION LIMITS FOR ON-PREMISE SALES? No State sales tax AT DISTILLERY? Tastings, TASTINGS AT OFF-PREMISE BOTTLE SALES ON SITE Yes, PROMOTION: SWAG (T-SHIRTS, GLASSES, ETC.)?

Yes liquor by the drink, beer and LOCATIONS? A license to max 2.25 liters (three 750ml TASTINGS AT ON-PREMISE FREE SOUVENIRS Yes, but wine by the drink as well permit spirits, wine and beer bottles) per person per Yes, see above* LOCATIONS? nothing of value tasting may be granted by the LIMITS FOR ON-PREMISE SALES? No day for craft distillery Commissioner to any person TASTINGS AT OFF-PREMISE LIMITS ON SOUVENIRS SWAG (T-SHIRTS, GLASSES, ETC.)? Yes LIMITS ON BOTTLE SALES? holding a license under this LOCATIONS? Yes Nothing of value can be Yes, max 2.25 liters FREE SOUVENIRS Yes title as a retailer. Spirits, given away for free BOTTLE SALES AT FAIRS/ per person per day wine and beer tasting may LIMITS ON SOUVENIRS Gifts and FARMERS MARKETS? No TAXES ON SOUVENIRS State ON-PREMISE CONSUMPTION take place only in a separate Services to Retailers Prohibited AT DISTILLERY? Yes, tasting applicable sales tax OFF-SITE TASTING EVENTS portion of a licensee's premises TAXES ON SOUVENIRS State ALLOWED? Yes or special events, can also PROMOTION: where alcoholic beverages are applicable sales tax own up to three restaurants not sold. The separate portion OFF-SITE BOTTLE SALE? No TASTINGS AT ON-PREMISE selling their products of the premises shall be an PROMOTION: LOCATIONS? Yes OFF-SITE DRINK SALE? No area designated for spirits, LIMITS FOR ON-PREMISE TASTINGS AT ON-PREMISE TASTINGS AT OFF-PREMISE ON-PREMISE FESTIVAL Yes wine and beer tasting by the SALES? No apparent limit LOCATIONS? Yes LOCATIONS? Yes w/ Commissioner. No charge — can sell other products OFF-PREMISE FESTIVAL Yes, tasting room license TASTINGS AT OFF-PREMISE may be made for the spirits, not manufactured on premises but only tasting LOCATIONS? Yes, at liquor BOTTLE SALES AT FAIRS/FARMERS wine and beer tasting. if distillery purchases stores, get sample license and MARKETS? Yes w/ tasting license FOR PROFIT EVENTS Yes through wholesaler BOTTLE SALES AT FAIRS/FARMERS a person can get two .5 ounce OTHER: MARKETS? No, but actively trying SWAG (T-SHIRTS, GLASSES, ETC.)? Yes OFF-SITE TASTING EVENTS samples per calendar day ALLOWED TO HOLD EVENTS ALLOWED? Yes to change that legislatively FREE SOUVENIRS Yes BOTTLE SALES AT FAIRS/ ON SITE? Yes OFF-SITE BOTTLE SALE? Yes OFF-SITE TASTING EVENTS FARMERS MARKETS? No LIMITS ON SOUVENIRS No % GRAIN FROM STATE No with tasting license ALLOWED? Yes — as long OFF-SITE TASTING EVENTS TAXES ON SOUVENIRS No as promoter of event obtains GOALS Want to increase OFF-SITE DRINK SALE? ALLOWED? Manufacturers, temporary large event license PROMOTION: bottle sales Yes with permit distillers, importers, producers, OFF-SITE BOTTLE SALE? Maximum TASTINGS AT ON-PREMISE ON-PREMISE FESTIVAL Yes distributors, wholesalers of 1 case (i.e., not more than LOCATIONS? Yes, samples, and retailers may donate OFF-PREMISE FESTIVAL Yes 12-750 ml bottles) per day intoxicating liquor to charitable and on premise restaurants # DISTILLERIES IN STATE 5 DSPs, to each retail customer for SPECIAL EVENTS Yes or nonprofit organizations TASTINGS AT OFF-PREMISE 4 active distilleries consumption off the premises; for on premises consumption FOR PROFIT EVENTS Yes LOCATIONS? Off premise shall be in containers LICENSE CLASSES Biennial only at nonprofit functions restaurants can have tasting OTHER: which are securely sealed Distilled Spirits License or where such organization rooms — as long as distillery is Biennial Craft Distillery License and have attached thereto receiving the intoxicating producing no more than 100,000 ALLOWED TO HOLD EVENTS a label setting forth such ON SITE? Yes liquor does not hold a permit to gallons per year and 65% of 3-TIER OR CONTROL 3-Tier information as required dispense intoxicating liquors ALLOWED TO HOLD OTHER product sold at restaurant PRODUCTION AND DISTRIBUTION: OFF-SITE DRINK SALE? Yes LICENSES? Yes, up to 2 is produced at distillery OFF-SITE BOTTLE SALE? No — at temporary large event FEE The biennial license fee tasting room licenses BOTTLE SALES AT FAIRS/ OFF-SITE DRINK SALE? No based on annual production: for ON-PREMISE FESTIVAL With % GRAIN FROM STATE No FARMERS MARKETS? No the first 500 gallons: $100, for a gathering license ON-PREMISE FESTIVAL Yes requirement OFF-SITE TASTING EVENTS ALLOWED? the next 5,000 gallons: 6 cents OFF-PREMISE FESTIVAL Allowed OFF-PREMISE FESTIVAL Yes, SEPARATE LAWS FOR BRANDY? No Yes, must be non-profit per gallon, for the next 10,000 with special permit but large event coordinator gallons: 4.5 cents per gallon, NOTES $2.85 per proof gallon OFF-SITE BOTTLE SALE? No must get license for large SPECIAL EVENTS Can get a excise tax (roughly $0.48/bottle) for the next 50,000 gallons: 3 OFF-SITE DRINK SALE? No event and manufacturer license to sell at non-profit cents per gallon, for the next for all the freedoms above must control purchase and event for 5 consecutive days at ON-PREMISE FESTIVAL Yes 100,000 gallons: 1.5 cents per resale or dispensing of area voted on in county to be gallon, for each gallon over OFF-PREMISE FESTIVAL Yes all alcoholic beverages used for such event, and must 165,500: .75 cents per gallon.

SPECIAL EVENTS Yes apply for license with ABCD 3 The biennial license to operate SPECIAL EVENTS Smaller LICENSE CLASSES Manufacturer weeks prior to event, $50 fee craft distillery is $1,500 Gatherings: need either FOR PROFIT EVENTS No permit-shall allow the gathering license for group FOR PROFIT EVENTS No, manufacture of alcoholic AVG TIME TO OBTAIN 30 OTHER: event or biennial premises valid must benefit a charity liquor and the storage, bottling Days upon submission of ALLOWED TO HOLD EVENTS for 2 years (can't do more than and wholesale distribution a completed application OTHER: ON SITE? Yes 10 gallons per calendar day and sale of alcoholic liquor MINIMUM PRODUCTION AMOUNT No ALLOWED TO HOLD EVENTS ALLOWED TO HOLD OTHER manufactured or bottled FOR PROFIT EVENTS Yes — if ON SITE? Yes MAXIMUM PRODUCTION AMOUNT LICENSES? No to permittees in this state promoter has temporary Craft Distillery — limited ALLOWED TO HOLD OTHER and without the state as large event license % GRAIN FROM STATE No to 750,000 proof gallons of LICENSES? No may be permitted by law.

SEPARATE LAWS FOR BRANDY? Yes distilled spirits in calendar year OTHER: % GRAIN FROM STATE No 3-TIER OR CONTROL 3-Tier ALLOWED TO HOLD EVENTS GOALS More involvement from PRODUCTION RELATED requirement PRODUCTION AND DISTRIBUTION: ON SITE? Yes the local craft community LIMITATIONS? See above SEPARATE LAWS FOR BRANDY? FEE $1,950 ALLOWED TO HOLD OTHER LICENSES? NOTES Cannot sell over 120 SELF-DISTRIBUTION? No Native brandy law Yes, limit is 3 alcohol licenses Proof without a prescription, AVG TIME TO OBTAIN 60-90 Days TASTING ROOM: GOALS Sales at certain alcohol may be % GRAIN FROM STATE No MINIMUM PRODUCTION AMOUNT No festivals in 2 years TASTINGS ON SITE? Yes–pursuant requirement exempt (Bacardi 151). Any MAXIMUM PRODUCTION AMOUNT No to spirit tasting license product labeled whiskey SEPARATE LAWS FOR BRANDY? No must be over 3 years old.

PRODUCTION RELATED FEES FOR TOURS Yes GOALS In addition to the LIMITATIONS? No BOTTLE SALES ON SITE Yes # DISTILLERIES IN STATE Over "farmers market" efforts, we are SELF-DISTRIBUTION? Yes 200 licensed, 70-80 operating also working on direct shipping LIMITS ON BOTTLE SALES? Craft TASTING ROOM: legislation. Currently there is distillery — not more than # DISTILLERIES IN STATE 90 LICENSE CLASSES Type 4 — no form of direct shipping. twelve 750ml bottles (1 case) Distilled Spirits Manufacturer's LICENSE CLASSES Colorado TASTINGS ON SITE? *Yes with MINIMUM PRODUCTION AMOUNT

DELAWARE

CONNECTICUT

CALIFORNIA

COLORADO

28

LICENSE CLASSES

DD 3-Tier

3-TIER OR CONTROL

PRODUCTION AND DISTRIBUTION: FEE

$4,000 annually 30 Days

AVG TIME TO OBTAIN

MINIMUM PRODUCTION AMOUNT

No

MAXIMUM PRODUCTION AMOUNT

75,000 gallons if craft distillery

PRODUCTION RELATED LIMITATIONS? No

No

SELF-DISTRIBUTION? TASTING ROOM:

Yes Yes LIMITS ON BOTTLE SALES? 2 bottles per brand per person or 6 bottles per year TASTINGS ON SITE?

BOTTLE SALES ON SITE

ON-PREMISE CONSUMPTION AT DISTILLERY? Tastings only LIMITS FOR ON-PREMISE SALES? Yes — only can

sell at a souvenir shop

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? With Distributor TASTINGS AT OFF-PREMISE LOCATIONS? With Distributor BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No OFF-SITE TASTING EVENTS ALLOWED? No OFF-SITE BOTTLE SALE? OFF-SITE DRINK SALE?

No No

OTHER: ALLOWED TO HOLD EVENTS ON SITE? No ALLOWED TO HOLD OTHER LICENSES? No

GEORGIA # DISTILLERIES IN STATE

25

LICENSE CLASSES

Distilling License 3-TIER OR CONTROL

3-Tier

PRODUCTION AND DISTRIBUTION: FEE $1,000 for license & $100 investigation fee AVG TIME TO OBTAIN 45 days MINIMUM PRODUCTION AMOUNT MAXIMUM PRODUCTION AMOUNT

No No

PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION? Local distilleries can directly sell 500 barrels of spirits per year TASTING ROOM:

Yes — 3 samples per calendar day or 1.5 oz per person daily FEES FOR TOURS No longer required to charge for tours.

BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? Up to three 750 ml bottles TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT

DISTILLERY? Can sell liquor by the drink if manufactured on-site, and there is no limit on consumption at the distillery.

LIMITS FOR ON-PREMISE SALES? Zero limits SWAG (T-SHIRTS, GLASSES, ETC.)? Yes — distillery

can give away promo items that do not contain alcohol FREE SOUVENIRS Distilleries can no longer give souvenirs.

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TAXES ON SOUVENIRS Yes — excise & use taxes on samples; use taxes on souvenirs

ALLOWED?

Yes

if alcohol purchase is not required to obtain LIMITS ON SOUVENIRS See above TAXES ON SOUVENIRS 4.712% (general excise tax + county surcharge)

OFF-SITE BOTTLE SALE?

OFF-SITE TASTING EVENTS ALLOWED? Special Use permit

Manufacturer—no/ Craft— yes OFF-SITE DRINK SALE? No ON-PREMISE FESTIVAL Yes OFF-PREMISE FESTIVAL No PROMOTION: SPECIAL EVENTS Yes TASTINGS AT ON-PREMISE FOR PROFIT EVENTS Yes LOCATIONS? On-premise licensee would need to apply for sampling permit, or OTHER: including value of tastings ALLOWED TO HOLD EVENTS in gross liquor sales ON SITE? Yes

OFF-SITE BOTTLE SALE?

No OFF-SITE DRINK SALE? No

ALLOWED TO HOLD OTHER LICENSES? No

ON-PREMISE FESTIVAL

% GRAIN FROM STATE

PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes — must

be manufactured by distillery.

TASTINGS AT OFF-PREMISE LOCATIONS? Yes BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

Special Use permit

No

HAWAII

HONOLULU COUNTY # DISTILLERIES

County — 4

Honolulu

Class 1 — Manufacturer license (allows manufacturer to sell original package to licensed wholesalers, sell liquor manufactured or distilled on licensee's premises from products grown in Hawaii); Class 2 - Restaurant License; Class 3 - Wholesaler dealers; Class 4 - Retail dealer; Class 5- Dispenser license; Class 10 - Special License (granted for sale of liquor for no more than 3 days); Class 18 - Small craft producer pub license.

3-TIER OR CONTROL 3-Tier LICENSE CLASSES

PRODUCTION AND DISTRIBUTION:

OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? To be determined

HAWAII

HAWAII COUNTY # DISTILLERIES

0

SEPARATE LAWS FOR BRANDY?

Yes — may participate in off-premise festivals SPECIAL EVENTS The commissioner may issue a special event use permit for the sale of alcoholic beverages for certain events which would otherwise require a retailer or retail dealers license. The commissioner shall specify by rule or regulation the events that shall qualify for a special event use permit; provided, however, that estate sales, the sale of inventory authorized under a bankruptcy proceeding, and activities that are similar in nature shall so qualify.

Such permit shall not be valid for more than ten days.

FOR PROFIT EVENTS Yes, with Special Event Permit OFF-PREMISE FESTIVAL

TASTINGS AT OFF-PREMISE LOCATIONS? Off-premises

1

18/2 Distilling 3-TIER OR CONTROL 3-Tier LICENSE CLASSES

PRODUCTION AND DISTRIBUTION:

$640 for Manufacturing/ $1,000 for craft + % on both AVG TIME TO OBTAIN 3 months MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT No FEE

PRODUCTION RELATED LIMITATIONS?

Manufacturing — none; Craft — 7,500 barrels SELF-DISTRIBUTION? Yes — craft manufactures through wholesalers TASTING ROOM:

Yes Yes BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? No TASTINGS ON SITE? FEES FOR TOURS

Small craft producer — no more than 7,500 barrels of alcohol on licensee's premises during license year (barrel = container not exceeding 31 gallons of liquor).

PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION?

Yes

TASTING ROOM:

Manufacturer — with commission approval; small craft producer is an onpremises consumption license.

FEES FOR TOURS Yes TASTINGS ON SITE?

BOTTLE SALES ON SITE

Manufacturer — only if manufactured or distilled from ON-PREMISE CONSUMPTION AT local fruits or products grown DISTILLERY? Manufacturer in Hawaii; Small Craft Producer Tastings/ craft dispenser — one liter, securely sealed LIMITS FOR ON-PREMISE SALES? No for off-premises consumption, manufactured on premises SWAG (T-SHIRTS, GLASSES, ETC.)? Yes LIMITS ON BOTTLE FREE SOUVENIRS Yes SALES? See above LIMITS ON SOUVENIRS

ON-PREMISE CONSUMPTION AT

Nominal value

PROMOTION:

DISTILLERY? Manufacturer — with commission approval; small craft producer is an onpremises consumption license

TASTINGS AT ON-PREMISE LOCATIONS? Yes

LIMITS FOR ON-PREMISE SALES? See response for

TASTINGS AT OFF-PREMISE LOCATIONS? Craft — Yes

SWAG (T-SHIRTS, GLASSES, ETC.)?

TAXES ON SOUVENIRS

sold— sales tax

If

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No OFF-SITE TASTING EVENTS

30

Bottle sales on site

Permissible to sell; if free — can't require purchase of alcohol to obtain FREE SOUVENIRS Permissible

No SWAG (T-SHIRTS, GLASSES, ETC.)? Yes FREE SOUVENIRS Yes LIMITS ON SOUVENIRS No LIMITS FOR ON-PREMISE SALES?

TAXES ON SOUVENIRS

County applicable PROMOTION:

TASTINGS AT ON-PREMISE LOCATIONS? Yes TASTINGS AT OFF-PREMISE LOCATIONS? Permit by BOTTLE SALES AT FAIRS/FARMERS MARKETS? With Special License

BOTTLE SALES AT FAIRS/FARMERS MARKETS? Fair/farmers market

OFF-SITE TASTING EVENTS ALLOWED? With Special

would need to hold a Class 4 Retail Dealer license

OFF-SITE TASTING EVENTS ALLOWED?

Tasting event host would need to apply for sampling permit or trade show permit OFF-SITE BOTTLE SALE? Site host would need Class 4 Retail Dealer license OFF-SITE DRINK SALE? Site host would need to hold on-premises consumption license, which would include Class 10 Special license or Class 13 Catering license ON-PREMISE FESTIVAL Festival would need to hold Class 10 Special license, be under approved Class 13 Catering license, or hold on-premise consumption license OFF-PREMISE FESTIVAL Festival would need to hold Class 10 Special License or be under approved Class 13 Catering License SPECIAL EVENTS Manufacturer — permitted, consumption requires Commission approval; Small Craft Producer— permitted FOR PROFIT EVENTS See response to Special Events

ALLOWED TO HOLD EVENTS ON SITE?

See response to Special Events

ALLOWED TO HOLD OTHER LICENSES?

Manufacturer — prohibited unless 100% ownership of other license, or the other license is a Wholesale Dealer; Small Craft Producer — not prohibited % GRAIN FROM STATE If product will bear Hawaii designated label (see HRS 281-3), or if Manufacturer is Local Products Kind, 100% of grain must come from Hawaii SEPARATE LAWS FOR BRANDY? No

HAWAII

KAUAI COUNTY

OFF-SITE DRINK SALE? Yes — but only if manufacturer of the licensed premises serves food cooked on-site and the no more than 50% of gross revenue to licensed premises is derived from sale of alcoholic bevs on site.

ON-PREMISE FESTIVAL Yes OFF-PREMISE FESTIVAL No SPECIAL EVENTS Yes FOR PROFIT EVENTS No OTHER:

off-premises licensee

licensee would need to apply for sampling permit

FEE Manufacturer Other Liquors — $1,320 base fee and $5,000 max additional fee based upon gross liquor sales; Small Craft Producer Pub Cat 1 Standard — $1,680, Cat 2 Entertainment — $1,800; respectively, $40,000 max additional fee based upon gross liquor sales.

AVG TIME TO OBTAIN 3-4 Months MINIMUM PRODUCTION AMOUNT No OTHER: MAXIMUM PRODUCTION AMOUNT

through division

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes

License

OFF-SITE BOTTLE SALE?

With

SEPARATE LAWS FOR BRANDY?

ON-PREMISE FESTIVAL

With

ILLINOIS

Special License

Special License

GOALS

OFF-PREMISE FESTIVAL

Distiller License

FEE

With commission approval ALLOWED TO HOLD OTHER LICENSES? No

No

IDAHO registered distilleries

14

LICENSE CLASSES

Manufacturers' License for sale to Division 3-TIER OR CONTROL Control PRODUCTION AND DISTRIBUTION:

Division may grant license to manufacturer or alcohol for sale to the division and to customers out of state, for a fee of $100 MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT No FEE

PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION?

$2,500

All special event and tasting licenses must be filed at least 14 days in advance

No

TASTING ROOM:

SELF-DISTRIBUTION? Can sell direct to consumer by the sample, drink, bottle, or case from the premises (Max 10,000 gallons annually). Cannot ship direct to consumer.

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes, if consumption

is in the form of a cocktail they must also offer food No

35,000 gallons/year (Max 2,500 gallons to non licensees)

PRODUCTION RELATED LIMITATIONS?

# DISTILLERIES IN STATE

35,000 gallons/year (Max 2,500 gallons to non licensees) SELF-DISTRIBUTION? No TASTING ROOM:

Yes, max 3 1/4ounce samples FEES FOR TOURS Yes BOTTLE SALES ON SITE Yes TASTINGS ON SITE?

LIMITS ON BOTTLE SALES?

Max 2,500 Gallons

LIMITS FOR ON-PREMISE SALES?

10,000 gallons annually

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes FREE SOUVENIRS

Yes

LIMITS ON SOUVENIRS TAXES ON SOUVENIRS

No Yes

PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes TASTINGS AT OFF-PREMISE LOCATIONS? Yes, but not

at grocery stores.

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No OFF-SITE TASTING EVENTS ALLOWED? Yes, 45 days

per year Yes SWAG (T-SHIRTS, GLASSES, ETC.)? Yes OFF-SITE DRINK SALE? Yes TAXES ON SOUVENIRS State ON-PREMISE FESTIVAL Yes, applicable sales tax 45 days per year PROMOTION: OFF-PREMISE FESTIVAL Yes, TASTINGS AT ON-PREMISE 45 days per year LOCATIONS? Yes SPECIAL EVENTS Yes, TASTINGS AT OFF-PREMISE 45 days per year LOCATIONS? Distillery must FOR PROFIT EVENTS Yes, have a registered tasting rep 45 days per year on site ($100), must be free, OTHER: limited to 1/4 ounce samples ON-PREMISE CONSUMPTION AT DISTILLERY? Samples

OFF-SITE BOTTLE SALE?

Yes — but cannot charge; limited to .25 oz per sample; 3/per person in a 24 hour period FEES FOR TOURS No BOTTLE SALES ON SITE No BOTTLE SALES AT FAIRS/ LIMITS ON BOTTLE SALES? No sales FARMERS MARKETS? No

ALLOWED TO HOLD EVENTS ON SITE? Yes

ON-PREMISE CONSUMPTION AT DISTILLERY? Sampling allowed

ALLOWED TO HOLD OTHER LICENSES? Yes, Farm Winery

TASTINGS ON SITE?

No

Yes Yes BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? Max 10,000 gallons out of premises

MAXIMUM PRODUCTION AMOUNT

SEPARATE LAWS FOR BRANDY?

MINIMUM PRODUCTION AMOUNT

FEES FOR TOURS

AVG TIME TO OBTAIN

MINIMUM PRODUCTION AMOUNT

No

18 months (see notes)*

TASTINGS ON SITE?

PRODUCTION AND DISTRIBUTION:

ALLOWED TO HOLD EVENTS ON SITE?

$250 Annually

AVG TIME TO OBTAIN

TASTING ROOM:

Craft

3-TIER OR CONTROL CONTROL 3-Tier

OTHER:

% GRAIN FROM STATE

No

None at present

LICENSE CLASSES

With Special License SPECIAL EVENTS With Special License FOR PROFIT EVENTS With Special License

FEE

PRODUCTION RELATED LIMITATIONS? See above

No

OFF-SITE DRINK SALE?

PRODUCTION AND DISTRIBUTION:

(Not including gallons made to be sold through wholesale)

ALLOWED TO HOLD OTHER LICENSES? Yes

requirement

With Special License

# DISTILLERIES IN STATE 23 registered, 20 operating. In the process of forming a guild.

LICENSE CLASSES Artisan Distiller's Permit 3-TIER OR CONTROL 3-Tier

MAXIMUM PRODUCTION AMOUNT 10,000 gallons

ALLOWED TO HOLD EVENTS ON SITE? Yes

% GRAIN FROM STATE

INDIANA

OFF-SITE TASTING EVENTS ALLOWED? Craft Distiller

Tasting Event license, $25 per location, # DISTILLERIES 0 LIMITS FOR ON-PREMISE each license only valid for SALES? Only by the drink LICENSE CLASSES maximum of 15 days at said Manufacturer's License SWAG (T-SHIRTS, GLASSES, ETC.)? Yes location without renewal.

3-TIER OR CONTROL 3-Tier FREE SOUVENIRS Yes OFF-SITE BOTTLE SALE? No PRODUCTION AND DISTRIBUTION: LIMITS ON SOUVENIRS No ON-PREMISE FESTIVAL Yes with on FEE Annual Fee — $900 premise consumption license, TAXES ON SOUVENIRS all drinks must be included Yes — use tax AVG TIME TO OBTAIN in the price of admission, Approximately 3 months PROMOTION: and tickets or punch cards MINIMUM PRODUCTION AMOUNT No TASTINGS AT ON-PREMISE must be given to attendees MAXIMUM PRODUCTION AMOUNT No LOCATIONS? Yes to track drink intake PRODUCTION RELATED LIMITATIONS? TASTINGS AT OFF-PREMISE OFF-PREMISE FESTIVAL *Can LOCATIONS? No 7,500 barrels per year (fiscal) participate in alcoholic liquor tasting if the premises BOTTLE SALES AT FAIRS/FARMERS SELF-DISTRIBUTION? Yes has obtained Special Use MARKETS? Bottles must be TASTING ROOM: or Special Event License bought through division TASTINGS ON SITE? Yes SPECIAL EVENTS See above* OFF-SITE TASTING EVENTS FEES FOR TOURS Yes ALLOWED? Yes, but not in stores. OTHER: BOTTLE SALES ON SITE Yes OFF-SITE BOTTLE SALE? ALLOWED TO HOLD EVENTS Bottles must be purchased LIMITS ON BOTTLE SALES? No ON SITE? Yes

Permit, A brewer permit, a distiller's permit % GRAIN FROM STATE No requirement

SEPARATE LAWS FOR BRANDY? Yes, you can get a farm winery/ distillery permit and make and sell brandy on your property directly to consumer if you grow the fruit on your property.

GOALS In the process of arranging proposed legislature to present to the state NOTES All Spirits must be poured by a licensed bartender. *If you want to be an Artisan Distiller in Indiana, which affords to the ability to sell directly to the consumer at your premise, one of the major restrictions is that you need WWW.ARTISANSPIRITMAG.COM

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to have a distilling permit, or brewery, or winery permit for eighteen months before you can sell directly to the consumer. If you've been a brewery for longer than eighteen months you can immediately start a distillery and sell to the consumer. If you are just starting a distillery you can start the distillery and start selling through distribution (both in state and out of state) for eighteen months then you can apply for the Artisan Distiller's permit and start selling to the consumer.

An artisan distiller may blend liquor that the artisan distiller obtains from another manufacturer with liquor that the artisan distiller manufacturers. The artisan distiller may sell the blended liquor as liquor that the artisan distiller manufactures only if the final product contains at least sixty percent (60%) of liquor that was fermented and distilled from raw materials by the artisan distiller at the licensed premises of the artisan distiller (you can't buy sourced whiskey and sell it on site. You have to ferment and distill at least 60% of the spirit).

IOWA

class "C" native distiller spirits liquor control license (only can serve liquor manufactured on licensed premises); Craft Distillery may not sell by the drink for on premise consumption PROMOTION:

MINIMUM PRODUCTION AMOUNT 1 proof gallon

TASTINGS AT ON-PREMISE LOCATIONS? Yes — see

MAXIMUM PRODUCTION AMOUNT

OFF-SITE DRINK SALE?

PRODUCTION RELATED LIMITATIONS?

above* Yes — alcoholic beverage licenses/ permits can be transferred from one location to another qualified location for a period of 24hrs — 7days (unless license is issued in incorporated city — then can only transfer to same city); sales limited to transfer period ON-PREMISE FESTIVAL Need to get temporary license that is valid for 5-24 consecutive days, but not Sundays unless get Class C Sunday sales privilege OFF-PREMISE FESTIVAL

Same as above

Can can seasonal license issued for 6 to 8 month period (not renewable) SPECIAL EVENTS

OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? Yes

Manufacturer's license; Microdistillery license 3-TIER OR CONTROL 3-Tier

PRODUCTION AND DISTRIBUTION:

PRODUCTION AND DISTRIBUTION:

$350 Liquor Manufacturer; $50 Distiller's Certificate of Compliance; $25 Broker's Permit; $500 MicroDistilled Spirits Permit; $25 Direct Shipper License MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT None for Distillery;

Micro distillery limited to 50,000 gallons per year

PRODUCTION RELATED LIMITATIONS? See above SELF-DISTRIBUTION? No — through wholesaler, unless obtain class E license TASTING ROOM:

*Yes — up to two .5 oz tastes per brand of native distilled spirits manufactured at native distillery. Must be free of charge unless class "C" native distilled spirits liquor control license BOTTLE SALES ON SITE Yes — rules provided below LIMITS ON BOTTLE SALES? Native distillers manufacturing more than 100,000 proof gallons per year will be allowed to sell up to 1.5 liters of spirits per person per day (must pass through wholesaler); a Microdistillery can sell 1/5 liters per person per day for off premises consumption TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Up to two 2

oz tastes of mixed drink or cocktail; microdistillery — no more than 2 oz per person per day may be sampled LIMITS FOR ON-PREMISE SALES?

Native distillers producing not more than 100,000 proof gallons a year & planning to serve spirits by drink at distillery must obtain a 32

Class A $3,090.00 per annum; Class B $1,000 per annum; Rectifiers license: Class A $2,580 per annum and Class B $825 AVG TIME TO OBTAIN 6 months FEE

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

LICENSE CLASSES Class C — native distilled spirits liquor control license to serve on premises; Class A — Micro Distillery License 3-TIER OR CONTROL Control — spirits regulated by Iowa Alcoholic Beverage Commission FEE

PRODUCTION AND DISTRIBUTION:

KANSAS LICENSE CLASSES

FEE Manufacturer's license $25,000; Micro distillery — biennial fee of $500 MINIMUM PRODUCTION AMOUNT

No

Microdistilleries — no more than 50,000 gallons per year

PRODUCTION RELATED LIMITATIONS?

Microdistilleries — no more than 50,000 gallons per year SELF-DISTRIBUTION? No TASTING ROOM:

Yes— as long as premises is in a wet county BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? In original, unopened containers to be consumed off premise TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes LIMITS FOR ON-PREMISE SALES?

For sales, must be licensed as club/drinking establishment SWAG (T-SHIRTS, GLASSES, ETC.)? Yes PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes TASTINGS AT OFF-PREMISE LOCATIONS? Yes, may serve

free samples of spirits at "special events monitored and regulated by division of ABC"

OFF-SITE TASTING EVENTS ALLOWED? Yes w/ special

events license as described above ON-PREMISE FESTIVAL Yes SPECIAL EVENTS Temporary permit has been issued pursuant to K.S.A. 41-2645

KENTUCKY 20+ Class A and Class B distiller's licenses 3-TIER OR CONTROL 3-Tier LICENSE CLASSES

Class A — no; Class B— will be a craft distillery and will produce 50,000 gallons or less of distilled spirits SELF-DISTRIBUTION? No TASTING ROOM:

Yes, a distillery can allow a consumer to sample, during a distillery tour for educational purposes, one (1) complimentary taste of unaged product, not to exceed1.75 ounces, manufactured at distillery premises FEES FOR TOURS Free to $14 ($12 is average) BOTTLE SALES ON SITE If distiller obtained souvenir retail license may sell souvenir packages at retail to distillery visitors — can not exceed 6 bottles or 4.5 liters per visitor per day (w/ the exception of business holding event on premises of distillery, in which case limitation shall be one liter per visitor attending event) — can only sell through gift shop or other retail outlet on distillers premises* LIMITS ON BOTTLE SALES? 6 bottles per person TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Sampling

MAXIMUM PRODUCTION AMOUNT

# DISTILLERIES IN STATE

Pending endorsement

allowed, unless NW3 cocktail endorsement

LIMITS FOR ON-PREMISE SALES?

No sales by the glass, but 6 bottles per person

SWAG (T-SHIRTS, GLASSES, ETC.)? A souvenir retail liquor

license may be issued to any licensed Kentucky distiller that has a gift shop or other retail outlet on its premises, if distillery is located in west territory (KRS 243.03) FREE SOUVENIRS Yes, if consumer branded, nonalcoholic promo item of nominal value in conjunction w/ distillery tour or complementary sampling event LIMITS ON SOUVENIRS No, just limits on bottles TAXES ON SOUVENIRS State — 6%, County — 5% PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes —

manufacturer needs to get sampling license under KRS 243.030(1) and (39) or under KRS 243.030(1),(26) and (39)

TASTINGS AT OFF-PREMISE LOCATIONS? No, Caterer or

No Alcohol through distributor FOR PROFIT EVENTS Yes — NQ3 License OFF-PREMISE FESTIVAL

MINIMUM PRODUCTION AMOUNT

SPECIAL EVENTS

MAXIMUM PRODUCTION AMOUNT A holder of a

OTHER:

small distillery license may distill, rectify, blend and bottle not more than 50,000 gallons of spirits per year.

ALLOWED TO HOLD EVENTS ON SITE? Yes

PRODUCTION RELATED LIMITATIONS? A holder

ALLOWED TO HOLD OTHER LICENSES? No, unless ABC

license endorsement Not required, but 95% or greater

% GRAIN FROM STATE

SEPARATE LAWS FOR BRANDY?

Rectifying license, endorsement, no separate laws

LOUISIANA LICENSE CLASSES Liquor Manufacturing Permit or Micro Distillery Permit 3-TIER OR CONTROL 3-Tier PRODUCTION AND DISTRIBUTION:

$1000, if sell less than 1,000 cases of product in the state, then only $200; Micro Distillery — $1000, plus additional fees related to gross sales AVG TIME TO OBTAIN Permits may be issues immediately, but the first 35 days is a probationary period FEE

MINIMUM PRODUCTION AMOUNT

of a small distillery license may distill, rectify, blend and bottle not more than 50,000 gallons of spirits per year SELF-DISTRIBUTION? A licensee under this section may sell to non licensees during regular business hours from the licensed premises where liquor is produced by the licensee liquor produced by the bottle, by the case or in bulk for consumption off the licensed premises. Spirits sold by distillers and small distillers in accordance with this paragraph must be first sold to the State, subject to the listing, pricing and distribution provisions of this Title.

TASTING ROOM:

Yes FEES FOR TOURS Up to distillery BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? No limit TASTINGS ON SITE?

No

ON-PREMISE CONSUMPTION AT DISTILLERY? A holder of a small

TASTINGS ON SITE?

distillery license licensed under paragraph E to operate a location licensed (under chapter 43) for on-premises consumption may pay the bureau the difference between the distillery's price charged to the bureau and the discounted list price charged by the bureau when a distillery purchases its own spirits to be sold at its on-premises location.

FEES FOR TOURS

LIMITS FOR ON-PREMISE SALES?

MAXIMUM PRODUCTION AMOUNT *12,000 gallons

for Micro Distillery

PRODUCTION RELATED LIMITATIONS? See above*

Yes — Senate bill #64 allows some to sell directly to consumers SELF-DISTRIBUTION?

TASTING ROOM:

Yes Yes BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? 12 bottles

Must purchase its own liquors back from the state

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

Yes

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes

FREE SOUVENIRS

LIMITS FOR ON-PREMISE SALES?

TAXES ON SOUVENIRS

No more than 1 case per person for each 30 day period

SWAG (T-SHIRTS, GLASSES, ETC.)?

Yes, can sell their product

LIMITS ON SOUVENIRS

No

5.5% sales tax PROMOTION:

TASTINGS AT ON-PREMISE LOCATIONS? Yes, max 12

TASTINGS AT ON-PREMISE LOCATIONS? Yes

1/2 samples per person per day unless substantial food is offered

TASTINGS AT OFF-PREMISE LOCATIONS? Type C Special

TASTINGS AT OFF-PREMISE LOCATIONS? Yes, pending

PROMOTION:

Event Permit — $100

OFF-SITE TASTING EVENTS ALLOWED? Type C —

Special Events Permit Yes, with special events permit ON-PREMISE FESTIVAL Yes OFF-PREMISE FESTIVAL Yes, with Type C Special Events permit SPECIAL EVENTS Yes, with Type C Special Events permit FOR PROFIT EVENTS Yes, with Type C Special Events permit OFF-SITE DRINK SALE?

other establishment has license

OTHER:

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? Being

ALLOWED TO HOLD OTHER LICENSES? Microdistilleries

review in legislation

shall hold a Retailer's license

OFF-SITE TASTING EVENTS ALLOWED? Yes

MAINE

# DISTILLERIES IN STATE 16 No, Caterer or other small distilleries establishment has license LICENSE CLASSES Small OFF-SITE DRINK SALE? No, Caterer distiller license or other establishment has 3-TIER OR CONTROL Control license, and/or site license PRODUCTION AND DISTRIBUTION: ON-PREMISE FESTIVAL Yes FEE $100 + $10 filing fee OFF-SITE BOTTLE SALE?

No

may only charge for admission, max 10 event per calendar year, 1 event per permit $25 fee per manufacturer involved OFF-PREMISE FESTIVAL Yes, but may only charge for admission, max 10 event per calendar year, 1 event per permit $25 fee per manufacturer involved SPECIAL EVENTS Yes, but may only charge for admission, max 10 event per calendar year, 1 event per permit $25 fee per manufacturer involved FOR PROFIT EVENTS Yes, but may only charge for admission OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? Yes, for example,

business can hold

% GRAIN FROM STATE

No restrictions

SEPARATE LAWS FOR BRANDY?

No

MARYLAND 1 LICENSE CLASSES Class 1 Distillery/Class 2 Rectifying 3-TIER OR CONTROL 3-Tier PRODUCTION AND DISTRIBUTION: FEE

$2,000

4-6 weeks for approval from date of application AVG TIME TO OBTAIN

MINIMUM PRODUCTION AMOUNT

No

MAXIMUM PRODUCTION AMOUNT Unlimited PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION? Can self distribute up to 27,500 gallons only if they make less than 100,000 gallons annually, must have Class 8 Limited Distillery Wholesale license TASTING ROOM:

2 oz. of sample total, no more than 1/2 oz. each — may be served in form of cocktail FEES FOR TOURS Up to distillery BOTTLE SALES ON SITE Yes, up to 2.25L/per person, per visit LIMITS ON BOTTLE SALES? Yes, up to 2.25L/per person, per visit TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? No LIMITS FOR ON-PREMISE

SALES? N/A pre approval for provided dates and SWAG (T-SHIRTS, GLASSES, ETC.)? Yes times, Yes, max 12 1/2 samples PROMOTION: per person per day unless TASTINGS AT ON-PREMISE substantial food is offered.

LOCATIONS? Yes A holder of a small distillery TASTINGS AT OFF-PREMISE license, upon application to LOCATIONS? Yes and approval of the bureau BOTTLE SALES AT FAIRS/FARMERS and payment of the license MARKETS? Yes−up to 4 locations fees, may obtain licenses for off-premises consumption for OFF-SITE TASTING EVENTS up to 2 additional locations ALLOWED? Yes other than the location of OFF-SITE BOTTLE SALE? Yes the in-state manufacturer licensed under this section.

OFF-SITE DRINK SALE? Yes The small distillery off— sample and bottle premises license fee is $100. sales — samples can be in form of cocktail BOTTLE SALES AT FAIRS/FARMERS MARKETS? Yes, pending ON-PREMISE FESTIVAL Yes approval on a month by month OFF-PREMISE FESTIVAL Yes—offbasis for provided dates and site permit—allows attendance/ times. Annual fee of $75. sales at unlimited festivals for Samples limited to 6 1/2 ounce which promoter/organizer has samples per person per day issued a state-issued NonOFF-SITE TASTING EVENTS Profit Liquor Festival Permit ALLOWED? Yes SPECIAL EVENTS Yes OFF-SITE BOTTLE SALE? FOR PROFIT EVENTS Yes Yes, with permit OTHER: OFF-SITE DRINK SALE? No ALLOWED TO HOLD EVENTS ON-PREMISE FESTIVAL Yes, but ON SITE? Yes WWW.ARTISANSPIRITMAG.COM

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ALLOWED TO HOLD OTHER LICENSES?

Brewery, Winery, Rectifier GOALS To be eligible for a distillery or small distillery license, a person must hold a basic permit for distilling, rectifying, blending and bottling spirits from the United States Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau.

for Manufacturer depending on volume of sales, capacity of plant, and location AVG TIME TO OBTAIN 30 Days

$70, outdoor service permit OFF-SITE BOTTLE SALE? Yes OFF-SITE DRINK SALE? No ON-PREMISE FESTIVAL Yes MINIMUM PRODUCTION AMOUNT No OFF-PREMISE FESTIVAL Yes at MAX PRODUCTION AMOUNT Unlimited licensed off premise accounts PRODUCTION RELATED LIMITATIONS? SPECIAL EVENTS Yes Pay different fees for annual FOR PROFIT EVENTS Yes license based on production OTHER: SELF-DISTRIBUTION? Yes

TASTING ROOM:

event infrastructure expenses

grain from in state sources

Yes, Four 1/4 oz samples per person per day.

FEES FOR TOURS Yes BOTTLE SALES ON SITE No

OTHER:

SEPARATE LAWS FOR BRANDY?

ALLOWED TO HOLD EVENTS ON SITE? Yes

NEBRASKA

MONTANA

LICENSE CLASSES

TASTINGS ON SITE?

No

Manufacturer's license allows manufacture, storage and sale # DISTILLERIES IN STATE 20 of alcoholic liquor to wholesale LIMITS FOR ON-PREMISE SALES? LICENSE CLASSES Micro Distillery licensees in and out of state; Yes, Four 1/4 oz samples Microdistillery license — Types 3-TIER OR CONTROL Control per person per day. of license Tier one (1-100 barrel PRODUCTION AND DISTRIBUTION: ALLOWED TO HOLD EVENTS PROMOTION: TASTING ROOM: daily capacity), Tier 2 (100ON SITE? Yes $600 annual fee FEE TASTINGS AT ON-PREMISE 150); Tier 3 (150-200), Tier 4 TASTINGS ON SITE? Yes ALLOWED TO HOLD OTHER LOCATIONS? Yes, Four 1/4 oz (200-300), Tier 5 (300-400), LICENSE CLASSES Class 9 AVG TIME TO OBTAIN 60-90 days BOTTLE SALES ON SITE Yes LICENSES? No class C or samples per person per day.

Tier 6 (400-500), Tier 7 (500+); Limited Distillery (requires MINIMUM PRODUCTION AMOUNT No retailing of any other spirits LIMITS ON BOTTLE SALES? No Note — daily capacity means county-issued Class D OFF-SITE BOTTLE SALE? No not distilled by company MAXIMUM PRODUCTION AMOUNT avg daily barrel production for "tavern" license, only ON-PREMISE CONSUMPTION AT OFF-SITE DRINK SALE? No Less than 25,000 gallons previous 12 months and if no applicable in Worcester Co.) % GRAIN FROM STATE 1 to 100 DISTILLERY? With Pour Permit OTHER: PRODUCTION RELATED LIMITATIONS? previous year to compare, then 3-TIER OR CONTROL 3-Tier LIMITS FOR ON-PREMISE SALES? No NOTES Distillery may pay fee of $500 for first year Less than 25,000 gallons % GRAIN FROM STATE If a person PRODUCTION AND DISTRIBUTION: SWAG (T-SHIRTS, GLASSES, ETC.)? Yes own a restaurant — Retail Licenses = Class C approved for a manufacturer's SELF-DISTRIBUTION? Yes — for alcoholic consumption on & FEE $500 PROMOTION: permit, Class 1, distiller’s can directly deliver to liquor off premises, sales in original permit produces a product with stores. All fees, taxes, etc AVG TIME TO OBTAIN 4-6 TASTINGS AT ON-PREMISE packages & sampling, Class D at least fifty-one percent(51%) that would have been incurred weeks for approval from LICENSE CLASSES Micro LOCATIONS? Yes for consumption off premises, of the finished product by date of application by going through the central Distilling License BOTTLE SALES AT FAIRS/FARMERS Class I for consumption on volume being obtained from warehouse are still applied.

MINIMUM PRODUCTION AMOUNT No MARKETS? No — limited 3-TIER OR CONTROL 3-Tier premises; Shipping licenses alcoholic fermentation of to wine manufacturers MAXIMUM PRODUCTION PRODUCTION AND DISTRIBUTION: 3-TIER OR CONTROL 3-Tier grapes, fruits, berries,honey or TASTING ROOM: AMOUNT 100,000 gallons OFF-SITE TASTING EVENTS vegetables grown and produced TASTINGS ON SITE? May provide FEE Manufacturer of Distilled PRODUCTION AND DISTRIBUTION: samples of distilled spirits that ALLOWED? Yes in Mississippi,and produces PRODUCTION RELATED Spirits of 20,000 to 40,000 FEE All tiers of alcohol & spirits were distilled on the premises, all of such product by using LIMITATIONS? Limited to one proof gallons $2000, $3000 OFF-SITE BOTTLE SALE? No is an annual license fee of with or without charge at the not more than one(1) still product per category (one bond.

Manufacturer of OFF-SITE DRINK SALE? No $1,000; operator's license of having a maximum capacity of distillery between 10 am and gin, one whiskey, etc.)

Distilled Spirits of fewer Micro distillery $250; Class C 8pm. No more than 2 ounces.

ON-PREMISE FESTIVAL Yes one hundred fifty(150)liters, than 20,000 proof gallons SELF-DISTRIBUTION? No $300, Class D $200, Class I **90% of the product must be the annual privilege license $1,000, 2,000 Bond SPECIAL EVENTS No $250; Manufacturer Shipping TASTING ROOM: distilled on-site.

Tasting may tax for such a permit shall be MAXIMUM PRODUCTION FOR PROFIT EVENTS No be presented in cocktail form** $1,000, Manufacturer Direct Ten Dollars($10.00)per ten TASTINGS ON SITE? Three 1/2-oz AMOUNT 40,000 Sales Shipping License $500 thousand (10,000) gallons per visitor after guided tour, must OTHER: FEES FOR TOURS Up to distillery SELF-DISTRIBUTION? No or part thereof produced.

MINIMUM PRODUCTION AMOUNT No have Class D Tavern License ALLOWED TO HOLD EVENTS BOTTLE SALES ON SITE Yes TASTING ROOM: ON SITE? Yes MAXIMUM PRODUCTION AMOUNT FEES FOR TOURS Up to distillery LIMITS ON BOTTLE SALES? 1.75 Microdistillery can only produce TASTINGS ON SITE? Microdistillery % GRAIN FROM STATE Farmers BOTTLE SALES ON SITE Yes, liters per customer per day 10,000 gallons liquor per year — may provide samples of Distillery does not specify with Class D license for off premise consumption # DISTILLERIES IN STATE 14 distilled spirits manufactured amount of product grown in PRODUCTION RELATED LIMITATIONS? (issued by county) registered distilleries ON-PREMISE CONSUMPTION AT on its premises, in an amount State, but does specify that Microdistillery can only produce LIMITS ON BOTTLE SALES? Yes, DISTILLERY? Yes up to 2 oz of LICENSE CLASSES Liquor not to exceed 15 ml per variety it is the state's agriculture 10,000 gallons liquor per year 15,500 gallons annually spirits per customer per day Manufacturer–Solicitor license per person, no more than 45 used in making products SELF-DISTRIBUTION? No ON-PREMISE CONSUMPTION AT ml by any person per day LIMITS FOR ON-PREMISE 3-TIER OR CONTROL 3-Tier TASTING ROOM: DISTILLERY? Yes, with Class D Between the hours SALES? BOTTLE SALES ON SITE Yes PRODUCTION AND DISTRIBUTION: license (issued by county) of 8 am and 2 am TASTINGS ON SITE? May LIMITS ON BOTTLE SALES? FEE $450 LICENSE CLASSES Small LIMITS FOR ON-PREMISE SWAG (T-SHIRTS, GLASSES, ETC.)? Yes serve samples of the spirits Microdistilleries — one 375mL SELF-DISTRIBUTION? May Distiller License, Distilling, manufactured at the craft SALES? No, with Class D bottle per customer per day of FREE SOUVENIRS Yes rectifying, blending and or not sell direct to retail, or distillery. Any such samples license (issued by county) product manufactured on site LIMITS ON SOUVENIRS No bottling spirits basic permit have any vested interest must not exceed, per person, per SWAG (T-SHIRTS, GLASSES, ETC.)? Yes (must also be available for in any retail locations day, 4 fluid ounces in volume.

TAXES ON SOUVENIRS State 3-TIER OR CONTROL Control distribution by wholesalers) PROMOTION: applicable sales tax — regulates wholesale TASTING ROOM: FEES FOR TOURS Yes ON-PREMISE CONSUMPTION TASTINGS AT ON-PREMISE of liquor only PROMOTION: TASTINGS ON SITE? Yes BOTTLE SALES ON SITE May sell AT DISTILLERY? Yes LOCATIONS? Yes PRODUCTION AND DISTRIBUTION: the spirits manufactured at TASTINGS AT ON-PREMISE FEES FOR TOURS Free or for a LIMITS FOR ON-PREMISE TASTINGS AT OFF-PREMISE the craft distillery at retail LOCATIONS? Yes — during FEE Basic Permit $100 Annually SALES? Can sell cocktails to fee, Retail By the Drink License LOCATIONS? Yes for consumption on or off the location's standard (Spirits, Wine and Beer) $300 public if they get cocktail MINIMUM PRODUCTION AMOUNT premises. Any such spirits BOTTLE SALES AT FAIRS/FARMERS business hours room license, but only one TTB DSP Permit first, then MLCC BOTTLE SALES ON SITE Yes sold at retail for off-premises MARKETS? Yes−up to 4 locations cocktail room license TASTINGS AT OFF-PREMISE consumption must not exceed, MAXIMUM PRODUCTION AMOUNT ON-PREMISE CONSUMPTION AT OFF-SITE TASTING EVENTS Yes — during LOCATIONS? SWAG (T-SHIRTS, GLASSES, ETC.)? Yes DISTILLERY? Yes Retail By per person, per month, 1 case 60,000 gallons annually ALLOWED? Yes location's standard of spirits and not exceed, per the Drink License (Spirits, PRODUCTION RELATED LIMITATIONS? FREE SOUVENIRS Yes business hours OFF-SITE BOTTLE SALE? Yes person, per year, 6 cases of Wine and Beer) $300 60,000 gallons annually TAXES ON SOUVENIRS State BOTTLE SALES AT FAIRS/FARMERS spirits. Spirits purchased on OFF-SITE DRINK SALE? Yes SWAG (T-SHIRTS, GLASSES, applicable sales tax SELF-DISTRIBUTION? May MARKETS? *Through a third the premises of a craft distillery — sample and bottle ETC.)? Yes not sell direct to retail party "retail license with PROMOTION: must not be resold by the sales — samples can be FREE SOUVENIRS Yes catering endorsement" purchaser or any retail liquor TASTING ROOM: in the form of a cocktail TASTINGS AT ON-PREMISE but not through distillery store. “Case of spirits” means LIMITS ON SOUVENIRS No TASTINGS ON SITE? Yes, but must LOCATIONS? Yes ON-PREMISE FESTIVAL Yes license privilege.

12 bottles, each containing pass server training program TAXES ON SOUVENIRS State BOTTLE SALES AT FAIRS/ OFF-PREMISE FESTIVAL Yes with 750 ml of distilled spirits.

OFF-SITE TASTING EVENTS applicable sales tax FEES FOR TOURS Free or for a fee FARMERS MARKETS? No off-site permit — allows ALLOWED? See above.* LIMITS ON BOTTLE SALES? Must PROMOTION: attendance/sales at unlimited OFF-SITE TASTING EVENTS BOTTLE SALES ON SITE Yes not exceed, per person, per OFF-SITE BOTTLE SALE? festivals for which promoter/ ALLOWED? Charitable Events TASTINGS AT ON-PREMISE month, one case of spirits LIMITS ON BOTTLE SALES? No See above.* organizer has issues a Yes Retail By LOCATIONS? and not exceed, per person, OFF-SITE BOTTLE SALE? No ON-PREMISE CONSUMPTION AT state-issued Non-Profit OFF-SITE DRINK SALE? the Drink License (Spirits, per year, six cases of spirits.

OFF-PREMISE FESTIVAL DISTILLERY? Yes, must pass Liquor Festival Permit See above.* Wine and Beer) $300 Spirits purchased on the Charitable Events server training program SPECIAL EVENTS Yes premises of a craft distillery ON-PREMISE FESTIVAL Within TASTINGS AT OFF-PREMISE SPECIAL EVENTS Yes LIMITS FOR ON-PREMISE SALES? No must not be resold by the the confines of the operating LOCATIONS? No FOR PROFIT EVENTS Yes purchaser or any retail liquor hours allowed for distilleries OTHER: SWAG (T-SHIRTS, GLASSES, ETC.)? Yes SPECIAL EVENTS 311.071.

OTHER: store. “Case of spirits” means OFF-PREMISE FESTIVAL NOTES May have a license for a 1.

Distillers may make FREE SOUVENIRS Yes twelve bottles, each containing ALLOWED TO HOLD EVENTS See above.* cocktail lounge and restaurant contributions of money for LIMITS ON SOUVENIRS No 750 mL of distilled spirits.

ON SITE? Yes special events where alcohol is SPECIAL EVENTS See above.* PROMOTION: ALLOWED TO HOLD OTHER ON-PREMISE CONSUMPTION sold at retail to a not-for-profit FOR PROFIT EVENTS See above.* LICENSES? No AT DISTILLERY? Yes organization that: does not hold TASTINGS AT ON-PREMISE LICENSE CLASSES Class liquor license, less than 50% of OTHER: LOCATIONS? Yes SWAG (T-SHIRTS, GLASSES, ETC.)? Yes 1 Distillers and/or members are liquor licensees, ALLOWED TO HOLD EVENTS ON TASTINGS AT OFF-PREMISE PROMOTION: Rectifier's Permit registered as nonprofit, net SITE? Within the confines LOCATIONS? Yes, tasting LICENSE CLASSES TASTINGS AT ON-PREMISE earning don't benefit private of the operating hours 3-TIER OR CONTROL 3-Tier room off location fee Farmer-distillery; LOCATIONS? Yes shareholder.

Distillers may make allowed for distillers $100 per location PRODUCTION AND DISTRIBUTION: Manufacturers License contributions of $ for festivals OFF-SITE TASTING EVENTS ALLOWED TO HOLD OTHER BOTTLE SALES AT FAIRS/ where alcohol sold at retail to FEE $4,500 3-TIER OR CONTROL 3-Tier ALLOWED? No LICENSES? No FARMERS MARKETS? Yes MINIMUM PRODUCTION AMOUNT No non profit if its registered w/ PRODUCTION AND DISTRIBUTION: OFF-SITE BOTTLE SALE? No sec of state, no earnings benefit % GRAIN FROM STATE Not OFF-SITE TASTING EVENTS ALLOWED? MAXIMUM PRODUCTION AMOUNT No private shareholder, uses the FEE $22-$110/year for Farmer limitations on grain source but OFF-SITE DRINK SALE? No Yes, samples only, consumer Distillery; $6,000-$10,000 there are tax preferences for contributions to pay special SELF-DISTRIBUTION? No and sampling event license SPECIAL EVENTS The ON-PREMISE CONSUMPTION AT DISTILLERY? Tastings

MARYLAND 2

MINNESOTA

MISSOURI

MICHIGAN

MISSISSIPPI

MASSACHUSETTS

34

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A publica tion of the ng Institu

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America te

The Distille of Marylandries Washington & , DC

Vol. 12 issue 3 winter

TTB Revamps Labeling Requi rements As Went Beer, So Goes Spirit s Pay to Play and the Impac Cocktail Culturt on e

2016-17 Distiller cover

WI 16-bottles.indd

1

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Distiller magazine The Voice of Craft Distilling Tri-annually: Summer, Fall, Winter distilling.com/publications/distiller-magazine/

Craft Spirits Conference & Expo Annually, every April. distilling.com/events/annual-spirits-conference/

Judging of Craft Spirits Annually, every February distilling.com/events/judging/

Hands-On Workshops From first-time introductions to master classes in producing, packaging, and marketing craft-distilled spirits distilling.com/events/distilling-workshops/

Annual Distillers’ Resource Directory The most comprehensive compilation of DSP’s and resources in the industry. distilling.com/publications/adi-distillers-resource-directory/ The Distiller’s Guide to Rum

Scotland

from the introduction…

A Whisky Lover’s

Guide

ding and packaging design for craft spirits. designing successful brands to share best lishing your brand strategy, selecting the rcing materials. Distributors, bar owners dering which brands to carry, and successights from the front lines. ers, designers and spirit lovers. Over 150 f excellence in packaging. It offers expert looking to create a premium brand that

The Distiller’s Guide to

RUM by

Ian Smiley, Eric Watson & Michael Delevante With Contributions by

Eric Zandona and Martin Cate

ard, CA, whitemulepress.com

White Mule Press Hayward, CA whitemulepress.com

This book was inspired by the recent popularity of rum among the cocktail circles, and by the advent of so many new rum distilleries in North America. Rum is now being made in micro-distilleries all over the United States, including a return to the original epicenter of rum distilling, Newport, Rhode Island. At the time of the American Revolution, there were about 30 rum distilleries in Rhode Island, 22 of which were in Newport alone, and the rum produced there was revered by some as the best in the world. The last Rhode Island rum distillery of that era closed in the 1840s. But, now they are coming back and not only in Rhode Island, but in all of New England, and across the United States and Canada.

White Mule Press Niche Books for Lovers of Spirits Thirty titles and growing. whitemulepress.com

In this book, you’ll read about the story of rum and how it is made, written by the well-known distillery expert, Michael Delevante. The book also details the ingredients, equipment, and processes used to make rum. You will learn about the lubricious effects of barrel aging, and the various ways that it is done. And, there is a chapter that explains step-by-step how to make a 155-gallon batch of rum mash and how to distill and age it, written by Ian Smiley.This chapter gives a new micro-distillery a proven recipe and process to get a running start in producing their first product. There is also a chapter on the batch distillation of rum using a hybrid batch distillation system comprised of a pot still and a rectification column written by Eric Watson of AlBevCon.

Ted Bruning

PO Box 577 Hayward CA 94541 (510) 886-7418

commissioner may issue special designated license for sale or consumption of alcoholic liquor at designated location to a microdistillery licensee or holder of manufacturer's license but only for 6 calendar days and must pay $40 per day; only one special designated license shall be required for application for 2 or more consecutive days

of 15,000 barrels or less per year, $1,200; (2) Domestic sales of more than 15,000 barrels per year, $1,692.

OTHER:

PRODUCTION RELATED LIMITATIONS? See above

ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? Yes

NEVADA Craft Distiller's License 3-TIER OR CONTROL 3-Tier LICENSE CLASSES

MINIMUM PRODUCTION AMOUNT

No

MAXIMUM PRODUCTION AMOUNT

If distilling less than 5,000 cases of liquor per year shall have the right to sell at retail at its facility for off-premises consumption

Yes—but no more than 3,000 nine liter cases for off premise consumption; each individual sale limited to 9-liter case; no more than 12 nine liter cases of liquor to any one customer per calendar year SELF-DISTRIBUTION?

TASTING ROOM:

Yes — PRODUCTION AND DISTRIBUTION: free or for a fee — limited to one 1/2 ounce sample FEE Application fee $400 per label per person + licensee fee $250.

Alcoholic Liquor Tax Bond, FEES FOR TOURS Yes $1,000 minimum BOTTLE SALES ON SITE Yes MINIMUM PRODUCTION AMOUNT No — if producing less than 5,000 cases per year SELF-DISTRIBUTION? No, max 10,000 gallons to wholesalers LIMITS ON BOTTLE SALES? Each in state, in any calendar year, liquor manufacturer shall manufacture for exportation to have the right to sell at retail another state, not more than at its licensed manufacturing a combined total of 20,000 facility no more than the cases of spirits at all the craft equivalent of 3,000 9-liter case distilleries the person operates. for off-premises consumption any of its liquor. Each retail TASTING ROOM: sale shall be limited to one TASTINGS ON SITE? May 9-liter case or less per sale. serve samples of the spirits No liquor manufacturer shall manufactured at the craft sell more than 12 9-liter distillery. Any such samples must not exceed, per person, per cases of liquor to any one customer in any calendar year. day, 2 fluid ounces in volume.

ON-PREMISE CONSUMPTION AT FEES FOR TOURS No DISTILLERY? Just samples, BOTTLE SALES ON SITE On the no sales except for off premises of the craft distillery, premise consumption sell the spirits manufactured LIMITS FOR ON-PREMISE SALES? at the craft distillery at retail Can sell on premise for off for consumption on or off the premise consumption premises. Any such spirits SWAG (T-SHIRTS, GLASSES, ETC.)? Yes sold at retail for off-premises consumption must not exceed, TAXES ON SOUVENIRS Taxes on per person, per month, 2 bottles Samples — 8% of sales or 8% of spirits. Spirits purchased of retail value of such samples on the premises of a craft PROMOTION: distillery must not be resold by the purchaser or any retail TASTINGS AT ON-PREMISE liquor store. Bottle of spirits LOCATIONS? Yes means a bottle containing TASTINGS AT OFF-PREMISE 750 ml of distilled spirits.

LOCATIONS? Each liquor LIMITS ON BOTTLE SALES? Must manufacturer selling no not exceed, per person, per more than the equivalent month, ONE case of spirits of 3,000 9-liter cases of and not exceed, per person, liquor per year at its licensed per year, SIX cases of spirits. manufacturing facility shall Spirits purchased on the have the right to distribute premises of a craft distillery samples directly to on-premises must not be resold by the and agency store licensees purchaser or any retail liquor for tasting on the licensed store. “Case of spirits” means premises in accordance twelve bottles, each containing OFF-SITE TASTING EVENTS 750 mL of distilled spirits.

ALLOWED? Each liquor ON-PREMISE CONSUMPTION manufacturer selling no more AT DISTILLERY? Yes than the equivalent of 3,000 9-liter cases of liquor per year LIMITS FOR ON-PREMISE at its licensed manufacturing SALES? Yes, see above facility shall have the right to PROMOTION: distribute samples directly to on-premises and agency store TASTINGS AT ON-PREMISE licensees for tasting on the LOCATIONS? Yes licensed premises in accordance BOTTLE SALES AT FAIRS/ OFF-SITE DRINK SALE? No FARMERS MARKETS? No OFF-PREMISE FESTIVAL No OFF-SITE BOTTLE SALE? No

NEW HAMPSHIRE LICENSE CLASSES Liquor Manufacturer license 3-TIER OR CONTROL Control — liquor only in state run stores PRODUCTION AND DISTRIBUTION: FEE Beverage manufacturer license: (1) Domestic sales

36

TASTINGS ON SITE?

OTHER: ALLOWED TO HOLD OTHER LICENSES? Can hold one

on-premise license

NEW JERSEY # DISTILLERIES IN STATE

Approximately 16 – 20 licensed, opened or in a license/planning stage

NEW MEXICO

LICENSE CLASSES Class A license for Plenary Distillery License; Limited Distillery License 3-TIER OR CONTROL 3-Tier

LICENSE CLASSES Craft Distiller's License 3-TIER OR CONTROL 3-Tier

PRODUCTION AND DISTRIBUTION:

PRODUCTION AND DISTRIBUTION:

FEE

$938

No

MAXIMUM PRODUCTION AMOUNT 20,000 gallons PRODUCTION RELATED LIMITATIONS? 20,000

gallons SELF-DISTRIBUTION? Yes (may also use a distributor) TASTING ROOM:

Yes, 3 gratuitous 1/2 ounce samples per person per day FEES FOR TOURS Up to distillery BOTTLE SALES ON SITE Yes TASTINGS ON SITE?

LIMITS ON BOTTLE SALES?

Up to 5 liters

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes LIMITS FOR ON-PREMISE SALES?

PROMOTION:

TASTINGS AT OFF-PREMISE LOCATIONS? With a

special permit attached to a class C lice

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No OFF-SITE TASTING EVENTS ALLOWED? With a special

permit attached to a class C license holder at approved premises OFF-SITE BOTTLE SALE? No OFF-SITE DRINK SALE? No ON-PREMISE FESTIVAL Not able to conduct their own festivals OFF-PREMISE FESTIVAL Not able to conduct their own festivals SPECIAL EVENTS With a special permit attached to a class C license holder at approved premises (this includes festivals conducted by 3rd party) FOR PROFIT EVENTS No OTHER: ALLOWED TO HOLD EVENTS ON SITE? With restrictions ALLOWED TO HOLD OTHER LICENSES? No

No requirements. Provision to include a statement/ logo New Jersey Distilled if 51% or more is used.

% GRAIN FROM STATE

No GOALS Currently establishing statewide guild. Collective goals are: Get the limits raised to as much as 100,000 gallons to be competitive with other states. Lower state and federal excise taxes to compete more appropriately with wine, beer, cider and mead Allow food to be served in order to approach alcohol consumption in a more responsible manner.

Establish best practices for all NJ state craft distillers.

Conduct festivals under the guild to promote awareness to public as well as industry and raise capital for lobbyist.

SEPARATE LAWS FOR BRANDY?

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No OFF-SITE TASTING EVENTS ALLOWED? Yes, need permit OFF-SITE BOTTLE SALE? OFF-SITE DRINK SALE?

MINIMUM PRODUCTION AMOUNT Craft Distiller

must manufacture no less than 1,000 proof gallons of spirituous liquors per license year at licensee's premises

PRODUCTION RELATED LIMITATIONS?

No No

OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes

distillery and must be for No consumption off the premises; only allowed in county where establishment of county or municipal ABC store been approved pursuant to G.S. 18B-602(g); must have "North Carolina Distillery Tour Commemorative Spirit" sticker affixed to bottle; no more than five bottles of spirituous liquor can be sold to a customer in 12 month period

ALLOWED TO HOLD OTHER LICENSES?

Other distilling licenses

TASTING ROOM:

TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes

PROMOTION:

NEW YORK 2

TASTINGS ON SITE?

LIMITS FOR ON-PREMISE SALES? SWAG (T-SHIRTS, GLASSES, ETC.)?

PROMOTION:

SEPARATE LAWS FOR BRANDY?

Yes

NEW YORK 1 LICENSE CLASSES

A

3-TIER OR CONTROL

3-Tier

PRODUCTION AND DISTRIBUTION: AVG TIME TO OBTAIN

25 days

No MAXIMUM PRODUCTION AMOUNT No SELF-DISTRIBUTION? No MINIMUM PRODUCTION AMOUNT

TASTING ROOM: TASTINGS ON SITE?

No

BOTTLE SALES ON SITE

No

LIMITS ON BOTTLE SALES?

N/A

ON-PREMISE CONSUMPTION AT DISTILLERY? No LIMITS FOR ON-PREMISE

FREE SOUVENIRS

Yes

LIMITS ON SOUVENIRS

Nothing of value

TAXES ON SOUVENIRS

State Applicable PROMOTION:

TASTINGS AT ON-PREMISE LOCATIONS? Yes

OFF-SITE TASTING EVENTS ALLOWED?

N/A Only with ABC approval No OFF-SITE BOTTLE SALE? No

OFF-SITE TASTING EVENTS ALLOWED? Yes, need permit

No Can do on-site festivals, but can never serve mixed drinks. And can never charge for sample tastings.

OFF-SITE BOTTLE SALE?

OFF-PREMISE FESTIVAL

OTHER:

ALLOWED TO HOLD OTHER LICENSES? Yes

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

BOTTLE SALES AT FAIRS/FARMERS MARKETS? Yes — must pay

ALLOWED TO HOLD EVENTS ON SITE? Yes

Just the 5 bottles per year that are North Carolina Tour Commemorative Spirits

ABC approval

N/A

ON-PREMISE CONSUMPTION AT DISTILLERY? No

Yes, need permit

OTHER:

tasting only

TASTINGS AT OFF-PREMISE LOCATIONS? Only with

No

LIMITS ON BOTTLE SALES?

TASTINGS AT ON-PREMISE LOCATIONS? Yes

$10 to department for "craft distiller's public celebration permit"; this permit can be shared w/ other craft distillers, small brewers and winegrowers OFF-SITE BOTTLE SALE? Yes at only 3 other locations, after craft distiller paid applicable fee for off-premises permit.

OFF-SITE DRINK SALE? Yes w/ craft distiller's public celebration permit ON-PREMISE FESTIVAL Yes OFF-PREMISE FESTIVAL Yes with craft distiller's public celebration permit SPECIAL EVENTS Yes with craft distiller's public celebration permit

No

BOTTLE SALES ON SITE

ON-PREMISE CONSUMPTION AT DISTILLERY? Complementary LIMITS FOR ON-PREMISE SALES?

No less than 60% of gross receipts from sale of spirituous liquors for preceding 12 months LICENSE CLASSES A-1 of licensee's operation being 3-TIER OR CONTROL 3-Tier derived from sale of spirituous liquor produced by licensee PRODUCTION AND DISTRIBUTION: SELF-DISTRIBUTION? No — can AVG TIME TO OBTAIN 25 days only sell spirituous liquors MINIMUM PRODUCTION AMOUNT No that are packaged by or MAXIMUM PRODUCTION for craft distiller to person AMOUNT 75,000 gal holding wholesaler's license, a craft distiller's license or SELF-DISTRIBUTION? Yes manufacturer's license TASTING ROOM:

Yes BOTTLE SALES ON SITE Yes SWAG (T-SHIRTS, GLASSES, ETC.)? Yes LIMITS ON BOTTLE SALES? Only can sell own produced FREE SOUVENIRS Yes liquor or liquors produced LIMITS ON SOUVENIRS No by another NM craft distiller of NM manufacturer on TAXES ON SOUVENIRS Yes craft distillers' premises PROMOTION: AND only for off premises TASTINGS AT ON-PREMISE consumption, not for resale.

LOCATIONS? Yes No limits but cannot serve anyone who is intoxicated

N/A

SWAG (T-SHIRTS, GLASSES, ETC.)?

FEE Manufacturer's license as distiller, except brandy—$3,000

AVG TIME TO OBTAIN 6–12 months (may be longer depending on town or city) MINIMUM PRODUCTION AMOUNT

SALES?

OFF-SITE DRINK SALE? ON-PREMISE FESTIVAL

Through ABC

No

Can get a permit from local gov't or to non-profit org. or political ALLOWED TO HOLD EVENTS org to serve liquor at ticketed ON SITE? Yes event held to allow unit of ALLOWED TO HOLD OTHER LICENSES? local govt or org to raise funds.

Other distilling licenses New law also will create a Special Events Permit that will allow free tastings in approved locations, but still # DISTILLERIES IN STATE About 60 limited to 0.25oz samples of each product, (6 products LICENSE CLASSES max). Details are still being Distillery Permit worked out by the state.

3-TIER OR CONTROL Control FOR PROFIT EVENTS Never — spirits sold only at ABC OFF-SITE DRINK SALE?

SPECIAL EVENTS

NORTH CAROLINA

PRODUCTION AND DISTRIBUTION: FEE

$300

AVG TIME TO OBTAIN

3 Weeks

No MAXIMUM PRODUCTION AMOUNT No MINIMUM PRODUCTION AMOUNT PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION? No. May Sell, deliver and ship spirituous liquor in closed containers at wholesale to exporters and local boards within the State, and, subject to the laws of other jurisdictions, at wholesale or retail to private or public agencies or establishments of other states or nations.

TASTING ROOM:

Yes — limited to 1.5 oz of spirituous liquor in calendar day per person (no more than . 25 oz each samples), cannot charge FEES FOR TOURS Can charge for tours but not for tastings BOTTLE SALES ON SITE Yes, 5 bottles per person per year. Distillers must buy the bottles from the state at wholesale price LIMITS ON BOTTLE SALES? Only can sell to visitors who tour TASTINGS ON SITE?

OTHER:

ALLOWED TO HOLD EVENTS ON SITE? Can do on-site festivals,

but can never serve mixed drinks. And can never charge for sample tastings.

ALLOWED TO HOLD OTHER LICENSES? No % GRAIN FROM STATE

requirement

No

No Goal is to have unlimited bottle sales from the distillery and to allow serving mixed beverages on-site. More freedom on-site. Also if mixed beverage accounts could purchase direct from distilleries at the state regulated MXB price that would be helpful SEPARATE LAWS FOR BRANDY? GOALS

NORTH DAKOTA 2 Domestic

# DISTILLERIES IN STATE LICENSE CLASSES

Distillery License

3-TIER OR CONTROL

3-Tier

PRODUCTION AND DISTRIBUTION:

$100 annual fee 3 months after federal approval FEE

AVG TIME TO OBTAIN

MINIMUM PRODUCTION AMOUNT WWW.ARTISANSPIRITMAG.COM

No

MAXIMUM PRODUCTION AMOUNT

LIMITS ON BOTTLE SALES?

PRODUCTION RELATED LIMITATIONS?

Must use majority of the state's farm products to manufacture and sell spirits produced on premises SELF-DISTRIBUTION? No — must go through wholesaler, except may sell spirits to domestic winery if spirits produced from products provided to domestic distiller by the winery TASTING ROOM:

Yes — only free samples FEES FOR TOURS No BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? Can sell/deliver in or out of the state; if in the state, no more than 9 liters or less per month per person for personal use; out of state sales are limited to 25,000 gallons in a calendar year TASTINGS ON SITE?

MINIMUM PRODUCTION AMOUNT

N/A

ON-PREMISE CONSUMPTION AT DISTILLERY? No

ALLOWED TO HOLD OTHER LICENSES? Yes, proper

A3a 3-TIER OR CONTROL 3-Tier

PROMOTION:

FEE

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? Yes OFF-SITE TASTING EVENTS ALLOWED?

Yes, tax commissioner may issue special events permit for not more than twenty events per calendar year OFF-SITE BOTTLE SALE? Yes with permit above OFF-SITE DRINK SALE? Yes with permit above ON-PREMISE FESTIVAL Yes, but only on contiguous property under common ownership, allowing free samples or its spirits and to sell spirits by glass or in closed containers OFF-PREMISE FESTIVAL Yes with special events permit SPECIAL EVENTS Yes with special events permit FOR PROFIT EVENTS Yes with special events permit OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes

ALLOWED TO HOLD OTHER LICENSES?

Yes, can also obtain retailer license allowing on premises sale of alcohol at restaurant owned by licensee and can own or operate a winery % GRAIN FROM STATE "Majority" of products from North Dakota agriculture SEPARATE LAWS FOR BRANDY? No

OHIO 1 A3 3-TIER OR CONTROL 3-Tier LICENSE CLASSES

PRODUCTION AND DISTRIBUTION:

$3,906 30 Days

$2 - $400 based on gallon production AVG TIME TO OBTAIN 30 Days MINIMUM PRODUCTION AMOUNT

PRODUCTION RELATED LIMITATIONS? No

State

SELF-DISTRIBUTION?

Controlled Dist.

TASTING ROOM:

1/4 Ounce Pours/Product Up to 1 full ounce per visit BOTTLE SALES ON SITE Yes — but 6% of sale goes to State LIMITS ON BOTTLE SALES? 2 bottles per person TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes if produce

TASTINGS ON SITE?

38

ALLOWED TO HOLD EVENTS ON SITE? No

ALLOWED TO HOLD OTHER LICENSES?

ALLOWED TO HOLD OTHER LICENSES? No % GRAIN FROM STATE

N/A

SEPARATE LAWS FOR BRANDY?

No

Oklahoma liquor laws will be substantially overhauled effective 10-1-2018, which expands the abilities of Distillers.

GOALS

OFF-SITE TASTING EVENTS ALLOWED? Yes, Need Permit

No OFF-SITE DRINK SALE? No OFF-SITE BOTTLE SALE? OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? Yes, proper

demising wall between permit premises needed

One

3-Tier

$3,125 per fiscal year 30 Days

AVG TIME TO OBTAIN

PRODUCTION RELATED LIMITATIONS?

Must have IAA to produce liquor above 80 proof SELF-DISTRIBUTION? NO — but, with special permit (TTB DSP permit). Only for producers more than 100 miles from OLCC's distribution warehouse and product cannot be one that is already in stock at warehouse.

Yes- 0.5 fl oz per sample, max 2.5 fl oz FEES FOR TOURS Option — can charge for flights BOTTLE SALES ON SITE With approval from OLCC; pay 30-40% in tax off gross sales amounts for bottle sales; need to be DSP retail outlet LIMITS ON BOTTLE SALES? No TASTINGS ON SITE?

# DISTILLERIES IN STATE

FEE

90-120 days MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT No

TASTING ROOM:

OKLAHOMA

3-TIER OR CONTROL

$100 Annually

AVG TIME TO OBTAIN

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

PRODUCTION AND DISTRIBUTION:

No

BOTTLE SALES AT FAIRS/FARMERS

No MARKETS? *Yes, with Special No Events Distillery permit, $25 fee per license day.

ON-PREMISE FESTIVAL No OFF-SITE TASTING EVENTS OFF-PREMISE FESTIVAL Annual ALLOWED? See above* special events license to sell beverages, quarterly special OFF-SITE BOTTLE SALE? See above* events license, annual public OFF-SITE DRINK SALE? See above* event license for up to 6 events, ON-PREMISE FESTIVAL See above* one-time public events license OFF-PREMISE FESTIVAL See above* SPECIAL EVENTS Annual special events license to sell SPECIAL EVENTS See above* beverages, quarterly special FOR PROFIT EVENTS See above* events license, annual public event license for up to 6 events, OTHER: one-time public events license ALLOWED TO HOLD EVENTS ON SITE? Yes, max 8 per calendar FOR PROFIT EVENTS Yes year (also can be limited by OTHER: specific city zoning laws)

FEE

LICENSE CLASSES

TASTING ROOM:

be held at any state liquor store, or by permit

PRODUCTION AND DISTRIBUTION:

TASTINGS AT OFF-PREMISE LOCATIONS? Yes

Distiller License State

TASTINGS AT OFF-PREMISE LOCATIONS? Tastings can

OREGON

PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION?

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

under the allowed limit per year and must have a kitchen LIMITS FOR ON-PREMISE SALES? N/A LICENSE CLASSES Need FREE SOUVENIRS As long as a distillery license to the gift does not exceed manufacture; Full on-premises the price of the alcoholic sales license is optional beverage purchased by personal consumer 3-TIER OR CONTROL Control - Oregon Liquor PROMOTION: Control Commission TASTINGS AT ON-PREMISE regulate liquor stores LOCATIONS? Yes

registered distillery

Controlled Dist.

No

MAXIMUM PRODUCTION AMOUNT 10,000 PG

No MAXIMUM PRODUCTION AMOUNT No MINIMUM PRODUCTION AMOUNT

TASTINGS AT ON-PREMISE LOCATIONS? Yes

OFF-SITE DRINK SALE?

LICENSE CLASSES

TASTINGS AT OFF-PREMISE LOCATIONS? Yes

TASTINGS AT OFF-PREMISE LOCATIONS? No

OFF-SITE BOTTLE SALE?

OHIO 2

TASTINGS AT ON-PREMISE LOCATIONS? Yes

ON-PREMISE CONSUMPTION AT

DISTILLERY? Yes— 0.5 fl oz per sample, max 2.5 fl oz LIMITS FOR ON-PREMISE SALES?

OFF-SITE TASTING EVENTS ALLOWED? No

demising wall between permit premises needed

PRODUCTION AND DISTRIBUTION:

AVG TIME TO OBTAIN

PRODUCTION RELATED LIMITATIONS? No

ALLOWED TO HOLD EVENTS ON SITE? No

No

No No

May sell your distilled spirits LIMITS FOR ON-PREMISE SALES? N/A SELF-DISTRIBUTION? No by individual glass or drink at your distillery and up to 5 PROMOTION: TASTING ROOM: other locations if you obtain full TASTINGS AT ON-PREMISE TASTINGS ON SITE? No on-premises sales license; also LOCATIONS? Yes FEES FOR TOURS No can sell other manufacturer's TASTINGS AT OFF-PREMISE distilled spirits by the glass BOTTLE SALES ON SITE No LOCATIONS? Yes or drink for consumption at LIMITS ON BOTTLE SALES? No your business w/ this license BOTTLE SALES AT FAIRS/ ON-PREMISE CONSUMPTION FARMERS MARKETS? No SWAG (T-SHIRTS, GLASSES, ETC.)? Yes AT DISTILLERY? No OFF-SITE TASTING EVENTS FREE SOUVENIRS Yes LIMITS FOR ON-PREMISE SALES? N/A ALLOWED? Yes, Need Permit LIMITS ON SOUVENIRS No PROMOTION: OFF-SITE BOTTLE SALE? No TAXES ON SOUVENIRS No TASTINGS AT ON-PREMISE OFF-SITE DRINK SALE? No PROMOTION: LOCATIONS? No

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

FEE

MAXIMUM PRODUCTION AMOUNT

OTHER:

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes LIMITS FOR ON-PREMISE SALES?

No

BOTTLE SALES ON SITE

No (25,000 cap applies to total production)

Anyone serving distilled spirits off premise must have valid Oregon serving permit, Industrial Alcohol Authority % GRAIN FROM STATE No

PENNSYLVANIA # DISTILLERIES IN STATE

16 pending

LICENSE CLASSES

license; Limited Distillery License

82,

Distillery

3-TIER OR CONTROL

Control

PRODUCTION AND DISTRIBUTION: FEE Distillery license if $5,400.00; limited distillery license $1,500 MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT No max for Distillery

licensees — Limited Distillery — no more than 100,000 gallons of liquor per year

PRODUCTION RELATED LIMITATIONS? No. No

taxes, only on sales

production

SELF-DISTRIBUTION? Yes — limited distilleries can sell to individual consumers, retail licensees and PLCB TASTING ROOM:

Yes FEES FOR TOURS Yes BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? No TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT

DISTILLERY? Yes, cocktails and tastings. Wine and Beer LIMITS FOR ON-PREMISE SALES?

Can even sell products from other breweries, distilleries, limited distilleries and limited wineries for onpremise consumption (up to 50% of total sales)

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

Yes

FREE SOUVENIRS

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

No TAXES ON SOUVENIRS State tax applicable for transactions

PROMOTION:

PROMOTION:

ON-PREMISE FESTIVAL

TASTINGS AT ON-PREMISE LOCATIONS? Yes

OFF-PREMISE FESTIVAL

LIMITS ON SOUVENIRS

TASTINGS AT ON-PREMISE LOCATIONS? Yes

MARKETS? Yes w/ permit. Up to 5 satellite locations

Yes Yes as long as event promoter gets a temporary large event license & distiller is responsible for purchase & dispensing of all alcohol SPECIAL EVENTS See above FOR PROFIT EVENTS Yes — and can share in the profits

OFF-SITE TASTING EVENTS ALLOWED?

OTHER:

TASTINGS AT OFF-PREMISE LOCATIONS? Yes — can

operate up to 5 additional PLCB approved locations

BOTTLE SALES AT FAIRS/FARMERS

Yes, with satellite permit OFF-SITE BOTTLE SALE? Yes — limited distilleries OFF-SITE DRINK SALE? Yes — limited distilleries ON-PREMISE FESTIVAL Yes

ALLOWED TO HOLD OTHER LICENSES? Yes

SOUTH CAROLINA # DISTILLERIES IN STATE 34 Licensees

OFF-PREMISE FESTIVAL

Yes with permit

SPECIAL EVENTS

Yes with permit Yes

LICENSE CLASSES Manufacturer License; Microdistillery License 3-TIER OR CONTROL 3-Tier

FOR PROFIT EVENTS

PRODUCTION AND DISTRIBUTION:

OTHER:

FEE Biennial fee of $50,000; Microdistillery biennial fee — $5,000

with permit

ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES?

Yes— Restaurant Liquor license, shipping license % GRAIN FROM STATE None

SEPARATE LAWS FOR BRANDY?

No

Credit card sales for on premise accounts at location of account GOALS

RHODE ISLAND LICENSE CLASSES

Manufacturer's license; Craft Distillery license 3-TIER OR CONTROL 3-Tier PRODUCTION AND DISTRIBUTION: FEE Annual fee of $3,000 for distillery producing more than 50,000 gallons per year and $500 for distillery producing 50,000 gallons or less per year; For the first 500 gallons: $100. For the next 5,000 gallons: 6 cents per gallon, For the next 10,000 gallons: 4.5 cents per gallon, For the next 50,000 gallons: 3 cents per gallon, For the next 100,000 gallons: 1.5 cents per gallon, For each gallon over 165,500: 0.75 cents per gallon (NOTE: biennial license fee to operate as craft distillery is $1,500 MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT No PRODUCTION RELATED LIMITATIONS?

No — but see fee schedule to see different limits SELF-DISTRIBUTION? No TASTING ROOM:

Yes — limited to 375ml per visitor per day in conjunction w/ tour and/or tasting (get spirits tasting license) BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? *No more than 750ml of spirits per visitor per day; craft distilleries can sell one case (12-750mL bottles) per day to each customer for off site consumption TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT

DISTILLERY? Yes — limited to 4.5 oz of distilled spirits per visitor per day, or combo of not greater than three drinks (1.5 oz each) of spirits LIMITS FOR ON-PREMISE SALES? See above*

MINIMUM PRODUCTION AMOUNT

No

MAXIMUM PRODUCTION AMOUNT

Not for manufacturer; microdistillery can only produce 125,000 cases per year

PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION?

No

TASTING ROOM:

Yes—max of 3 oz per person per day in tasting room for free or for a charge can be straight or in a cocktail; must be accompanied by a tour FEES FOR TOURS Up to the distillery BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? Up to three 750ml bottles or 225 liters in other bottle sizes per customer per day can be purchased by customer at distillery, but must be marked equal or higher in price than retail stores. Must be stamped "not for resale."

TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Not of the bottles

purchased at distillery

LIMITS FOR ON-PREMISE SALES?

Limited to product manufactured at licensed premises

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes, may sell items

promoting brand at location where liquor produced in a room separate from the locations of the tastings FREE SOUVENIRS Yes LIMITS ON SOUVENIRS No TAXES ON SOUVENIRS

State excise tax PROMOTION:

TASTINGS AT ON-PREMISE LOCATIONS? Yes TASTINGS AT OFF-PREMISE LOCATIONS? Yes, at

licensed events

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No OFF-SITE TASTING EVENTS ALLOWED?

Yes, at licensed events OFF-SITE BOTTLE SALE? No OFF-SITE DRINK SALE? Yes, at licensed events ON-PREMISE FESTIVAL In tasting room or parking lot but tasting rules still apply OFF-PREMISE FESTIVAL No,

WWW.ARTISANSPIRITMAG.COM

must buy the product at retail for events/ can only come out to educate SPECIAL EVENTS Sampling can occur off-premises if establishment has permanent seating capacity of 50+, not more than sampling of 4 products at a time, samples less than 1/2 oz per product FOR PROFIT EVENTS Yes OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? Yes, as a separate

entity/building. Must have separation between tiers % GRAIN FROM STATE No requirement SEPARATE LAWS FOR BRANDY?

No

More bottle sales on site, Sunday sales, Sell bottles at licensed events

SOUTH DAKOTA 7 LICENSE CLASSES Distilling License; Artisan Distiller license 3-TIER OR CONTROL 3-Tier # DISTILLERIES IN STATE

PRODUCTION AND DISTRIBUTION: FEE $4,000.00 for Distiller's License; $500 for Artisan Distiller AVG TIME TO OBTAIN 4-6 weeks MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT

Artisan Distillers: no more than 50,000 gallons spirits annually

PRODUCTION RELATED LIMITATIONS?

Artisan Distillers: no more than 50,000 gallons spirits annually SELF-DISTRIBUTION? Yes can sell to wholesalers, retailers, and customers on-premise TASTING ROOM:

Yes, no sample may be larger than 25 ml. Max 3 per person per day FEES FOR TOURS Up to distillery BOTTLE SALES ON SITE Yes LIMITS ON BOTTLE SALES? No TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes LIMITS FOR ON-PREMISE SALES?

No

SWAG (T-SHIRTS, GLASSES, ETC.)? Yes, nothing of value

Yes, nothing of value

FREE SOUVENIRS

Nothing of value. No distiller or wholesale licensee may attempt to promote the sale of liquor by tie-in sales arrangements or by any device such as gifts or other concessions of financial value to a customer TAXES ON SOUVENIRS State applicable sales tax LIMITS ON SOUVENIRS

PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes TASTINGS AT OFF-PREMISE LOCATIONS? *County

Fair Grounds—Special Event License

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

event has liquor license No OFF-SITE DRINK SALE? See above* ON-PREMISE FESTIVAL Yes OFF-PREMISE FESTIVAL See above* SPECIAL EVENTS See above* OFF-SITE BOTTLE SALE?

40

Yes

ALLOWED TO HOLD EVENTS ON SITE? Yes

and Rectifiers Permit (D) 3-TIER OR CONTROL 3-Tier PRODUCTION AND DISTRIBUTION:

distiller solicits business from restaurant or bar NOTES Do not have a definition for "craft" distilleries in Texas, so difficult to delineate between craft and large distilleries

$1,500 annually ALLOWED TO HOLD OTHER LICENSES? AVG TIME TO OBTAIN The Yes — an on-sale license typical timeline for a Distiller % GRAIN FROM STATE Artisan permit varies depending on Distillers — at least 30% of the sophistication of the # DISTILLERIES IN STATE 14 raw materials, other than water, applicant and whether they Licensed Distilleries used to produce distilled spirits are in a dry county and have shall consist of agricultural to get voter approval.

LICENSE CLASSES products grown in the state. If MINIMUM PRODUCTION AMOUNT No Distillery license less than 30%, can file affidavit 3-TIER OR CONTROL All MAXIMUM PRODUCTION AMOUNT No w/ department to request beverages over 3.2% alcohol approval of production anyways PRODUCTION RELATED regulated by state LIMITATIONS? No SEPARATE LAWS FOR BRANDY? No PRODUCTION AND DISTRIBUTION: SELF-DISTRIBUTION? No FEE Initial fee $3,800; TASTING ROOM: application fee $300; TASTINGS ON SITE? Yes, samples LICENSE CLASSES renewal fee $2,900 1 ounce each product Distillery License AVG TIME TO OBTAIN Must FEES FOR TOURS Yes 3-TIER OR CONTROL 3-Tier submit application to License & Compliance Division BOTTLE SALES ON SITE Yes PRODUCTION AND DISTRIBUTION: by 10th of month to have LIMITS ON BOTTLE SALES? Yes, FEE $1,000 per annum and time for processing two 750ml bottles per person $300 application fee.

MINIMUM PRODUCTION AMOUNT No per month (every 30 days) AVG TIME TO OBTAIN 30 days MAXIMUM PRODUCTION AMOUNT No ON-PREMISE CONSUMPTION AT MINIMUM PRODUCTION AMOUNT No DISTILLERY? Samples Only; PRODUCTION RELATED MAXIMUM PRODUCTION AMOUNT No just recently began to allow LIMITATIONS? No cocktail sales at distilleries PRODUCTION RELATED LIMITATIONS? SELF-DISTRIBUTION? Yes, Distillery license allows facility LIMITS FOR ON-PREMISE outside of the department, to manufacture or distill SALES? Yes, 2 750ml bottles manufacturers can sell to spirits w/ alcohol content of per person per month out of state consumers 8% or greater by weight SWAG (T-SHIRTS, GLASSES, ETC.)? Yes TASTING ROOM: SELF-DISTRIBUTION? No LIMITS ON SOUVENIRS Distillers TASTINGS ON SITE? Yes—must TASTING ROOM: are allowed to sell souvenirs charge small fee because they and things like that but are taxable; no more than 2.5 TASTINGS ON SITE? Yes — as they cannot sell them ounces per person per day, must a part of a public tour of to package stores as a be for educational information distillery's premises form of advertisement and must have substantial FEES FOR TOURS Up to distillery food available on site TAXES ON SOUVENIRS State BOTTLE SALES ON SITE Yes applicable sales tax FEES FOR TOURS Yes LIMITS ON BOTTLE SALES? No more PROMOTION: BOTTLE SALES ON SITE Yes than five gallons of 1/6th of TASTINGS AT ON-PREMISE LIMITS ON BOTTLE SALES? No a barrel to any one customer LOCATIONS? Yes, but cannot ON-PREMISE CONSUMPTION ON-PREMISE CONSUMPTION advertise outside of the store AT DISTILLERY? Yes AT DISTILLERY? Yes — with signs for "tasting event" samples and cocktails — can only advertise on LIMITS FOR ON-PREMISE SALES? No premises and by direct mailings SWAG (T-SHIRTS, GLASSES, ETC.)? Yes LIMITS FOR ON-PREMISE SALES? Must be spirits TASTINGS AT OFF-PREMISE FREE SOUVENIRS Yes produced at distillery LOCATIONS? Only at LIMITS ON SOUVENIRS No licensed liquor stores SWAG (T-SHIRTS, GLASSES, ETC.)? Can sell souvenirs TAXES ON SOUVENIRS State BOTTLE SALES AT FAIRS/ applicable sales tax FARMERS MARKETS? No FREE SOUVENIRS Yes PROMOTION: OFF-SITE TASTING EVENTS LIMITS ON SOUVENIRS No ALLOWED? No TASTINGS AT ON-PREMISE TAXES ON SOUVENIRS 9.25% LOCATIONS? Yes OFF-SITE BOTTLE SALE? No state sales tax TASTINGS AT OFF-PREMISE OFF-SITE DRINK SALE? No PROMOTION: LOCATIONS? Yes ON-PREMISE FESTIVAL No TASTINGS AT ON-PREMISE BOTTLE SALES AT FAIRS/ LOCATIONS? Yes OFF-PREMISE FESTIVAL No FARMERS MARKETS? Yes TASTINGS AT OFF-PREMISE SPECIAL EVENTS Yes OFF-SITE TASTING EVENTS ALLOWED? LOCATIONS? Yes Yes, but must get event FOR PROFIT EVENTS No BOTTLE SALES AT FAIRS/ permit and specify whether OTHER: FARMERS MARKETS? No it is a 120 or 72 hour event ALLOWED TO HOLD EVENTS ON SITE? OFF-SITE TASTING EVENTS OFF-SITE BOTTLE SALE? Yes Yes — just cannot advertise ALLOWED? Yes, at festivals outside the store with signs OFF-SITE DRINK SALE? Yes OFF-SITE BOTTLE SALE? Yes, for a "tasting event," but ON-PREMISE FESTIVAL Yes bottle sales allowed at festivals may advertise on premises (special festival permits are filed and by direct mailings OFF-PREMISE FESTIVAL No with the TABC). At least three SPECIAL EVENTS Special event ALLOWED TO HOLD OTHER participating distilleries are permits are readily accessible required to pull a festival permit. LICENSES? Distillers Agent and are rather lenient; must Permit (DK) $114; must also Can have to fifteen per year. state whether permit is for 72hr hold a "Package Store Tasting OFF-SITE DRINK SALE? to 120hr events and the director Permit" in order to conduct Yes, at festivals. shall not issue any more than tastings at a package store four single event permits in any ON-PREMISE FESTIVAL Yes % GRAIN FROM STATE No one calendar year if one or more requirement on using Texas OFF-PREMISE FESTIVAL Yes of the single events is a 120 grain, however, you are hour event and no more than SPECIAL EVENTS Yes, but not allowed to use the "Go twelve single event permits if a festival permit would Texan" marketing campaign each one is a 72 hour event. still have to be filed logo unless your agriculture FOR PROFIT EVENTS Yes FOR PROFIT EVENTS Yes, products are grown in Texas with a festival permit OTHER: SEPARATE LAWS FOR BRANDY? No OTHER: ALLOWED TO HOLD EVENTS GOALS Hoping to increase ON SITE? Yes, limited by ALLOWED TO HOLD EVENTS the number of bottles sold occupancy permit, 40 people ON SITE? Yes online direct to consumers so distilleries are not limited to ALLOWED TO HOLD OTHER SEPARATE LAWS FOR BRANDY? No 2 bottles per person every 30 LICENSES? Yes days; also hoping to remove % GRAIN FROM STATE They requirement that distributor use 100% grain from state, be present whenever a LICENSE CLASSES Distillers FEE

UTAH

TENNESSEE

GOALS

OFF-SITE TASTING EVENTS ALLOWED? Yes, as long as

FOR PROFIT EVENTS OTHER:

TEXAS

but do not get any assist from the state for doing so

FOR PROFIT EVENTS

SEPARATE LAWS FOR BRANDY?

No Would like to get some kind of preferential treatment for local distilleries with the state liquor system NOTES Cannot order a double of liquor (only 1.5 oz at a time)

OTHER:

GOALS

ALLOWED TO HOLD EVENTS ON SITE? Yes

VERMONT

LICENSE CLASSES Distiller's' licenses; Limited Distiller's licenses — in order to legally distill spirits in VA, distillers must obtain a Beverage Distilled Spirits plant permit from the TTB in addition to the license.

3-TIER OR CONTROL Control — just over spirits

LICENSE CLASSES Manufacturer — Third Class License — allows holder to sell spirits for consumption on licensed premises 3-TIER OR CONTROL 3-Tier PRODUCTION AND DISTRIBUTION: FEE $1,000 for 1 full year, $500 for 6 months or less

No MAXIMUM PRODUCTION AMOUNT No MINIMUM PRODUCTION AMOUNT PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION?

No

TASTING ROOM:

Yes — up to 2 oz. per person per day FEES FOR TOURS Yes BOTTLE SALES ON SITE Yes TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes SWAG (T-SHIRTS, GLASSES, ETC.)? Yes PROMOTION: TASTINGS AT ON-PREMISE LOCATIONS? Yes TASTINGS AT OFF-PREMISE LOCATIONS? Yes BOTTLE SALES AT FAIRS/FARMERS MARKETS? Allows manufacturer

or rectifier of vinous, malt and spirituous beverages to taste (2 oz for malt and vinous with a total of 8 oz or 1/4 oz of spirits with a total of 1 oz) and sell beverages produced by the manufacturer by the glass or unopened container. At one 4th-class location, vinous manufacturers may taste and sell products (by the glass or unopened container) of 5 other manufacturers provided they are purchased on invoice and allows vinous manufacturers to sell their products to 5 other manufacturers or rectifiers; (10 of the fourth class licenses are allowed per year and the length of the permit lasts for 1 year ending on April 30th or length of farmers market) $65 fee OFF-SITE TASTING EVENTS ALLOWED? Yes

Yes OFF-SITE DRINK SALE? Yes ON-PREMISE FESTIVAL Yes with educational sampling event permit (must charge $5 per person entry fee, products may be samples at 2 oz. per product for educational purpose OFF-PREMISE FESTIVAL Yes SPECIAL EVENTS *Special event permit — allows holder to attend event open to public to taste (1/4 ounces totaling 1 oz of spirits) and sell by glass or unopened bottle, spirits for duration of event, or 4 days, whichever is shorter, $35 fee; can apply for up to #104 of these permits a year, must apply five days prior to event; — Educational sampling event permit — allows holder to conduct event open to permit (minimum charge of $5 a person entry fee) at which spirits may be samples (2oz per product) for educational purposes OFF-SITE BOTTLE SALE?

special events*

See

ALLOWED TO HOLD OTHER LICENSES? Yes

VIRGINIA

PRODUCTION AND DISTRIBUTION: FEE Less than 5,000 gallons annually: $450. 5,001–36,000 gallons annually: $2,500.

More than 36,001 gallons annually: $3,725 MINIMUM PRODUCTION AMOUNT No MAXIMUM PRODUCTION AMOUNT

Limited Distiller's licenses — manufacture not more than 36,000 gallons of alcoholic beverages per calendar year (located on farm in Commonwealth & agricultural products are grown on the farm)

PRODUCTION RELATED LIMITATIONS? See above SELF-DISTRIBUTION?

No

TASTING ROOM:

Yes with a tasting license (used for purpose of featuring & educating consuming public), limited to three .5 oz samples per person per day FEES FOR TOURS Yes BOTTLE SALES ON SITE Yes — but to sell product to general public, must first have at least one product listed/sold through ABC retail store and then must get authorized as a VA ABC "distillery store" and enter into a contract with ABC LIMITS ON BOTTLE SALES? No limits TASTINGS ON SITE?

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes LIMITS FOR ON-PREMISE SALES? No limits SWAG (T-SHIRTS, GLASSES, ETC.)? Yes LIMITS ON SOUVENIRS

No limits

TAXES ON SOUVENIRS

State sales tax PROMOTION:

TASTINGS AT ON-PREMISE LOCATIONS? Yes, but limited

to three 1/2 oz samples per person per day

TASTINGS AT OFF-PREMISE LOCATIONS? Yes, but limited

to three 1/2 oz samples per person per day

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? Yes,

if licensed by ABC

OFF-SITE TASTING EVENTS ALLOWED? Yes OFF-SITE BOTTLE SALE? Yes, if licensed by ABC; starting July 1, 2017 — distilleries can sell bottles at events conducted "for the purpose of featuring and educating the consuming public about spirit products" ON-PREMISE FESTIVAL HB 2029 & SB 1448 (Jan 2018) will allow distillery stores to participate in events or festivals throughout state conducted for purpose of featuring and educating consuming public about spirits products without having to obtain a banquet license.

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HB 2029 & SB 1448 (Jan 2018) will allow distillery stores to participate in events or festivals throughout state conducted for purpose of featuring and educating consuming public about spirits products without having to obtain a banquet license.

SPECIAL EVENTS Yes, if manufacturer obtains Banquet License for special event, authorizes manufacturer to give samples of spirits, no single sample may exceed 1/2 oz per spirits product offered, unless served as mixed beverage (1.5 oz.); no more than 3 oz of spirits offered to any person.

No more than 4 of these licenses per year & can occur of no more than 3 consecutive days w/ one license.

OFF-PREMISE FESTIVAL

OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes

PRODUCTION AND DISTRIBUTION:

LIMITS FOR ON-PREMISE SALES? N/A SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

N/A

TAXES ON SOUVENIRS

45 days

N/A N/A

No

150,000 proof gallons

PRODUCTION RELATED LIMITATIONS? Must use

50% WA grown produce SELF-DISTRIBUTION? Yes TASTING ROOM:

N/A SWAG (T-SHIRTS, GLASSES, ETC.)? Yes PROMOTION:

ALLOWED TO HOLD EVENTS ON SITE? ALLOWED TO HOLD OTHER LICENSES? Brewery, Winery/

Cidery, Craft Distillery Looking at wholesale change to licenses available here. Looking to add festival permissions, allow out of state shipping to occur & create a brand ownership category

WASHINGTON, DC LICENSE CLASSES

TASTINGS AT OFF-PREMISE LOCATIONS? Yes. 1.5 oz/

PRODUCTION AND DISTRIBUTION:

3-TIER OR CONTROL

3-Tier

person/day in 1/4 oz pours

FEE

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? Not

MINIMUM PRODUCTION AMOUNT

yet.

OFF-SITE TASTING EVENTS ALLOWED? Yes, with permit OFF-SITE BOTTLE SALE? Yes, but only by a non-profit with permit OFF-SITE DRINK SALE? Yes, but only by a non-profit with permit

No No ON-PREMISE FESTIVAL Can get a license to hold event — but only can give 3 oz of samples to persons OFF-PREMISE FESTIVAL At licensed facilities for spirits SPECIAL EVENTS At licensed facilities for spirits FOR PROFIT EVENTS At licensed facilities for spirits OFF-SITE BOTTLE SALE? OFF-SITE DRINK SALE?

OTHER: ALLOWED TO HOLD EVENTS ON SITE? Yes ALLOWED TO HOLD OTHER LICENSES? No

No distillery or mini-distillery may sell more than three thousand gallons of product at the distillery or mini-distillery location the initial two years of licensure. The distillery or minidistillery may increase sales at the distillery or mini-distillery location by two thousand gallons following the initial twenty-four-month period of licensure and may increase sales at the distillery or minidistillery location each subsequent twenty-fourmonth period by two thousand gallons, not to exceed ten thousand gallons a year of total sales at the distillery or mini-distillery location.

SELF-DISTRIBUTION? No — control state BUT can only sell up to 3,000 gallons at the distillery for the first 2 years, then can increase by 2,000gal in a two year period after the first two years, and can do the same each two year period; BUT can never exceed 10,000 gallons in a one year period

Manufacturer's License — class A

Legislation pending

OFF-SITE TASTING EVENTS ALLOWED? No

OTHER:

TASTINGS AT ON-PREMISE LOCATIONS? Yes. 1.5 oz/

person/day in 1/4 oz pours

at a time and 1 per day

BOTTLE SALES AT FAIRS/ FARMERS MARKETS? No

Distilleries — $1,500 annually; Mini-Distilleries $50 annually AVG TIME TO OBTAIN 15 days

GOALS

LIMITS FOR ON-PREMISE SALES?

TASTINGS AT OFF-PREMISE LOCATIONS? Yes, one flavor

$6,000

MAXIMUM PRODUCTION AMOUNT

No No

PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION?

Yes

TASTING ROOM:

Yes — no more than 3 ounces of spirits per customer in one day FEES FOR TOURS Up to distillery BOTTLE SALES ON SITE Yes TASTINGS ON SITE?

FEE

Only farm distilleries have requirements — 25%

% GRAIN FROM STATE

No

MAXIMUM PRODUCTION AMOUNT 50,000 gallons PRODUCTION RELATED LIMITATIONS?

TASTING ROOM: TASTINGS ON SITE?

Complimentary samples allowed OTHER: FEES FOR TOURS Yes ALLOWED TO HOLD EVENTS ON SITE? BOTTLE SALES ON SITE Yes — Not yet. Legislation pending provided that all liquor for ALLOWED TO HOLD OTHER LICENSES? ON-PREMISE CONSUMPTION sale to customers from the AT DISTILLERY? Yes Brewery, Winery/Cidery, distillery or the mini-distillery General Distillery/Rectifier.

LIMITS FOR ON-PREMISE SALES? for off-premises consumption Just must apply for on-site shall be subject of a five sales and consumption percent wholesale markup fee permit — only of products for items sold in gift shop, 2% LICENSE CLASSES General manufactured at the distillery market zone tax; and an 80 Distillery/Rectifier SWAG (T-SHIRTS, GLASSES, ETC.)? Yes cents per case bailment fee to 3-TIER OR CONTROL 3-Tier be paid to the commissioner.

PROMOTION: PRODUCTION AND DISTRIBUTION: LIMITS ON BOTTLE SALES? No TASTINGS AT ON-PREMISE FEE $2,000/year ON-PREMISE CONSUMPTION AT LOCATIONS? Yes DISTILLERY? Only samples AVG TIME TO OBTAIN 45 days TASTINGS AT OFF-PREMISE LIMITS FOR ON-PREMISE MINIMUM PRODUCTION AMOUNT No LOCATIONS? Yes SALES? Must be sold only for BOTTLE SALES AT FAIRS/FARMERS MAXIMUM PRODUCTION off-premise consumption MARKETS? Yes, with Class AMOUNT Unlimited SWAG (T-SHIRTS, GLASSES, ETC.)? Yes K Farmer's Market license, PRODUCTION RELATED valid for 6 months; annual fee FREE SOUVENIRS Yes LIMITATIONS? None

WASHINGTON 2

42

Yes

Yes LIMITS ON BOTTLE SALES? No

but no other consumption on premises

PRODUCTION AND DISTRIBUTION:

MINIMUM PRODUCTION AMOUNT

FEES FOR TOURS

TASTINGS AT ON-PREMISE LOCATIONS? Tasting yes,

Yes, but only by a non-profit with permit OFF-SITE DRINK SALE? Yes, but only by a non-profit with permit ON-PREMISE FESTIVAL No OFF-PREMISE FESTIVAL No FOR PROFIT EVENTS No

LIMITS ON BOTTLE SALES?

ON-PREMISE CONSUMPTION AT DISTILLERY? No

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes,

LICENSE CLASSES Separate license for Distilleries and Mini-Distillery 3-TIER OR CONTROL Control — monopoly over wholesale of distilled spirits

BOTTLE SALES AT FAIRS/

Yes

Sales Tax —6%

WEST VIRGINIA

FARMERS MARKETS? Not yet.

Legislation pending

Not yet. Legislation pending

Unlimited sales of products made by DSP

PROMOTION:

ALLOWED TO HOLD OTHER LICENSES? Yes

TASTINGS AT ON-PREMISE LOCATIONS? Yes. 1.5 oz/

2 oz/ person/day in 1/4 oz pours BOTTLE SALES ON SITE Yes. Exempt from 17% retail "fee" TASTINGS ON SITE?

BOTTLE SALES ON SITE

ALLOWED TO HOLD EVENTS ON SITE? Yes

PROMOTION:

OFF-SITE BOTTLE SALE?

MAXIMUM PRODUCTION AMOUNT

TAXES ON SOUVENIRS

OTHER:

OFF-SITE TASTING EVENTS ALLOWED? Yes, with permit

$100/year

MINIMUM PRODUCTION AMOUNT

ON-PREMISE CONSUMPTION AT DISTILLERY? No

person/day in 1/4 oz pours

Craft Distillery 3-Tier

AVG TIME TO OBTAIN

Unlimited sales of products made by DSP

LIMITS ON SOUVENIRS

LIMITS ON SOUVENIRS

OFF-SITE TASTING EVENTS ALLOWED? Yes

Yes OFF-SITE DRINK SALE? Yes ON-PREMISE FESTIVAL Yes w/ Class I Festival license — for $2,000, must be for performance of sports or cultural or tourism-related activity, no more than 5 consecutive days (only one festival per applicant in 3 month period) OFF-PREMISE FESTIVAL Yes FOR PROFIT EVENTS Yes

LIMITS ON BOTTLE SALES?

FREE SOUVENIRS

$500 — can do tastings too

OFF-SITE BOTTLE SALE?

person/day in 1/4 oz pours

3-TIER OR CONTROL FEE

2 oz/ person/day in 1/4 oz pours BOTTLE SALES ON SITE Yes. Pays 17% retail "fee" TASTINGS ON SITE?

TASTINGS AT OFF-PREMISE LOCATIONS? Yes. 1.5 oz/

WASHINGTON 1 LICENSE CLASSES

Yes

SELF-DISTRIBUTION? TASTING ROOM:

NOTES

WYOMING

WISCONSIN

TASTING ROOM:

LICENSE CLASSES

FEES FOR TOURS

PRODUCTION AND DISTRIBUTION: FEE

$1,000 annually

MINIMUM PRODUCTION AMOUNT MAXIMUM PRODUCTION AMOUNT PRODUCTION RELATED LIMITATIONS? No SELF-DISTRIBUTION? No — must sell to wholesalers TASTING ROOM:

Yes — no more than 1.5 oz complimentary, can charge for additional samples

TASTINGS ON SITE?

Yes Up to Manufacturer BOTTLE SALES ON SITE Yes, but must sell in room separate from facility used to serve customers for on premise consumption without payment of an additional fee LIMITS ON BOTTLE SALES? No TASTINGS ON SITE?

Manufacturers' and rectifier's permit authorizes manufacture/ rectification of intoxicating liquor on premises.

3-TIER OR CONTROL 3-Tier

No No

LIMITS FOR ON-PREMISE SALES? None SWAG (T-SHIRTS, GLASSES, ETC.)? Yes

Can give away souvenirs for free as long as they have no LIMITS FOR ON-PREMISE SALES? No value to the retailer except SWAG (T-SHIRTS, GLASSES, ETC.)? Yes as an advertisement FREE SOUVENIRS Yes LIMITS ON SOUVENIRS None LIMITS ON SOUVENIRS No PROMOTION: TAXES ON SOUVENIRS Sales tax TASTINGS AT ON-PREMISE LOCATIONS? 3 oz per person PROMOTION: per 24 hour period TASTINGS AT ON-PREMISE TASTINGS AT OFF-PREMISE LOCATIONS? Yes LOCATIONS? Yes TASTINGS AT OFF-PREMISE BOTTLE SALES AT FAIRS/FARMERS LOCATIONS? Yes MARKETS? Can only sample BOTTLE SALES AT FAIRS/ if liquor retailer is there, FARMERS MARKETS? No has pulled catering permit, OFF-SITE BOTTLE SALE? No and has given permission to sample under their license OFF-SITE DRINK SALE? No OFF-SITE TASTING EVENTS ON-PREMISE FESTIVAL Yes ALLOWED? Yes. OFF-PREMISE FESTIVAL In OFF-SITE BOTTLE SALE? Yes, general, unlike beer and but only to satellite location wine, liquor is not allowed on public property in Wisconsin.

OFF-SITE DRINK SALE? No This limits festivals to events ON-PREMISE FESTIVAL Yes help on private property OFF-PREMISE FESTIVAL Yes if where the property owner/ there is a retailer who has leasee has a liquor license pulled a permit and is allowing SPECIAL EVENTS In general, us to sample. Distillery not unlike beer and wine, liquor allowed to service off premise is not allowed on public SPECIAL EVENTS No property in Wisconsin. This limits festivals to events FOR PROFIT EVENTS No help on private property OTHER: where the property owner/ ALLOWED TO HOLD EVENTS leasee has a liquor license ON SITE? Yes FOR PROFIT EVENTS Yes cocktails and samples

No "Mini-distillery" means an establishment where in any year no more than fifty thousand (50,000) OTHER: gallons of alcoholic liquor is ALLOWED TO HOLD EVENTS manufactured with no less ON SITE? Yes than twenty-five percent of raw agricultural products ALLOWED TO HOLD OTHER being produced by the owner LICENSES? No of the mini-distillery on the % GRAIN FROM STATE No premises of that establishment, requirement and no more than twenty-five SEPARATE LAWS FOR BRANDY? No percent of raw agricultural products originating from any source outside this state: Provided, That the maximum LICENSE CLASSES allotted production amounts Manufacturer's License, shall not exceed the annual Class A, Class B incremental production limitations provided for 3-TIER OR CONTROL Control pursuant to section three-a of — licenses must be this article: Provided, however, approved by State That a distillery licensed PRODUCTION AND DISTRIBUTION: and operating as of the FEE Manufacturer's License effective date of this section = $250 (separate license for that applies for designation equipment); Class A License = by the Commissioner as a $100; Class B License = $50 minidistillery is eligible to be licensed as a mini-distillery MINIMUM PRODUCTION AMOUNT No without compliance with MAXIMUM PRODUCTION AMOUNT No the requirements for the percentage use of on-premises PRODUCTION RELATED LIMITATIONS? No grown and in-state raw agricultural products.

SELF-DISTRIBUTION? No SEPARATE LAWS FOR BRANDY?

1 — now entire building is licensed dispensing room.

ON-PREMISE CONSUMPTION AT DISTILLERY? Yes, limited to one

FREE SOUVENIRS

ALLOWED TO HOLD OTHER LICENSES? No

No requirement GOALS 1. Get an allowance of limited number of special event permits per year that would allow us to sample and sell cocktails at event (i.e. fundraisers, community events, etc.) Ideally we would get 24 but we would be hugely benefited by even 12.

2. Eliminate the requirement that distillery physically ship product that is going to come right back to our on-site tasting rooms to the state liquor commission and then ship it back. 3. Get an allowance of one on-site tasting room and one additional satellite tasting room. Currently, if you have an on-site tasting room that counts as your "satellite" tasting room even if it is attached. There is no requirement that it be attached but you are only allowed one total. If your satellite tasting room is not attached, you cannot sell bottles or cocktails from your distillery NOTES Essentially, we are not allowed to serve product outside of our satellite location and distillery. We can offer samples at locations that have liquor licenses. We can work with a retailer who can pull a 24-hour catering permit to do events outside of licensed buildings, but we aren't allowed to service them — the retailer has to. % GRAIN FROM STATE

room, except upon payment of an additional license fee equal to two-thirds (2/3) of the fee paid for the original license, a licensee may have and maintain one (1) additional dispensing room in the same building under the authority of the original license.

Legislation to go in effect July WWW.ARTISANSPIRITMAG.COM

WINTER 2017 UPDATE:

T

he Craft Beverage Lawyers Guild, the non-profit trade group consisting of both inhouse counsel for craft beverage makers and outside counsel who dedicate a substantial portion of their practice to the craft beverage industries, held its annual meeting this past September. The meeting was held during the Wine, Beer and Spirits Law Conference in Portland, Oregon. Over twenty-five Craft Beverage Lawyers Guild members and prospective members gathered at Baerlic Brewing Company for the meeting. The lawyers in attendance were from around the country and included lawyers from AmLaw 200 firms, small-to-mid-size firms, solo practitioners, and inside counsel from

CRAFT BEVERAGE LAWYERS GUILD W R I TT E N BY RYA N M A L K I N

some of the largest craft beverage suppliers in the country.

Officers of the Guild led a discussion about the Guild’s achievements over the past year and plans for 2018.

Perhaps most importantly, officers and attendees discussed how members could get involved to help the Guild achieve its goals of increasing the level of service craft beverage producers are receiving from their counsel.

After the meeting, Portland-based Guild members led the attendees on a tour of several breweries and bars in the area. If you’re interested in networking with like-minded attorneys and sharing great craft products, please visit www.cblg.org for membership information.

Visit www.cblg.org for more information on the Craft Beverage Lawyers Guild.

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45

INTERSECTION of SPIRITS AND MARIJUANA the

BY MARC E. SORINI AND VANESSA BURROWS

I

n the past three years, TTB has approved an increasing number of certificate of label approvals (“COLA”) for hemp-flavored vodka, from Mill Six’s hemp, white tea and ginger flavored vodka to Olde Imperial Mystic’s hemp infused vodka. Distillers have designed labels with green smoke-like images and psychedelic sixties-style lettering to hint at their cultural connection to marijuana. As more states have legalized recreational cannabis, distillers have been thinking more ambitiously about combining their distilling business with one or more aspects of the emerging marijuana business.

But marijuana currently operates in a very uncertain place in the U.S. legal system. According to the National Conference on State Legislatures, seven states and the District of Columbia have legalized the recreational use of cannabis, and California will begin accepting applications and issuing licenses for dispensaries for recreational use on January 1, 2018. Moreover, 29 states, the District of Columbia, Guam, and Puerto Rico currently permit the medical use of marijuana.

Many of these states have developed complex and extensive excise tax, distribution, packaging, and marketing rules to regulate this socially-sensitive business.

The federal government, however, has not yet significantly changed its position towards the consumption of marijuana. In the waning days of the Obama Administration, the Drug Enforcement Agency (“DEA”) denied a petition to begin a rulemaking that would reschedule marijuana from Schedule I to another schedule. DEA relied on a scientific and medical evaluation from the Department of Health and Human Services (“HHS”), which concluded that marijuana has a high potential for abuse, no accepted medical use, and lacks an acceptable level of safety for use even under medical supervision. DEA then concluded based on the HHS evaluation and other data that marijuana should remain in Schedule I. The Food & Drug Administration (“FDA”) has approved three drugs with synthetic versions of a substance that is present in or that acts similar to substances present in the cannabis plant, but the FDA has not approved marijuana itself as a safe or

46

effective drug to treat any disease.

Although the Obama Administration did not substantially alter existing federal laws on marijuana, both Congress and that Administration did make some halting steps towards marijuana legalization. In 2014, Congress passed the Agriculture Act of 2014 (“Farm Bill”), which allowed the limited production of industrial hemp for research purposes. Among other things, the Farm Bill permits the cultivation of cannabis with low concentrations of delta-9 tetrahydrocannabinol (“THC”) — the primary intoxicating substance in marijuana — by authorized higher education research institutions and state departments of agriculture.

More importantly, the Obama Administration’s Department of Justice issued a series of guidance memos to federal prosecutors on medical and recreational marijuana that modified existing policies.

The most significant memo has become known as “the Cole Memo.”

The 2013 Cole Memo sets enforcement priorities for federal prosecutors evaluating marijuana operations operating in compliance with relevant state laws and indicates that the federal government will rely on state and local law enforcement and regulatory bodies to address marijuana activity under their own drug laws. Prosecutors are to exercise prosecutorial discretion and focus on persons whose conduct interferes with one or more of eight listed factors. Those factors are:

1. Preventing the distribution of marijuana to minors; 2. Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels;

3. Preventing the diversion of marijuana from states where it is legal to other states;

4. Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

5. Preventing violence and the use of firearms in the cultivation and distribution of marijuana;

6. Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use;

7. Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and

8. Preventing marijuana possession or use on federal property.

The Obama Administration issued additional guidance on marijuana-related financial crimes, such as money laundering, which also recites these eight priorities. Under that memo, prosecution may be appropriate if the financial institution or individual providing banking services knows the business is diverting marijuana from a state where marijuana sales are regulated to one where sales are illegal under state law.

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The inauguration of Donald Trump as the 45th President of the United States portended potentially major changes in federal policy.

On the subject of medical marijuana, President Trump voiced support for its legalization and use during his campaign. But he said the legalization of recreational cannabis use in Colorado was “bad” and “causing a lot of problems” on several occasions. Around the same time, President Trump indicated that he views legalization as a states’ rights issue. More ominously, President Trump appointed Senator Jeff Sessions as the Attorney General of the United States. While in the Senate, Sessions was a strident critic of any easing of legal restrictions on marijuana use, and his posture upon appointment did not appear to change at all. To many new marijuana businesses, the future looked bleak indeed.

So far, however, no massive retrenchment has occurred. Most astonishingly, the Trump Administration has yet to disavow the Cole Memo. This is particularly surprising as the Cole Memo does not have the force of law and could be cast aside without any need for congressional action or administrative rulemaking. As of October 2017, the Department of Justice had merely announced a task force to evaluate the Cole Memo and marijuana policies, but had made no decisions about its ultimate fate.

Moreover, the prospect of renewed federal enforcement against businesses operating in accordance with state law has helped galvanize a bi-partisan group in Congress (the Congressional Cannabis Caucus) to protect the legalization decisions of their respective states.

The number of federal legalization bills introduced has increased in the current Congress, and those bills appear to be attracting more co-sponsors than in prior sessions of Congress. That said, President Trump has issued a signing statement objecting to a provision in the Consolidated Appropriations Act of 2017, which funded the federal government through September 30, 2017. (A continuing resolution is in place through December 8, 2017.) The law prohibits the Department of Justice from using funds to prevent certain states, territories, and the District of Columbia from implementing their own laws that permit the use, cultivation, distribution, and possession of medical marijuana. President Trump declared that he would treat the provision consistent with his constitutional responsibility to ensure the laws are faithfully executed, which essentially means that he deemed the provision unconstitutional.

So the current state of federal law remains quite uncertain. Even under the Obama Administration, the Cole Memo provided little comfort, as it represented mere guidance to prosecutors and would not serve as a legal shield to anyone facing a criminal prosecution or other adverse action (e.g., asset forfeiture) under federal drug laws. And with the announced hostility to legalization by the current Administration, the risks of entering into the marijuana trade — even when taking place in a state with a comprehensive regulatory structure — have only increased.

So distillers seeking to enter the marijuana business as investors or more face a host of questions and risks. For starters and as already noted, marijuana remains a Schedule I drug under federal law. This carries with it significant potential criminal penalties: Trafficking in 100-999 kilos of marijuana carries with it a civil fine ranging WWW.ARTISANSPIRITMAG.COM

between five and 25 million dollars, or a five to 40 year prison sentence for a first offence. A host of additional civil fines and prison sentences arise from related conduct, including using the Internet to DISTILLERS deliver, distribute, or dispense controlled SEEKING substances, advertising the sale of TO ENTER controlled substances, distribution near a truck stop or highway rest area, and THE MARIJUANA distribution near schools, colleagues, or BUSINESS AS “youth-centered recreational facilities.”

INVESTORS OR In addition, federal laws subject all MORE FACE property used in an offense involving Schedule I substances, and all proceeds A HOST OF of the offense, to forfeiture to the U.S. QUESTIONS government. In short, should the Trump AND RISKS. Administration decide to vigorously enforce current drug laws against businesses operating marijuana businesses in accordance with state laws, the penalties would quickly ruin businesses and lives.

Even if the Cole Memo continues to keep federal prosecutors from bringing the full weight of the criminal justice system to bear on businesses operating in accordance with state marijuana laws, distillers face additional risks due to alcohol’s status as a heavily-regulated commodity itself. All distillers hold one or more federal Basic Permits to operate, and might also hold importer and/or wholesaler permits.

In addition, distillers hold a host of state-issued licenses and permits, most critically in the state(s) in which they operate distilleries, but also in states where they ship and store their spirits.

Federal permits and state licenses and permits often are conditioned on operating in compliance with the law. Many licensing schemes also inquire as to the fitness of the business and/or its ownership and management based on their moral fitness and character.

Alcohol regulators, particularly ones in jurisdictions that are not friendly to the concept of legalizing marijuana sales, can certainly characterize any operation involving marijuana as unlawful u n d e r federal law.

Moreover, amorphous criteria like an owner’s or manager’s moral character and fitness could

47

be cited by a regulatory body as a reason an owner or manager’s involvement in the marijuana trade (even if lawful in the jurisdiction in which it takes place) renders that person ineligible for a license to produce, A distribute, and/or retail alcohol beverages.

DISTILLER’S And although a full exploration of ADDITION OF these issues falls beyond the scope of this article, the connection HEMP, MARIJUANA, between an alcohol business OR ANY OF THE and the marijuana trade can, CANNABIS PLANT’S depending on the jurisdiction PARTS OR BYPRODUCTS and other circumstances, jeopardize the business’ TO VODKA OR OTHER ability to obtain, renew, and/ SPIRITS GENERALLY or hold an alcohol beverage TRIGGERS THE FORMULA license or permit.

Further obstacles arise where APPROVAL REQUIREMENT a distiller seeks to incorporate CONTAINED IN marijuana directly into its TTB’S DISTILLED distilling business. A distiller’s SPIRITS PLANTS addition of hemp, marijuana, or any of the cannabis plant’s parts or byproducts REGULATIONS. to vodka or other spirits generally triggers the formula approval requirement contained in TTB’s distilled spirits plants regulations. These regulations arise under the Internal Revenue Code, not the Federal

48

Alcohol Administration Act (“FAA Act”) and, as such, do not require the spirits to move in “interstate or foreign commerce” in order to trigger the formula requirement. In other words, contrary to popular belief, even if a distillery never sells to a buyer in another state, TTB’s formula requirement still applies.

The formula requirement accordingly gives TTB a “gatekeeping” mechanism to screen recipes of vodkas or other spirits containing marijuana-derived ingredients. In the past several years, a handful of distillers have distilled spirits from hemp and grain and flavored or infused vodka with hemp as a stand-alone flavor or in combination with other flavors. Under TTB’s 2000 hemp policy, an applicant submitting a formula must submit a laboratory analysis of the hemp component (oil, seeds, etc.) and satisfy TTB’s requirement that the finished product does not contain THC or any ingredient that federal law considers a controlled substance under the Controlled Substances Act (“CSA”). The CSA defines marijuana broadly to include “all parts of the plant Cannabis sativa L., whether growing or not” as well as the seeds, resin, and every compound, derivative or preparation of the plant, seeds or resin. The definition of marijuana does not include sterilized seeds incapable of germination, the mature stalks of such plant, fiber produced from mature stalks, certain derivatives of the mature stalks, or oil or cake made from the seeds of the plant.

If TTB adheres to the position it has articulated, then, it would consider marijuana-derived ingredients a Schedule I drug and therefore prohibited unless the ingredients are found only within the mature stalks or other excepted parts of the plant listed in the definition of

WWW.ARTISANSPIRITMAG.COM

marijuana. In short, until federal law changes we may be a long way before THC and/or CBD-infused spirits hit the market.

State law, even in states where marijuana is legal, may present additional challenges to a distiller seeking to directly integrate weed into its distilling business. The statutes and regulations governing legal recreational marijuana use often prohibit such use on the premises of an alcohol licensee. While there are initiatives to change that status quo in some places (e.g., Colorado), distillers need to carefully scrutinize their home state’s laws — even in states that have legalized recreational marijuana — to avoid inadvertently putting their state licenses in jeopardy.

Even if a distiller can navigate the TTB formula process and receive approval of a spirit containing marijuana-derived ingredients, labeling presents yet another potential obstacle. As indicated above, spirits must receive a COLA if the product will enter into interstate commerce (i.e., cross state lines). Here, TTB’s only published policy (the 2000 hemp policy) is that the distiller is “prohibited from using depictions, graphics, designs, devices, puffery, statement, slang, representations, etc. implying or referencing the presence of hemp, marijuana, any other controlled substance; or any psychoactive effects.” Since then, TTB has informally stated that it continues to adhere to that policy.

More broadly, however, TTB’s COLA-approval decisions have indicated a slow loosening of its previously-staunch stance on drug lingo and references in the labeling of alcoholic beverages. TTB has approved labels with the phrases “Legalized 2014” on Colorado High Mtn. Vodka and “Cannabis Sativa L.” on Sea Hemp Flavored Vodka.

To sum up, the spread of recreational marijuana laws through the states does not yet create a clear or risk-free path for distillers to integrate the cannabis business, cannabis use, or cannabis-derived ingredients into their distilling operation. Given the considerable public sentiment in favor of greater liberalization of marijuana laws, some distillers may decide to take risks in order to become early participants in this exciting new business opportunity. The more cautious will likely survey the layers of legal uncertainty and decide to wait for changes in conflicting federal laws before risking a situation where their distillery investment goes “up in smoke.”

A version of this article will also appear in The New Brewer.

Marc E. Sorini is a partner in the law firm of McDermott Will & Emery LLP, based in the Firm’s Washington D.C. office. He leads the Firm’s Alcohol Regulatory & Distribution Group, where he concentrates his practice on regulatory and litigation issues faced by supplier-tier industry members.

His practice for distillers includes distribution agreements, distribution counseling and litigation, labeling, promotional compliance, compliance strategy, and federal and state tax and trade practice enforcement defense.

Vanessa K. Burrows is an associate in the law firm of McDermott Will & Emery LLP, based in the Firm’s Washington D.C. office. She is a member of the Firm’s Alcohol Regulatory & Distribution Group, where she advises clients on FDA, TTB and DEA laws, regulations, guidance, and responses to enforcement matters. Her regulatory experience related to medical and recreational marijuana issues includes scheduling, packaging, labeling, drug coverage and exclusions, and federal prohibitions and requirements for marijuana and industrial hemp.

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STICK TO THE

CODE

A CAUTIONARY TALE W R I TT E N BY S H AW N B E R G E R O N

O

ver the course of the past few months, we’ve had the opportunity to travel a bit.

Wherever we go, we always make sure we visit with our old distillery friends and make new ones along the way. There’s no better way to sample fine spirits than to visit the locals, and we usually combine sampling with conversation about how things are in the distilling world. Interestingly our conversations almost always start with products, procedures, and markets but somehow the conversation usually comes around to the topic of regulations and regulators. A common theme has been developing. Everyone we talk to is asking a question along the lines of: When it comes to codes, standards and all this regulatory “stuff” who’s really in charge and for how long?

In the last issue I had promised we’d be talking about alarm systems, and we will indeed visit this topic in the next edition, but this current topic is alarming, and I want to provide some guidance about how to proceed and some options that are available when the rules of your world suddenly

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change. Now remember, I’m not an attorney, and you always want to keep yours close, but I have dealt with regulations and regulators for three decades, which has provided on-the-job training.

The owner of any business should try to determine which regulator is really in charge and then try to determine what they may be expecting of you. Rules change, regulators change, and the ones that have just arrived may not feel as warm and fuzzy about your business as the ones that had been here before. Don’t wake up in a cold sweat thinking about this, but pay attention to little signs around you and talk with others. Mishaps that are coming down on those around you may be a canary in your coal mine.

What follows is a tale of woe that a client of mine is living through.

One of our distilleries has been at it for quite some time.

Wonderful products, great marketing, and being in the right location has led to a level of success that most small distillers envy. Taking a paycheck every week

and a long vacation after Rules change, just a few years is enviable but this guy has done it! regulators Just a few months back from vacation his sunny days change, and became overcast as one of those “apparently should the ones that have dealt with this in the past” moments came to the have just front and center. Noticing that the rickhouse is getting arrived may chock full, my guy applies for a building permit for a new, not feel as slightly larger one. Permits have never been a problem, warm and submit the paperwork, pay the fees, answer a few minor fuzzy about questions and the permit arrives in the mail. It’s your business always been simple, but this time, things seemed a bit as the ones weird. His distillery is in a small rural area, one where that had been the local regulators are very supportive as they all enjoy here before. stopping by the tasting room (and the townsfolk enjoy the taxable real estate that he’s developed). From the perspective of building and fire codes, this little town has let the professionals at the state level deal with the permitting, which saves

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on the energy invested by local volunteers and no one makes enemies that they have to bump into every morning while grabbing coffee at the village store.

The local officials gave their approval for the construction of yet another taxable rickhouse and our guy looks forward to the arrival of the permit. But then, like never before, an ominous letter comes falling from above. The professional regulators at the state level never required a face-toface before, but this time, the big fellows want a meeting… at the distillery! After a few e-mails a mutually acceptable day is decided and shortly after the bright red sun rises the cavalcade arrives.

Introductions are made, pleasantries exchanged and then they get down to business: This new application lead to a review of this property file and turned up that the annual inspection was many months overdue. Quite a surprise as after several years our guy has never had an annual inspection. “When do you want to do this,” they ask. After the lump in his throat clears he makes the best of

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well and good,” their leader it and thinking we’ve Ignorantia says. “He didn’t know what always been straight he was doing, and that’s with them says “how legis neminem why he’s no longer here. You about right now?” They need sprinkler systems. You nod in agreement and excusat— needed them then and that off through the array hasn’t changed. You’ve got of buildings they go. not knowing four weeks to get the plans Our guy leads like any approved and sixteen to get good leader, proudly the law is them installed.” Oh my! showing the results of no excuse.

The building and fire toiling fourteen hours codes that apply to your each day for the first craft distillery are outside several years. The pros of the knowledge area of many building ask questions, lots of questions and they and fire officials, and both codes and take photos, lots of photos. They write officials can change. Combine the lack copious notes in their write-in-the-rain of knowledge with pressure that is often notebooks and as things are winding down being applied from various places, like their leader turns to my guy and says, the Assessing Department that wants to “where’s the sprinkler systems?” His first get the abandoned property that you’ve reaction was terror. Swallowing, my guy purchased back onto the tax rolls, and responds that surely they are mistaken as expensive requirements sometimes just all plans were submitted and approved, get overlooked, one might even say, construction inspected, and there’s the sometimes set aside under influential cherished Certificate of Occupancy signed pressure. When the process began years by a lot of people with important titles, before no one dictated a sprinkler system one being his predecessor. “That’s all

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and my guy didn’t know about sprinkler systems. He certainly wasn’t going to go offering one. His first response was to stand firm: “Not my fault, I did everything I was asked to do, and that ship has sailed”.

Sorry, wrong answer. Ignorantia legis neminem excusat, or in English, not knowing the law is no excuse. Unfortunately, the law of the land says that if code cop is right and his predecessor was a buffoon, this regulatory blunder has indeed become your problem. If your Certificate of Occupancy was issued based on a faulty application of the building or fire codes or even misinterpretation by an official that signed it, your cherished C.O. can probably be revoked.

The offer of sixteen weeks to come into compliance, as impossible as this seems, could actually be considered gracious.

What should you do? First, don’t do or say anything that’s going to jeopardize your TTB license. Second, close out this meeting as graciously as possible, find a quiet place and dial up your legal counsel.

You’re going to need help as the adage “you can’t fight city hall” is accurate. If these folks stick to their position your war chest is going to be smaller than their bottomless one. Get some help and take the highest road available. Demonstrate that the steps you took when starting this business were upfront and above board. Show them that you did what was asked of you and remind everyone of that.

Use your good behavior as a tool towards additional time… two years instead of sixteen weeks for example. In most cases, after the initial bad feelings pass, an agreement of some

reasonableness can be reached.

Finally, words of wisdom from someone that’s done this for a long time: When you’re in the midst of permitting your new project and some official offers you something that you know is just not right or seems to miss something that you know is required, do what your mother always told you; be honest and speak up. Don’t accept what appears to be a wonderful gift.

Like the arrival of free GNS that you never ordered; it's probably not going to end well.

Shawn Bergeron is an NFPA and ICC certified fire protection specialist and building official with Bergeron Technical Services in North Conway, New Hampshire.

For more information or assistance call (603) 356-0022 or visit www. bergerontechnical.com. They will be happy to help you with your distillery no matter how near or far.

Unfortunately, the law of the land says that if code cop is right and his predecessor was a buffoon, this regulatory blunder has indeed become your problem.

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DOULL THE DRUGGIST’S BOOK

…OR, HOW TO GET DRUNK AT THE PHARMACY WRITTEN BY JOHN MCKEE

3 Drachms (about 1/8 of an oz.) each of Chloroform, Tinctures Opii & Camphor and Aromatic Spirits of Ammonia mixed with 4 oz. of Brandy made an excellent Internal and External Pain Killer…. with the noted exception that the Miner’s Delight Pain Killer will be found far better.

W

hen Courtney and I bought the building for our distillery, we also took possession of the records of the previous owners, The Pioneer Club of Butte. The Pioneers were an eclectic group; they allowed both sexes to participate (we found out later that made for better dances), they could trace their club lineage back to the founding of our town, and they had an amazing repository of records tracing back to their founding left behind in closets of our new building.

It was in those records that we found the apothecary book of the local

FIGURE 1: Figure the Opium had as much effect as 4 oz. of Brandy!

Druggist, Doull Bros. Pharmacy, 938 N. Main St. Butte, MT. From somewhere in the late 1800’s through the 1920’s, one of the Doull brothers became a member of the Pioneers Club and donated his recipe book to the club at some point in that era. In the book, we were reminded that alcohol was a staple of medicine in the early days and this article is an homage to one of the legs our industry of distilling currently stand upon as part of our origin story.

In Title 16 of the Montana Code, drafted after Prohibition to regulate the sale of alcohol in Montana, there are

FIGURE 2: The Doull Bros. Letterhead. School & Surgical supplies, Fine Confectionary & Trusses....the Walmart of the 1800's.

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FIGURE 3: Anise Seed Cordial: You'd want to invite this guy to every party you had. some interesting exemptions in first part of the code…exemptions that relate to alcohol as medicine. Specifically:

MCA 16-1-203. Health professions exemption.

A physician, dentist, veterinarian, or pharmacist, acting within the scope of the individual's professional responsibility and license to practice, who prescribes, prepares, or administers alcohol or substances containing alcohol and sells or charges a fee does not violate the prohibitions of this code.

MCA 16-1-204. Licensed hospital or health care facility. Any person in charge of an institution regularly conducted as a licensed hospital or health care facility may administer alcoholic beverages purchased by the person to any patient or inmate of the institution and may charge for the alcoholic beverages.

FIGURE 4: A great recommendation of "Club House" whiskey.

Yep, if you’re a doc in Montana you can prescribe alcohol, hell…if you’re a veterinarian you’re more than welcome to get the animal hammered according to Montana code. We’ve jokingly considered asking the local Walgreens to sell our whiskey, because although they’re not allowed to sell liquor as a full-blown liquor store, they can sell via their pharmacist’s recommendation via the permissive in 16-1-203.

Which is why this Druggist’s book is so interesting. When referencing alcohol, according to notes elsewhere in his notebook, unless ABV% is otherwise stated, the alcohol in the recipe is to be 95%. Take for instance Pimples and Blotches, in which case have we got you covered! Figure if it didn’t work for your complexion at least you could drink enough to convince yourself that it did work.

FIGURE 5: Another recommendation for a Also of interest is that the whiskey to wash down the "Elixir".

Druggist was also responsible for glues, varnishes, Bay Rum, Cordials, Honey Wines, ‘Elixirs’, all of which had interesting uses of alcohol in various proofs.

From Ken Burns’ documentary on Prohibition, we’ve learned that often the use of alcohol was to ensure that the liquid one was drinking was antiseptic, especially in a time when clean water was not an absolute. But from some of the records in the archive left to

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us in the building, it didn’t necessarily mean to some that the Druggist was your best bet!

We’ve noted that in some of the recipes, a small distillation of the medicine is required to remove the “essential oils”, “a few drops per gallon” to make the mixture more palatable.

Perhaps referring to heads-like compounds?

All in all the archive of the book and related paperwork was north of 100 pages. The collection can now be seen at the Butte Silver Bow Archives and Artisan Spirit Magazine has an online site for you to check out at your convenience. Cheers.

John McKee, along with his wife Courtney, are the coowners of Headframe Spirits in Butte, MT. John and Courtney briefly considered opening a compounding pharmacy based on the recipes in Doull’s book, marketing true artisanal craft ibuprofen. But, alas, hooch was easier. For more information, email john@ headframespirits.com.

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FIGURE 6: The McKee credited for the art is of no relation to this author... but I sort of wish he was.

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DISASTER RECOVERY HOW DO YOU GET YOUR DISTILLERY BACK TO WORK AFTER THE WINDS DIE AND THE WATER RECEDES? WRITTEN BY GABE TOTH /// PHOTOGRAPHY BY AMANDA JOY CHRISTENSEN

D

istillers in flood- and storm-prone areas have always had to keep an eye on the skies, and recent hurricanes in the Gulf and on the east coast have proven that the stakes of this “when-not if” calculus will only intensify along with the weather.

At the tip of the Florida Keys, Paul Menta at Key West First Legal Rum said that longtime residents of the Keys know how to get by in isolation, without water, electricity or cell service, which helped them weather this hurricane season.

“I’ve been down here for a long time. You have a plan A, a plan B and a plan C. This was the first time going to the plan C,” he said. The chef and distiller said the community had a phone chain going after Hurricane Irma to let friends and relatives know they were ok, and he was able to tap into the local fish market, which he also co-founded, to help tide things over. “Lobster and rum go a long way,” he said.

Joe Breda at the Old Humble Distilling Company, on the north side of Houston in Humble, Texas, was stranded by floodwaters when Harvey struck, but otherwise he and the Houston distilling community didn’t see much trouble. “I got stuck at my house for a few days, but we didn't get any water at Humble.

Everybody I know had water in their house. We were delivering fans, we were ripping out sheetrock.”

“There’s not much you can do, really. The last time there was an evacuation out of Houston it was a fiasco. I’d rather my stock remain in the distillery than in a panel truck on the road, so it would have to be a huge storm for me to consider doing anything drastic like that.”

The Polish-born Kozuba clan in St. Petersburg, like most Florida distillers, also didn’t have a lot of trouble with the storm at their facility. Distiller Matthias Kozuba of Kozuba & Sons Distillery said that they were in a mandatory evacuation zone, and kept an eye on things via their cameras at the distillery.

“It was not only new to us because it was one of the biggest storms in American history to hit Florida.

For us as immigrants it was completely new. We didn't really know what to expect,” he said. “We got lucky enough and didn't get hit directly.”

Depending on their unique circumstances, some producers have built their facility around the idea of catastrophic weather. Menta knows how impactful the weather can be in the Florida keys, so he had Vendome engineer and install wheels when he bought his still.

“It was in the business plan to set up for a hurricane, mainly for the flood part of it. If a wind comes and rips your roof off, there's not much you

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can do,” he said.

UP AND RUNNING It’s important to remember that just getting to the distillery in the alien landscape can be a disorienting experience. Landmarks have moved or disappeared, streets are closed, the area is changed in unpredictable ways.

After Irma had passed, the Kozubas came back to a St. Petersburg that had already been cleared of debris, tree limbs, and any other impediments.

Thankfully they had no fermentations going, only lost power for a couple of hours, and had the most key element, “a lot of luck.”

Kozuba said they lost revenue from tours, private events, and other on-site sales, but didn’t have to do any repairs or renovations after Irma had passed.

In Key West, it was a little longer before Menta was able to reopen, but he took the crucial step of getting back to the distillery as quickly as possible to start cleaning up. “Right after the storm was over, and it was blowing 40 (mph) out, we were out there taking care of business.”

LOSSES Distillers in Florida and Houston generally escaped without significant losses, but other distilleries over the years haven’t always been as lucky. At Cedar Ridge Distillery in Iowa, Jeff Quint saw the Cedar River rise ten feet over its record high during the summer of 2008.

“Our original location was in downtown Cedar Rapids. We were outside of the 500-year floodplain, and if someone had tried to sell us flood insurance we would have accused them of trying to rip us off,” he said. “We wound up taking on three and a half feet of water. It was devastating.”

He said cleanup was its own ordeal. “This was by no means pristine water,” Quint said.

“We came back in to assess the damage, and there was probably an eighth to a quarter of an inch of scum covering everything. There were dead fish in the distillery. Are we still in business, or are we out of business?” he started asking himself.

“About half of my inventory was lost, tanks were knocked over. My wife Laurie started cleaning a few things, and I went up and checked the messages and there were a few orders we could fill. Kind of by accident or by default, we found ourselves conducting business.”

Colin Spoelman, co-founder and head distiller at Kings County, was hit hard by Hurricane Sandy

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in 2012. The distillery is located in the United States Navy Yard, which the city has been developing as an incubator for businesses, but which also sits at a low elevation. The storm surge was 13 feet, which came up three feet in the distillery itself.

“In the scheme of things, we lost a lot of grain, we had to pump out the basement and make sure all the electrical was fine,” he said. They spent a week with no electricity, in weather that ranged from 40 degrees at night to 55 in the day, essentially cleaning out the distillery in the cold and dark.

“Fortunately it's an old brick building, it doesn't have any drywall in it at all.” Spoelman said. As a result, they lost tens of thousands of dollars, instead of more than a hundred thousand dollars.

They were able to stagger the impact of the costs, and being a small business played to their advantage since they had no heavy equipment to replace, such as forklifts.

One problem Spoelman had not foreseen was the scarcity of gasoline. “The whole Northeast was out of gasoline, so we couldn't get out and make deliveries. So that interrupted cash flow in a way that we hadn't anticipated.”

Luckily, their barrel stock was upstairs and wasn’t affected, though one barrel did remain downstairs. Nicole Austin, head distiller at the time, came to him later with an odd comment about the whiskey in that barrel.

“She said, ‘This barrel tastes like chicken.’ It clicked in my mind that that was one of the barrels that had been in production the day before,” Spoelman said. “For one reason or another, seawater must have gotten into it. I do know that it's actually still lying around. It's four years old now.”

Spirit Hound Distilling of Lyons, Colorado, was hit hard in 2013 when the St. Vrain valley flooded, inundating the distillery and the small community. The flood hit the older, more affordable neighborhoods along the river hardest, wiping out homes belonging to locals and artists, resulting in the displacement of longtime residents, according to Spirit Hound co-owner Craig Engelhorn.“They’re gone now. We lost a lot of really cool people,” he said. “It changed the complexion of the town. The neighborhoods have changed.”

Just like in Cedar Rapids, the flood came through and hit every musty, dirty corner of the canyon, as well as a waste treatment

facility, on its way to Lyons. Spirit Hound flooded knee-high, and Engelhorn spent two months cleaning up, ripping out walls, and having pumps rebuilt. They still have a line on the bay door about 16 or 18 inches up from the floor that marks the high-water line.

“We were literally able to scoop the mud out of the glycol chiller.

Our sanitary pumps were under water,” he said. “For days it just seeps out of the walls,” Engelhorn said. “You rinse off the tank legs and more falls off. It was just Hershey’s-chocolate brown and smelly. There was mold immediately growing up the walls, climbing up the paint.”

With a hired crew of 35 people attacking the problem, putting up drywall and disposing of waste, they were able to reopen after two months, but it took longer than six months to truly get back on their feet. However, even now they still haven’t entirely gotten the building back to pre-flood condition. Engelhorn pointed to a concrete slab where he thinks the floodwaters compacted the earth under the building. “You can feel the floor moving,” he said.

COMMUNITY INVOLVEMENT No distillery is an island, and craft producers in particular often take pride in being an active part of their community. So when disaster strikes, many craft producers put their own house in order, then look outward to see what can be done.

In St. Petersburg, Kozuba saw a need for water even before the storm hit. “The whole area ran out of water pretty quickly. A week before the hurricane it was hard to find water,” he said. So Kozuba filled a tank with 600 gallons of water from their reverse osmosis system, advertising on social media that anyone in need could come fill up jugs and tanks. They also donated 30 percent of bottle sales to the Red Cross for 30 days after the storm.

Down in the Keys, Menta was busy feeding about 50 first responders and finding them housing, looking around the community and seeing who needed help and getting people stabilized and housed. He says priorities continually evolved as the situation progressed. One day the priority was reopening the hotel to provide housing, another day it was securing safe landing zones for helicopters. “Every day it changed. We continued to pay our staff, because it takes the pressure off.” Eventually the community reopened the pier and held a benefit party at sunset. More than a

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thousand locals showed up.

In Lyons, Engelhorn said that in addition to being flooded and without utilities, the town was shut off by a roadblock. People took to the unpaved mountain roads and side roads, sometimes parking miles away and hiking in with food or medicine. The local market took its perishable inventory to the school, which was serving as a shelter. “There were a lot of parties,” he said, as people’s deep freezers thawed and food had to be cooked.

Spirit Hound took the batch of rum that had gotten submerged by the flood and sold it as a fundraiser for the fire department. They had buttons for $50, $100, $150 and $200 bottles, eventually handing the firefighters a check for $10,000.

“People would come in and say, ‘I want to buy one of those $200 bottles of rum,’” Engelhorn said. “After the flood, I saw the best in people.”

THE NEXT ONE Those who have been through such an event have plenty of advice for those who live and work in a flood or storm zone and may be thinking about the next big one. At Kozuba & Sons, the crucial point was to “protect your primary asset:” Have insurance in place to cover the hundreds of thousands or millions of retail dollars in product, whether it’s in bottles or barrels.

“If the warehouse got flooded, then we would be in big trouble,” Kozuba said. “You want to protect it, this is your asset. One of your biggest expenses is insurance, my advice is probably pay for the right insurance. I know it hurts, paying for insurance is expensive, but I think it's worth every dollar just to be on the safe side.”

Breda, in Houston, was on the same page. “If we were facing a significant storm where the facility was in danger — something like Katrina or Ike bearing down on us directly, keeping in mind we’re 90 miles inland — we would pretty much stick with the standard plan: trust in insurance and reinforce our windows,” he said.

Spoelman also believes in protecting Kings County’s “most precious commodity,” in a more physical sense. “The aging inventory being upstairs far and away made the difference for us, being in business now versus not being in business any more,” he said. “Store your barrels in a place where they're not likely to be jeopardized by floods. If you live in a coastal area, you're going to

be exposed to it. It is one of those things that you can't plan for it, unless you're planning for it every day.”

If you’re in a somewhat more precarious position, like an island that’s a hundred-mile drive from the mainland, you might already know what to do. “You carry a go-bag,” Menta said, with things like medical supplies, Gatorade and waterproof lights.

“Be prepared. There's a certain calm if you feel prepared. Don't do anything out of your comfort zone. It'll go horribly wrong,” he said. “It was in our business plan how to handle this, and it worked.” He also encourages people to, “Be creative, write dumb shit. Up on the roof, in big orange letters, we spray painted ‘Save the Rum.’” Back in Iowa, Quint cautioned against expecting too much, too soon, from a government bureaucracy. “The FEMA process, at least at the time, getting any significant FEMA help was a very long process. You have immediate needs, and for a federal government to come in and try to provide any immediate help is an insurmountable task,” he said.

“Work with your local economic development support staff. It isn't just FEMA that can help with this.” Because they’re classified as an agricultural business, he said they “found quicker relief working through a USDA program than working through FEMA.” He also advocates for business interruption insurance as well as insurance against environmental hazards. “Understand what your natural disaster risks are, floods, tornadoes, fires. We’re up on top of a hill now, so tornado hits and lightning strikes are some of our biggest risks, and we’re insured for those,” he added. Quint cautions against the proverbial eggs in one basket, also. “Don’t keep all your inventory in one place. We have whiskey in five buildings, in case a tornado takes out one of them.”

At Spirit Hound, Engelhorn urged others to “heed the warning” and be proactive when a possible storm is coming. “It wasn’t much, but it’s a lot of time to get stuff off the ground,” he said. Don’t hesitate to get in touch with a contractor on day one. Everyone else is getting in line, so don’t hesitate to get in line first. The same is true of volunteer groups.

And when the big one comes, and insurance kicks in then what’s at the top of his shopping list?

“All the rags, man.”

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DISTILLERY-LED SOLUTIONS TOWARDS SUSTAINABLE PROCESSES WRITTEN BY PAUL HUGHES, PH.D., DERRICK RISNER AND LISBETH GODDIK

t

he fermentation processes employed during the production of foods and drinks can be broadly classified as solid-state (SSF; low water activity) and aqueous-based (LSF; high water activity). Both are commercially important sectors, but for the purposes of this article we will restrict the discussion to some LSF systems.

For two popular product categories based on LSF — beer and wine — the focus is on achieving a consistent and high quality spent fermentation broth that is then finished and packaged. This is not a very romantic view of either of these venerable categories of drinks, but in the dispassionate terms of industrial fermentations it is, nonetheless, true. For both beer and wine production there is little opportunity to adjust product composition downwards after fermentation and maturation, beyond removal of fermentation organisms and using precipitants, adsorbents or enzymes to remove specific

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chemical entities such as proteins. For the remainder of this article we will consider two industries where the manufacture of the final products requires substantial removal of an aqueous by-product: distilled spirits (specifically whiskeys) and cheese.

Cheese and whiskey may seem like strange bedfellows (although a peated Scotch complements a strong blue cheese admirably), but a brief comparison of the two processes (Fig. 1) clearly shows that not only is there a requirement for aqueous by-products to be removed, but also implies that these streams are by no means “pure” water and usually require further processing prior to disposal.

In the case of Scotch malt whisky production, the aim is to recover the “essence” of a beer feed as an alcohol concentrate.

By way of example, if a beer feed of 9% ABV is distilled to a 71% ABV still-strength spirit then for every 100 gallons of feed (ie nine gallons of alcohol), only around 12 gallons of spirit are recovered if we assume alcohol recoveries in excess of 95%. This means that some 88 gallons of aqueous by-product remain. Similarly the production of cheese involves the coagulation of proteins and subsequent separation of whey. This whey, rich in calcium and proteins represents around 90% of the initial milk feed volume.

So, in both cases, the largest products by volume, if not in value, are their respective by-products.

As we implied earlier, the term “aqueous by-product” is rather disingenuous. Aqueous they may be, but compositionally they are challenging. If we first consider Scotch whisky production, the first point to bear in mind is that the feed for the still is not dissimilar from unhopped beer, known in Scotland as wash. Typically wash is at around 7 – 9% ABV and, as new make Scotch malt whisky spirit is made in simple pot stills, spirit strengths required for satisfactory maturation (> 63% ABV) are generally not achievable in one distillation step, so most often two stills are used: a wash still and a spirit still. It is the by-product from the wash still, called pot ale, which we will focus on here. This is typically 4.0 – 4.5% (w/v) solids content, made up of yeast, yeast residues, soluble protein and carbohydrates, with an appreciable level of copper. Its high

Biological Oxygen Demand (BOD) adds significant cost in many effluent treatment situations, so it is most commonly evaporated to form pot ale syrup (PAS) and sold as is or the PAS is co-pelletized with residual grains from upstream processes to form distillers’ dark grains (DDGS) that can be sold as cattle or pig feed.

More recently there have been great strides made in the conversion of by-products such as pot ale into energy sources, and as an example, more than 500 MW of electrical equivalent capacity are produced across the UK, as electricity or biogas from processes labeled anaerobic digestion (AD). Essentially cultures of microorganisms are used in static or continuous tanks to biodegrade byproducts. Advantages include little logistics costs for AD plants co-located at the distillery, and a potentially substantial reduction in energy costs.

This conversion though is not without difficulties, with protein degradation often generating nitrogen as ammonia and sulfur as hydrogen sulfide, both of which are toxic to many micro-organisms.

There is therefore a desire to remove this protein prior to AD. The separation and analysis of pot ale proteins reveals an amino acid profile that has potential as a protein ingredient for feeds. One example, which has been developed by Horizon Proteins, using their own patented technology to isolate purified proteins from pot ale at low cost, with the intention of using it as a supplement for soybean and fish meal proteins in aquaculture. If the feeding trials go well, the cost of the processing will be more than offset by the market value of the protein, with the additional benefit of a residual, de-proteinated feedstock that is more amenable to AD. That’s not quite the whole story though. The growth of aquaculture is limited largely by the availability of suitable proteins, with soy having anti-nutritional properties and fish meal protein, derived largely from anchovies, susceptible to oceanic phenomena off the Pacific coast of South America. So the introduction of another protein ingredient should help to stimulate further growth in aquaculture. The protein source does not necessarily need to be derived from malted barley, the raw material of Scotch malt whiskies. Other grain-derived processes (including both potable

FIGURE 1 Comparison of cheese- and whiskey-making processes. The black dotted box indicates the operations that generate up to 90% of the aqueous by-products from both processes.

RAW MATERIAL PREPARATION

CRUDE PRODUCT FORMATION

REMOVAL OF WATER-RICH BY-PRODUCTS

ELABORATION TO FINAL PRODUCT

WHISKEY

MILLING; STARCH AND PROTEIN HYDROLYSIS

FERMENTATION TO CREATE ETHANOL

DISTILLATION TO CONCENTRATE ETHANOL

DILUTION, MATURATION, FILTRATION

CHEESE

PASTEURIZATION, FERMENTATION, RENNET ADDITION

COAGULATION OF PROTEINS

WHEY REMOVAL

SALT, PRESS, RIPEN Fig. 1. Hughes et al.

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and fuel fermentation/distillation processes), using corn, wheat and rye may well yield additional protein feed ingredients.

Returning to cheese production, the whey co-product can be problematic for artisanal creameries. On a large scale, whey can be effectively processed using a series of filtration steps and diafiltration to produce whey protein concentrates from the retentate which is spray dried and used in food and human supplement production.

The lactose in the remaining permeate can be concentrated via crystallization then dried and refined for food manufacture.

More recently, vodkas and other ethanol streams made from whey have started to appear in the market, especially in New Zealand, the UK and the USA. There is even a cream gin produced in the UK, where the cream has been used as a botanical, ie before distillation. A production challenge is the fermentation of lactose into ethanol. Traditional fermenting yeasts, such as Saccharomyces cerevisiae, are unable to hydrolyze the lactose disaccharide, so commonly enzymes (lactases) are used to break down lactose into its component sugars glucose and galactose. However there are yeasts that can achieve the conversion of lactose into ethanol without recourse to added enzymes. In our laboratory, we have successfully cultured a yeast strain, Kluyveromyces marxianus, which converts the lactose within whey to ethanol.

The initial thinking was that this approach could be used to develop whey neutral spirits for the smaller scale creameries but, analogous with the pot ale story, it seems that there is value in using whey fermentation to remove lactose as it has a

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high biological oxygen demand (BOD) that can, certainly in some areas, substantially elevate effluent costs. So the business model becomes one of reduced costs of by-product disposal rather than its valorization. This is partly analogous to the situation for pot ale, where the original focus on a fish feed supplement has shifted somewhat to improving the quality of energy-yielding AD feed, although there are still compelling business arguments to produce and market the supplement protein feed.

We have discussed two examples of by-product treatment in which the distilled spirits industry can potentially play a role. We have seen that the production of a by-product that could be monetized both in terms of energy production and yielding a feed protein ingredient solves two challenges: cleaner AD feed and potentially a fish protein supplement that is more suitable to aquaculture diets. Also, the fermentation and distillation of creamery whey to reduce both BOD and COD could in turn result in lower effluent costs and is deliverable on a smaller scale. There is also potential application to produce whey-derived spirits, something that has been commercialized, and indeed this has been achieved to some extent. Both of these concepts are currently in-play but serve to indicate the possibilities that might be available to enhance sustainability and profitability of operations of all scales.

Paul Hughes, Ph.D. is assistant professor of food science and technology at Oregon State University in Corvallis, OR. For more information visit www.oregonstate.edu or call (541) 737-4595.

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CLIMBING the MOUNTAIN WOOD’S HIGH MOUNTAIN DISTILLERY FINDS SPACE TO GROW W R I T T E N BY MAR GAR ET T WAT ER BU RY /// PH OTOG RA PH ED BY A M A NDA J OY CH RI STENSEN

T

he DIY ethos runs deep in the craft spirits industry, but few distilleries take that value to heart quite as strongly as Wood’s High Mountain Distillery in Salida, Colorado. Step inside the distillery, housed in a converted auto body repair shop, and a dizzying array of equipment, experiments, contraptions, concoctions, and apparatus of every sort greet the eye.

“We’re working hard on the mad scientist vibe,” says co-founder PT Wood with a smile. He points to the “Frankenstein” still they use for all of their stripping runs and explains how he made it himself, all the way down to the parrot. The finish still, a 140-year-old 50-gallon German pot still named Ashley, came from the living room of the manager of a large ethanol plant in Louisville, but hadn’t been run in 50 years.

Undeterred, PT did “a little bit of repair on some of the connections,” bought some parts from Vendome, and fired it up for the first time in half a decade. It works great.

“It’s all by hand,” says PT. “It’s good. You become more intimate with the product that way.”

Brothers PT and Lee Wood founded Wood’s High Mountain Distillery in 2011 after dreaming about making whiskey together since the 1990s. Since then, they’ve become a leading voice in the industry, with PT serving as the Vice President of the ACSA board and working on changes in state legislation through the Colorado Distillers’ Guild.

As their distillery has grown, they’ve encountered many of the same challenges that face other distillers, big, small, craft, and mainstream alike: capacity, working capital, and space. So they’re working on an expansion—but in true Wood’s High Mountain style, they’re keeping it grassroots, financing their growth with bank loans and a friends-and-family capital raise rather than taking on big investor money. It’s all part of a long-term plan, which PT says is absolutely essential for craft distillers, especially now.

“It's a dangerous road as it is, and without a really well thought out, detailed, long term plan of exactly what the steps are, how you're going to get there, and how you're going to pay for it—and paying for it's the

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big part—you’re diving into this black hole,” says PT. “You're probably better off going to Vegas and putting all your money on red 31, because I think your odds are better... “ A big part of that expansion is bringing in bigger, higher-efficiency equipment, a necessary step for Wood’s High Mountain’s growth, but a nail-biter of a transition, since different still types and sizes produce different flavor profiles. “It’s a significant change, and one that keeps a guy up at night,” says PT. “But we’ll get the equipment, tune it, and dial it in. At this point I know exactly what our white dog should taste like going into the barrel, so we’ll mess with it until I can peg that down.”

While fearlessly pursuing growth is an essential part of being a successful distiller, so is a healthy dose of caution.

“You have to be somewhat of a visionary to produce a product that is good enough and different enough to survive in the marketplace and to own some shelf space,” says PT. “But then you also have to be a good enough businessman and enough of a skeptic of your own skills to put together a business that will survive, and will survive potentially some hard times.” He’s particularly concerned about the potential of the European Union putting sanctions on American spirits which might cause big producers to flood the domestic market. “All of a sudden, a $10 bottle of Jack compared to your $50 bottle of whatever becomes an even harder sell than it is right now.”

One of the ways Wood’s High Mountain counters that risk is through innovation.

“From our point of view, one of the reasons we’re going to exist and be out there in the marketplace is because we’re doing something that nobody else is doing,” says PT. Rather than adherence to tradition, the principle that guides Wood’s High Mountain Distillery is something different: Is this something PT and Lee want to drink?

That philosophy means of the distillery’s products, white and aged spirits alike, have a distinctive twist that sets them apart from other producers. Wood’s Tenderfoot Whiskey, an American malt whiskey, is made with three different kinds of malted barley as well as malted rye and malted wheat. Their Alpine Rye Whiskey is made of WWW.ARTISANSPIRITMAG.COM

73% malted rye and 27% specialty barley malts, adding a distinctive toasty quality to the rye spice that makes the spirit unique, and underscores its connection to Tenderfoot.

Gin presents another avenue for exploration. Wood’s Mountain Hopped Gin uses Cascade hops as one of its botanicals, riffing on Colorado’s longstanding status as a craft beer mecca and adding a citrusy, resinous note. Treeline Barrel Rested Gin has a byzantine production process, involving three different aging regimes,

with some components spending up to two years in the cask. “What a nightmare, but it’s delicious,” laughs PT. A brand-new product, Blue Yonder Gin, relies on butterfly pea flowers to add a soft floral note (no “grandma perfume” flavor here, says PT) and also impart a brilliant indigo color. Even better, thanks to the magic of anthocyanin chemistry, that color is pH reactive. Add some acid—say, a healthy pour of white vermouth—and the spirit transforms into a deep violet “It really dresses up your martinis and makes

it super sexy,” says PT. “It’s fun for the bartender, and the consumer.”

Still, there are some lines that PT won’t cross. “I was reading about somebody aging Scotch in herring barrels,” says PT. Then he laughs and shakes his head. The odds seem good the world won’t be seeing any fish-finished whiskeys from Wood’s High Mountain anytime soon.

Wood’s High Mountain Distillery is located in Salida, CO. For more information visit woodsdistillery.com or call (719) 207-4315.

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2017

SPIRITS INDUSTRY MERGERS & ACQUISITION Year in Review

WRITTEN BY KEVIN O’BRIEN

5.9%

Whiskey

Vodka

Rum

Tequila 13.2%

M

10.1% HOLLYWOOD BLOCKBUSTER – STRONG -8.5% M&A ACTIVITY IN 2017

categories as craft beer and premium wines continue to outpace lower priced offerings.

In an effort by spirits companies to capitalize on these growth trends, there was an abundance of M&A activity in 2017.

Total

>$25

$10 - $15

Ultra

1.6%

Mid

Value

<$10

Premium

$15 - $25

4.5% ergers and acquisition activity in the spirits industry remained robust in 2017. Buoyed by healthy employment figures, low interest rates and record stock market performance, 2017 was the eighth consecutive year of economic expansion in the U.S. Against this favorable macro-economic backdrop, the spirits industry exhibited positive growth trends for the year. For the 52-week period ended October 7, 2017, Nielsen market data showed overall spirits dollar volume growth of 1.6%. However, the more telling storyline was the growth in the Premium ($15-$25 per 750ml) and Ultra (>$25 per 750ml) price categories. Year-over-year dollar growth for the Premium and Ultra categories was 4.5% and 5.9%, respectively (see Figure 1). This trend towards “premiumization” is consistent -2.2% with other beverage alcohol

FIGURE 1

Nielsen Dollar Growth

by Pricing Category (52-weeks ended October 7, 2017)

-4.6%

Source: Nielsen Food+Liquor

There were several well publicized transactions in the last year with one deal in particular garnering substantial media coverage – Diageo’s acquisition of Casamigos. Aside from being-4.8% co-founded by international celebrity George Clooney, this transaction turned heads with a3.3% reported purchase price approaching $1 billion.

Squarely positioned as a lifestyle focused, luxury priced tequila, Casamigos was reportedly on pace to sell 170,000 cases in 2017. By all metrics, this acquisition set a new bar for the price -0.2%While an extreme example, this paid relative to case production. transaction is indicative of where large producers were focusing their M&A strategy in 2017 — luxury priced products.

The year began with the announcement that Pernod Ricard had closed on a majority stake investment-3.6% in the acclaimed West Virginia-based bourbon producer Smooth Ambler. On the heels of this transaction it was announced that Remy Cointreau finalized their first foray into the domestic whiskey space with -7.7% the acquisition of single malt producer Westland Distillery in Seattle. Additional new entrants into the domestic whiskey space included SPI Group with their acquisition of highly sought after Kentucky Owl Bourbon, as well as French luxury conglomerate LVMH purchasing Woodinville Whiskey.

After making a splash in 2016 with the acquisition of whiskey producer High West, Constellation continued to fortify its domestic whiskey portfolio with a minority investment in Virginiabased Catoctin Creek Distillery. Deutsch Family Wine & Spirits

RNDC

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69 13.6%

Southern Glazer’s

FIGURE 2

Notable Spirits Industry Transactions Closed in 2017

TARGET

ACQUIRER

Smooth Ambler

Pernod Ricard

CATEGORY motivation

Luxury American Whiskey

Category Expansion

Luxury Gin

Sipsmith

Beam Suntory

Westland Distillery

Rémy Cointreau

East Tennessee Distillery Facility

Sazerac

Catoctin Creek Distilling

Constellation Brands

Luxury American Whiskey

Kentucky Owl Bourbon

SPI Group

Luxury American Whiskey

Bulldog Gin

Gruppo Campari

Bittermens

Sazerac

Tuthilltown Spirits

William Grant & Sons

Del Maguey

Pernod Ricard

Casamigos

Diageo

Teeling Whiskey Co.

Bacardi

Luxury Irish Whiskey

Woodinville Whiskey

LVMH

Luxury American Whiskey

Carolans and Irish Mist

Heaven Hills

Premium Irish Liqueur

Bib & Tuckers and Masterson's

Deutsch Family Wine & Spirits

Luxury American Whiskey

Germain-Robin

E&J Gallo

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Luxury Expansion

Luxury Single Malt Whiskey Category Expansion

Facility

Production

Luxury Expansion

Category Expansion

Premium Gin

Category Expansion

Premium Bitters

Category Expansion

Facility

Production

Luxury Mezcal

Category Expansion

Luxury Tequila

Luxury Expansion

Category Expansion

Category Expansion

Category Expansion

Luxury Expansion

Luxury Brandy

Luxury Expansion

added to its existing whiskey portfolio with the acquisitions of luxury priced Bib & Tucker and Masterson’s brands. The past year also saw investments in distilleries to help support growth with Sazerac’s purchase of a distillery in East Tennessee and William Grant & Sons acquisition of the Tuthilltown Distillery, which produces its acclaimed Hudson Whiskey brand.

Aside from domestic whiskey, there were several notable brand acquisitions in 2017. Reflecting the increasing popularity of the tequila category, Pernod Ricard acquired Del Maguey, the leading mezcal brand in the U.S. Mezcal, a small sub-category of tequila, was one of the fastest growing spirits categories in the past year. Premium and Ultra priced gin also attracted attention in 2017. Beam Suntory expanded into the Ultra gin category acquiring London-based Sipsmith, while Gruppo Campari purchased the remaining stake of Bulldog Gin after making a minority investment several years earlier. Other transactions of note involving large spirits companies included Bacardi’s minority investment in rapidly growing Irish whiskey brand Teeling Whiskey Co., E&J Gallo betting on luxury brandy with the acquisition of Germain-Robin, Heaven Hill diversifying its portfolio with the additions of Carolans and Irish Mist brands, and Sazerac’s strategic investment in Bittermens, a Portlandbased premium bitters.

The underlying motivation for the acquisition of these desirable spirits brands in 2017 was to fill “white space” voids in the acquirers’ portfolios (Figure 2). The white space can either consist of not having a brand in a specific product category (e.g., tequila or gin), or not having a brand at a certain price tier within a product category (e.g., Ultra-priced whiskey or Premium-priced rum). With this understanding, it is important to acknowledge the factors driving the increasing number of transactions over the last few years. These factors include consumer demand for Premium and Ultra-priced products, a rapidly consolidating distributor and retailer network, and increased pressure from “upstart” craft spirits producers.

PREMIUMIZATION TREND — WHISKEY AND TEQUILA REMAIN HOT

As previously discussed, the Premium and Ultra price categories were the primary drivers of growth in the spirits industry over the past year. Diving deeper into the data reveals that tequila, gin and whiskey were the specific categories that led the growth of higher-priced spirits offerings. For the 52-week period ending October 7, 2017, Nielsen market data showed Ultra-priced tequila, gin and whiskey dollar growth of 13.2%, 12.9% and 10.1%, respectively (Figure 3). Reflecting these trends, there were several acquisitions within these specific product categories in 2017. Conversely, vodka continued its slide with a particular negative trend in the Ultra price segment.

Consumers are demanding luxury products to the detriment

WWW.ART ISANSPI RI TMAG.CO M

5.9%

Whiskey

Tequila

Gin

All Spirits

12.9%

10.1% -8.5% Vodka

Rum

Tequila

Gin

13.2% -4.8%

All Spirits 5.9%

12.9%

3.3%

>$25

1.6% -8.5%

Total

Ultra

-2.2%

Rum

13.2%

-0.2%

-0.1% 5.9%

$10 - $15

Total Mid

<$10

Value >$25

Ultra

Premium

$15 - $25

Premium

$15 - $25

of Value and Mid-priced offerings. In order to satisfy the demands of these consumers, retailers are reshuffling their shelf4.5% sets to feature higher priced brands. Suppliers without established Premium or Ultra brands face limited options as they seek to remain relevant.

5.9%They can attempt to raise prices Whiskey on select brands in their portfolio, launch a new brand, or acquire an existing brand. Anecdotal evidence indicates that the market is less than 4.5% favorable to those brands increasing 10.1% 1.6% price without the ability to deliver on value. Introducing a new label into the market has proven successful for some suppliers, but can be prohibitive for many due to the substantial sales and marketing costs and timeframe required for a successful roll-out.

Given the difficulty and 3.3% risk of the first1.6% two options, the acquisition of an established brand becomes an enticing alternative.

Vodka

FIGURE 3

-4.8%

Nielsen Dollar Growth by Category All Prices vs.

Luxury Priced (52-weeks ended October 7, 2017)

-3.6%

1.6% -7.7% -0.2%

Source: Nielsen Food+Liquor

-0.1%

NEW WORLD ORDER — WHOLESALER CONSOLIDATION

of the U.S. wine and spirits market by dollar volume. Following this announcement, Southern Wine & Spirits and Glazer’s, two -3.6% of the largest wine and spirits wholesalers, surprised the industry The past few years have seen several significant mergers between by announcing their intent to combine operations. The Southern some of the country’s largest wholesalers. As the distribution funnel Glazer’s merger provided the wholesaler with a dominant, nearcontinues to narrow due to the growing number -7.7% of producers and national footprint and combined revenue of over $15 billion.

-4.6% dwindling amount of independent wholesalers and retailers, spirits In response to the Southern Glazer’s merger, it was recently RNDC companies are finding it increasingly difficult to secure access to announced that Breakthru 13.6% Beverage and RNDC intend to merge the marketplace for their products. In response to a number of in 2018.

Assuming this transaction closes, these combinations Southern Glazer’s large grocery store mergers, including Safeway-Albertsons and may forever change the wholesaler landscape, as two 31.8% Royal Ahold-Delhaize, wholesalers experienced their entities are forecasted to control over 55% of the Breakthru own wave of M&A activity.

U.S. wine and 10.0% spirits market (Figure 4). As At the end 2015, it was announced access to retailers becomes more limited, that Charmer Sunbelt Group and Wirtz and competition among wholesalers Beverage Group were merging to increases exponentially, many in the RNDC create Breakthru Beverage. The industry foresee additional M&A 13.6% new group has coverage in over Remaining Distributorsactivity at the wholesaler level Southern Glazer’s 44.6% 16 markets and combined in order to address competition 31.8% revenue of over $5 billion, challenges posed by the newly Breakthru representing almost 10% established distributor duopoly.

10.0% The impact of these wholesaler mergers on large FIGURE 4 spirits companies is substantial.

Wine & Spirits Distributor Market Share – 2017 Distributors now have significant leverage over their supplier Remaining Distributors Source: partners. This is of particular 44.6% Shanken Impact Spirits Report 2017 WWW.ART ISANSP IRITMAG.COM

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concern for the spirits industry in that the largest suppliers are less concentrated than their beer and wine competitors. In 2016, the top-3 spirits suppliers accounted for approximately 40% of the U.S. market. In comparison, the beer industry is the most “top-heavy” with the top-3 suppliers controlling approximately 78% of the market and the top-3 largest wine suppliers control about 51% of the market. Due to the fractured nature of the spirits industry, these large suppliers have less influence with their distributors and, therefore, must find ways to keep their distributors focused on their portfolios.

In general, larger retailers prefer to work with larger wholesalers in order to better integrate and simplify their supply chain and forecast demand. Additionally, retailers continue to rationalize their product SKU selections in order to optimize use of shelf space. Distillers with products that do not meet specified margin or sales velocity rates are ever more susceptible to losing placements. Wholesalers are likely to respond by focusing on those products that meet retailer expectations to the detriment of those that do not. Add these challenges to the steady increase in private label brands and continued growth of craft beer and premium wine, and it becomes clear that there are major headwinds facing suppliers in the threetier wholesale system. As a result, larger suppliers will find it necessary to continue to add strong brands to their portfolios in order to maintain relevance and mindshare with their wholesale partners.

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THE UPSTARTS – RISE OF CRAFT SPIRITS PRODUCERS

The increased demand for Premium and Ultra-priced products, as well as consumers’ affinity to “buy local,” has allowed craft spirits producers to capitalize on the growth of the spirits industry over the last several years. The Craft Spirits Data Project Report, published in October 2017, provides substantial insight into the growth of the craft spirits industry. For context's sake, the publication defines a craft producer as those whose distilled spirits are produced in the U.S., have not removed more than 750,000 proof gallons from bond, market themselves as craft, and are not openly controlled by a large supplier.

Using this definition, the Craft Spirits Data Project Report shows that a number of craft spirit producers grew from 280 in 2011 to 1,439 in 2016, an increase of over 400%. With price points that tend to fall in the Premium to Ultra price range, craft spirits are clearly a contributor to the eroding market share of larger suppliers. As evidence, craft spirits retail sales by dollar value have increased from $800 million in 2011 to $3 billion in 2016, an increase of approximately 275% - far outpacing the growth of the overall spirits industry. Additionally, in 2016 craft spirits sales represented almost 4% of the total U.S. spirits industry by value, a far cry from the approximately 1% of value share in 2011.

While the growth of the craft spirits industry is encouraging, it is also becoming more difficult to sustain. With the noted increase in power

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of the consolidating distributor network, it is now exponentially more difficult for craft producers to get access to the market. There is continued evidence of craft producers attempting to expand outside of their home markets with limited success. Without “boots on the ground”, as well as the full support of distributor partners, expanding outside of core markets is an uphill battle. Due to these challenges, many acclaimed, luxury priced brands have sought, and will continue to seek, strategic partners that will provide the necessary muscle to navigate the rough seas of distribution.

The past few years have seen large suppliers either acquire craft producers outright, or make minority investments that are accompanied by sales and marketing agreements. Minority investments have been viewed as being mutually beneficial for both parties in that large suppliers are able to fill a “white space” in their portfolio, while the craft producer is able to leverage the distribution prowess of their partner to grow its brand. As the amount of entrants into the craft spirits industry continues to grow, it is expected that more of these types of minority investments will occur in the future.

CONCLUSION – WILL MARKET TRENDS CONTINUE IN 2018?

Barring any negative swings in the U.S. economy, the industry growth trends in 2017 are likely to carry forward into 2018 since there does not appear to be any slowdown in the consumer’s seemingly insatiable appetite for higher quality spirits. This push toward premiumization will likely translate into continued acquisitions of Premium and Ultra-priced spirits brands. As the proliferation of higher quality spirits brands grows, the pressing issue of concern for independently owned producers will be access to the retail marketplace. These concerns are bound to spur further M&A sales activity in 2018, as well as the consummation of sales and marketing alliances with larger spirits companies that can secure a sales footprint for independent brands.

Kevin O’Brien is a Sr. Vice President with Zepponi & Company, a leading beverage alcohol M&A firm. A certified public accountant (CPA), Kevin has presented on various accounting and finance related topics for the American Distilling Institute Conference, Craft Brewers Conference, Oregon Wine Symposium, and CiderCon.

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MIDWEST SPIRIT 45th PARALLEL BUILDS A THRIVING DISTILLERY IN THE AMERICAN HEARTLAND W R I TT E N BY M A R GA R E TT WAT E R B U RY P H O T O G R A P H Y BY A M A N DA J OY C H R I S T E N S E N

I

n Field of Dreams, a voice from the cornfield spoke to Kevin Costner, promising “if you build it, he will come.”

There’s something in the phrase that speaks to the American psyche, our deeply felt belief that somewhere, in all that open emptiness, among the unbroken fields of crops and plowed earth and endless sky, there’s opportunity to be had—and all it requires is a leap of faith.

Paul Werni followed that call. When he first dreamed up 45th Parallel Distillery in 2004, craft distilling was in its infancy. Nobody believed that you could make great vodka in New Richmond, Wisconsin, a tiny agricultural town just on the other side of the state line from Minneapolis. The three acres that would become his production facility, tasting room, and aging warehouses were home to nothing more intoxicating than the eerie swish of corn stalks rubbing against one another in the Great Plains wind. It was so isolated, the city had to put in a new road to reach the spot where 45th Parallel’s building would be built. “When we first started, there was nothing,” says Paul. “We would sit outside on lawn chairs sipping vodka and looking out at the field. Every building you can see today was not there.”

In the beginning, Paul founded 45th Parallel to make vodka.

He loved the creative aspects of his previous career in landscape construction, but as time passed, he started to pine for a less physically demanding job, and his wife worried he was working too much. In the mid-2000s, craft distilling was still a very small niche, but momentum was starting to build. Picking up a bottle of Tito’s Vodka at his local liquor store planted the seed. The Midwest grows the majority of the nation’s grains. Spirits are made from grain. Why wasn’t anybody making spirits in Wisconsin?

Paul poured himself into research, taking classes, reading books, and tasting products from first-wave distillers like GermainWWW.ARTISANSPIRITMAG.COM

Robin. He broached the topic with his wife, and the next day, she brought home a book about vodka herself. Approval secured, Paul sold his share of his business to his partner and used the profits to launch 45th Parallel Distilling in partnership with his college buddy, Scott Davis.

Finding a space was the next challenge. Initially, Paul wanted to open in Minnesota, but the annual permit fee at that time was $30,000, a deal breaker for any small distillery. So he started looking at western Wisconsin, an area full of small, agricultural communities and—increasingly—booming Minneapolis suburbs.

The first few towns he approached weren’t enthusiastic, but New Richmond welcomed the idea. “They really wanted a new business here,” says Paul. “My first acre was $500, and they even put in the road for us.”

45th Parallel knew from the beginning that it wanted to source local grain, but it took a bit of trial and error to find the right supplier relationship. First, Paul worked with a small local mill, but wasn’t satisfied with the grist he was receiving. So he went to a larger regional mill, but still struggled with inconsistencies, occasionally discovering feed pellets mixed in with his grist. Finally, he called the mills to ask for a recommendation for an individual farmer to work with directly. Both recommended the same farmer: Arlen Strate, owner of Rusmar Farms, just eight miles from the distillery.

In the beginning, Arlen wasn’t sure what to make of the idea. The first time Paul asked, Arlen said no. “I think he felt it would disrupt his routine,” says Paul. “And he thought it was odd we’d want to make vodka around here. He didn’t think it was going to work.”

Undeterred, Paul tried again the next week, and finally got him to agree to a trial run—only Paul would have to come out and pick up the grain every week. Now, Rusmar Farms delivers to 45th Parallel

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two or three times a week.

Vodka was the first focus for 45th Parallel, but like most craft distilleries, changes in the spirits market inspired the team to expand in other directions. “This industry is changing so fast right now,” says Paul. “I could sell vodka everywhere I wanted when we opened our doors, but now every part of the state, and all the states around us, they have their own little distilleries and they’re all making vodka. So it’s hard to move your vodka out of your region.”

Now, he says 90% of the production team’s time is spent making whiskey, including bourbon whiskey, wheat whiskey, and rye whiskey, all using locally sourced grains and aged onsite in full-sized casks for at least four years. “Vodka was our flagship, and we do well with it, but I would say rye is what people really seem to like right now,” says Paul. However, he’s starting to see some of that same saturation dynamic from vodka begin to impact whiskey.

“A couple of years ago, I was getting calls

from everywhere asking for our bourbon,” says Paul. “We didn’t have enough for our own market, so we’d say no. Now, a lot of states are coming up with their own bourbons. You’re going to be selling in your own region unless you have some marketing dollars to go beyond your region.

Any new distillery is going to have to think about that.”

Another major revenue stream for 45th Parallel is contract distilling, especially for startup brands that want to get a head start

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maturing their whiskey while they navigate the permitting process. Today, it represents almost half of their revenue, huge growth from even two years ago. “Some of our whiskeys were starting to win awards,” says Paul, “so we started getting calls: ‘Hey, could you make this for us?’ Now, we’re at complete capacity.”

45th Parallel isn’t the only thing that’s growing. The once-sleepy town of New Richmond has tripled in size since the distillery was founded, and the empty

fields around its headquarters are now dotted with buildings. This year marks a decade since 45th Parallel sold its very first bottle, but Paul isn’t taking any time out to celebrate. The team is already contemplating its next expansion, which will include the addition of an event space to host weddings and other gatherings for the region’s growing population.

“You almost have to become a destination location now,” says Paul. “Look at the wineries, how much they focus on being

destination locations, how breweries are focusing on tap rooms. That’s where they’re making their money.” Paul’s wife’s dream of a quieter life, with less work and more time spent at home? So much for that. “I probably work more now than I did then!” laughs Paul.

45th Parallel Distillery is located in New Richmond, Wisconsin. For more information visit www.45thparalleldistillery.com or call (715) 246-0565.

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W E WE A RE ARE H HERE ERE DIVERSITY WITHIN THE DISTILLING INDUSTRY WRITTEN BY MARGARETT WATERBURY

obody compiles official statistics about the demographics of the American craft distilling industry, but anybody who’s attended a distilling conference or visited more than a handful of craft distilleries has likely noticed a lot of white, male faces.

As the nation grapples with profound questions related to how women are treated in the workplace, how people of color are denied opportunities that others take for granted, and how the contributions of both groups to American cultural life are minimized, the spirits industry has done some soulsearching of its own. In 2016, the world was first introduced to Nearest Green, the black slave who originally taught Jack Daniel to distill. Earlier this year, Tales of the Cocktail was convulsed by controversy stemming from a blackface incident involving its founders.

The irony is that women and people of color have been part of the American spirits industry for as long as the industry has existed. Among the early American settlers, it was women, not men, who took on most of the distilling duties at home, and it was women pioneers like Marjorie Samuelson at Maker’s Mark who helped shape the contemporary bourbon industry. Enslaved Africans made whiskey at George Washington’s distillery in Mount Vernon and taught some of the founding fathers of the bourbon industry how to run a still.

From a global perspective, distillers of color are making some of the most successful, popular, and delicious spirits in the world, from boutique mezcals, to Jamaican rum, to some of the most coveted malt whisky on the planet.

The American craft spirits industry is still in its infancy, which means it has the opportunity—and responsibility— to set a precedent that will influence generations to come. It’s a big task, but it’s one that many producers are taking seriously. There’s a lot that the craft spirits industry is doing right—and, like most industries, there’s room for improvement.

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THE STARTUP MENTALITY IS AN OPEN DOOR For everybody, one of the attractions of the craft spirits industry is the chance to cover uncharted territory and make your own path.

That DIY dynamic can feel freeing to people who have had a hard time cracking into an established industry that favors one kind of person.

Nicole Austin is a spirits industry consultant who’s currently working as the commissioning engineer for the new Tullamore D.E.W. distillery, but her career began in the craft world when she joined King’s County Distillery in 2010 as its master blender. When I asked her about her experience as a woman in distilling, she said the question is one of her least favorite to answer. “Every time people publish an article saying they just discovered women in the distilling industry, it’s insulting,” says Nicole. “Not only are we here, we’re leading the industry.”

When she started at King’s County, Nicole says the uncharted territory of craft distilling made the industry feel welcoming. “There was no ceiling to break through. The industry was being created, and so you got to decide how it was created. There was nobody in front of you to tell you no. I didn’t have to defeat a guy. I made the organization, so there was nobody to take it from. There’s no entrenched patriarchy,” she says. “You’re already breaking rules by doing it at all.”

Chad Robinson started at Catoctin Creek in 2011 as employee number four. His original role as a brand ambassador has since expanded to include sales, marketing, and distribution. “Now I just call myself ‘Chad from Catoctin Creek,’” he laughs. “I do a lot of things.”

Chad says he spent high school and college being one of just a few black people in the room, so he wasn’t going to let craft spirits’ whiteness stop him from pursuing the career he wanted. “I always recognize it, but it wasn’t going to phase me in a way where it would hinder my success,” says Chad. “I didn’t think of it as any greater challenge than navigating the world as a person of color normally.”

“For distillation and spirits sales, I find it’s typically reasonably warm and welcoming and accepting,” says Chad. “I’ve definitely had folks say it’s rare you see a person of color in your role, I’ve had people remark about it to me, but it’s never a “Are you sure you should be doing this?” kind of remark.

It’s more like “I’m noticing this.”

Roy Aguilar’s family has lived in Sandia, Texas, for four generations. So when he started his distillery, South Texas Distillery, in 2016, he wanted to feature ingredients from the local landscape. One of his flagship products is a vodka distilled from mesquite beans, the fruit of the tree better known for providing excellent fuel for smokers and barbecues.

Roy says he hasn’t felt any bias in the craft spirits industry—in fact, he thinks his Latino heritage has been a boon for his company, because it helps him connect with his Texas audience. “There’s a lot of Texas pride, and people are so supportive of local,” says Roy. At the same time, he’s wondered about connecting with other Latino distillers.

“I never hear of Latino distillers in the United States. In Mexico and other parts of Central America there are lots, but you don’t hear about us too much in the United States. To this day, I don’t have an answer. I just don’t know how many of us there are.”

CHALLENGES AND ISSUES Women clearly comprise an important and growing share of the craft spirits industry, from marketing and front-of-house positions to technical and leadership roles. Yet their visibility is often diminished, leading to those breathless stories in industry and national press that “discover” female distillers for the first time.

“Visibility for women distillers is a big problem,” says Maggie Campbell, vice president and head distiller at Privateer Rum and current board member of the American Craft Spirits Association (ACSA). “I had been drinking Appleton Rum for forever, and I had no clue that it was run by a woman of color [Joy Spence]. Or Bowmore’s Rachel Barrie? I never heard her name.” She says visibility is important because it shows aspiring distillers the industry will welcome them. “If we open

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our doors to everyone in every walk of life, we will end up with the best distillers,” says Maggie. “Talent can come from anywhere.”

A lack of visibility is one facet of a more pervasive gender-based workplace bias that some women report experiencing in the craft spirits industry. Maggie says she was discouraged from applying for head distilling jobs because she’d heard the owners would prefer to work with men.

The feeling of being unwanted began to take its toll, and when Privateer offered her the head distilling job in 2012, she worried she didn’t have the chops. But support from other distillers helped her make the leap, and when she started work, she found she had the skills she needed after all. “I hadn’t realized that I had let other people get to me for so long, people talking over me at meetings, not listening to my ideas,” says Maggie. “When I got here and I could just do my job without having to fight to be heard, it was amazing how fast success came to our company.”

Unfortunately, explicit bias and inappropriate behavior by individuals does continue to impact women and people of color in the spirits industry. At a consumer spirits tasting event in San Francisco a few years back, Maggie says an intoxicated man grabbed her while she was talking to friends. “It was humiliating and embarrassing. It’s not the worst thing that ever happened to me, it’s not career ending, but all those things take up so much space in your brain that is not you doing your job,” says Maggie.

Chad says he, too, has had some negative experiences based on his race, “but not so much that I get put off from the work. For me, it’s about making the brand successful.

If somebody is not going to see the product because they’re looking at me, that’s not good.”

Another major issue is access to capital.

Craft distilling start-up expenses are high, operational costs are significant, and the business model, in many ways, remains unproven. Barriers to accessing financing are major hurdles for people of color and women entering the industry as business owners.

“If I were to point to a pinch point, it’s

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money and fundraising, which is so much more available to white men,” says Nicole Austin, “If you’re trying to find money from private investors, they are usually in the types of industries that are very patriarchal, like banking and law, and they have a tendency to give it to people who remind them of them.”

Chad thinks the same dynamics apply to people of color. “If you need a half million dollars for equipment alone—never mind the other pieces you need—that’s going to be the first obstacle that a lot of people of color will have trouble clearing, whether it’s life circumstances or opportunities that came to others and not to you.”

Family leave is often a casualty of the bootstrapped startup economy, and its absence can limit women’s tenure at a distillery. Privateer Rum offers family leave for women and men, but Maggie says she’s not sure how many other distilleries do the same. “It’s hard for a small business to do,” says Maggie. “But in distilling, when we talk about aging barrels and stock, it’s all about the long term, so our policies are geared towards keeping our employees. If somebody leaves in less than three years, it’s not very useful to us.”

TIMES ARE CHANGING At Du Nord distillery in Minneapolis, Minnesota, co-owner and distiller Chris Montana is also on the board of the ACSA. He and his wife, Shanelle Montana, always explicitly encourage women and people of color to apply for jobs at the distillery in their openings postings, but they say they’ve noticed a skill gap, particularly among distillers of color. “I don’t know any other black guys in my personal circle of friends who are super hyped on brewing or distilling,” says Chris. That means some of his hires are brand-new to the industry, so Du Nord needs to invest more time and money in training, education, and coaching to get new employees up to speed.

Chris says he’d like to see an industrysponsored internship program for aspiring distillers of color looking to break into the industry and gain skills. Applicants who are accepted would be placed in working distilleries for six to eight months, with their

salary jointly paid for by the host distillery and the ACSA. “They gain skills, and then they could join that company they’re in— but if they don’t, they’re marketable now,” says Chris. He says the program could not only help bring more people of color into craft spirits, but also address craft spirits’ widening ratio of skilled distillers to new companies. “There’s a shortage of people who know what the hell they’re doing,” he laughs. “And we’re creating people who know what the hell they’re doing.”

Relatedly, Chad is encouraged by a new trend he’s observed: spirits producers marketing to black consumers in a more sophisticated way. Recently, he attended the House of Remy marketing event, which included a seminar about the role of blending in Cognac production. “It was really good to see that kind of thing, because there were lots of people of color there, and this is the kind of thing we want to see more of. Everybody in the room was fascinated, super engaged, and happy to hear about blending. But so often, that’s not how Cognac is marketed to people of color. Brands do a lot of club and event promotions with models, not a brand ambassador talking the product the same way they would with, say, Ardbeg,” says Chad.

And at Privateer Rum, Maggie says she’s encouraged to see more men stepping up to intervene in sexism-in-action. “... I am seeing behavior change a lot in the last five to ten years. A lot of men in our community are taking great leadership positions in this.” She’s also seeing more women entering the industry every day, including as owners and founders.

Sometimes, progress is measured in little steps. Recently, Maggie had a Facebook exchange with a group of other woman distillers about the best pants to wear in the distillery—not exactly a radical topic. “But that was a first!” she says. “We had a technical workwear discussion as professional women that had nothing to do with how hard it was to be a woman or something awful that happened to us. The industry has changed a lot, and I’m so grateful—but we still have a ways to go.”

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WITHERSPOON DISTILLERY WRITTEN BY AMBER G. CHRISTENSEN-SMITH

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t’s difficult to imagine how an old Piggly Wiggly grocery chain store, inhabited by squatters for nearly a decade, could be turned into an absolutely unrecognizable whiskey and bourbon distillery.

Natasha DeHart, co-founder of Witherspoon Distillery, takes us through the space explaining, “It was completely abandoned.” The now gutted and overhauled craft distillery resides in a once overlooked neighborhood that is now thriving and growing…and the investment is paying off.

Witherspoon Distillery, located in Lewisville, Texas, is quite a find for this—until

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recently—overlooked area of downtown where people may have shied away from previously. In 2012, Quentin Witherspoon, founder, and the DeHart’s joined together to bring a dream to fruition.

“My husband and I are homebrewers, and Quentin was making moonshine in his garage. They were in the Marines together and it happened to be that we all moved back to the area at the same time; a mutual Marine friend came to visit and linked the two of them up,” shares Natasha. “So we just started talking about opening a distillery and it just happened.

PHOTOGRAPHED BY AMANDA JOY CHRISTENSEN

It is definitely bigger and better than we dreamed.”

The distillery space swoons with towering barrels and the whir of machinery as you walk through. People are busy, in the mental state of creating and crafting. “We did a lot of background work. We originally opened at another plant that was much more modest,” explains Quentin. The space they are in now was a once light industrial section and the space was much bigger and rent was more reasonable than other downtown areas.

With their move into the local area, Witherspoon Distillery’s growth has influenced the

businesses in Old Town for the better. Quentin goes on to say, “The city has been extremely accommodating throughout the entire process; we bring in a lot of business for the city.”

There weren’t restaurants in the area and it was a straight up gamble to choose the location without the typical traffic a distillery might want— but the way Witherspoon has encouraged growth by not competing with restaurants and rather working with them for success in a symbiotic way has created a unique and prosperous business. Natasha and the rest of the gang couldn’t be happier with the

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expansion of the business area: “It’s a lot more touristy now.”

That growth is taking off in the area with more and more people investing in real estate in Old Town.

In fact, growth was even faster than they anticipated early on.

Natasha looked into garnering more traffic for their space in the fall of 2013 by offering up a Groupon. As she says, “All of a sudden it blew up.”

Quentin adds to this with his own observations: “We had to limit the amount of people coming through. We now have over 20,000 people yearly. We have seven tours Friday and Saturday.” Eventually, they found they had to hire help. As Natasha puts it, “It went from no business to a lot of business overnight.”

With all the hard work and effort to develop relationships with other businesses, Witherspoon has found its niche in the neighborhood and an abundance of respect and loyalty. They host local charity events, honor the older businesses in the area with a night of their own, and use their event space and garden area for all sorts of events. “This has been such a cool journey—to see how it’s changed the community has been so much fun for us, ” Natasha says.

While all the expansion can lead to new ideas and projects, Natasha stays targeted on the distilleries primary goal: “We focus on the booze.”

This laser focus is apparent as Natasha leads us through the barrel room. “In my mind at least, here’s where the magic happens.

The barrels make it delicious.

This is where nature takes over.”

She is excited about the process and the products that come out of that process. She explains, “It gets to about 120 degrees in here,

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which encourages the whiskey to age faster.” They are constantly collecting data with sensors to see where it’s aging the quickest and to know where and when to move the barrels around. Soon, their barrel room will reach capacity and they will need to expand to a new space not only for the storage, but for more production due to demand. The data comes in handy: “With our calculations it will be completely full by the end of the year.”

The continued growth is also due in part to favorable law changes in the state. Prior to 2013, they did not have as much freedom regarding pouring, sampling, and selling. Shortly after they started, they gained the ability to pour samples for guests and sell bottles to customers.

While all sodas, cordials, bitters, and liquors used in house must be homemade—which can sound overwhelming—that turned out to be good news. Natasha explains, “What we thought would be a hinderance, has turned out to be something amazing and it makes the cocktails so much better.”

Witherspoon now has a bar and an in house mixologist that celebrate all their homemade concoctions.

It has been a serendipitous journey for the folks at Witherspoon. Their hard work has paid off and they are able to chase their dream full throttle.

Focus, passion, and community have given them the ability to channel their success. “If you’re passionate about it and serious, go for it. I wouldn’t discourage anyone. We’re having a blast.”

Witherspoon Distillery is located in Lewisville, TX. For more information visit www.witherspoondistillery.com or call (214) 814-0545.

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BELTWAY BANTER with TOM LALLA Interview between Tom Lalla & Robert Lehrman

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PROVIDED BY TOM LALLA

hat follows is an email interview between Tom Lalla and Robert Lehrman.

Tom was the top lawyer at Pernod Ricard USA from 1991 to 2013 (Senior Vice President and General Counsel). Pernod has a wide range of spirits and wine products throughout the world, from Chivas to Absolut to Martell. Before that he was a partner at Buchman & O’Brien (one of the earliest and busiest law firms devoted to alcohol beverage law) in New York for about 10 years. After law school and before entering the alcohol beverage industry, Tom was an assistant district attorney in New York State. Not incidentally, Tom was my first boss when I was new to being a lawyer. I watched with amazement as he took over the reins in the legal department of a small spirits company that by fits and starts became a colossus.

Who were the legendary beverage lawyers before you, and what made them so?

The outstanding, legendary beverage lawyer of the past few generations was Abe Buchman. I worked with Abe and his firm for 10 years and then continued to work with him when I joined Pernod Ricard. Abe was a mentor and a role model for tireless devotion to the industry. Abe taught me the necessity of finding practical solutions for our clients’ issues. Sometimes, as lawyers, we lose sight of being practical. We get hung up in the legal niceties of an issue. What Abe stressed was that we find a solution that was practical for the client and accomplished the client’s goals without running afoul of the legal requirements. Another legend was Bill Schreiber.

I had the pleasure Any good stories about Abe Buchman? of working with both My first professional experience with Abe Buchman Bill and Abe when occurred about a week after I joined the Buchman the Buchman and firm in 1981 when I was called into Abe's office. He Schreiber firms merged told me that one of our major wholesalers was shut in 1986. Having both down due to a strike by the warehouse employees.

Abe and Bill together He instructed me to go to the client’s headquarters in the same office was where the warehouse was located to make certain a beverage alcohol that the situation remained peaceful and calm. The lawyer’s dream come basis for my involvement in this matter, Abe said, true. With so much was that I had been a prosecutor and should be able shared knowledge to bring some "law and order" into the situation. about the law, the What Abe had not told me was that the problem was industry, and its not with the union but with our extremely volatile players and so many client. My real job was to keep our client from doing exciting projects something regrettable. I spent several days with the being worked on by client and happily reported back to Abe that all was them, it was a unique under control. I always had the sense that Abe enjoyed moment in my career. watching my “baptism by fire" from a distance.

“Responsibility

should not be paid mere lip service.

From my vantage point, responsibility was taken seriously by the members of the industry.”

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What advantages do you see for the huge v. the tiny players in the industry?

A major corporate entity like Pernod Ricard or Diageo has the financial resources to engage in creative innovation in a variety of categories and to market new products effectively.

A craft distillery may not have the financial resources to move beyond the category of its major product. Take craft bourbon whiskey, for example. Bourbon whiskey is a product that has had major swings in consumer acceptance over the past 30 to 40 years. While it may be very chic to drink craft bourbons now, will this trend in consumer preference last for the long haul? If it doesn't, a craft distillery may not readily be able to shift its production to a more consumer– friendly product, especially due to the aging required for bourbon. A Pernod Ricard or Diageo has multiple products in different categories.

It is more adapted to shift with the changes in consumer preferences.

Do you think the regulatory system works well?

“The regulatory

system is outdated, cumbersome, and not responsive to today's marketplace.”

No. The regulatory system is outdated, cumbersome, and not responsive to today's marketplace. Certainly, even if the current regulatory scheme was not in place at all, alcohol beverages must be treated differently from other consumer products. However, federal and state laws and regulations dealing with alcoholic beverages grew out of the post–Prohibition period when there was still the possibility that organized crime would control production and distribution. Neither the federal law nor any of the state laws have been dramatically updated to accommodate for many of the changes in the industry and the general marketplace. With major publicly traded corporate entities now involved in the production and distribution of alcoholic beverages, the specter of the involvement of organized crime has dissipated. Many of the laws written in the 1930s that assumed that organized crime would reenter the alcohol beverage industry are no longer applicable. However, there is no desire nor political will to change these laws. In a country that has so many other important issues to manage, change to alcohol beverage laws and regulations is a nonevent. The anomaly created by the 21st Amendment, i.e., that state beverage alcohol law trumps federal law, has led to a mosaic of differing laws and How would you describe your regulations. For lawyers who practice in this field, this time at Pernod Ricard USA? is a blessing. For their clients, this is a nightmare.

What changes have you noticed, in alcohol beverage law, from early to late in your career?

One significant change is in responsibility. Joseph E. Seagram & Sons set the gold standard for responsibility over 35 years ago. Both the Distilled Spirits Council and the Century Council have taken Seagram's lead to a whole new level. The industry’s self-regulating model sets the standard for other industries interested in effective self-regulation. I was always concerned about the manner in which the tobacco industry marketed its products with such techniques as Marlboro men ads and medical endorsements of the calming benefits of smoking.

This may have worked for a time but has ultimately worked to the tobacco industry’s detriment. The tobacco industry's lack of self–restraint cried out for governmental regulation. The tobacco industry made it clear that self-regulation was not possible.

The beverage alcohol industry has for the most part avoided governmental regulation of its marketing and advertising. For this, the industry should be applauded. However, being responsible requires constant vigilance. Responsibility should not be paid mere lip service. From my vantage point, responsibility was taken seriously by the members of the industry.

Responsible consumption must always be the focal point for those in the beverage alcohol industry.

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I often described my job at Pernod Ricard as the ultimate dream job for a lawyer. I was working in an ever-changing business with products that people knew and consumed. Pernod Ricard is acting on the international stage. It worked from an entrepreneurial model that empowered each of us to seize upon positive opportunities and minimize negative factors when performing our responsibilities.

What were the favorite parts of your time at Pernod?

My favorite times at Pernod Ricard were when working on and closing the Seagram, AlliedDomecq, and Absolut transactions. There was a great sense of accomplishment on the part of everyone at Pernod. This was especially so when we closed on the Seagram transaction where we acquired 40% of the Seagram business in the United States. We were like a guppy swallowing a large fish. Thanks to meticulous planning on the part of Pernod, integration of the Seagram business was perfectly executed. On the lessons learned from the Seagram integration, the subsequent acquisitions of Allied-Domecq and Absolut vodka were executed perfectly. As any lawyer who has worked in mergers and acquisitions knows, the closing of major transactions such as any of these is satisfying and rewarding. I was fortunate enough to experience this up-close three times in an eight-year period.

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What have you been doing since Pernod?

Since I retired in June 2013, I have been enjoying the perks of being retired. I have been traveling to places such as Vietnam and Cuba. Before retirement, I had avoided visiting Cuba due to the Havana Club litigation.

I've been spending much time in Manhattan enjoying its cultural opportunities. I continue to serve on several boards of not-for-profits. I've been very involved with Legal Services of Hudson Valley, which provides free, high-quality counsel in civil matters where basic human needs are at stake for low-income individuals and families who cannot afford an attorney. The exemplary service they provide to seven counties in New York encapsulates the values that all lawyers should aspire to. In addition, I have been teaching at Pace University School of Law for the past 10 years. In the spring, I will be teaching a Mergers and Acquisitions course.

Do you have any advice to lawyers entering the field of beverage alcohol law?

My advice to lawyers just entering the field of beverage alcohol law is to get yourself out of the office and spend some time in on-premise and off-premise establishments.

Keep in mind that the practice in your state is different than in many other states. Make a point of visiting your client’s distillery, winery, or brewery so that you can develop an appreciation of the issues facing producers of alcoholic beverages. The beverage alcohol lawyers must be up to speed on the law and the business that they represent. To do this, don’t rely solely on telephone conversations or email communications. Get out of your office and visit the client’s place of business.

Your firm should be prepared to absorb the travel time.

Face-to-face meetings with your clients will enhance your practice of beverage alcohol law. Your client will have increased confidence in your understanding of the issues. This creates a win-win for everyone.

Robert C. Lehrman is a lawyer at Lehrman Beverage Law, PLLC in metro Washington, DC. Since 1988 he has specialized in the federal law surrounding beer, wine and spirits, such as TTB permits, labels, trademarks and formulas. The firm has seven beverage lawyers, over 50 years of combined experience, and publishes a blog on beer, wine and spirits trends, at www.bevlaw.com/bevlog.

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KINGSBARNS DISTILLERY WRITTEN BY MARGARETT WATERBURY

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oocot. That’s Scots for dovecot, which is English for what we Americans would call a pigeon house. It’s not a feature most distilleries have, but Kingsbarns Distillery in eastern Fife, Scotland, is a little different.

Just like the United States, Scotland is going through a spirits boom. Consumers are buying more spirits, exports are up, and interest in previously under-the-radar categories (hello, gin) is at a high keen. But unlike the U.S., Scotland’s spirits industry wasn’t totally crushed by Prohibition, which means the U.K. is still home to more than 100 functioning distilleries, many predating not only Prohibition, but the invention of electricity.

Although there are now many fewer distilleries in the United Kingdom than the United States, Scotland hasn’t been

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PHOTOGRAPH PROVIDED BY KINGSBARNS DISTILLERY

immune to startup fever. During the latter half of the 20th century, many more Scottish distilleries closed their doors than opened them, but the last decade has brought unprecedented investment in new production facilities, brands, and distillery expansions.

One of the newest distilleries in Scotland is Kingsbarns Distillery, founded in 2014.

It gets its name from its location, the town of Kingsbarns, which sits on the north side of the Firth of Forth, a deep bay on Scotland’s east coast. It’s a bucolic, serene world apart from the narrow grey streets of Edinburgh, all rolling fields of barley interspersed with hedgerow-lined lanes and the odd stone wall.

Fife has traditionally been one of the primary grain-growing regions in Scotland, but until recently, it had no distilleries.

Instead, it has golf. Kingsbarns is just a few miles down the road from St. Andrews, the town where golf was purportedly first played 600 years ago. You can still play on the St. Andrews Old Course, but be prepared to plan ahead—tee times are now booked through October of 2018. For those who don’t make the cut, the Kingsbarns Golf Course provides an appealing alternative, and it’s also where the story of Kingsbarns Distillery begins.

Co-founder Douglas Clement used to work as a caddie on the Kingsbarns Golf Course. Every game he caddied, somewhere around hole 17, players would ask him: “So, where’s the whisky around here?” And every time, he was forced to explain that Fife was sadly bereft of distilleries. One day, he decided to take matters into his own hands and convinced

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production facility at the back. The the Scottish government to give him doocot, on the other hand, was left a £600,000 grant to start a new virtually as-is, drifting feathers and distillery. A crowdsourcing campaign all, and became the place of honor raised an additional £46,000 and for Kingsbarns’ very first barrel of demonstrated the local community’s whisky after it was distilled in 2015. commitment to the project. But Drawing on the region’s agricultural Douglas needed something else: traditions, Kingsbarns uses only Expertise. unpeated malt made from Fife“In Scotland, you’re up against really stiff competition,” explains - Scott Robertson grown barley. Water comes from an KINGSBARNS’ VISITOR CENTER aquifer more than 300 feet below Scott Robertson, Kingsbarns’ Visitor DEVELOPMENT MANAGER the distillery. Four pot stills—two Center Development Manager.

7500 liter wash stills, and two 4500 “Heaven help you if your whisky liter spirit stills—made by Forsythes produce enough spirit to fill doesn’t stand up to your competitors’.” So Douglas partnered with about 25 casks a week. When we visited, the spirit wasn’t quite the Wemyss family, a wealthy family with experience in the spirits old enough to be called whisky, but we were able to taste some industry (their line of blended whiskies includes several that make of Kingsbarns’ new make as well as some two-year-old whisky-init across the Atlantic, including Peat Chimney and The Hive) as progress. The new make is fruity and sweet, with a strong fresh well as deep roots and extensive agricultural landholdings in Fife. grain character. After two years in ex-bourbon casks, it’s starting to “They had some expertise, so it was less intimidating for them,” take on a lovely chocolatey quality. Kingsbarns says it’s on track to says Scott. “And the barley fields connected to the family are right release its first whisky in 2018. on the doorstep. The stars aligned.”

As anybody who’s ever started (or even visited) a new whisky First, the project needed a place to call home. Douglas and the distillery knows, it’s good to be able to sell something else to pay Wemyss family found a 300-year-old stone farmhouse just outside of the bills while that whisky matures. In that spirit, Kingsbarns also Kingsbarns proper, complete with stables, a barn, a residence, and, makes Darnley’s Gin; a three-gin portfolio including an original yes, a doocot. They refurbished the building, turning the farmhouse London dry prominently featuring elderflowers, a spiced gin and stables into a visitor’s center and café, and adding a modern

“In Scotland, you’re up against really stiff competition. Heaven help you if your whisky doesn’t stand up to your competitors’.”

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showcasing warm notes like cardamom and ginger, and a Navy Strength spiced gin bottled at a cocktail-friendly 57% alcohol.

Until recently, Kingsbarns has been having a producer in London contract produce Darnley’s Gin. However, when we visited in September 2017, they were getting ready to fire up their brandnew onsite gin distillery, complete with a specialized gin still.

The Darnley’s brand is part of the U.K.’s ongoing gin craze. 2017 marked the first time that spirits generated more revenue than beer in the United Kingdom, with consumers buying 43 million bottles of gin alone. Even the most humble pub now has several gins to choose from, as well as a surprisingly wide array of different tonics, garnishes, and fancy ice. While sitting at a world-famous whisky bar in Speyside, I watched the bartender fix just as many gin and tonics as drams—maybe more.

St. Andrews is one of Scotland’s major tourist attractions, so Kingsbarns has made major efforts to tap into the tourist trade.

The distillery offers two different tours: one focused on whisky, one focused on gin. The whisky tour begins with a pass through a museum-like exhibit outlining the history of Fife, the history of the Weymss family, and a high-level overview of how whisky is made.

From there, guests take a full spin through the production facility to check out the mash tuns, fermenters, and stills—oh yes, and the doocot. Then, it’s up to the tasting room to sample a bit of still-strength new make—and, when it’s ready, taste some mature Kingsbarns whisky.

Gin tours take a different tack. Visitors are led into what appears at

first to be a large, comfortably outfitted, and completely featureless room with a long table at the center. Once they’re seated around the table, guests watch as the tour guide slowly unveils exhibits hidden behind painted panels around the perimeter of the space, slowly transforming the plain room into a sensory feast of images, stories, and smells related to how gin is made. Eventually, the tour guide pulls a curtain to unveil a glass window into the distillery itself, with the still on full display—and, for a finale, another wall turns into a make-your-own cocktail bar, complete with glassware, garnishes, and mixers. “It’s so fun,” says Scott. “It’s a real surprise for guests. They don’t know what to think at first.”

Scotland’s new-wave spirits industry is, in many ways, less developed than the United States. There are fewer startups, even more challenging legal hurdles, and less New World emphasis on innovation and experimentation. Yet there’s much an alternative point of view can teach American producers. When your competition has a 200-year head start and is backed by one of the most dominant spirits groups in the world, you’ve got to get creative, and Kingsbarns has created an amazingly welcoming and memorable visitors’ room experience that lingers long after the flavor of juniper vanishes from your palate. That Kingsbarns 50-year-old crystal decanter whisky might be a few decades off, but for now, bringing spirits production to this corner of Fife is reward enough.

Kingsbarns Distillery is located in Kingsbarns, Fife, Scotland. Visit www.kingsbarnsdistillery.com for more information.

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Understanding t Soleras

hose new to the alcohol beverage industry may not be familiar with the term "Solera," but those who’ve been around a while, no doubt have seen it used—or misused—on many different products.

So what exactly is a Solera and why should you care?

The word Solera in Spanish literally means “del suelo” or “from the floor”, referring to the location of the layer of aging barrels from which Sherry is extracted for bottling. Aging in vertically-stacked rows of barrels, with precise procedures for adding fresh (at the top) and withdrawing aged Sherry (from the bottom), represents the culmination of a search by producers to minimize year-to-year variations in the final product.

Each year, aged Sherry is taken out of the bottom layer or casks, but the casks are not emptied completely. Instead, most producers take out only 1/3 of the Sherry available in the cask, no more than once per year. The Solera casks are then re-filled (a process known as “rocío” in Spanish) with the contents of the casks in the first Criadera. The casks in the first Criadera are then re-filled

Unaged product goes in...

2nd Criadera

1st Criadera

Solera Level

Barrels in a Solera structure

Written and Photographed by Luis Ayala

with the contents of the second Criadera, and so on until the last (uppermost) Criadera is refilled with fresh product.

As you can imagine, the Solera system works very well as a means to homogenize year-to-year variations in production. If a particular year resulted in a production of inferior quality, by the time that production makes its way to the bottom row of casks, such variation would have disappeared almost completely. Also, as a consequence of the blending procedure, the age of the final product is not a straightforward number, and this is the source of many abuses.

Sherry has been a protected Denomination of Origin term for over 80 years, and while the production of sherries is strictly regulated, the nomenclature that applies to the production methods does NOT have protection outside the sherry industry. In other words, any spirits bottler can add the word “Solera” or “Criadera” to a label and not be subject to adherence to standards. In over two decades of consulting for the rum industry, for example, I have seen white rums (unaged) with the word Solera on the labels. I have also witnessed producers who stack their barrels in pyramid-like structures, and use that arrangement alone as justification for using the word Solera to describe their products, even though they don’t follow the traditional procedures required for Sherry.

One of the most popular Solera rum brands is produced in a country where the norms do not even allow the re-filling of the barrels during the aging process!

...aged product goes to bottling.

Soleras vs Vertical Stack

Barrels stacked vertically

Solera structures offer advantages to aging spirits in vertical stacks, but these advantages come at a significant cost. Let’s take a closer look...

Aging spirits involves acidification and esterification of the distillate inside the barrel.

Both of these require the presence of oxygen, which enters the barrels to replace the alcohol that is evaporated (the “Angel’s Share”). Consequently, it is easy to understand that the more alcohol evaporates

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from inside the barrel, the more oxygen will enter it and the faster the acidification and esterification will be completed. Here is where Solera structures have a significant advantage over the vertical stacks, because Soleras allow for uniform air circulation around all the barrels, not just the ones on the outermost edges of the stacks. It helps to think in terms of baking cookies in an oven: if you overlap some cookies, you will be able to get a nice, brown and crispy edge on some of the cookies, while those cookies that are touching or are being covered by others will not be baked at all.

The baking, in the case of barrels, is the exposure to the hot ambient air of the warehouse, which dries out the outer surface of the barrels, promoting additional “sweating” or evaporation. This evaporation, in turn, is responsible for an equal volume of oxygen finding its way into the barrel, where it helps with the acidification and esterification. Also, if the Solera is built with spacers between the barrels, as depicted in the picture above, the master blender can easily remove the bungs by hand and can have access to the barrels’ contents, without needing to move the barrels.

The disadvantage of Soleras, however, is that they represent a very inefficient use of warehouse space.

Depending on the thickness of the staves employed in the construction of the barrels, Soleras usually can reach only 5 to 6 levels high, before the weight of the structure becomes too much for the lowest-most level to support. Stacking pallets with barrels, however, represents the most efficient use of warehouse space, because the downward pressure is exerted along the barrels’ strongest axis. Using vertical stacks of pallets, warehouse managers can have a barrel density that is usually 4 to 5 times higher than when using Soleras, which is significant. The vertical stacks, however, present the challenge of reduced acidification and esterification, plus the need for forklifts and labor every time the master blender needs to retrieve samples from the barrels.

So what should you do about Soleras?

If you are a consumer and one of the products that interests you is labeled as a Solera, you should reach out to the technical (not marketing) people behind the brand and ask very specific questions, such as “is this product aged in actual Soleras and following the sherry blending method?”

If you are a producer and are considering branding one of your products with the word “Solera”, consider first if any of the following apply to you:

> > > >

You are experiencing quality variations from year to year and are looking for a way to mitigate them

You are willing to start setting up a Solera now and accept that you will not be able to withdraw true Solera aged spirits from the barrels until several years from now Do your local regulations (usually fiscal or tax in nature) allow you to re-fill barrels in your bonded warehouse?

Are you just interested in an exotic-sounding moniker even though it could be interpreted as being misleading

Or perhaps you are a producer and don’t really care about using the name “Solera” on your product’s label, but you could use a Solera structure if:

> > >

You want easy access to all your barrels, without needing a forklift to move them You want to maximize the benefits of maturation (acidification and esterification) and You are not limited by space in your aging warehouse

Soleras have a reason for existing and a very specific implementation methodology designed to make them work. When used in this context, they can be the source of much pride by the producers and the topic of many educational discussions with visitors and distributors alike. But using the term on a product when the company behind it has no knowledge of its meaning, no resemblance of its implementation and no interest in its benefits, can draw a lot of negative attention toward the brand and can also lead consumers and the industry to question other aspects of the operation.

Luis Ayala is an international rum consultant and broker of specialty aged rums.

He is founder of The Rum University, Rum Central and Got Rum? magazine.

Visit www.gotrum.com or email luis@gotrum.com for more information.

March 5-6, 2018 | Pittsburgh | www.americancraftspirits.org WWW.ARTISANSPIRITMAG.COM

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Bits and Blobs and UFOs A HAZY PROBLEM IN NEED OF A CLEARER SOLUTION W R ITTEN A ND PHOTOS PROVI DED BY G A RY SPEDDI NG, PH.D.

Over time many alcoholic beverages are likely to form a haze, show a light precipitate, or even exhibit a potential for significant turbidity which can be caused by colloidally dissolved organic substances or inorganic metal or mineral deposition.

Significantly, sediments and hazes are on the rise in craftdistilled spirits. Such issues cause alarm for distillers unaware as to their origins or how to prevent or alleviate their formation. We will thus discuss the origins of these unsightly issues and discuss colloidal stability of beverages.

To do this we need to dip into the Scotch whisky literature and reach back to the 1960’s for some cogent discussions, and even much earlier. Even then we will see that there are still unknowns out there with room for speculations about Unidentified Floating Objects (UFOs) in different kinds of distilled spirits. Let’s try to clear the muddy waters or the “greying” spirits — read on.

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ver the past two decades we have been presented with an ever-increasing number of spirit samples with hauntingly eerie-looking sediments, precipitates, gels, and globs of unidentified (and sometimes unidentifiable) matter. The situation is getting worse as more craft products enter into the marketplace and, furthermore, the extent of matter appearing in solution is increasing to the point that sometimes the entire bottle appears like a snow-globe ornament, much like the beer colloidal mess shown in the figure below. A lesser cluttered example of a floc in a bottle of a white spirit is also shown.

The urgent calls received are requests for us to indicate to the distiller (as for the brewer) how to resolve the issue. There are two problems to this, one being the time and expense needed to try and pinpoint the compositional nature of said UFOs (Unidentified floating objects), unless it is one of two key causes (see below).

New causes of hazes are being discovered with our application of newer technologies. The second problem is that when we tell the distiller how to possibly resolve it they categorically state that the suggested solution is a nonstarter (again for reasons as will be explained

Beer Colloidal Haze

later); in essence, you can be a puritan or live with these messes! But your customer might not forgive you.

The topic of precipitations and hazes (aka. turbidity) in distilled spirits is quite complex and has not been discussed much in the literature since a seminal series of papers published in 1960 and 1963 (Warwicker, 1960; 1963 a, b). Primarily the topic has not received much attention in the public domain (journal publications), probably because most distilleries privately cured this issue with use of completely pure dilution water, free of mineral ions, or via chill proofing and filtration with clearly defined specifications as to mineral content in the filter media, these being key processes for long(er)-term clarity/stability.

However, hazes/turbidity include those formed by organic and inorganic types of matter. We recently uncovered some unique components leading to precipitates/suspended solids, possibly based on plasticizers or glass production chemistries (glass-mold release components or oils or coatings, etc., used in plastic tubing/containers). Near infrared microscopy is becoming a useful, though expensive, technique in uncovering the culprits involved in these more unusual cases and may become the tool of choice in advancing our understanding in this area. Though, at

Floc Haze

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SIDEBAR 1

the end of the day, careful attention to detail in producing spirits can prevent the occurrence of particulate issues in the first place, and keep customers and the distiller happy.

Causes of Turbidity, and Filtration

Discher, (2016) presents us with a comprehensive listing of the causes of turbidity (hazes or colloidal suspensions) in whiskies (See SIDEBAR 1: on COLLOIDAL STABILITY and HAZE for general details and definitions on the topic of hazes and colloidal stability. Note: the present article uses the terms hazes and turbidity interchangeably as both are seen in the literature).

The major causes of turbidity, accounting for rankings of between 20-25% each, are: minerals — calcium, magnesium and silicates; iron; and polysaccharides — pectins (e.g., from winebased spirits such as brandies, etc.) and dextrins (short chain carbohydrates). Microorganisms and higher fatty acids and fatty acid esters account for turbidity with rankings of around 15% each (see SIDEBAR 2: on WHISKIES, COLLOIDS, FATTY ACIDS, STEROIDS and CHILL-PROOFING for more on fatty acids and sterol hazes). Less than 10% rankings for causes of turbidity then go to copper and polyphenols with other causes of lesser rank including; proteins, mechanical impurities, charcoal dust, dirt/debris — perhaps from cardboard or other packaging materials and filter fibers etc., the plant class of compounds known as terpenes, cork and, finally, higher volatile sulfur compounds (Discher, 2016).

The distiller has thus a clear need to understand these many causes and the potential remedies! A chart illustrating these causes and origin points might be drawn up by the distiller as part of their quality assurance and quality control program. This list of causes appeared in a review dealing primarily with whiskies but, as will be seen, many apply to other spirit types as well.

The driving force behind the Discher paper is to promote filtration to distillers but he covers important concepts and origins of materials to be removed by appropriate filtration. In dealing with whiskies, following dilution to bottling strength or blending, multiple and consecutive filtration steps may be employed. Distillate may be clarified via removal of fine colloidal to

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on COLLOIDAL STABILITY and HAZES A colloid is a homogeneous, non-crystalline substance consisting of large molecules or ultramicroscopic finely divided particles (1 to 1000 millimicrons [10-9 meter or nanometers] in size) of one substance dispersed within a continuous medium in a manner that prevents them from being filtered easily or settled rapidly. Colloids include gels, sols, and emulsions; the particles do not settle and cannot be separated out by ordinary filtering or centrifuging like those in a true suspension. The term colloid also refers to the particulate matter so dispersed.

Colloids may be thought of as a mixture with properties between those of a solution and a fine suspension (finely “floating” matter).

A colloidal gel is a colloid in a more solid form than a sol (liquid).

A sol is a colloidal suspension of very small solid particles in a continuous liquid medium.

Sols are quite stable and show a unique light scattering pattern known as the Tyndall Effect.

(The reader will find neat descriptions/demonstrations on the web.)

A hydrogel is a colloidal gel in which water is the dispersion medium.

An emulsion is a colloid consisting of a mixture of two liquids such as those of oil in water.

It refers to microscopic particles of liquid dispersed in another liquid. Milk is an example whereby lipophilic (fat loving or hydrophobic = water hating) particles are dispersed in a water based (aqueous) medium (see SIDEBAR 2: on WHISKIES, COLLOIDS, FATTY ACIDS, STEROIDS and CHILL-PROOFING).

Much more is known or published on the colloidal stability of beer and, in this case, usually refers to the propensity of beer to form non-biological hazes due to interactions between beer components – principally polyphenols and proteins leading to the formation of visible precipitates; colloids in beer can take the form of gelatinous (jelly-like) masses. Sometimes the unidentified masses in spirits are opaque and gel-like in nature and maybe metal hydroxides or other materials and are not usually based on proteins or polyphenols nor on associated protein-polyphenol complexes (Spedding, Linske and Weygandt, 2017). Though polyphenols and tannins are abundant in wood-aged wines and spirits! Further research work might be needed in regard to potential haze formation in certain distilled spirits even considering that the rankings for polyphenols and proteins as causes of turbidity were illustrated as being low in the case of whiskies (Discher, 2016).

Hazes are the result of light scattering by colloidal or larger particles suspended in the spirit solution. Such hazes are usually visually unappealing and often signal to the consumer that something is wrong with the product. Most of the time these issues are caused by harmless materials in the product arising from raw materials or from situations that arise during processing and or bottling (see main text). Given sufficient time most products will have a propensity to form some form of haze or precipitates regardless as to the steps taken to ensure a long and stable shelf-life.

Particles of greater than colloidal size settle out if there is no agitation to suspend them or keep them suspended. True colloids are indefinitely stable suspensions. They arise when the size of the particles is both sufficiently small and they are of density similar to that of the spirit – this keeps them suspended (“floaties”) by Brownian motion (Siebert, 2006). [Brownian motion refers to erratic random movements of microscopic particles in a disperse phase - particles in suspension.

The movement is caused by continuous irregular bombardment of the particles by the molecules of the surrounding medium.]

When a system is cooled, the withdrawal of energy can result in the settling of larger colloidal particles and may cause solubility reduction and the formation of additional matter. Interestingly the consumer often initiates this haze formation or precipitation by chilling the spirit in a very cold fridge or the freezer. When the spirit is warmed up again or agitated the suspension disappears upon re-solubilization of the matter. A simple statement on the bottle to the effect of this issue potentially happening might reduce the number of complaints over these visually unappealing though harmless “unidentified objects.”

In addition to temperature, alcohol content and the solution pH exert strong influences on precipitation and haze formation; this is discussed further in the text. The process of haze production is said to be reversible if no deposits have been produced and if the haze disappears when the temperature is raised. If a deposit occurs the term “thick” may be applied and complete reversibility is unlikely in such instances (Warwicker, 1960). Though as mentioned earlier, this topic is quite complex based upon the number of components at play in distilled spirits production and the spirit itself. This reversibility or irreversibility can easily be tested by the distiller with a few simple experiments. Forced aging of bottled spirits could also be entertained to establish the shelflife stability of product. Simple visual inspections often sufficient evidence to show potential for turbidity problems with product in the marketplace or consumer liquor cabinet.

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SIDEBAR 2

on WHISKIES, COLLOIDS, FATTY ACIDS, STEROIDS and CHILLPROOFING Whiskies and other aged spirits are, as discussed in the main text, subject to the physical and chemical principles related to colloidal stability and the production of colloidal particles (see also SIDEBAR 1: on COLLOIDAL STABILITY and HAZES).

Grain based spirits may see the contribution of lipids via extraction from the barley or other cereals and these carry through all the processes and to the maturation phases. Other lipid class molecules – the sterols are derived from the wood and are related to the largest class of plant derived chemicals known as the terpenoids. More on the structure and chemistry of these constituents is presented below, following a general discussion on colloids, lipids and cold or chill-proofing of spirits.

The Scottish whisky industry is known for the use of the chill filtration process to reduce the propensity for chill haze formation. This will apply to bourbon whiskey production also and the method is proposed for rums too as detailed within the main text. When whiskies are above 46% ABV - at around 20-25 °C - no hazes or major effects on clarity will usually be evident. However, and for example when reducing aged spirit to bottling strength the spirit may become cloudy (hazy), reducing its visual appeal to the consumer.

Based on the actual composition different whiskies will also have different levels of lipids and so some will show the issue of chill-haze or clouding more intensely and/or more often than others.

The chemical explanation for the appearance and disappearance of cloudiness in spirits such as whisky is related to hydrogen bonding and to so called hydrophilic (water loving) and hydrophobic (water hating) properties of water, ethanol and lipids. Lipids (from the “fat” class of molecules) consist of a portion known as the head and a portion known as the tail. The head portion, which is hydrophilic – meaning it prefers to be in contact with like-minded molecules (those that are water or water-like or loving) is characterized by an electrically charged hydroxyl (OH) group. The tail group which hates water (water fearing = hydrophobic) is composed of one to three variable length hydrocarbon chains. See Figure 1 for typical structures of phospholipids and steroids.

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coarse dispersed solids such as crystalline precipitates, metallic turbidity, and the charcoal particulates from the barrel char (Discher, 2016). In the next (“cosmetic”, optional) filtration step, ethereal, oily and fatty compounds are separated out at low temperature — chill haze component removal! [See SIDEBAR 2.]

Visible hazes or turbidities are also, as implied earlier, caused by mineral-laden dilution water. In practice dilution water should be as pure and free of calcium, magnesium, silicates and iron as possible.

It is suggested than bourbon whiskey containing as little as 1 part per million of calcium will show some precipitation given sufficient time (personal communication from a Kentucky bourbon distiller). When choosing, or using, filtration media the distiller must be sure these too are low in calcium, magnesium and iron, otherwise these very filtration systems will impact the stability of the filtrate and precipitation and turbidities will arise later. The application of filtration processes should, therefore, not be considered lightly nor essential to a particular operation without careful thought. Issues arising from filtration of spirits was dealt with in the early literature, and processes implemented to otherwise ensure clarity and stability of product when filtration itself indeed caused issues beyond its desired intent.

Key papers from the 1960’s

As stated earlier, very little has been published (at least in English) on the topic of turbidity and sediments. The reader should, therefore, be aware of three key papers from the 1960’s (Warwicker, 1960; 1963 a, b). While not easy reading, many points, also presented and summarized here in this article, can be uncovered from the description of the extensive experimental work carried out under the direction of Warwicker. Some summary details are presented below. But first a little digression — to floc or not to floc and what types of floc — those are the questions now addressed.

See below and both SIDEBARS 1 and 2 for extended details.

Two Flocs in Whisky: “Reversible” and “NonReversible Floc”

Aylott (2014), in a discussion regarding whisky analysis, cogently covers whisky stability in a mere one-page sub-headed topic. “Filtered whisky is normally a clear product, but two forms of flocculation may occasionally be experienced in Scotch whisky.” (Aylott, 2014). The first described is known as “reversible floc” and may form on long term storage at very cold temperatures.

[There is a tendency in the US for consumers to store spirits in the freezer and this is one reason we are seeing more samples with precipitation-related issues.] The whisky develops a haze which disappears upon warming and shaking of the spirit; the haze or clouding here was referred to as “greying” in the earlier literature. When such hazes are examined the culprits are found to be ethyl esters of long chain fatty acids and larger alkyl esters. [See SIDEBAR 2] The “reversible floc” formation can be minimized via chill filtration. Some craft distillers say categorically no to filtration and as such may have to live with the “problem” or state “this product may show a precipitation upon cooling” and that it is harmless enough in nature. However, we are seeing cases where the entire bottle shows these floating masses that have been called “snow globes” by some brewers and distillers based on their distinct appearance.

Aylott states, “This process (chill filtering) reduces the concentration of “reversible floc” forming material and has no effect on product character.” Refer to the details cited from Discher (2016) under Causes of Turbidity and Filtration above for more on this.

The second form of flocculation is known as “irreversible floc” and presents as hairlike crystals of calcium oxalate (see also under TEQUILA, below). These crystals form slowly and settle when the normally low parts per million (ppm) concentrations of oxalic acid in the whisky react with also quite low concentrations of calcium ions. Hence the need to keep calcium to zero (or absolute minimum) levels in dilution water. Some distillers will also remove some of the oxalate WWW.ARTISANSPIRITMAG.COM

FIGURE 1

Summarizing some general points from the 1960’s Warwicker papers

Extracts from oak wood include some calcium — contributing perhaps as much as 7 ppm! Barrel extractives thus contribute to deposition and double ion-exchange was shown to alleviate the problem. Magnesium ions from filter pads can throw a deposit as can calcium picked up from filter pads and filter aids. Thus, for chill filtration, filter pads, filter aids and DE should be low in these alkaline earth metals. Zinc and aluminum salts can cause similar results. Deposition increases as pH rises from 4.5 to 4.9 according to interpreted results of the experiments performed in the 1960s (Warwicker, 1960; 1963 a, b). In general, the critical pH for deposition seems to be 4.9 while above pH 6.0, there is no deposition. Simple evaluations of pH in distilled spirits are to be recommended, along with observations, over time, of the clarity of the packaged product. Perhaps now, 50 years on, new investigations into this pH variable might be warranted. At the very least a routine testing of calcium, magnesium, iron and zinc concentrations in process water and final product might also, therefore, be recommended.

Chill proofing with subsequent filtration will improve the stability

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Different solvent properties of water and ethanol are at play here as in other aspects of distilled spirits chemistry. With respect to fatty acids, the dominance of the long hydrocarbon chains prevents the oil from mixing with water. (Many fats HEAD at typical room temperatures are oils.) However, TAILS ethanol also has a hydrocarbon chain and an OH group yet mixes easily with water. The carbon chain is so short it is not an issue with respect HYDROPHILIC HEAD to its interaction and association with water CH —N+(CH ) (and in fact ethanol and water are mixable | CH | – miscible in scientific terms - in all proporO | O—P—O tions). In fact, the tails of ethanol slide into the | O | structural matrix of water and this formation of CH —CH—CH | | O O | | water and ethanol leads to a volume contraction of C=O C=O | | CH CH simple (binary) ethanol-water solutions. The short | | CH CH | | chain of ethanol is also chemically compatible with long CH CH | | CH CH hydrocarbon chains of lipids and allows the mixing of | | CH CH | | them with ethanol. The ethanol is said to participate in CH CH | | CH CH the solvation of both water and fats and can help keep | | CH CH | CH CH fats in solution under certain conditions of course. | | CH CH | | This phenomenon is both dependent upon the ethanol CH CH | | CH CH concentration, temperature and structural perturba| | CH CH | | tions by other volatile and non-volatile species in CH CH | | CH CH distilled spirits. Much is yet to be understood in | | CH CH this matter. In addition to hydrophobic and HYDROPHOBIC TAIL hydrophilic interactions (molecular forces of attraction and repulsion) the binary solvent – ethanol-water structure is held together by hydrogen bonding and this affects the solvation (the solvent) properties and potential for interaction of the two species – water and ethanol, and their bonding with other components.

In whiskies, as the ethanol concentration drops (during proofing and bottling for example), at some point it can no longer PHOSPHOLIPIDS assist keeping the oil and water together and separation will occur; as noted above this happens somewhere around 46% HYDROPHILIC HEAD ABV at 20-25 °C. At much lower temperatures, even the higher POLAR HEAD GROUP concentrations of ethanol cannot RIGID prevent the separation. Hence the PLANAR requirement for chill-haze separaSTEROID RING tion or chill-proofing operations STRUCTURE as sometimes implemented by whisky/bourbon distillers.

When lipids and water NON-POLAR are not compatible together HYDROCARBON STEROID-BASED the lipids will try to push TAIL LIPIDS themselves together and away from water (converseHYDROPHOBIC ly it could simply be said TAIL that water tries to aggregate and push away the lipids); this driving force, direction and extent is all subject to thermodynamic principles. Lipids will form spherical structures called micelles where the lipid molecules orient themselves to present the hydrophilic (water loving) head group exposed to water while burying their tails in the center of the sphere to form a hydrophobic core. The formation of the “micelle structure” is a fundamental property that helped give rise to biological systems. See Figure 2 for a diagram of a micelle.

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by resin treatment. It is to be noted that it can take several months to get calcium oxalate formation in product and the higher the proof the higher the risk of formation. Some whiskies, filtered through charcoal prior to maturation, can also pick up calcium from the wood and here the calcium levels may be reduced using ion-exchange treatments.

Interesting historical accounts on activated carbon treatment of whisky may be found in works by Dudley (1908) and by Williams and Fallin (1943). Diatomaceous earth (DE) filter pads are used in some distilleries. As DE is itself made up of tiny calcium-based “sea shells” it should be obvious that proper quality specifications should be in play if this filtration product is used.

The oxalates issue has been resolved by the major distilleries but is a very complex topic as recent brewing research has shown. Anything that can affect the delicate solubility equilibrium dealing with oxalates (from grains/cereals) and calcium ions (from grains, barrel wood and water) in solution can tip the balance in favor of precipitation.

The common thought that limestone water is good for bourbon production conveys a bit of myth here and it is best to use dilution water absolutely-free of organic matter and minerals to help promote stability. Though it must be remembered that calcium and magnesium ions are important in fermentation and yeast health so understanding their levels throughout production is also quite important.

However, both the calcium ions and oxalate levels need to be known in the spirit to begin with to ensure they are not too high in concentration at bottling time (see issues related to all this below). It is stated (personal communications) that bourbon has higher levels of oxalic acid than for Scotch or Canadian whiskies in part supposedly due to the use of new cooperage; this idea or concept possibly bears further investigation. Theoretically, therefore, lower calcium in dilution water or “cut-water” is required for bourbon whisky production.

Keeping calcium as the limiting reagent should keep the oxalates in solution unless something else changes the solubility equilibrium.

STRUCTURES of PHOSPHOLIPIDS and STEROID LIPIDS

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FIGURE 2

STRUCTURE of a MICELLE Hydrophobic hydrocarbon chains are buried in the interior and the hydroxyl hydrophilic head groups are exposed to water; think of as a sphere. While only one hydrocarbon chain is seen attached to the head groups, in biological membranes they are usually exist with two hydrocarbon chains per head group.

of whiskey providing there is no contamination during filtration.

Development of deposits and the rate of deposition also depend upon the pH and temperature. Moreover, pH changes with metal ion addition or depletion. A critical pH value for a blending of Scotch whiskies was noted at 4.5 above which deposits occur in a few days (see the note on pH 4.9 above). A tannin-based factor was suggested as being extracted from wood during maturation and deposited when a sufficient concentration of certain metals was present and the pH was above a critical value. The corrosive effect of alcoholic spirits has been noted in relation to acidity and can dissolve metals such as copper, aluminum, zinc, cast-iron and brass. Thus, the contact of brown spirits, at any part of the process, with respect to pickup of tannins, fatty acids and minerals also needs to be considered when dealing with the topic of haze prevention. To gain a full understanding of this topic in relation to different spirits, the reader is encouraged to review these extensive research papers by Warwicker in their entirety (Warwicker, 1960; 1963 a, b). In the meantime see also below.

General Notes Concerning Instabilities in Spirits Other than the Whiskies RUM AND BRANDY Now these micelles are very small but when masses of them form they scatter light, which results in a cloudy suspension. It is such a suspension of solid particles in a liquid that we referred to above as a colloid (see SIDEBAR 1: on COLLOIDAL STABILITY and HAZES). Colloids are not easily filtered out. However, such particulate matter can be removed by chill filtration. Furthermore, different lipids have different length hydrocarbon tails – the length determining solubility and flavor impact (Discher, 2016). Choice of fermentation and distillation conditions will impact the types and concentrations of fatty acid esters produced and the decisions to be made on filtration steps implemented post-aging/pre-bottling. The longer hydrocarbon chains make the lipids less soluble and these form micelles just below 46 % ABV. Other lipids will only form micelles with a further drop in ethanol content. In lipid chemistry, this is also dependent upon the amount of the lipid present and is known as the critical micelle concentration. Different whiskies, based on raw materials and processing, will harbor different compositions and concentrations of lipids and so a one size filtration operation may not fit all situations. Some non-chill filtered whisky batches will be troubled with haze issues while others won’t. And sometimes hazes could be developed for other reasons. The hazes will be dependent upon not only lipid content and composition but also on the ethanol concentration, temperature, possibly on mineral content, and sometime just time itself allowing for the aggregation of molecules.

A final point to make concerns the presence in mature whiskies (and including bourbon whiskies) of sterols which may also precipitate upon chilling and, as we have seen recently with many calls, possibly even as stored at room temperature (20-25 °C). Several steroid-based lipids (see schematic in FIGURE 1 and FIGURE 3) which are related to the better-known cholesterol have been identified in Bourbon; campesterol, stigmasterol and beta-sitosterol included in the list and even sugar derivatives such as sitosterol-D-glucoside (Braus, et al; 1957). The glucoside behaves as an organophilic (philic = loving) colloid, swells and disperses on heating in organic liquids, and forms gels on cooling of such dispersions (Braus, et al, 1957 – See also SIDEBAR 1). FIGURE 3 summarizes some details on fatty acids and sterols.

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Instability in rum and brandy was featured in the second article by Warwicker (1963a). Here again his discussion included the issue of bad filtration. Deposition of metallic ions or metal complexes along with a shift in pH to critical values was found important to haze formation (pH 4.8 and below bad, pH above 4.9 good). Warwicker also stated: A “chilling process appears to be the best method of stabilizing rums and brandies.” Chilling must, however, be done at final strength for sufficient removal of water-insoluble matter to avoid deposition (Warwicker, 1963a).

Significantly, a chill proofing process was again noted as not being sufficient to ensure product stability though if metal ion contamination occurred afterwards. Deposits in such spirits were also found to contain protein matter (see Warwicker 1963a for the physical and chemical rationale and evidence for this.)

During the 1960’s it seems many manufacturers of beverages started to use stainless steel tanks for aging or resting or storage of product and if these were not free of mineral deposits were a likely source of haze promoting metal ions. Furthermore, corrosion of metals by alcohol solutions depends on the acid content, the type of metal and the time of contact and temperature. Alcohol at 40-50% by volume was demonstrated to attack iron more easily than zinc, copper aluminium, tin and bronze (Warwicker, 1963a). Brandy was also shown to “throw a deposit” if sufficient magnesium had been extracted from filter pads (Warwicker, 1960). Thus, some common themes as for whiskies are clearly apparent here.

GIN AND VODKA Calcium and other mineral/metal deposition is not pH dependent (no critical pH determined) as for other brown or aged spirits. While calcium oxalates are an issue in whiskies, rums and brandies, calcium carbonates are suggested as more of an issue in gins and vodkas. “Gin and vodka should, as for other spirits, not be allowed to come into contact with

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FIGURE 3

zinc, iron or aluminium unless the surface of the metal is protected.” (Warwicker, 1963b); the corrosive effect of alcoholic spirits was noted here yet again in relation to acidity and the dissolving of metals (copper, aluminum, zinc, cast-iron and brass). The use of demineralized water is recommended for both gin and vodka (Warwicker, 1963b); in key experiments gin showed the propensity to produce a white deposit with copper ions in a few days and a brown deposit with ferrous ions after only 1 day. Only slight white deposits were seen after six weeks with large additions of magnesium and calcium. We note that gin botanicals may add to the acidity and volatile oil content and this may play a role in silky turbidities which may perhaps not be considered a defect in heavily flavored gins. A review of the Warwicker (1963b) paper by gin producers, as well as observing the effects of different botanicals and ingredients under different conditions, should be of concern and interest.

The final concentration of ions in vodka, which can combine to form an insoluble compound, is critical. The total hardness of water is of importance for clarity and stability of vodka (Krosnijs and Kuka, 2003). Water hardness is determined largely by the content of calcium and magnesium ions, and these together with bicarbonate and sulfate ions form bicarbonates and sulfate salts, whose solubility diminishes in water-ethanol solutions. In addition, as for gins, deposition of calcium carbonate can be quite significant (Warwicker, 1963b); other ions in solution further decreased the solubility of the carbonate.

When these depositions occur, vodka is said to become “muddy” with the dregs settling in the bottom and on the walls of the bottle (Krosnijs and Kuka, 2003). With fruit flavored or enhanced vodkas calcium and magnesium ions also gradually precipitate tannins, pectins and organic acids — use of and treatment of water is thus of paramount importance here too to prevent such depositions. If the vodka distiller cannot, or chooses not to, use demineralized water, then solubility experiments are recommended to determine the concentrations of ions WWW.ARTISANSPIRITMAG.COM

that a particular type or brand of vodka will retain without deposition (Warwicker, 1963b). An interesting final comment here relates to ion pick up from filter pads.

There should be no danger of ion pick up since the vodka will be only slightly acid if made up with demineralized water and slightly alkaline if made with softened water (Warwicker, 1963b).

TEQUILA Little is readily available in the literature concerning turbidity issues in tequila and similar beverages. Though one tequila producer states “Tequila gets filtered to remove suspended particles and to get rid of any possible turbidity; at the same time, the bottles to be filled are washed with tequila of the same type they will contain, then the tequila is pumped into the filler machinery. Once the bottles are filled, the first visual inspection is performed to identify any undesirable particles in the bottle.” As a different type of spirit, based on a unique and atypical carbohydrate source, the mineral content and possibly lipids etc., might provide avenues for precipitation of components over time — even if unaged white spirit forms are considered. Another online source states: “In the bottle of tequila can contain small solid particles, which is not considered a fault and suggests that tequila is not filtered before bottling to preserve the flavor”.

Several papers have been presented discussing, in general terms, the mineral contents in Tequila, though not necessarily with any associated haze issues. However, it is noted that many plant tissues contain calcium oxalate crystals and they appear to be particularly abundant in tequila (Lachenmeier, et al, 2006). Calcium oxalate crystals are of diverse forms and the form in spirits tends to include a type known as raphides — needle like CaC2O4.H2O crystals, which are sharp at both ends (see figure below). The acidic pH of Agave liberates free oxalic acid which is transferred into the alcoholic distillate. Only below pH 4 can relatively small concentrations of oxalate be found in distillate (Lachenmeier, et al, 2006).

ORGANIC HAZES a summary of the fatty acids and sterols which can be responsible for hazes in whiskies -SITOSTEROL

STIGMASTEROL

ETHYL PALMITATE

(2 STRUCTURAL ILLUSTRATIONS)

ETHYL MYRISTATE We can summarize here that organic hazes in spirits arise mainly from fatty acids, fatty acid ethyl esters, etheric oils, terpenes and higher alcohols. Fatty acids can condense with ethanol to form ethyl esters and water with such reactions being reversible – showing the dynamic chemistries at play even in the bottled spirit. The formation of organic haze is, thus, ethanol and pH dependent, and as noted above, is also affected by temperature.

The sterols as a class belong to the terpenes and are derived from the oak wood used for barrels.

They are basically fats with an alcohol functional group and are involved in whiskey instability and, even at low levels, can give rise to permanent flocs or haziness. These can sometimes be remedied by the chill or cold-filtration process (details discussed by Discher, 2016 including details and information on the selective removal of flavor-active fatty acid esters); many craft distillers and some major Scottish whisky distillers prefer not to touch filtration as it may rob the spirits of some flavor components. Unfortunately for many craft distillers the hazes and flocculation of matter we see are significant and turn the consumer off from further consumption or purchase and so chill filtration will be their only remedy, unless other causes of haze and flocculation, as discussed in the text, are (also) involved.

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As oxalate has been found predominantly in the last fractions of distillation (the tailings) it is important to discard these last-runnings. Besides the possibility of them forming in tequila they are suggested as being a source of dermatological irritation among tequila distillery and agave plantation workers (Salinas, Ogura and Soffchi, 2001). Again seemingly innocuous minerals such as calcium are thus not be ignored.

Summary, Final Points of Discussion and Actions to be taken to Avoid Turbidity Issues

The distiller needs to understand the quality attributes of raw materials (plus their preparation) and the capacities of their yeast strains. They then need to control the fermentation conditions, the distillation process, and consider the quality of the dilution water and any filtration media used. The quality and cleanliness of glass bottles, and the cleanliness of the bottling house and machinery and other equipment is then also important. All this is needed in-order to prevent or reduce the appearance of hazes, colloidal suspensions and precipitates.

Filtration media includes charcoal — very fine charcoal particulates can bleed through into product! A silky grey-black greasy-like precipitate might be evidence for carbon deposit bleed through. If charcoal filtration is used then the simplest explanation is that such deposits are carbon-fines. A definitive identification would require some extensive and expensive investigation. Diatomaceous

REFERENCES Aylott, R. (2014). Whisky analysis. In: Whisky: Technology, Production and Marketing (Second Edition). Edited by Inge Russell and Graham Stewart. Elsevier/Academic Press.

Chapter 14; 243-270.

Braus, H. Eck, J.W., Mueller, W. M. and Miller, F.D. (1957.)

Isolation and Identification of a Sterol Glucoside from Whiskey. Agricultural and Food Chemistry. 5 (6); 458-59.

Discher, H. P. (circa 2016 and on line). As Clear as Amber: Turbidity in Whiskey – Flaws or Taste Criterion an Application Report of the EATON Technologies Company.

Dudley, Wm. L. (1908). The Filtration of Alcoholic Liquids Through Wood Charcoal. J. Am. Chem. Soc. 30 (11); 17941789.

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earth (DE) particulates bleeding through the filtration system appear, under a basic light microscope, as intricate shapes of the diatoms forming its matrix-providing evidence of breakdown of the filtration operation. A significant summary in all this is that filtration conditions must be understood and controlled based on the actual composition or type of spirit being produced and bottled (Warwicker, 1960; 1963 a, b), the reason and need for filtration, and upon a knowledge and understanding of the nature and composition of the filtration medium and the integrity of the filtration system.

Distillers often want to add a “local” angle to their marketing but the use of well-water should be avoided for dilution unless tested to be sure it is really a mineral-free quality source. An insistence on use of local water sources is one rejection argument against advice to use only mineral free dilution water. Checking the performance of any water purification system is essential and should be standard operating procedure.

Consumers often chill spirits or store them in the freezer and so pre-testing of product by the distiller, perhaps over an extended time period, can reveal if these issues are likely to occur with their own product.

Glass bottles must be free of detergents, mold release compounds (from the actual production molding of the bottles — not the microbiological kind of mold — though that too must not be overlooked if present in the bottling house) and lubricating oils and greases or dust residues from plant or packaging materials. Protein based adhesives might also be a concern as will unclean pipe-lines, tanks and distillation Krosnijs, I. and Kuka, P. (2003). Influence of Water Hardness on the Clearness and Stability of Vodka. Pol. J. Food Nutr. Sci. 12/53, SI 2; 58-60.

Lachenmeier, D. W., Sohnius, E-M., Attig, R. and López, M.G. (2006). Quantification of Selected Volatile Constituents and Anions in Mexican Agave Spirits (Tequila, Mezcal, Sotol, Bacanora). J. Agric. Food Chem. 54 (11); 3911-3915.

Malinovsky, K. (2000). Turbidity Problems in the Spirits Industry. Brantweinwirtschaft. 140 (17); 253-255. [A shortened translation by Ing. Janda A. on the web – The issue of turbidity in liqueur.]

Salinas, M. L., Ogura, T. and Soffchi, L. (2001). Irritant contact dermatitis caused by needle-like calcium oxalate crystals, raphides, in Agave tequilana among workers in tequila distilleries and agave plantations. Contact Dermatitis. 44 (2); 94-96.

equipment (unpassivated stainless steel? or heavy mineral deposits in stainless steel tanks {iron} or stills {copper} etc.).

For sweetened spirits, microorganisms — including spore forming microbes if present in sugar syrups etc., could be problematic and ultimately become a source of microbiological-based haze (Malinovsky, 2000). Bottling operations should be undertaken only in clean areas, free of any grains, raw materials or food items and any other materials which may be or become a source of microorganisms and/or dust particles, fibers or oils etc.

Due diligence and understanding as to how these hazes (turbidities), particulatesuspensions and precipitates arise will solve many of the problems we are presented with weekly. Sometimes identifying these visually offending materials can be quite costly unless they are sitosterol or calcium oxalate related; these two causes often being quickly identified via microscopy and confirmed, if necessary, by means of chromatographic techniques.

It is hoped that this review and sidebars, along with the cited references, will provide the distiller with a clearer understanding of this rather murky and technically complex issue. Wishing you clarity in understanding and success in producing crystal clear and long-time shelf-stable spirits.

Gary Spedding, Ph.D. is a brewing analytical chemist/sensory specialist and managing owner of Brewing and Distilling Analytical Services, LLC. The team also includes Jessi Bentley, B.Sc. chemist, Matthew Linske, B.Sc. lead microbiologist, and Philip Gennette, B.Sc. analytical technician. For more information visit www.alcbevtesting.com or call (859) 278-2533.

Siebert, K.J. (2006). Haze Formation in Beverages, LWT (Food Science and Technology). 39; 987-994.

Spedding, G., Linske, M. and Weygandt, A. (2017). Beer Colloidal Stability. The Brewers Journal. Jan-Feb 2017; 80-83.

Warwicker, L. A. (1960). Instability in Potable Spirits. I. – Scotch Whisky. J. Sci. Food. Agric., 11; 709-716.

Warwicker, L. A. (1963a). Instability in Potable Spirits. II. – Rum and Brandy. J. Sci. Food. Agric., 14; 365-371.

Warwicker, L. A. (1963b). Instability in Potable Spirits. III. – Gin and Vodka. J. Sci. Food. Agric., 14; 371-376.

Williams, G.C. and Fallin, E.A. (1943). Activated Carbon Treatment of Raw Whisky. Industrial and Engineering Chemistry. 35 (2); 251-254

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CRAFTING SPIRITS with HONEY By the National Honey Board

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t’s a good time to be in the spirits industry. Sales are increasing1, premiumization is working1 and millennials are turning to liquor over beer.2 It’s also a great time to be in the honey industry.

Demand for pure natural sweeteners is growing3 and more and more consumers are understanding the unique depth of flavor honey brings to spirits or cocktails.

Consumers of spirits are on a quest for authenticity and uniqueness, which is why so many mainstream and craft distillers are using honey in their new products. What started in the 1970s as a way to attract female consumers to the whiskey category has gone mainstream across most major whiskey brands, and has trickled down to other spirit categories and liqueurs.

The benefits of using honey in spirits go well beyond just adding a sweet flavor note to a finished product. Honey also adds a depth of flavor to distilled spirits through its combination of simple and complex carbohydrates, minerals and other properties.

From a marketing standpoint, honey is the perfect sales tool to make a bottle stand out. From bee to honeycomb to honey dipper, honey’s iconography is the perfect imagery to win over consumers.

The ingredient is on trend, as a popular sweetener and flavor throughout the beverage industry.

Honey can be used in distilling as either a fermentation substrate for spirits production, or as a flavor component that is added to a finished spirit to deliver sweetness and taste. When used for fermentation, honey provides a concentrated source of sugars that are fermented into alcohol. Honey also brings a distinctive array of aroma characters, many of which are recovered and expressed in the finished spirits.

As a flavoring component, honey contributes sweetness, body and mouthfeel and a range of distinctive tastes and aromas to a distilled product. It’s currently being used as an essential natural flavoring by a growing number of large multinational distillers, bringing the taste of honey to many popular flavored liquors, including whiskies, vodkas, rums and liqueurs.

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HONEY AS FERMENTATION SUBSTRATE

Honey is a highly concentrated source of sugars, composed largely of fructose and glucose, with smaller levels of maltose, sucrose and other minor sugar types. It contains minerals and vitamins, and has a water content of about 20% on average. Honey has desirable properties as a fermentation substrate as the natural sugars in honey are highly fermentable by yeast and the mineral content helps support healthy fermentation.

Honey does have a low nitrogen content, however, so it is necessary to provide supplemental nitrogen to enable rapid and complete fermentation. It is common for distillers to add a commercial yeast nutritional supplement to provide both nitrogen and additional minerals to ensure healthy fermentation.

To initiate fermentation, honey is pumped into a fermenter, where it is diluted with water to a sugar concentration specified by the distiller and mixed with a select blend of nutrients. A sugar concentration of 18-20 °Brix (percent by weight) is used by many distillers and should yield 8-10% alcohol (alc/vol) at the end of fermentation. Other distillers are finding success pushing the sugar concentration over 24 °Brix in efforts to improve plant efficiency and increase production capacity.

Next, yeast is added to start fermentation. Honey distillers, akin to their mead (non-distilled honey wine) counterparts, tend to allow for a slow and cool fermentation to take place, which can take 10 to 14 days to complete.

Upon completion of fermentation, the honey wine is distilled to recover the alcohol and volatile honey aromas. The preferred type of still used on the honey wine is governed to some degree by the style of spirit being produced. For example, to produce a honey vodka, one must distill to no less than 190 proof (95% alc/vol), and this is achieved by running a series of distillation runs using either a column or pot stills, or both.

First, a “stripping” distillation is run using either a continuous column or a pot still, and this is followed by one or more “rectification” or

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“spirit” distillations in a pot still containing, or attached to, 12 or more rectification trays.

More than one spirit distillation run may be required to achieve the high proof (>190 proof) requirement or the desired degree of neutral character in the spirits. Keep in mind that high proof distillation will remove the majority of the honey aroma characters, but while the honey notes will be muted, a clean fermentation and careful distillation can still allow the honey to express itself in a unique and subtle way.

When producing a honey eau-de-vie, a honey brandy, or any other type of spirit where a high flavor congener level and honey flavor attributes are desired, a low proof distillation process should be conducted. In this case, a column or pot still stripping run would be followed by a second pot distillation using four to six rectification trays.

In other cases, a single pot distillation might be preferred, especially if a strongly flavored spirit is desired. In either case, suitable heads and tails cuts will be taken in the final distillation run as dictated by the desired taste profile of the finished spirits.

It may be advantageous to mature a honey spirit to add richness, complexity and depth, and to smooth and round the spirit’s flavor.

This would be especially compelling for a highly flavored (low proof) spirit, which could benefit from aging in once-used bourbon barrels or reused rum, brandy or whisky barrels. Aging for a few months to a few years could create a palate of new and intriguing flavors to accent and complement the aromas of the original honey substrate.

Honey is an expensive raw material when used as the singular source of sugar for converting into alcohol. It requires a little more than 1.5 lbs. of honey to produce one 750 mL bottle of honey vodka. However, honey also makes a spirit premium, and industry trends have proven that consumers are willing to pay for a premium product.1 Regardless, it is important for honey distillers to optimize their use of honey. Distillers will need to maximize the yield of alcohol recovered from their honey by applying proper yeast nutrition techniques and proper fermentation controls. They also can use honey in innovative ways to explore new spirits styles and tastes, perhaps by blending honey with other sugar sources or with fruit juices in a manner similar to those used by mead producers.

HONEY AS A LIQUOR FLAVORING

Whereas using honey as a fermentation substrate is complex, using honey as a flavoring is a much simpler process that can still yield significant outcomes in both flavor and sales. Although honey is one of the most commonly used flavorings in products such as whiskey, its full potential remains untapped, especially when it comes to using varietals.

In the United States alone, there are more than 300 varietals of honey, each with a unique flavor solely dependent on where the bees forage for nectar. In general, darker honeys have stronger, more robust flavor profiles, and lighter honeys have more delicate, floral flavor profiles.

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When used as a liquor flavor, honey plays a support role in the overall taste of products such as bourbon, dark rum or gin, or it can take a dominant position when used to flavor a vodka or in a sweet liqueur.

When using honey as a flavor, an additional filtration will be required after the addition of the honey to the spirit to remove any honey components that are rendered insoluble by the alcohol content of the finished product. A filtration as tight as 5-10μm will remove these alcohol insoluble honey residues.

The use of honey as a sweetener and flavoring agent for finished liquors is much more economical than using honey as the primary fermentation substrate. As a sweetener and flavoring agent, honey may be used at levels of up to 10%. The wide variety of tastes and aromas displayed by honeys of different floral origins offers distillers great opportunities to create unique and original flavors, especially when added to matured spirits or used in combination with other natural flavors and extracts. The versatility of the flavor of honey truly offers great opportunities for the distillers.

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HONEY CONSIDERATIONS: HEAT TREATMENT

Honey is easily fermentable, and in many cases, the all-natural sweetener is simply diluted with water, mixed with yeast and select nutrients and allowed to ferment. However, honey does have microorganisms that naturally occur. Since honey is highly acidic with a pH of 3.9, these microorganisms are dormant.

However, some distillers may elect to pasteurize their honey by heating upon (or after) dilution with water. This helps control bacteria and wild yeast populations that could lead to reduced alcohol yields and a risk of off-flavors if left unchecked. There are other distillers, however, who choose to leave the natural microbial flora in the mix and avoid heat-treatment.

HONEY CONSIDERATIONS: STORAGE

Honey can be used year-round by the distiller, as it displays a high level of stability, especially when stored at room temperature in a dry environment. Honey stored in sealed containers can remain stable for decades and even centuries! However, honey is susceptible to physical and chemical changes during storage; it tends to darken and lose its aroma and flavor or crystallize. These are temperature-dependent processes, making the shelf life of honey difficult to define. For practical purposes, a shelf life of two years is often stated.

Honey may crystallize and form a “granulated” semi-solid texture.

This process does not denigrate the honey, and it can be returned to the liquid state by gentle heating.

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SOURCES

Distilled Spirits Council - http://www.discus.org/2016AnnualEconomicBriefing/ New York Post - http://nypost.com/2017/07/24/millennials-prefer-trendy-booze-over-beers-report/ 3 Techavio report - https://www.technavio.com/report/global-food-sweetener-market

707.944.2277 ramondin.com

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SAMPLES OR QUOTATIONS : sales@ramondinusa.com

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UNION HORSE DISTILLING

Written by Amber G. Christensen-Smith Photographed by Amanda Joy Christensen

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ike a thunderous stampede of hoof steps drumming the ground, your heart can nearly burst from your chest when a new idea invades you. The bug can catch you and create a stirring that ignites ideas for change. Damian Garcia and his two brothers and sister, owners of Union Horse Distilling of Lenexa, Kansas, know a thing or two about ideas coming to fruition and taking them places they had never even imagined.

Damian, who is the distillery’s Director of Sales, shares their story: “My brother worked at a microbrewery and he got the bug back then in college. About late 2008 he started talking about wanting to start something.” Soon after, they toured a craft distillery and the light bulbs went off. In early 2011 they secured a space and started setting up equipment.

Union Horse Distilling is a treasure not only for its popular spirits, but also for its beautiful event space. The Garcia family has found success with producing four spirits and by entertaining the public.

“Our mindset was just make the best whiskey we possibly could,” says Damian. But while they waited for their bourbon and rye whiskey to age, they experimented with creating a white whiskey and vodka to get profits coming into the business. Their Long Shot White Whiskey is made up of a sour mash recipe, and their Rider Vodka is slow filtered and made from 100% wheat.

Union Horse uses local grains—whole kernel corn, wheat, and rye—and makes all their spirits in the grain to glass tradition. They use new Missouri American Oak barrels to age in small batches. For six to seven hours per day, they are mashing, cooking, and blending up their spirits, and even use a second shift to keep production going at a constant rate. Damian says their Vendome Still—Chester Copperpot, lovingly named after the explorer from The Goonies—is their workhorse and is even viewable from part of the event space as you tour the facility.

In early 2010, Patrick Garcia, head distiller, started coming up with recipes for their bourbon and rye. “We saw that there wasn’t a lot of rye (whiskey) out there. It was a hard recipe to make, but we’ve got it down now,” shares Patrick.

Damian continues, “When we came up with the rye whiskey, we wanted to make something that was unique and different. So we came up with our whiskey being 100% rye. It was a devil to make.” Now they are on their tenth batch of bourbon and eighth batch of rye whiskey. “Whiskey is hard. There are so many different variables—from the condition of your grain coming in, to the water WWW.ARTISANSPIRITMAG.COM

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you are using and the climate and storage of your barrels. With a small batch producer like us, you have limited capacity and limited storage, and you’re wondering what the barrels up here and down here are doing,” Damian says, gesturing to the height of barrels on the racks. “It’s highly scrutinized.”

However, all those differences are what makes craft, well, craft.

Patrick shares, “A little bit of variance is actually pretty good.

It shows that we are craft. We’re not Jim Bean; we’re not Jack Daniels.”

Their craft spirits have not only found popularity because of their craftsmanship, but also because of their visibility within their event space. In the beginning, their goal was to solely create aged spirits, but they soon discovered that having a space for business meetings, parties, and receptions was very profitable as well. Damian and his siblings knew they had to do something with the large area that was left vacant at their location. Having an event space really brought something unique to the area. “The event space is a large portion of our business,” explains Damian. “It helped drive awareness and added to the distillery with booking events here. Once we started putting that out there with advertising, people wanted to come out here.”

“The event space has definitely been a good anchor to the facility because you have a captured audience when they are here for an event. Sometimes we have to curb production because of an event, however,” continues Patrick. This is when that second production shift comes in handy: “We have a second shift so we can run the 500 gallon still twice a day. It’s useful to have those two shifts.”

Another part of their profitability was their drive for change with distillery focused legislation. Early on they learned they could not do tastings on their tours or sell bottles from their facility. This was not only a shocking revelation, but it was also a conduit for change in Kansas, propelled by the Garcia family.

Patrick explains, “We hired a lobbyist. There were a lot of people that didn’t want us to have tastings and to sell from our facility.” After much work with the legislators, Kansas distillers can now offer two-ounce tastings, make mixed drinks, and sell souvenir bottles out of their facilities. “We’re not advertising ourselves as a liquor store. People come in here for a tour; they’re coming here for the full experience. The change has definitely benefitted us.”

Other distilleries are thankful for the work the Garcia family did with legislation in Kansas. Damian says, “It was a huge step for Kansas.”

Union Horse Distilling is successful because they have found ways to work together as family, create spirits that their community desire, and find ways to diversify their profits.

Knowing when to capitalize on other endeavors can be a smart move for all distilleries.

Union Horse Distilling is located in Lenexa, KS. For more information visit www.unionhorse.com or call (913) 492-3275.

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w

hen people talk about the great spirits traditions of the world and their ingredients, the conversation tends to focus on the starch or sugar-rich fermentable bases—be they grains, fruits or spuds— or, to a lesser degree, the water source.

It’s much rarer for microorganisms to be the center of the discussion (beyond a few fleeting mentions of yeast-generated esters). But that’s not the case with shochu, Japan’s native spirit. And it’s not the yeast that producers and enthusiasts usually wax rhapsodic about, but the koji—the mold that produces the necessary enzymes to break down starches into fermentable sugars (It’s also a critical component of sake, as well as non-alcoholic foodstuffs like miso paste and soy sauce).

Typically, the koji mold (aka kojikin) is inoculated onto steamed rice and allowed to propagate—a process that usually takes about 48 hours. Once kojikin cultivation occurs on the rice, that rice becomes komekoji, or, simply, rice koji. It’s then added to the mash to enable the saccharification process.

And that applies to all mashes, even the ones that aren’t rice-based. Rice koji is used in shochus made from all sorts of bases. The major ones, in addition to rice, include sweet potatoes, barley, black sugar and buckwheat (there are nearly 50 other less-common bases that can be used).

But it’s not just koji’s uniqueness to the category that makes it such a conversation piece, but the fact that it’s absolutely essential to the flavors that make shochu shochu. “Koji is the magic behind shochu, it’s what distinguishes shochu from other spirits,” says Jesse Falowitz, partner and co-founder of Nehan Spirits, which owns and imports the brand Mizu Shochu. Mizu is produced at Munemasa Shuzo Co. in the city of Arita in Japan’s Saga prefecture and uses two-row barley from Saga as its base.

“I speak to a lot of bartenders and I hear how a lot of brands present their spirits and [microbes are] one thing they’ll only get into during the presentation if someone asks about it,” Falowitz says. “But koji is essential to the conversation; it’s essential in defining

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the Soul of Shochu

get acquainted with koji, the microbe that defines the japanese spirit

WRITTEN BY JEFF CIOLETTI

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shochu. And it’s really part of gastronomic culture of Japan, as well.”

There are three main species of koji and all have been used, to varying degrees, in shochu production.

black koji

The most ancient of the molds is black koji, whose scientific name, aspergillus awamori, reflects its most common use, as the microbe of choice in awamori—the long-grain indica-rice-based spirit that’s unique to Okinawa. Black koji is very high in citric acid and is known to produce extremely strong enzymes to break down starch. The microbe also has become popular among shochu producers, as it’s known to produce a drier spirit, with a rich, earthy flavor and aroma. The acid level is also a big plus, as it fights off any unwanted bacteria that might bring unpleasant elements to the mash.

Some shochu makers that had dabbled with black-kojibased products have moved away, as aspergillus awamori, to put it lightly, has a tendency of taking over. “It’s sort of pervasive,” explains Stephen Lyman, founder of Kampai

US and one of America’s foremost experts on the spirit. “[Producers] start getting this distillery mold, mold that’s propagating and getting all over the place.”

Lyman recalls that during one of his stints working at shochu distilleries in Kyushu (the southwestern-most of Japan’s main islands), such an infection occurred.

“Even after doing a complete disinfection of the koji room, it shut down koji production for a day,” he says. “Any rice that fell on the floor ended up being propagated with black koji. It just overpowers white koji and yellow koji. You’ve got to be really careful when using it.”

Black koji’s labor-intensity hasn’t deterred the makers of Mizu, as it’s crucial to the flavor profile they pursued for the flagship Saga Barley product, as well as its soon to launch green tea shochu. In addition to the barley and the rice koji, 10 percent of the mash is roasted green tea. Rice koji is the first mash and barley is added for the second. About mid-way through the second mash—six or seven days into the process—the distillers add the green tea.

“The aroma of roasted green tea is not faint or delicate—

it’s pretty rich,” says Falowitz.

“Pairing that with black koji gives it peak aromatics.”

white koji

For Mizu’s other release, its Lemongrass shochu, it uses the breed most commonly used for the spirit, aspergillus kawachi, aka white koji. White koji is actually a mutant form of black koji that’s also known to produce high levels of citric acid and powerful enzymes to saccharify starch.

The Mizu team wanted to make sure that the predominant aroma notes were from the lemongrass—which accounts for five percent of the mash—rather than the koji, and the white variety offers more subdued aromatics for that purpose. It’s also not quite as invasive as aspergillus awamori, which makes it a bit easier to control in the koji room. “White koji tends to be much more mellow and balanced, I’d even say sweeter,” Lyman says.

yellow koji

Yellow koji, or aspergillus oryzae, is far less frequently used in shochu production— it’s the koji used in sake, soy

sauce, and miso—but when it is, it brings a pronounced floral quality to the spirit.

While you still get some of the same strong enzymes to break down starches as you do with black and white, yellow is considerably lower in acidity and more sensitive to heat— hence its uncommon presence in the shochu world. However there are some notable brands that make an aspergillus oryzae interpretation of the spirit, including the sweet-potatobased Sakura Shiranami, from Kagoshima’s Satsuma Shuzo.

There’s also Tomi No Hozan, another Kagoshima-produced sweet potato offering from Nishi Shuzo Co. “[A distiller] likes to say koji is honest,” notes Lyman. “If you cut corners on making koji, it’s not going to turn out well.

You’ve got to do everything you can to propagate it efficiently, otherwise you’re not going to come out with a strong fermentation. And that means you can’t cheat.”

Jeff Cioletti is the editor at large of Beverage World Magazine, creator of The Drinkable Globe website, and hosts the web series, The Drinkable Week.

LOGGERHEAD DECO, INC. 1640 LA DAWN DR. PORTAGE, WI 53901 630.206.3747 www.loggerheaddeco.com info@loggerheaddeco.com

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r o B To ot to n p r o C B

THE BENEFITS OF BENEFIT CORPORATIONS WRITTEN BY CARRIE DOW

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oday’s companies are doing business a new way, where economics meets social awareness. Many companies are becoming more consumer friendly, environmentally conscious, and socially attuned to the world around them, and it shows in their business practices.

These practices include recycling and sustainability, fair wages and hiring practices, and putting profits into community instead of shareholder pockets.

What business owners, including distillers, may not know is there is an organization that will help them establish these practices in their corporate culture to aid them in attracting customers and investments. The program is called B CORPORATION, or Benefit Corporation, and it is run by the non-profit organization B LAB. B Corporation, or B Corp, is a certification program that companies can use to show their commitment to helping the world while growing their business. B Lab compares this label to a food getting certified as organic or production resources as fair trade. As a WWW.ARTISANSPIRITMAG.COM

consumer, this seal tells you how the company does business. To learn more about this program, we’ll look at three distilleries, two already certified and another going through the process.

Formed in 2006, B Lab is the largest certifier of Benefit Corporations in the world and is trusted by institutions such as the Sierra Club and Entrepreneur Magazine. The organization took over a year to fully develop the best practices, ratings systems, and standards by which companies are measured before being certified.

Why certify? Callie Rojewski, Marketing and Communications Associate at B Lab, says “Consumers, especially millennial consumers, want to know they are buying from a good company.

B Corp certification provides this credibility for them.” Not only can it attract customers, but certification can help distilleries attract investors who want to know how their money is being used, and attract better employees, people looking for more than just a paycheck.

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Today there are 2,310 companies in over 50 countries and across 130 industries listed as Certified B Corps, including major corporations like Ben & Jerry’s, New Belgium, Patagonia, and Etsy.

However, there are currently very few B Corp distilleries.

Lyle Estill, CEO of FAIR GAME BEVERAGE COMPANY in Pittsboro, NC, says his distillery had B Corp certification written into the business plan before opening in 2012.

“I’ve been active in the B Corp community for about as long as there has been a B Corp community,” he says, starting with his first company, Piedmont Biofuels in 2004. He even helped hone the assessment questions, largely through his complaints about them, he jokes.

Fair Game is an environmentally friendly distillery that gets ingredients from nearby organic farms and has a 100kW solar array on site. As familiar as he is with the certification process, some aspects are daunting.

“You have to have six months of revenue before [B Lab] will even talk to you, so we were one year in before we certified,” details Estill. Despite the lengthy process, it isn’t all encompassing.

“You work on it and then you set it aside,” says Estill, “and then you work on in and then you set it aside, and then you fight about it, and then you agree up on it, get past that hurdle, and then set it aside. Then you throw the ball over to [B Lab] and they’re not exactly speed demons. I would say it was a six month process.”

For Estill, Fair Game’s B Corp status is a huge opportunity.

“It’s a sales tool because B Corps like to buy from other B Corps and therefore we have lots of direct relationships as a result. We have about 40 B Corps in our neck of the woods and we get together for parties and meetings. If I host a B Corp evening in my tasting room, 90 people to show up.”

Estill says the biggest challenge to becoming and staying certified is “pushing it to the far corners of the company.” His goal is to make sure the entire workforce understands why Fair Game does what it does.

“If the corner office people are sitting around talking about their carbon footprint, is that discussion making it to the truck driver that is using most of the carbon in the company?” Estill asks. “He’s the one who decides if he idles his engine or not.”

Estill strongly recommends every business take the assessment.

“The wonderful thing about doing the B Lab assessment is the self-discovery that goes along with that. Everybody should do it, whether they’re going to certify or not. It teaches you a lot about your company.”

Distilleries are some of the most forward-thinking industries in the country using locally sourced ingredients and equipment, creating employee-owned corporations, and donating time, materials and profits into local communities. So why aren’t there more? Becoming a certified B Corp means being subjected to rigorous scrutiny and undergoing a lengthy investigative process that takes time and money, both precious commodities for distillers.

Karen Hoskin of MONTANYA DISTILLERS in Crested Butte, Colorado, is currently in the certification process. She started in February of this year and hopes to have certification in November, WWW.ARTISANSPIRITMAG.COM

which will coincide with the company’s 10-year anniversary. She admits she could have acquired it sooner, but the demands of her business increased over the summer and she put the process on hold. Refocused this fall, she is determined to receive her certification by the end of the year. However, it hasn’t been easy.

For example, when she started, Hoskin knew where everything in her supply chain came from, but when B Lab asked for documented proof, she realized B Lab wasn’t just going to take her word for it.

“There is a long assessment and answering questions,” she explains. “They ask you questions like ‘Where do you bank?’ They prefer you bank with a credit union rather than a giant corporate bank. They want to know how your policies reflect your commitment.

It can’t just be lip service.”

To become certified, the first thing a business must do is take the B Impact Assessment survey, which can be done online and take anywhere from one to three hours. Taking the assessment is free.

Companies that score at least 80 out of 200 possible points in the 150-question survey are then scheduled for an assessment review.

From there, businesses go through a phone interview and turn in supporting documentation for review.

While many distilleries build sustainability into the business from the start, becoming a Certified B Corp can be daunting. It can also be expensive. Fees to become certified range from $500 to $50,000 and are determined by annual sales revenue. Fees are paid annually, so as a company’s sales grow, the fees grow, and certification has to be reviewed every two years. For distilleries wanting to become certified, Hoskin thinks it’s better to wait until the distillery is established.

“Distilleries are so capital intensive to start with,” she notes, “and the B Corp requirements can cause people to take on more spending when they aren’t ready.”

Located in Butte, HEADFRAME SPIRITS received its Certified B Corp status in January 2017. CEO Courtney McKee says she hopes Headframe will inspire other businesses to redefine their corporate practices. While the spirits the distillery makes are award-winning, McKee is most proud of what Headframe does for the Butte community. During its first two years in business, Headframe donated over $40,000 to local non-profits and has regular charity events in its tasting room. The distillery also partners with Montana Tech, a local engineering college, to provide educational opportunities to students.

“I’m proud of the tradition of Headframe Spirits, the products we make and how we give back to the community. We hope to organize the company as New Belgium did and make it employee-owned rather than sell it to a conglomerate in the future.”

Even if your distillery isn’t ready to take on the task, Rojewski says that simply taking the free B Impact Assessment can give non-certified business owners an idea of where the company is and provide a blueprint for what needs to be done as they grow.

Says Rojewski, “Any company can use it to measure and manage their impact on the world.”

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IMPLICATIONS OF LABOR LAWS IN THE CONTEXT OF BOTTLING PARTIES AND SIMILAR EVENTS

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DON’T BOTTLE TROUBLE

ardly a week goes by without an announcement crossing my social media stream about an upcoming bottling event at a craft distillery. In many cases, my feed tells me that the distillery is looking for passionate supporters of the brand to come down to the facility and help with the bottling on a given day — in exchange for which these helpers will earn the locally required minimum wage, get the opportunity to purchase one of the bottles and possibly receive a hearty lunch. Not a bad deal, really.

Perhaps more often, however, the distillery is asking for volunteers to assist with bottling. The volunteers will still receive the hearty lunch and the opportunity to buy a bottle and some merchandise — possibly with the benefit of the distillery’s friends, family and employee discount — but will not earn any actual cash. And this is the sort of thing that keeps me up at night. You see, I really want to participate in a bottling party. I’d love nothing more than spending a Saturday at a distillery filling bottles, applying labels and packing cases of one of my favorite spirits. But I just can’t bring myself to do it. And it isn’t because I’m too busy or can’t be bothered; it is because I really don’t want to get these small distilleries in trouble, and I know that under state and federal law these kinds of bottling parties are problematic.

Under a federal statute known as the Fair Labor Standards Act (FLSA), the use of volunteers to provide labor is highly regulated. That doesn’t mean it is prohibited. But if the volunteer doesn’t fit within the very narrow confines of what the Department of Labor (DOL) considers a volunteer, then the individual is most likely actually an employee under applicable federal law. And that means that the business benefiting from the labor will have failed to pay the individual a minimum wage. That failure carries with it some rather draconian potential consequences, including not only the obligation to pay the unpaid wages but also liquidated damages in an additional amount equal to the unpaid wages, plus the attorney’s fees of any individual who successfully brings a claim. Depending on the business location, an individual may be able to obtain additional penalties and remedies under state and local wage and hour laws. And if that weren’t enough, it makes for a very bad and very public spectacle, which can result in significant reputational damage. With this as the potential consequence

WRITTEN BY BRIAN B. DEFOE

of mischaracterizing volunteers, it is important to understand who is — and who is not — a volunteer.

Under the FLSA, an individual may only be classified as a volunteer if her labor meets the following criteria:

== ==

It is performed for public service, humanitarian or religious objectives; It is performed without the expectation or receipt of any kind of compensation; and

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It does not displace employees and is not of the type that would otherwise be performed by employees.

The DOL is quite strict in its application of these principles. For example, the DOL has opined that individuals could be characterized as volunteers if — while assisting a hospice center — they sat with patients simply to provide the patients’ families with needed breaks or attended funerals.

But they could not be characterized as volunteers if, instead of sitting with patients, they were providing general clerical or administrative support to the hospice. The first set of activities — according to the DOL — were in the nature of public service, humanitarian and religious activities. The second set of activities were not.

Taking each of these in turn and in the context of a small distillery, we can see how allowing “volunteers” to help WWW.ARTISANSPIRITMAG.COM

with bottling could lead to a violation of the FLSA. While we may appreciate the social or other community benefits of fine spirits, it is obviously difficult to argue that our test subject is volunteering as part of a public service, humanitarian or religious exercise. The labor is being performed without the expectation of cash compensation — but by providing her with a discount on her purchases and the aforementioned hearty lunch the distillery is actually providing our pseudo-volunteer with a form of compensation. And since she’s almost certainly being solicited to help with bottling for the sole purpose of avoiding the need to hire employees to perform the task, her work is exactly the kind of labor that would otherwise be performed by employees and does in fact displace employees.

For those keeping score, this means our dutiful laborer has failed each of the three required prongs for being considered a volunteer under the FLSA and if our distillery engages her on this basis it is breaking federal law and probably other state and local laws as well.

Recognizing this, some distilleries seek to claim that our laborer is actually more appropriately classified as an intern. Unfortunately, this claim too likely fails — as internships are also quite closely regulated.

Under the FLSA, an individual can provide services without compensation if she is an intern. But an internship or training program will only qualify for this exclusion from the requirement to pay minimum wage if the specific facts and circumstances of the program meet all of the six following criteria:

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; 2. The internship experience is for the benefit of the intern; 3. The intern does not displace regular employees, but works under the close supervision of existing staff; 4. The employer that provides the training derives no immediate advantage from the activities of the intern and on occasions its operations may actually be impeded; 5. The intern is not necessarily entitled to a job at the conclusion of the internship; and 6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Turning back to our distillery and laborer, let us again examine each of these criteria. Under DOL guidelines, the more an internship is structured around a classroom or academic experience, the more likely it is that the internship will satisfy the first criterion. Suppose, therefore, that our distillery agreed to provide an internship to a would-be distiller who wanted to learn how to separate a distillation run into heads, hearts and tails, the internship involved a heavy dose of instruction in chemistry and was being offered in conjunction with the intern’s enrollment in a university or community college course relating to distilling and for which she was to receive WWW.ARTISANSPIRITMAG.COM

academic credit. Under these circumstances, it seems quite likely that our internship meets the first of these criteria. But in the context of the bottling party these aren’t really our circumstances.

Instead, our intern is probably going to be given a quick course in how to operate some bottling equipment — or possibly how to apply a label on that bottle — and sent on her way at the end of the day. There’s nothing particularly educational or academic about that interaction; our internship likely fails the first criterion.

Similarly, it is hard to see how our internship meets the second criterion. Our intern is not the primary beneficiary of her labors — the distillery is. Under DOL guidelines, the fact that the intern may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the protections of the FLSA (i.e., getting paid and any overtime requirements) if the employer is benefiting from the intern’s work. In our situation, the intern can perhaps say that she has a new skill — but how often is she really going to benefit from her newfound ability to operate a bottlefilling apparatus? By contrast, how beneficial was her work to the employer? The relative benefit of the internship appears heavily weighted in favor of the employer. Our internship has failed the second criterion as well.

We considered the third criterion when we tried to characterize the bottling party as a volunteer experience. The laborer is intended to perform work that would otherwise be performed by employees.

An excellent argument can be made that this is not the sole purpose of the bottling party (a secondary purpose is to obviously create community around the distillery’s brand and deputize new brand evangelists). But this secondary purpose does not change the fact that our intern’s work will — by design — displace employees.

So, as with our inability to satisfy this criterion in the context of a volunteer classification, we similarly do not satisfy it in the context of an internship.

With respect to our fourth criterion, I can report that many distilleries have told me that having bottling parties does — in fact — impede their operations. Sometimes it impedes them quite severely, as when the helping hands manage to drop full bottles on the floor, apply labels incorrectly or generally cause a ruckus.

But this is only half of the criterion — and probably not even the important half. The bigger question is whether the employer actually derives a meaningful benefit from the intern’s work. And unless the distiller has been unfortunate enough to organize the world’s worst bottling party — where everything that can go wrong does in fact go wrong and at the end of the day the distillery is in a shambles, nothing has been bottled and the floor is now wet with spilled spirit, the distillery has probably received some meaningful benefit from the efforts of the intern. If the distillery has received a quantifiable economic benefit from the activities of the intern, we’ve just failed the fourth criterion.

With respect to the fifth criterion, we have probably (finally) reached some good news. The intern is almost certainly aware that she is not likely to receive a job offer at the end of this engagement.

Assuming that is true, then we will have met our obligation for calling the bottling party an internship. But note that there is a trap

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here for the unwary. DOL guidelines state that if an intern is placed with an employer for a trial period — during which she will be evaluated for a permanent position — then the intern is likely an employee during that trial period as well and should be paid a wage.

For our sixth criterion, we turn away from the facts of the engagement and get to the understanding of the parties. Like the fifth criterion, the sixth presents some potential good news for our employer as well as another trap.

The good news is that if both the employer and the intern understand that the position is one for which no wages will be owed, then we will have met the criterion. But beware the trap — or rather traps — presented by this test. First, it requires a meeting of the minds between the employer and the intern. And since the distillery is only one side of that equation it is possible that the employer would believe there was agreement when in fact the intern did not agree and did expect to be paid. In that circumstance, the criterion would not be met. Secondly, note that the guidelines are somewhat unclear on whether the criterion can be met if the intern understands that she is not entitled to payment but her understanding is incorrect because — for example — the internship fails any one of the preceding five criteria. In that circumstance too it is possible that the internship will fail the sixth.

So, how did we score on the internship test?

Not great. One or two out of six is not good. But this exam is pass/fail — and that means we fail.

Our internship must meet all of the six criteria in order to qualify for the exclusion from FLSA wage protections — and ours didn’t measure up.

Of course, some distilleries will try to get past these volunteer and internship issues by having the laborers sign an agreement

— possibly even one they spent good money getting an attorney to draft — that claims to waive their rights to payment under the FLSA and applicable state and local law. And if the bottling party situation is enough to keep me up at night, the waiver issue is enough to make me puke the still.

Let me take this opportunity to be unequivocal. If an individual is entitled to the wage protections of the FLSA, that individual cannot waive those rights. Such a waiver is unenforceable and will be disregarded by the DOL or any court that considers the matter.

Sure, having someone sign a waiver may have a slight deterrent effect; to the extent that they believe they have waived any rights they have it may make them less likely to bring a claim. But at the same time, having someone sign a waiver suggests that the employer knew the laborer was entitled to the protections of the FLSA. So, by requiring that the would-be volunteer or intern sign the waiver, the employer has actually strengthened the case of the DOL or any plaintiff trying to bring a claim for unpaid wages. On balance, an employer is probably better off not seeking an unenforceable waiver that makes it look like they were trying to skirt the law. And if the distillery’s attorney told them the waiver would work, the distillery needs a new attorney.

At this point, a distillery might well acknowledge that using this type of labor is a technical violation — a foot fault if you will — but question whether that liability has any real likelihood of surfacing. A recent case suggests that it does. The case doesn’t relate to spirits producers, but does concern a similarly passionate group of individuals — yoga practitioners.

In October 2016, a class action lawsuit was filed in United States District Court for the Northern District of California,

IF AN INDIVIDUAL IS ENTITLED TO THE WAGE PROTECTIONS OF THE FLSA, THAT INDIVIDUAL CANNOT WAIVE THOSE RIGHTS.

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alleging violations of the FLSA and California state labor laws arising from a program operated by CorePower Yoga, LLC. The case hinged on the following basic fact: for years, CorePower had operated a program in which it engaged individuals to assist with the maintenance and cleaning of its yoga studios in exchange for reduced-cost membership at the studios. Subsequently (possibly at the insistence of counsel?), CorePower changed this program to pay its laborers a minimum wage — but required that they pay back a significant portion as part of their membership fee. In each case, the individuals provided 1-3 hours of labor per week. Most were quite happy to have done this and enjoyed the arrangement.

The limited labor was a small price for them to pay in order to get to participate in their weekly yoga sessions at the studios.

But for whatever reason, one individual didn’t stay happy with this arrangement. That individual brought the lawsuit on behalf of himself and all other individuals who had been part of this program.

He didn’t win the case at trial. But he really didn’t have to win it. CorePower — staring down potential damages equal to several times the maintenance and cleaning costs it had saved over the years by operating the program, quickly settled the case for total payments to the plaintiff class members (and the law firm that brought the case) in the amount of $1.65 million.

Three things are worth noting here. First, as I mentioned many — possibly even most — of the individuals that had participated in the CorePower program were happy to have done so. They liked their yoga and thought the price was right. They may even have felt good about providing the cleaning and maintenance services to their local yoga studio and considered it doing something good for their community. But none of that mattered in the case and it doesn’t matter under applicable law. They were entitled to receive wages for their work — and once it began paying those wages, CorePower could not legally require them to pay them back in the form of membership fees. Doing that was a violation of state and federal law.

Secondly, even if the individuals were willing to provide the services for free or repay their wages, they made that decision on the basis of an assumption about the likely amount of those wages. A volunteer today who understands that she is giving up $10 per hour in minimum wage for her efforts today may feel very

differently about that interaction a year later if she learns that she’s now entitled to receive $20 per hour for her work that day — simply because the distillery didn’t pay her the minimum wage at the time.

Which brings me to my third and final point. If a distillery decides to accept volunteer or intern labor and in so doing mischaracterizes employees and fails to pay wages, what the business is actually doing is creating a contingent and hidden liability. That liability, although not reflected on the business’ balance sheet, will exist and will remain hanging over the business’ head until the relevant statute of limitations has expired. For claims brought under the FLSA, that means that the distillery has potential exposure for a period of two years from the last date on which it received the benefits of the labor but failed to pay wages. If the employer’s actions were willful, the period is extended back three years. And since a successful claim carries with it a right to recover attorney’s fees and interest from the date that the wages should have been paid, the amount of that liability increases with every day that passes until it is extinguished — either by payment or the lapse of the statute.

Creating and allowing that liability to linger does not benefit a business over the long term. Rather, it creates a fiscal sword of Damocles. The sword may not fall today. It may not fall ever. But if it falls, it will be painful. The business that experiences this misfortune will wish it had simply paid workers the minimum wage for their efforts. This is because a claim is made or because a prospective buyer of the business, upon reviewing the employment records of the business, discovers the potential for liability and reduces the price it is willing to pay. Many of those workers would have probably turned around and bought a bottle or two at the end of the day. I know I would.

Brian B. DeFoe is a business lawyer at Lane Powell, where he focuses his practice on helping companies in the customer-facing industries of hospitality and retail. Brian can be reached at defoeb@lanepowell.com, via phone at (206) 223-7948, or on Twitter @BrianBDeFoe. Visit www.hoochlaw.com for more thoughts on spirits and the laws that govern them.

This is intended to be a source of general information, not an opinion or legal advice on any specific situation, and does not create an attorneyclient relationship with our readers.

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WRITTEN BY HARRY HALLER

AIRAG

Genghis Khan and Attila the Hun were fans. Its purported medicinal properties led the likes of Leo Tolstoy, Maxim Gorky, the Russian imperial family, and even British members of Parliament to venture to the outer reaches of Central Asia to consume the beverage. When Hillary Clinton tried it, she said it tasted like yogurt. Others have described it as reminiscent of stomach bile.

Depending on where it's being served, it is known as airag, gimiz, qimiz, kumiss,

114â&#x20AC;

kumiz, koumiss, kymys, kymyz, kumisz, kymyz, gymyz, or kymys. In the West it was often referred to as "milk champagne." It is also one of the three most ancient alcoholic beverages, sharing that honor with mead and beer. However, unlike beer, mead, wine, sake, or most any distilled spirits, this unofficial national drink of Mongolia is not made from a plant-based feedstock. It is made from milk. Specifically, horse milk.

ILLUSTRATED BY FRANCESCA COSANTI

With 40% more lactose than cowâ&#x20AC;&#x2122;s milk, mare's milk lends itself to a more viable fermentation. That appears to be the only upside. There are downsides aplenty. For one, it is not only somewhat challenging, but actually dangerous, to milk a mare. You need to allow the foal to begin suckling, pull it off the teat, then keep the little one beside you as you milk mama. Two, the

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yields are ridiculously small: 600 horses produce 25 gallons a day. Three, the drink only lasts for three days after it is made.

Originally the milk was placed with some yeast in rawhide bags which were strapped onto the horses the nomads rode daily. The bouncing churned the milk. Nowadays it is done using a technique called "bumpingferment" whereby the milk is placed in the leather bag but a wooden stick protrudes from the encasement. This is used to stir the milk 500 times a day for three to four days. On the last day, the number of stirs goes up to 5,000, or until the milk curdles.

WWW.ARTISANSPIRITMAG.COM â&#x20AC;

To make this 3% ABV drink stronger, two methods have been used. First, freeze distillation. Producers take the Airag out into the snow, letting it freeze and thus separating the water from the alcohol.

Another strategy uses a crude still of sorts.

The Airag is poured into an open pot, purple wicker or elm branches are placed on top, and a small pot of cold water is added to the stack, inside of which a small jar is hung. The whole ensemble is then placed over a fire. As the pot heats up from the fire, the Airag evaporates and vapors

condense inside the jar. The end result of either method is Arkhi â&#x20AC;&#x201D; a beverage with an ABV varying between 10 and 12%. This is often served warm with yak butter.

Side note â&#x20AC;&#x201D; to alleviate the pains of an Airag/Arkhi hangover, Mongolians have traditionally eaten pickled sheep eyeballs.

"Here's looking at you, kid."

Harry Haller is an independent consultant focused on working with sugarcane-based distilleries. He can be reached at 00harryhaller@gmail.com.

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G N I T EXECU N A L P E THGINS WITH

BE G N I R U PROC T H G I R THE T N E M P EQUI N Y SHANNO WRITTEN B

O'NEIL

you’ve in our series, p to this point ng and search, planni done a lot of re your distillery. open or expand to n io at ar ep pr ed into the rams are burn Block flow diag milestone elids and your back of your ey of your own d to the ticking schedule is tie internal clock.

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e those time to execut Now it’s finally g with the e plans, startin carefully mad ocurement. equipment pr critical step of ial pieces the most cruc This is one of y potential y project. Ever in your distiller be carefully ndor needs to d, equipment ve ust be outline ope of work m vetted, a full sc d your plan developed, an specifications il involved t for every deta has to accoun to manufacture time it will take including the the installation ur equipment, and deliver yo implications and any safety ts en m ire qu re oid. nt pitfalls to av or other importa

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LET YOUR LEA TIMES DICTATEDY PROCUREMENT P OUR LAN

If you’ve been following alon g with us, you should have created two critical docum ents that will he lp inform your eq uipment choice s going forward.

A detailed proc ess flow diagram (PFD) will give yo u an outline of exac tly which piec es of equipment yo u’ll need for di st ill ing your spirit(s) of choice, whi le the rough order of magnitude (R OM) will dictate yo ur ballpark bu dg et for each critica l element. Arm ed with these tw o guides, your next step is to dete rmine which pi eces of equipment on your list w ill require the lo ngest lead tim es.

Hint: It’s prob ably the stills.

This is the thir installment in

d

a series for Artisan Spir it Magazine featu ring insights from H askell, a Jacksonville , Floridabased architec ture, construction a nd engineering firm .

“Your stills, w hich are the sh owpieces of any distiller y, typically ha ve the longest lead tim es to manufac ture,” says Mitchell Hall, Project M an ager at Haskell. “T here are only a handful of reputable st ill manufactu re rs and they all ha ve long backlo gs of orders waiting to be satisfied. ” Mitchell has le d several Engi neerProcure-Cons truct (EPC) sp iri ts projects and ha s seen lead tim es in excess of tw o years “Certa in spirits are trad itionally distill ed in very specific ty pes of stills, so when you’re trying to follow tradition al distillation met hods you will also limit your sele ction of availa ble manufacturers and increase your lead times,” sa ys Mitchell.

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While some stateside manufacturers might have production schedules closer to a year, there is still a lot to be accounted for from the time the purchase order is placed until it is shipped, delivered, and installed in your distillery.

Beyond the stills, other specialty pieces like fermenters, mash tuns and lauter tuns can come with long lead times for production as well. In addition to your key distillation pieces, your procurement plan also needs to account for the equipment that will fill and package your product for distribution.

“It’s critical for your anchor pieces to be procured well ahead of detailed design completion as long as the specifications are defined,” says Mitchell. “That way you can work backwards to size all the other systems accordingly. You’ll need a variety of other tanks, instrumentation, valves and pumps to complete your process flow, which all have lead times associated with them as well.”

As you work backward from the longest lead times to the shortest, your equipment procurement plan will start to come together. But before you place a purchase order, you need to know what terms and conditions to cover with your selected vendors.

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THE TAKING CARE OF T’S AND C’S

me clients run , we’ve seen so “Unfortunately y direct from when they bu es ng le al ch to in ble or onelook unfavora er ov d an or a vend says Mitchell. d conditions,” sided terms an ould be broken yment terms sh Ideally, your pa the shop such as when into milestones materials are n bmitted, whe su e ar gs in draw completed, fabrications is ordered, when uipment is , and when eq delivery to site oned. Along ally commissi fin d an d, le al inst provide acturer should uf an m e th , ay the w dates. lar progress up you with regu anufacturers to to ask your m t an rt po im “It’s s with photos a regular basi update you on

PLANNING FOR IN Back at your fa cility, it’s time to fin alize your installatio n plan.

Once the equi pment arrives, your fir st order of busine ss is to unpack an d inventory all of your items. If you have a hundred valv es or a thousand va lves, every single on e has to be checked to make sure it is the right size, has the right connectio ns and is made fr om the right mater ials.

Any items dam aged in shipping or that do not perform as expected need to be addressed with your vendor be fore final acceptan ce and payment is ap proved.

STALLATION Your installatio n plan should also in clude a phased star tup process to plac e and test each piec e. Start with static ch ecks to ensure that each piece is physic ally in the right sp ot and properly conn ected to the necess ary plumbing and electrical syst ems.

Next, you will want to run dynam ic checks to confi rm that the equipm ent moves approp riately.

“You need to ensure all the compo nents in your new di stillery are moving th e way they should fr om the rotation of the motors to the operatio n of your valves,” says

ss,” says on their progre t and narratives ect Director “I r, Haskell Proj ity Ryan Holliste opportun the buyer, the also gives you, st you co kes which can to catch mista la too te..” ey before it’s time and mon e schedule list of mileston ur yo on ed ud Incl visit to the be a planned dates, should acceptance n for a factory vendor’s locatio for your FAT should arrive test (FAT). You items. If you t of inspection is kl ec ch a with ple, you’ll a tank, for exam are purchasing s and port the dimension want to verify ts, piping and ur utility inpu locations for yo of equipment, ng on the type di en ep D . es valv product or want to run a you may also e machinery uct through th simulated prod ecified. it works as sp at th rm nfi co to

Ryan. “You al so need to simul ate production ru ns with water prio r to product to en sure potentially da ngerous leaks are dete cted and your flow paths are all correct. ” For the final stage, the prod uct qualification, you need to run yo ur actual produc t through the equipment to ensure it produces th e right characte ristics in your spirits and meets desired production sp eeds.

“Moving throug h these stages, it’s im portant to make sure your key stakeholders ar e part of the process, ” says Ryan. “They sh ould

walk with you, know where the equi pment is, ask questio ns, and see how th e equipment op erates.”

While you are waiting on your equipm ent deliveries and installation, yo u should also cr eate a training plan for the staff members who will be operat ing your machinery. W hether you are dealin g with automated sy stems that include a human machine interf ace (HMI) or man ual machinery, yo u and your staff need to know every de tail associated with your equipmen t’s operations an d maintenance before the piec es arrive on site.

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COMMON PITFAL

LS TO AVOID

Working with distillery equipment, th ere are a few common area s where people often encounte r obstacles that you will w ant to avoid.

Your budget fo r any piece of equipment sh ould include no t only the purcha se price and installation co sts, but also spare part cost s, freight, taxe s, and—if your ve ndor is overse as —import dutie s. Failing to account for th ese items will certainly have negative impa cts on your budget and timeline.

“If your manuf acturer is quot ing you times for completion and not includ ing shipping, there’s a pote ntial for a huge impact to your schedule particularly if you are dealin g with internatio nal shipments ,” says Ryan. “If you haven’t considered th at and you ha ve a tight timelin e for installatio n and startup, yo u could wind up facing som e really costly options to get your equipmen t on-site in tim e or face dela ys.”

On the flip side , there are some opportun ities to save money in the procurement and design planni ng phases whi le also improvin g factory safe ty .

Knowing the po tential hazard s of your equipm ent, as well as the municip al restrictions , fire codes, elec trical area classifications for hazardous areas, and resp onsible practic e guidelines from organizations like the Distil led Spirits Council durin g the design planning and equipment procurement stages, will he lp you minimize safety risks with cost effe ctive decision s.

“Because alco hol is a flammable su bstance, you need to make sure all of your equipment is rated for the hazards it will encounter,” sa ys Ryan. “If you don’t specify th at up front with your manufac tu re r it can be very costly down the road. You also want to evaluate your design layout to see if movin g electrical

componentry away from your hazardous area s when feasib le can reduce or eliminate thes e classification requirements.”

One last, but very key area to consider w hen choosing your equipmen t, is scalability .

If you have lo ng term plans to expand prod uction, you need to take in to account the space requ irements for adding more eq uipment.

“It’s critical to understand your current an d future production ne eds so that you can proper ly size your equipment or make sure it’s scaleable for expansion,” says Ryan. “W e’ve seen folk s design buildin gs sized for today’s needs and inevitably they start to ex pand and find themselves co nstrained by physical size and capacitie s of existing utilitie s that no long er match their de mand. You definitely wan t to make sure you’ve laid ou t your equipm ent smartly to antic ipate growth.”

Anthony White leads the Beer, Wine & Spirits division at Haskell which is dedicated to engineering and installing world-class manufacturing systems and facilities for clients in the Beer, Wine & Spirits Markets. Anthony graduated from the University of Florida’s Hough Graduate School of Business with a Master of Business Administration and from the University of Florida with a Bachelors in Construction Management, and is a Certified General Contractor.

CLOSING IN ON THE STARTUP e.

You’re so clos it? el Can you fe your KPI’s You’ve hit all timeline and milestone ow targets, you kn and s your flow rate lumes, production vo l the you’ve met al and e federal, stat s, your municipal code ve been stakeholders ha e project bought into th pment and your equi is on the way. created In short, you ed the ut a plan, exec it’s plan and now strate time to demon r the completion. Fo r ou conclusion of ver some series, we’ll co ils you additional deta when need to know pment executing equi d firing installation an tion line up your produc e. for the first tim

P R O V I D I N G R Y E to the distilling industry for over 50 years.

Brooks Grain Improving the quality of life with grain.

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CANNED COCKTAILS WR I TTEN BY AARON K NOL L ILLU ST RATION BY AM ANDA J OY CHRI STENSEN

I

clutched a Moscow Mule in my hand as I rose up to celebrate Matt Nieto’s third goal of the game and first career hat trick.

Denver’s Pepsi Center and a Colorado Avalanche hockey game might not seem like the place to have a craft cocktail, but there I was, drinking Mile High Spirits’ Punching Mule.

Canned cocktails aren’t a new invention, but they are catching on, especially among the craft and smaller-scale distilling community, as a way of getting the spirits into new contexts. Think grabbing a can from the ice chest at a backyard BBQ. Packing a cooler to bring to the beach. Or, as in the story above, at a sporting event.

The opportunities seem to be there. Cory Muscato of Lockhouse Distillery in Buffalo, New York said, “I like the idea… I think we're almost there as a culture, where it’s going to become more culturally acceptable to just grab and go. Cocktails could be the next thing.”

He adds, “...but the market is tough.” Distillers and producers who have waded into the market thus far, have experienced some challenges, needed to acquire some new skills and expertise, but also made some new fans of their work.

THE MARKET AND THE OPPORTUNITY Jay DiPrizio, co-owner and co-founder of Illinois based Chicago Distilling Company, said “Anecdotally, it’s about the convenience factor,” referring to the market needs that they sought to fill with their line of canned cocktails. Chicago Distilling Company currently cans an Old Fashioned with their Blind Tiger Bourbon, a gin and tonic with their Finn’s Gin, and a mule with their Ceres Vodka.

Maybe, he added, “Convenience and in-home entertainment.”

Over 80% of spirits are consumed off-premise, says a 2016 report on American drinking habits.1 While it’s certainly true that a general increase in spirits interest and consumption is tied to a desire to “make drinks by hand,”2 there’s a growing portion of the market that turns to the ready-to-drink category because of “time savings and ease of use.”3 Wyn Ferrell, owner of Denver-based Mile High Spirits saw the opportunity firsthand. He poured, served, and watched Mile High’s take on the Moscow Mule called Punching Mule catch on at events.

It wasn’t simply that they wanted an option that could exist side1 2 3 4

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(2016).

(2016).

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(2016).

White Spirits RTD Alcoholic RTD Alcoholic RTD Alcoholic

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by-side in a world dominated by beer or to appeal only to drinkers who didn’t want beer. “Craft beer drinkers are looking for more… people are more willing now to say ‘I’ll try a canned cocktail.’ ” Canned cocktails afford distillers an opportunity to capitalize on other trends in drinking. Transparency in labeling appeals to health- and ingredient-conscious millennials. Clearly marked ABV helps those who are watching their alcohol intake better keep track, especially compared to cocktails. Ferrell also added, “gluten-free is obviously a big thing right now.” Canned cocktails are gluten free simply as a matter of production, making it an easy way to tap into a still growing market segment. Ryan Seng, bartender and founder of Sacramento, California based Can Can Cocktails concurs. “I like them as a gluten-free beer alternative [but] most of my consumers are below 45 and people on the go who like good things, good packaging, and something convenient.”

A 2016 Mintel and Lightspeed report noted that although consumption of ready-to-drink cocktails as a whole has declined since 20114, consumers’ preferences within the category are changing. As malt beverage sales slow, canned cocktails, especially “with a craft focus, which can imply quality,” is ripe for growth.

If the market and opportunity is there, how have distillers and canned cocktail creators forged into a new space which requires new equipment and new skills?

THE PROCESS DiPrizio, Seng, and Ferrell all saw their ideas borne out of bars and tasting rooms. DiPrizio saw it as an easy “extension of our

US - October 2016.

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tasting rooms.” However, duplicating the on premise experience has challenges, especially when trying to replicate an existing cocktail that consumers are familiar with.

Mile High’s Punching Mule began in their tasting room and bar as a mule menu. Though they were popular in the bar, Ferrell noticed through his research that “people were struggling to drink more than one. The sweet tooth of America is something that you need to play into,” he added, but simply duplicating the in-house cocktail wasn’t working. They dialed down the sweetness and he saw the rebuy rate go through the roof. Ferrell said that again, the drinker’s context was something you need to keep in mind. The can gets shaken, tossed around. The cocktail in the bar gets diluted over ice and stays cold in a copper mug. Being adaptable might be a key takeaway from the Punching Mule story.

DiPrizio and Chicago Distilling Company similarly echo the importance of research as the basis for their line of cocktails. “We researched how to do it two, two and a half years.” Chicago Distilling Company had a test kitchen and leveraged communal food and drink expertise. One of the big things that DiPrizio realized through his team’s test runs was the importance of carbonation. Compared to other canned alcoholic drinks, “we look for a higher carbonation rate,” Jay adds, the lesson coming from another industry familiar with carbonation and cans, soft drinks.

“The biggest hurdle was shelf stability,” DiPrizio said. Their cocktails are currently stable for nine months, but they’re still looking for ways to stretch it even further. Ferrell and Mile High struggled with the same thing. Their Punching Mule uses Sodium Benzoate, which unfortunately has made it tough for them to get their product in organic stores.

Vodka can be a difficult category to compete with head-to-head on the shelf with so many mainstream brands occupying shelf space. Mile High uses their off-the-shelf Elevate Vodka for their Punching Mule. In a way, their canned mule is a value add for their vodka, giving it a competitive advantage in a crowded space.

There’s an added synergy in putting vodka to work in cocktails, as vodka is a chief ingredient in five of the nine most common named cocktails on cocktail menus around the United States based on a 2016 menu study.5 Can Can is strictly a canned cocktail company, but Ryan Seng notes how important the quality of spirits is for a budding business.

For their launch they selected a vodka and a bourbon they thought would mix well, but they are looking forward to a closer partnership with their source in the future. “Old Tavern is a new startup distillery and we’re excited to work together.”

THE TTB The difficulty in getting a canned cocktail to market might be one of the biggest rumors surrounding the opportunity. Ferrell and DiPrizio were dismissive. For an experienced distiller getting a canned cocktail to market is no more difficult than getting a spirit to market, at least in terms of the TTB. 5 6

“I started in the industry, I launched over 50 brands,” said Ferrell.

“I know what they’re looking for and how to make a proper label.”

DiPrizio noted, “the [approval process] was fairly simple... Just an understanding of packaging size.”

Packaging sizes do vary whether a distiller looks to use glass or cans. Cans must be filled to 355 ml, 200 ml, 100 ml or 50 ml.6 Distillers looking to compete side by side with beer are opting increasingly frequently for the standard 355 ml or 12 US fluid ounce can. If you’re familiar with canned cocktails, especially the familiar slim can gin and tonics widely available in the UK, the 250 mL size is not an option under current TTB guidelines.

These sizing options can post a challenge for consumers as well.

Many are familiar with the “can of beer,” as a fundamental unit of drink. Comparing canned mules, Chicago Distilling Company’s Chicago Mule is 200 mL and 10% ABV and Mile High’s Punching Mule is 355 mL and 7% ABV, the latter a bit closer to 1.5 cocktails worth of alcohol, though not far out of line with many craft beer offerings.

Working with a recognized cocktail or variation on a recognized cocktail can also make the approval process a bit easier, but names didn’t cause a lot of trouble. DiPrizio said getting his Chicago Mule approved “wasn’t too difficult.” Ferrell was equally as nonplussed, “you can go into obscurity, you just have to have their statement of composition.”

Categorization for the TTB can be a bit of a challenge though for emerging product categories like canned cocktails. Chicago Distilling’s mule is listed as a Vodka Specialty, whereas Mile High’s mule is categorized as a Cocktail Under 48 proof. New York City’s Interboro Spirits Gin and Tonic is classified as an Other Cocktail, whereas the Chicago Distilling’s Gin and Tonic is a Gin Specialty.

Within similar cocktail types, there’s a fair amount of variation in official categorization.

Taxation is another difficult issue for distillers looking to break into canned cocktails, and perhaps more challengingly because it directly affects consumers. Wyn Ferrell said that Mile High was founded with a “fair pricing strategy.” They wanted to provide spirits at a price point that made them more affordable and more accessible to the average consumer. “A lot of states including Colorado don’t even tax by ABV, they tax it on volume. And it makes it very unfavorable,” adding “we’re operating on a very slim market on the [Punching Mule].

THE EQUIPMENT I haven’t been into many distilleries that have their own canning line, but that’s exactly what distillers who have been able to break into this space have had to do. Cutwater Spirits, the spirits-focused spinoff from San Diego’s Ballast Point, leveraged their expertise in brewing and an old machine— formerly used for canning beer— to get their canned cocktails up and running.

Ryan Seng says his startup took a cue from the early days of craft brewing as well. They built their own canning line, enabling them

Mintel. (2016). White Spirits - US - October 2016.

27 CFR § 5.47a Metric standards of fill (distilled spirits bottled after December 31, 1979).

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to process “smaller tanks, smaller label runs.”

Mile High started by renting a mobile canning line. But as demand for their Punching Mules increased, they needed a more sustainable solution. “We outgrew them and got our own canning line from Wild Goose.” Wild Goose Canning is a Boulder, Colorado based producer of canning lines that has become one of the top suppliers for craft brewers. Wyn says they’re already looking towards an upgrade.

Chicago Distilling Company opted for a canning line from a slightly different source. With their attention on carbonation and cues from the soft drink industry, they looked for a canning line that could meet those demands.

Distillers who haven’t cut their teeth in the brewing word and therefore aren’t familiar with canning lines shouldn’t be afraid, nor should they assume it’s plug and play. Wyn said, “there’s a bit of a learning curve to get to know the equipment— we’re the mechanics, we’re the engineers, we’re the builders—but you just need the right mind, and a lot of patience to deal with the equipment.”

With this new equipment does come the risk of lack of focus. Danielle Smith of Sheffield, Massachusetts-based Berkshire Mountain Distillers said “yes, we made Gin & Tonics and Vodka & Tonics. We only did one large run…” The distillery has since put it on hold. Smith added that they’ve decided to focus on their core products. “The demand for the rest of our line is just too high to devote the time at the moment.”

CRAFTED

BY HAND & CHARRED TO PERFECTION Our

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CLOSING THOUGHTS Though the market opportunities seem to be there, distillers looking at creating their own line of canned cocktails may need to weigh the pros and cons. New equipment can be costly. New product development and research can be time consuming (and don’t skip the research!). And expertise may need to be developed among the distillery team, especially if staff are unfamiliar with soda creation and perishable product development. There are real pricing challenges on the consumer side that ask you to convince people that a canned cocktail is worth the per-can price. There’s also the risk of losing focus of your core products.

But millennials’ tastes are looking towards new ways to enjoy spirits in a variety of new contexts and the market is rife with opportunity, and while the regulatory hurdles are not entirely absent, they don’t seem to be as daunting to savvy, experienced distillers.

And so the opportunity remains in the coolers of America’s backyards.

I N F O @ S P I R I T S C O N S U LT I N G .CO M

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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.

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S PI R I T S CO N S U LT I N G .CO M

BUILDING NEW BRANDS & BUSINESSES PRODUCT & BRAND DEVELOPMENT STRATEGY & FINANCIAL PLANNING PRODUCT LAUNCH SALES & MARKETING EXECUTION

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MAHIA NAHMIAS ET FILS WRIT TE N AND PHOTOGRAPHED BY BEN JA M I N P E I M

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n a small warehouse tucked away in an industrial area of Yonkers, New York, Nahmias Et Fils is busy reviving a centuries-old North African Jewish tradition. They’re making Mahia (pronounced MAhia), an alcohol distilled from fermented figs.

The company, made up of husband and wife team David 56, and Dorit, 50, set up shop in Yonkers, a city of 195,000 in Westchester County, just north of New York City, in 2011, and unleashed their first bottles of Mahia onto the market the following year.

But a handful of years before, the couple never would’ve seen themselves in the distilling business. David had long worked as a computer software engineer, while Dorit was a prominent foreign exchange trader. But the 2008 economic crash and ensuing Great Recession swept both of their jobs away. The couple’s late start to the distilling industry, however, hasn’t daunted them.

“You have to take risks in your life to achieve something,” David said. “This is just one more risk.”

Originally from Morocco, David had long held a passion for Mahia, which he made at home as a hobby and gave away to friends for years. Working long hours in software development, he daydreamed of one day opening up a Mahia distillery. Searching for jobs in their respective fields proved fruitless after the financial crash, and the pair soon decided to turn David’s dream into reality.

David took distillery classes at

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the American Distilling Institute in Kentucky, the Koval Distillery in Chicago, and then they took out a small business loan before opening their doors.

Although it was David’s first foray into the distilling business, he comes from a long line of Mahia makers.

He was born to a Jewish family in southern Morocco—a small town called Taznakht—where his family made Mahia for generations.

Morocco was home to a Jewish community for thousands of years.

In the mid-twentieth century, it numbered over 250,000. But the last 60 years saw most of the country’s Jewish population leave the country, mostly for Israel, France, Canada, and the United States.

David, for his part, left when he was 15.

Morocco is a Muslim majority country, and historically Muslims were discouraged from making or consuming alcohol. So making Mahia was a primarily Jewish occupation.

The drink was consumed by Jews and non-Jews alike, for celebrations and also to treat ailments, digestive issues and earaches being two examples, before the advent of modern medicine. Hence the name, which means “water of life” in Arabic.

As the Jewish population left the country, traditional Mahiamaking faded.

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“All this history, I didn’t want it to die,” David said. “I wanted to bring it to the world.”

Nahmias et Fils makes Mahia from a recipe passed on from his (800) BEERCUP • BEERCUP.COM grandmother: dried figs, water, some yeast, and a little bit of fresh anise seed for flavor.

YOUR SOURCE FOR BARWARE & CUSTOM DECORATED PRODUCT They get their figs shipped in from Fresno, California. The figs “Time and resources are a challenge I’ve seen many are crushed with water three times and then a little bit of yeast clients struggle with. I’m here to help eliminate is added. The mash then sits in containers for two weeks, while it those burdens.” ferments.

It’s then pumped into the still with a little bit of fresh anise seed.

Eight hours later, after the distilling process has run its course and they’ve made the appropriate cuts for heads, hearts, and tails, what’s left is 165 proof Mahia. David then blends in a measured amount of water to bring it down to 80 proof, before finally bottling it.

Each mash contains about 450 pounds of figs, which make MEET SAM between 60 to 70 750-milliliter bottles of Mahia. That comes out KEY ACCOUNT to six to seven pounds of figs per bottle, and they don’t add sugar REPRESENTATIVE or additional chemicals.

Her favorite cocktail?

“If you eat clean food, you won’t have so many issues,” David said.

“Vodka seltzer with a lime” “The same applies to alcohol. We always say, ‘drink clean.’”

One lesson they’ve learned is how much the quality of the figs count. When they first started, the quality of the figs they received, C A L L ( 80 0 ) B E E R C U P T O D AY O R V I S I T “wasn’t great,” and the Mahia wasn’t to their liking. Now they make TA P.B E E R C U P.C O M /A R T I S A N T O L E A R N M O R E . sure that the figs they receive are ripe and sweet.

“The more you pay attention to details, the better the product,” David said. “You have to take the extra steps.”

Nahmias et Fils is the sole producer of Mahia in the country,Sam_Ad_ and QtrPage.indd 1 10/24/17 David sees it as not just a way to spread his passion but also to pay homage to his mother—a lifelong Mahia maker who passed away in 2009—and, by extension, his family’s history.

Along with Mahia, they also make whiskey, which they call Legs Diamond for a famed Prohibition-era New York bootlegger, with apples sourced from organic grain farmers in Upstate New York.

Legs Diamond is made from 100 percent organic rye.

They sell Mahia and Legs Diamond at farmers’ markets in New York and supply many restaurants and wine and spirits stores in New York City, Los Angeles, and San Francisco. They also supply Mahia to the Moroccan Pavilion at Epcot Center in Disney World in Florida.

While Mahia is traditionally drunk straight, Nahmias et Fils promotes the alcohol as something that can be used in mixed drinks, particularly cocktails with citrus. They promote a list of recipes on their website.

“There’s an increasing demand, which means it’s harder to supply,” David said.

They’re now putting together a business plan for investors so they can expand the business and produce more Mahia. Their goal is to one day make Mahia a household name

Nahmias Et Fils is located in Yonkers, NY. For more information visit www.nahmiasetfils.com or call (646) 644-4256.

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2:05 PM

A Brief Overview of

MANUSCRIPT WRITING

W R I T T E N B Y J E S S I N . B E N T L E Y, B . S C .

A basic guide to presenting scientific findings, creative thoughts, or literature reviews in a journal or magazine

INTRODUCTION:

Scientific research and critical thought is essential to any field of science and technology. Research leads to scientific progress, and that progress leads to the betterment of modern society. However, research is useless without the ability to translate findings into concise and coherent writings to share with others in the field. This article considers the basics of writing manuscripts for journals and magazines in which direct findings from scientific research and experimentation, or a synthesis of other ideas from literature, may be shared with others. It is also written to provide a basis for understanding how to best represent the ideas of others when preparing reviews of various topics. Many reviews appear to be the sole creative work of the presenting author, when in-fact they represent the synthesis of ideas of many others. It is important to cite those whose statements are being expressed, BASIC FORMATTING & STYLE: critiqued, or otherwise The manuscript style usually calls for the article to be written in a standard plain text, 12- point font commented upon. such as Times New Roman. Double spacing is rarely needed when writing manuscripts; instead, all lines A common format are usually numbered for submission. This will allow the editor to more easily make edits to the manuscript, requested by scientific and the numberings are removed before publication. Editors tend to not accept paper manuscripts anymore, journal editors, and instead opting for digital copies in a word document form (.doc, .docx), rich text format (.rtf), or PDF file useful elsewhere, is (.pdf). Such will be specified by the Editor in Chief. the manuscript format.

Abstracts, Keywords, & Introductions: Manuscripts are not the The basic format of a manuscript should start out with an abstract. An abstract is a concise paragraph, final published article, generally 100-200 words. The goal of an abstract is to inform readers as much as possible about the but are the writings contents of the paper without being too wordy. Most abstracts include the objective of the paper, a brief sent to the editor of the experimental method or the general theme of the review in question, and the essential results and conclusions journal or magazine. In of experimental work, or details of the important findings from the literature review. There should not be any this format style, a cover literature citations in the abstract. All sections of the manuscript should be divided using clearly defined letter containing the headings and subheadings, if applicable. title, authors, affiliations, For journals that publish online, keywords may often be required as part of the manuscript submission. and email addresses is Keywords are five to six words of importance that relate to the manuscript. It may help to think, “What would sometimes used as the someone search for that could lead them to my article?” first page for submission Following the abstract and keywords sections of the manuscript is the introduction to the main article. purposes, but this is The introduction is brief, usually one not as common as in to two paragraphs in length. It details MAIN BODY: the past. An abstract is the purpose of publishing the article, Experimental Methods & Results present, as well as the provides the reader with any past relevant The body of the manuscript proceeds the introduction. main article, broken findings, and gives a brief background on Generally, the body begins with a materials and methods down into key sections the topic. Depending on the topic, as well section. This section, sometimes referred to as the such as the introduction, as the target audience, the introduction experimental sections, outlines the process used to reach materials and methods, may need to be more general or lengthier the findings presented in the article. Specific methods used results, discussion, and in nature. If the audience may be in the experiment should be referenced if they were not literature cited. There unfamiliar with the topic, a more in-depth personally devised. New methods used should be explained may also be a section for introduction may be needed. Literature in more detail than well-established methods, which can be acknowledgments and citations are often used in this section, as explained generally. The proper methods should be listed copyright. These topics background information and past findings and written out in enough detail for reproduction of the are explained more in are usually found through other sources experiment by another scientist. It is important to include depth later in this piece. and are not original information. any relevant materials used in the experiment, including the

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brand names. Be sure not to provide unnecessary details in this section, such as that the pH was measured with a pH meter, unless it pertains to the audience in question.

Once the materials and methods have been explained in detail, the results of the experiment can be stated. The results section should be well organized, logical, and concise. Most of the figures and tables included in the findings will be presented here. Any tables and figures included in the manuscript should be added at the end, not where they belong in the text. Denote where the figures belong so they may be properly inserted for final publication by the editor. There are many ways to denote or suggest where figures and tables need to be inserted, but clearly stating Figure 1. where the figure should be inserted while subsequently labeling Figure 1. in the end pages should be sufficient labeling. It is important to note that the results alone should not contain any discussion regarding the implications of the findings. This should be left for the next section: the discussion. In the case of a review paper materials and methods details will not be present of course. However, results of the synthesis of ideas from the literature can go into a “results or relevant findings” section with headings and subhead titles for the topics as appropriate.

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DISCUSSIONS & CONCLUSIONS:

The discussion section takes the results of the experiment and provides an interpretation in perspective of past findings and research. The whole pertinent field of science (spirits and distilling science) should be considered when discussing these interpretations, and ideas should be discussed in a broad context rather than specifics. Specificity within the discussion may be needed if the target audience has significant knowledge regarding the topic. A good way to think about the organizational structure and flow of the discussion is like an upside-down pyramid: more general ideas should be presented first, followed by more specifics. Findings should be linked to literature, then to theory, and finally to practice (if appropriate) (5).

Limitations should be mentioned in the discussion as well. This includes any errors possibly made during the experiment, or how the experiment presented may be improved upon. An important point here is the need to think clearly about the controls required to ensure that the experimental results are credible.

Also, if the data is statistically relevant and valid, an outline as to how those validation tests were done needs to be made. Ideas for future directions of research can also be discussed here. Similarly, for a review style paper the present author(s)’s interpretations OPTIONAL SECTIONS: and suggestions can be In addition to the sections of a manuscript mentioned above, there made in a discussion are optional sections that may be used. These include a section for any section. If the discussion supplementary material, containing any extra figures, tables, videos, is short in length, it can etc. that may pertain to the main article, but are not included in it. be combined with the Another optional section is the acknowledgments. This section contains results section under a a recognition of anyone who provided funding, grants, or any other header such as “Results & contributions. Author contributions, such as others that significantly Discussion”. helped in the experiment, wrote methods, or analyzed data, may be listed After the discussion in another optional section if needed. Finally, any conflicts of interest section, some articles may must be stated, as it is an ethical obligation as a scientist or science have a need to include writer to acknowledge such conflicts. a final body section: the conclusion.

The conclusion section gives REFERENCES: the author a final chance Internal & External Citations to wrap up the article. It Proceeding the main article, a complete list of references should is an especially useful be included. The importance of adequately citing references cannot section to have if there is be overstated, as it is crucial to give credit to the appropriate people a lot of information and and groups for their ideas. Plagiarism, even if not intentional, has the results presented that may potential to ruin an author’s reputation. Typically, at least some of the benefit from a reiteration ideas, research, or methods mentioned in a journal article will come of the key points and from an outside source other than the author. In these cases, the outside findings.

Restate the sources should be given credit through both internal and external purpose of the experiment, citations. References listed in the article also provide readers with other how the experiment was sources where they may find additional information regarding the topic performed, and the key of interest. results. Again, for a review, There are a variety of stylistic variances in both internal and external a summary of the article citations. It is important to research the journal or magazine with regards can be made. Some papers to how they will request citations be formatted, however, there are some of this type may run with a common formats that may be used when no author guidelines are present. combined discussion and Regarding internal citations, they may be denoted with a number in conclusions section. When brackets or parenthesis placed before the punctuation (Ex: (1). or [1].). writing a conclusion, it is The number corresponds with a citation in the external reference list at important to remember to the end of the manuscript. Typically, citations will either be numbered be concise and limit to one sequentially by order as to when they appeared in the main writing, or or two paragraphs, much will be listed alphabetically by author’s last name in the master list with like the introduction. a number corresponding. In some citation styles, the author’s last name

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and pagination of the citation are inside of the parentheses rather than just a number (Ex: (Bentley, p. 1-3). [Bentley, p. 1-3]). Other common styles of internal citations may be used, but that is to the discretion of the editor, and it is best to check beforehand.

External citations are equally, if not more, important than internal citations.

Some journals have more strict guidelines for citing references, therefore it is important to check in the “Instructions to Authors” section or with the editor of the journal/magazine for any specific requirements. Commonly, external citations are listed at the end of a manuscript in either alphabetical or sequential order. Alphabetical ordering seems to be the most commonly used among brewing magazines, with articles by the same author being listed from earliest publication to most recent. If multiple methods by the same source are used (such as the American Society of Brewing Chemists Methods of Analysis, ASBC MOAs), they should be listed in the paper under one reference (1,3).

There are an extensive number of ways to cite literature and other sources used. In most cases, if the formatting of citations is consistent throughout the paper and contains all pertinent information, they will be accepted during editing. Typical styles of citing references include Modern Language Association (MLA), American Psychological Association (APA), and Chicago style formatting. A good, free source of information regarding these common formats is the Purdue University’s Online Writing Labs (OWL) website (4). There are also several online reference list generators which will automatically create citations based on information given, and even Microsoft Word has a built-in reference list generator that can be utilized for different styles of citations.

Citations vary slightly not only based on style choices, but also based on the source itself. The information included in a citation may vary slightly depending on if the source is another journal article, a book, an online source, a PDF/ word document, etc. Even if the arrangement and style is different, the same basic information regarding the reference should be included. This information generally begins with the author’s last name, first name followed by the full article title. The journal or book name should also be present, and is generally italicized. If a volume/edition and page number are relevant, they too should be included in the citation. A date of publication, or at least the year, is also typically included. The placement of the date can vary, based on the request of the journal as seen below. Enough information should be provided in the citation for someone to find the exact same source used as easily as possible.

Below are two examples of basic citations of the same ASBC methods; one from the Journal of the ASBC and the other from Technical Quarterly (TQ, the official journal of the Master Brewers Association of the Americas [MBAA]). The examples are to illustrate how two prominent journals in the brewing industry cite the same source.

ASBC example (1): American Society of Brewing Chemists. Methods of Analysis, 8th ed. Beer-10A Spectrophotometric color method, -14 Ash; Yeast-3A Methylene blue dead yeast cell strain. ASBC, St. Paul, MN, 1992.

TQ example (3): American Society of Brewing Chemists. (1992). Methods of Analysis, 8th ed. Beer-10A Spectrophotometric color method, -14 Ash; Yeast-3A Methylene blue dead yeast cell stain. ASBC, St. Paul, MN.

Jessi Bentley is a recent graduate of Eastern Kentucky University. She works as an HPLC and general alcohol beverage chemist at Brewing & Distilling Analytical services in Lexington, KY. Email jessi@alcbevtesting.com for more info.

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TOPICS TO CONSIDER:

Aside from the main body of work and reference list, there are other topics to consider before sending the final copy of a manuscript to an editor. It is important to be aware of any abbreviations and acronyms used throughout the body of work. These should be completely spelled out upon first use in the paper to avoid confusion on part of the reader. With regards to abbreviations in the brewing and distilling industry, there are a list of acceptable abbreviations noted by the American Chemical Society available for reference (2). Any measurements stated in the paper should conform to standard metric units. Figures and tables included in the manuscript should follow a consistent styling and resolution set forth by the magazine/ journal. Any figures, tables, pictures, illustrations, etc. that are not original work should also contain adequate citation and relevant permissions to use as with any other type of information presented. Even using figures stated to be “Public Commons/Domain” may still need permissions from the artist or photographer to be used.

It is important to note that revisions will most likely be needed based on feedback from the editor. Some purely technical revisions may be requested, such as formatting or source editing, even if the paper is otherwise acceptable. Brushing up on the requirements for the specific magazine/journal before submission of a manuscript may save time and effort on both the part of the editor and author later in the process. It is equally as important for a magazine/journal to set forth guidelines for potential authors to follow for the same reason. If invited to contribute an article, or if offering to write a paper for a journal or magazine be sure that both parties are on the same page to ensure as smooth a publishing experience as possible. If done right it is a rewarding experience to contribute to the literature in a field that is of interest to you and to enhance the knowledge of others.

REFERENCES (1) American Society of Brewing Chemists. Instructions to Authors. Journal of the American Society of Brewing Chemists. (online). 2016. Accessed Oct. 2017.

(2) Godhill, A.M., Garson, L.R., Eds. The ACS Style Guide.

American Chemical Society. Washington, DC, 2006.

(3) Master Brewers Association of the Americas. Abbreviated Guidelines for Authors of TQ Papers. Technical Quarterly (TQ). (online). 2015. Accessed Oct. 2017.

(4) The Purdue OWL Family of Sites. The Writing Lab and OWL at Purdue, 2008. Owl.english.purdue.edu/owl. Accessed Oct. 2017.

(5) San Francisco Edit. Fourteen Steps to Writing an Effective Discussion Section. Scientific, Medical and General Proofreading and Editing. www.sfedit.net WWW.ARTISANSPIRITMAG.COM

R O T I S I V Y R E L L I T DIS

E C N E I R E P EX PART 4

WR

NITT TIM K Y B N ITTE

EL

SIS

ALY N A & S C ETRI

M VISITOR

A visitors program is an expense. To ensure you’re getting a return requires determining explicit objectives, measuring them, and then taking corrective or enhancement action on those measurements.

Remember that for a visitors program, the product is delivery of a quality guest experience that accomplishes specific business objectives (from Part III). An experience is a series of engaging and educational moments which tells your brand story and builds to a conclusion which encourages the participants to take action (from Part II). Arguably the most important component of a guest experience, the tasting closes the visit and is often the best moment to convert the visit into a sale or generate other business value (from Part I).

Just like a distillery manufactures spirits, a visitors program exists to manufacture guest actions. The difficulties of measuring and analyzing the success of a visitor program stems from the soft nature of actions and the complexities of capturing them in a reportable format. But there are techniques that can be used to determine the level of success and course-correct as needed.

OKR BASICS

WHAT’S VALUABLE TO MEASURE

OKR stands for ‘Objectives and Key Results.’ The alwayshelpful Wikipedia defines OKR as: “a framework of defining and tracking objectives and their outcomes. Fundamentally, OKRs answer the two questions “What do we want to achieve?” and “Did we achieve those things?”

The specifics of both of those questions and their answers must be recorded in order to be analyzed. It’s very easy to skip the hard work of that step, but it’s also very easy to spend money with no return on a visitors program — and possibly not even know that’s happening.

So what are the actions you want visitors to take? Those are the foundation of your metrics.

WHAT CAN’T BE MEASURED The most common justification for having a visitors program is “raising brand awareness.” And while there are techniques for measuring that metric at regional, national or global scales, it’s a futile effort to try to directly determine how much a visitors program is impacting the brand at that level. It’s a safe assumption that if you’re accomplishing the other more easily measured metrics outlined below that awareness of your brand will rise as a direct result.

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Here’s a common list:

» Visitor counts Be sure to compare like days — ­ days of the week, holidays, local events, etc. cause drops and spikes.

» Bottle sales Bottle sales per visitor is the most useful metric.

For example, do you sell 1 bottle per 10 visitors, or 1 per 50? While visitor count is a difficult metric to move — especially for your visitors center staff — bottle sales per visitor is a metric that you and they can take action to increase.

» Non-alcohol merchandise, especially branded merchandise Again, per visitor is the most useful number here.

» Socials: • Yelp and other public reviews • Sign ups for your e-newsletter and social media follows • Correctly tagged social media posts from at your distillery

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These are even better if you brand name or logo is included in the image. Consider that explicit prompts and deliberate pauses in your guest experience will often dramatically increase these!

» Industry relations: While the actual actions in this list may not occur during a visit, these can be tracked in the same way as traditional sales leads.

• Yelp Retailer activations • Cocktail menu placements • Media inquiries (earned media)

CAPTURING & ANALYZING YOUR METRICS Someone, or possibly multiple someones, in your company will need to be assigned to capture metrics and generate reports. If this isn’t made explicit it won’t happen. In addition to writing down what you want to know, write down who is responsible for making it happen and when the data needs to be submitted and analyzed.

Remember that the day is the unit of time for a visitors program, so having an end of day report which includes all of the data points is usually the easiest way to generate the metrics.

Further analysis may be done on weekly, monthly or yearly basis.

There are some obvious analysis points for your metrics like low-stock levels for re-ordering and staffing for expected visitor volumes. Both sales and social media interactions should grow over time. But there’s also non-obvious information that’s valuable, too. For example, where on your tour are the majority of pictures taken and shared and do those spots have clear brand identification?

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OKRS & STAFF Staff morale and OKRs have a tight relationship. People want to be successful and whatever OKRs you establish will become the driving force and decision-making framework. Nothing will drive your staff to frustration more than not understanding how they’re being evaluated, so ideally as many metrics as possible should be shared with your visitors center team.

Successes should definitely be shared!

Like the common front-of-house/back-of-house divide in a restaurant, a distillery visitors center may get divided into tour guides, greeters and ticket sales, gift shop clerks, administrative staff, etc. Having shared goals also increases inter-departmental cooperation and reduces competition.

A visitors center employee that I used to work with would always tell the same anecdote to every new hire. He explained that he only became a successful tour guide once he understood that his job wasn’t to give a great tour — his job was to sell bottles. Analysis should be reviewed on a regular, scheduled basis so employees know when to expect feedback and aren’t startled by spontaneous negative feedback or corrective actions. Scheduling review sessions also provides staff with an opportunity to offer suggestions in a format where their ideas can be captured and acted upon. A pre-open daily meeting is a great time for this.

CONFIRMING VALUE Having metrics allows an attempt at a cost-benefits analysis for the visitors program. For very small distilleries with minimum staff who double-duty production and guest services, the retail sales can often easily justify the program. But once dedicated staff are involved, it’s common for a visitors program to run at a loss. Having concrete data determining secondary benefit is critical to getting a solid business return.

Tim Knittel is a bourbon educator, writer and event specialist in Lexington, Kentucky. He formerly managed the culinary and VIP hospitality programs for the Woodford Reserve Distillery. He now runs Distilled Living which provides private bourbon education, brand representation and distillery consulting services. He holds the title Executive Bourbon Steward through the Distilled Spirits Epicenter.

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s s a r G Blue nicals a t o B &

Gin begins to assert itself in bourbon country.

WRITTEN BY JEFF CIOLETTI ILLUSTRATED BY LANETTE FAULKINBERRY

f

or Joe Heron, sometimes the best parts of the spirits-making journey are the ones that aren’t completely planned.

“Suddenly, we became the accidental gin company,” says Heron, founder of Louisville, Kentucky’s Copper & Kings Distillery.

When Copper & Kings launched in 2014, the company was already going against the grain— pun intended—by opening a brandy distillery in the heart of bourbon country. It always intended to make gin in small quantities to sell mostly at the distillery in Louisville’s Butchertown neighborhood and maybe at a few other local accounts.

“We weren’t that excited about getting into gin because [the category] is so fragmented,” Heron recalls, “but we were very excited because we knew we could make a very distinctive gin with a brandy base that’s double-distilled. And then it exploded and it’s now sold across our footprint, in as many as 30 states.”

And, just as Copper & Kings discovered when it produced the first of its flagship fruit-based spirits in a very grain-minded region, the Blue Grass State is very fertile ground for innovation beyond the obvious distillates.

The rise of Kentucky-produced gin reflects a greater renaissance that began in Europe and has started to make its way to the opposite side of the Atlantic. On the surface, the U.S. gin rebound seems modest. The Distilled Spirits Council reported total category growth of 0.7 percent last year.

But it’s the first time in many years that the change in volume versus the prior 12-month period was in positive territory, however modest. And, if you drill deeper beyond the category-wide figure, you’ll see the real, premiumization-driven narrative: gin’s high-end and super-premium price tiers—the sweet spots for craft spirits—were up a respective 9.8 percent and 11.8 percent.

The surge in interest in above-premium gins has enabled distillers to innovate quite a bit within the space. In addition to its aged and “Immature” grape brandies and its aged and unaged apple brandies, Copper & King produces American Dry Gin and American Old Tom Gin, as well as a WWW.ARTISANSPIRITMAG.COM

growing roster of limited releases like the Frenchoak-finished L’Inspecteur, the Serbian-juniperbarrel-aged Stray Cat and the bourbon-barrelfinished Alley Cat. “Distillers love making gins,” says Heron. “There’s quite a creative palette, you can paint quite wildly as a distiller if you do

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it authentically.”

Most recently, Copper & Kings completed arguably its most ambitious gin-related project when it distilled the world’s oldest known recipe for the botanical spirit. The recipe was first documented in 1495 by a merchant from the Duchy of Guelders (modern-day Germany) and it later appeared in Tristan Stephenson’s book, “The Curious Bartender’s Gin Palace.” The original document detailed a brandy recipe made from “10 quarts of wine with clear Hamburg beer.” After the initial distillation it would be re-distilled with “two handfuls of dried sage, one pound of cloves, 12 whole nutmegs, cardamom, cinnamon, galangal, ginger, grains of paradise” and, of course, juniper. The distiller enlisted the aid of Louisville’s Monnik Beer Co. to produce the medieval Hamburg beer. Copper & Kings released the completed product as 1495 Guelders Gin. As creative as Copper & Kings has been with its gin program, the distillery has been eager to share the spotlight with others from its neck of the woods. It did so last summer when it hosted the first-of-its-kind event, Supersonic: The Kentucky Craft Gin Festival.

(Copper & Kings named it after the Oasis song, Supersonic, which featured the line, “I’m feeling supersonic, give me gin and tonic”).

The event, held in early August in the distillery’s spacious courtyard, attracted a larger crowd than Heron’s team had expected. “Honestly, we do a lot of events and this one was easily one of the most successful,” Heron recalls. “There were at least 1,000 people and we were utterly slammed.”

Joining Copper & Kings were Corsair Distillery, which operates a distillery in Bowling Green, Kentucky (in addition to its better-known site in Nashville, Tenn.) and New Riff Distillery in Newport, Kentucky.

Corsair Distillery is best known for whiskeys like Ryemageddon rye and Triple Smoke American malt, as well as alt-grain offerings like Quinoa Whiskey and Oatrage, but few realize that the first spirit it produced was a gin (the distillery had to sell something while it waited for its whiskeys to age). And, its Artisan Gin, crafted on the distillery’s hand-hammered gin-head pot still, has garnered multiple awards—including gold medals at the 2009 San Francisco World Spirits Competition, 2009 World Beverage Competition and the 2011 International Review of Spirits Awards from the Beverage Testing Institute.

About five years ago, Corsair also launched an award-winning gin aged in barrels that previously held the distillery’s spiced rum. The company also released a limited-edition gin with smoked botanicals.

“I never thought I would have ever made a gin, and now I love gin,” says Corsair co-founder and owner Darek Bell.

4:18:04 PM It’s also quite profitable for the company, as about one-third of Corsair’s revenue comes from gin sales.

“We’re in the middle of whiskey country and we have a lot of gin haters come through our doors and we have to perform what we like to call a ‘gin-tervention,’ where we have to introduce people to gin again as an adult,” Bell says. “And we’re shocked at how many whiskey-loving gin-hating people will try gin. And they can appreciate it now, when they couldn’t appreciate it in college.”

Gin’s fortunes, he says, are very much intertwined with those of the craft and classic cocktail scene. It also helps that many WWW.ARTISANSPIRITMAG.COM

new American gins have departed significantly from the London dry style, becoming more approachable for consumers who didn’t think they liked the spirit.

The distillery also has been exploring gin’s roots with the release of an award-winning genever-style spirit two years ago, made with malted barley.

“I would say that as there’s been a renewed interest in gin, there’s been renewed interest in the history of gin and where it came from,” Bell notes. “Gin has a much richer history than people realize and one thing marketers haven’t done a good job of is draw on that rich history that’s been so important with whiskey. With genever, we want to go back in time and say ‘this is where a modern London dry gin evolved out of.’”

So far, he says, it’s mostly been “hardcore mixologists” who’ve geeked out over the genever-style product.

Two-hundred-plus miles to the northeast of Corsair’s Bowling Green facility, New Riff has always considered itself, first and foremost, a bourbon distiller. But gin has been part of its DNA since it opened in 2014.

“We’re gin lovers,” says Jay Erisman, New Riff’s VP of strategic development. “I’m a gin lover, my father was a martini man. There was never a question if we’d ever make a gin.”

But the company wanted its gin to have a sense of place, not unlike that of another whisk(e)y producer in a historically whisk(e)ycentric region across the pond. Just as Bruichladdich captured Islay’s terroir with locally foraged botanicals in The Botanist gin, New Riff sought to give consumers a taste of the Ohio Valley. Its Kentucky Wild Gin combines classic gin botanicals like coriander, orris and angelica root, cinnamon, lemon and bitter orange (as well as juniper, of course), with regional flora like goldenrod and Eastern red cedar berries—a local species of juniper.

“It doesn’t replace standard juniper,” Erisman points out, “it augments it.”

(There is some historical significance to red cedar in the gin world. Two-hundred years ago, author Anthony Boucherie included the botanical as an alternative to expensive, imported juniper from overseas for whiskey distillers looking to convert their products into gin).

Additionally, the recipe incorporates spicebush, which has been a part of Native American cuisine for centuries.

“It’s an expression of our location that’s gotten some traction in the marketplace,” says Erisman. “You’ve got to have a local flavor where you are, unless you’re living in an urban jungle.”

It’s debatable whether the Blue Grass State’s many indigenous flavors ever will lead to a quintessential Kentucky gin style. And it’s unlikely that the botanical beverage ever will become as synonymous with the Commonwealth as its native corn-based whiskey has. But, at the very least, Kentucky is proving to be a state big enough for more than one classic spirit.

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Jeff Cioletti is the editor at large of Beverage World Magazine, creator of The Drinkable Globe website, and hosts the web series, The Drinkable Week.

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131

winter IMBIBING WRITTEN BY RENEE CEBULA

I

n the Christmas classic, It’s a Wonderful Life, the angel Clarence enters a bar with George Bailey whom he has just saved from drowning. George orders a double bourbon. Clarence, whose last visit to Earth seems to have been sometime in the 1700s, requests a “flaming rum punch.” Changing his mind, he asks instead for “hot mulled wine, heavy on the cinnamon, light on the cloves.”

Winter is traditionally a special drinking season. This tradition has a long history which we get glimpses of in film, literature, and legend. Some of our most lovable characters have been known to enjoy a winter libation.

Even Saint Nicholas, depicted with flush cheeks and a red nose, hints of a recent tipple.

The conviviality of the season and the cooler temperatures call for a different set of drinks than those of summer. Hot drinks hit the spot after a day of skiing or shoveling snow.

Other winter drinks are communal — punches like eggnog are a favorite, but there are forgotten punches worth reviving. And there are savory cocktails that are particularly comforting when the weather turns cold. Winter drinks feature distinct liquors and flavors. Amber and brown spirits — bourbons, whiskies, rums, and brandies dominate the winter season. Ice is sometimes replaced with hot water, or even a flaming poker to produce a winter warmer.

Let’s explore the history of some of these winter drinks, and learn how to make them.

132

HOT DRINKS The category of drink that does the real seasonal work are hot drinks. Mulled wine may come to mind as the go-to hot drink, but we wanted to feature the more spirited and exotic libations.

In colonial America, the Flip was the go-to winter drink at the tavern. Taking advantage of the stout beer produced by colonial housewives and the rum and molasses of the Triangle Trade, the Flip is a dramatic winter warmer.

Here’s something from midcentury America and a bit more approachable. According to The Holiday Drink Book published by Peter Pauper Press in 1951, “the Farmer’s Bishop makes a dramatic and effective treat on a Christmas Eve or other festive winter occasion.” (The Farmer’s Bishop is the descendant of the Smoking Bishop, an English punch featuring port, roasted oranges, and cloves.

Charles Dickens refers to it in A Christmas Carol and it is widely believed to have been one of his preferred tipples.)

Again, use caution when working with hot liquids and anything flaming.

THE FLIP INGREDIENTS:

8-12 oz. stout beer 2 tablespoons molasses 1 oz. Jamaican rum

1 hot fireplace poker (colonial taverns used a loggerhead)

PREPARATION:

Pour stout beer into a heatproof mug or more historically authentic, a tankard. Add molasses and rum. Heat the fireplace poker to red hot and thrust into drink.

Keep in place until the foaming and sputtering stops.

Drink hot. Caution: Use care when handling a hot fireplace poker and mug or tankard of hot beverage.

(Adapted from And a Bottle of Rum by Wayne Curtis, 2006.)

THE FARMER’S BISHOP INGREDIENTS:

6 oranges ½ gallon hard cider, separated with ½ cup reserved, heated 48-50 whole cloves 1 teaspoon cinnamon 1 qt. applejack or apple brandy (any apple-infused ¼ teaspoon freshlyamber spirits), heated ground nutmeg 2 tablespoons fine sugar ¼ teaspoon cloves 1 fire extinguisher—keep at hand PREPARATION:

Stick 8 cloves in each orange and bake whole in a 300-degree oven for 1 hour. Place baked oranges in a heated punch bowl and prick each orange with a fork. Pour the heated applejack (or apple-infused amber spirits) into the punch bowl, sprinkle with 2 tablespoons fine sugar. In a cup, mix ½ cup hard cider with the spices — cinnamon, nutmeg, and cloves. Set aside.

(Adapted from The Holiday Drink Book by Peter Pauper Press, 1951.)

Okay, this is where it gets tricky. In the 1951 Peter Pauper Press book, it says that after adding the hot applejack, you set fire to it, “letting it burn for a few seconds only” and extinguish the flame with boiling cider. Researching this drink and more modern methods of preparation suggest using a sugar cube.

Place the sugar cube on a long-handled heatproof spoon.

Soak the sugar cube with applejack, carefully light it and lower into the punch bowl. Immediately extinguish the flame with the heated hard cider. Add the ½ cup cider and spices to the prepared punch bowl. Serve at once or reheat later.

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PREPARATION:

Most ubiquitous of winter drinks is perhaps the hot toddy. There are many variations, but this is the best-known recipe and a foundation for ingredients and ratios. A thermos of hot toddies may be prepared before winter outings to spread the cheer among your party.

No fire is necessary to prepare this drink!

HOT TODDY INGREDIENTS:

2 oz. whiskey (bourbon, rye) 1 tablespoon honey (sweetener) 2 teaspoons fresh lemon juice ¼ cup hot water

Melt honey with hot water in a heatproof glass or mug.

Add other ingredients. Garnish with lemon wedge.

Variations: This drink provides a great foundation for experimentation. Google “hot toddy variation” and get more ideas than winter nights. Try a new small batch spirit from your area.

Choose a sweetener: honey, or infused syrup. Add some citrus juice and voila. This drink can also be infused with dried herbs and peel by using a tea infuser. Let infuser steep in the hot liquid.

SAVORY COCKTAILS BRANDY OLD FASHIONED

While summer drinks are often sweet and light—think gin and tonics or mojitos—winter drinks tend towards the savory. Dark liquors, strong herbal notes and spices, and hints of maple or apple are typical.

Old fashioneds made with bourbon or rye are a winter staple, but in the cold climes of Wisconsin and northern Minnesota, there’s a regional variation called the Brandy Old Fashioned. The origins of the drink are obscure, and it has little resemblance to the old fashioneds you are used to. Wisconsin Cheeseheads consider this the Badger State’s official drink. The basic recipe is to muddle a sugar cube with 1 each, orange slice and maraschino cherry, and a splash of 7-Up or Sprite in a rocks/dof glass. Fill the glass with ice, add 2 oz. brandy and top with 7-Up or Sprite. Garnish with an additional orange slice and maraschino cherry. If the muddled fruit and sweet soda is a turn-off but you’d like to try some variation of this upper Midwest classic, give this variation a try.

INGREDIENTS:

1 demerara sugar cube 5-6 dashed orange bitters 1 bar spoon Luxardo maraschino cherry syrup 1 ½ oz. bourbon, whiskey, or rye ½ to 1 oz. brandy Orange slice Luxardo maraschino cherry PREPARATION:

In a rocks/dof glass, muddle the sugar cube with bitters and syrup making a paste. Can add a splash of seltzer water to the paste if needed. Add a large ice cube and pour spirits over the ice. With a bar spoon, stir the liquid around the ice for 1520 seconds. Garnish with orange slice and cherry.

Our final winter drink is a new creation, developed by former restaurant owner Sylvia Fountaine and featured on her wonderful blog Feasting at Home (feastingathome.com). The Long Winter’s Nap features whiskey, maple syrup, and ginger. This cocktail is a new classic. It does require some preparation in advance, but once the syrup is made, the drink comes together in THE LONG WINTER’S a snap.

NAP

INGREDIENTS:

This tour of some of our favorite winter drinks is the barest introduction to a rich tradition of hot drinks, punches, and savory cocktails. Classic bartending books such as the first guide for bartenders, How to Mix Drinks by Jerry Thomas (reprints easy to find) and the more recent, Death and Co: Modern Classic Cocktails by Kaplan, Fauchald, and Day have many recipes. Winter Cocktails by Maria Del Mar Sacasa is a wonderful volume with many more. Cheers to winter!

Renee Cebula is a cocktail historian. She is the owner and curator of Raising the Bar: Vintage & Badass Barware. FB: Raising the Bar Northwest, Insta/ Twitter: badassbarware, raisingthebarbarware.com.

WWW.ART ISANSP IRITMAG.COM

2 oz. Bourbon, whiskey, or rye 2 tablespoons *infused maple syrup (or plain maple syrup)

1 ½ tablespoons fresh lemon juice Star anise pod

PREPARATION:

For infused syrup, place maple syrup, water, ginger, and whole spices in a small pot. Heat over medium heat and simmer for 5-10 minutes on low heat. Let stand 10 minutes. The longer you infuse, the more intense the flavor. You could let this sit overnight, or strain it right away. Strain through cheesecloth and/or mesh sieve.

In a cocktail shaker, pour the bourbon, infused maple, and lemon juice over ice. Shake and strain into a small lowball or coupe glass. Garnish with star anise pod and lemon slice (or zest).

* INFUSED MAPLE SYRUP ½ cup real maple syrup ½ cup water ¼ cup sliced ginger 3 star anise pods Optional additions: Douglas Fir, crushed cardamom pods, cinnamon stick, whole clove, peppercorns

(From Sylvia Fountaine, 2016.)

133

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68

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131

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88

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115

CF Napa Brand Design

Ultra Pure

26

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7, 45, 53, 73, & 77

Thousand Oaks Barrel Co.

2&6

Flowdesign

43

GRAINS

108

BARWARE Boelter

123

Distillery Products

7

Sterling Cut Glass

72

BOTTLE & GLASS DECORATING Loggerhead Deco

106

DISTILLING EQUIPMENT

Brooks Grain

118

Artisan Still Design

44

L&M Glick Grains

112

Corson Distilling Systems

39

HBS Copper Stills Prospero Equipment Corporation

31 101 & 108

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Rudolph Research Analytical

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24

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52

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104

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12

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57

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33

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64

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131

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6

8 & 22

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121

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113

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49

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7&9

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121

InLine Filling Systems, LLC

76

7

109 29

41 128 101

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8 & 135

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89

37

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19

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86

Distillery Products

18

43

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100

REFRIGERATION & CHILLERS 4&7

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109

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G&D Chillers

FILLING EQUIPMENT

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7 & 11

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86

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Fort Dearborn

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Live Oak Bank

The Booze Stylist

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Ramondin, USA

131

23

Saverglass

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35

100

Imperial-Packaging Corporation

20 6 & 17

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6

8

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6 & 61

Spokane Industries

48

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91

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54

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