Artisan Spirit: Spring 2024

TABLE of COnTEnTS

iSSUE 46 /// Spring 2024

pUBLiSHEr & EDiTOr Brian Christensen

CrEATiVE DirECTOr Amanda Joy Christensen

SEniOr WriTErS

Carrie Dow

Reade A. Huddleston, MSc.

COnTriBUTOrS

Jason Barrett

Brad Berron

Colin Blake

Kris Bohm

Christopher Carlsson

Seth DeBolt

Andrew Faulkner

Christine M. Green

Sailor Guevara

Doug Hall

Aaron Knoll

Jose Alonso

Ricardo Arreloa

Reema Desai Boldes

Amanda Joy Christensen

Carrie Dow

Rich Manning

Gabe Toth, MSc.

Stacy C. Kula

Aaron Linden

Matt McGinnis

Michael T. Reardon, P.E.

David Rice

Ben Robbins

David Schuemann

Nicole Shriner, Ph.D.

John P. Thomas, II

Lauren Voke

pHOTOgrApHErS

Andrew Faulkner

Jessica Matushek

Michael T. Reardon, P.E.

Devon Trevathan

SALES & MArKETing Ashley Monroe

INNOVATIVE SOLUTIONS since 1912

A barrel should be more than an aging vessel, it should be a partner in achieving your desired flavor profile. Using science-based research and experimentation, ISC barrel experts collaborate with world-class distillers to create innovative barrel solutions for their unique spirits.

THAnK YOU TO ALL OUr 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.

The American Spirits Exchange is a national importer and distributor serving the alcoholic beverage industry (spirits, wine, and beer). We provide domestic and international companies with access and support to the U.S. market. Regardless of your size — from micro, craft distiller to publicly traded multinational — our focus fuels your growth. Our flagship Foundations™ program provides companies with access to the U.S. market. We handle your business-to-business functions from start to finish: permitting, brand approvals, purchase order processing, invoicing, and compliance.

BSG is focused on supplying craft distillers with the best ingredients from around the world. The craft distilling market trusts BSG to deliver the finest ingredients at competitive prices, without sacrificing customer service. With distilling malts and grains from Rahr Malting Co., Weyermann®, Simpsons, Crisp and Malting Company of Ireland, as well as a full range of yeasts, yeast nutrients, enzymes, botanicals, and finishing products, we have a wide range of distilling ingredients to help you create high quality, artisanal spirits.

Every element of Cage and Sons equipment is designed and crafted to provide you with the very best distilling experience at an affordable rate because we know that bottom line matters, but so does function. At Cage and Sons, adequate is never an option, and we continue to develop and design new high functioning, cutting-edge distillation systems that enhance the distillation industry. Cage and Sons works every day to bring you the very best distillation systems for the very best value.

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

The Distilled Spirits Council of the United States (DISCUS) is the leading voice and advocate for distilled spirits in the United States. Representing producers and marketers of distilled spirits, DISCUS advocates on legislative, regulatory, and public affairs issues impacting the distilled spirits sector at the local, state, federal, and international levels; promotes the distilled spirits sector, raising awareness and opening markets in the United States and around the globe; and encourages responsible and moderate consumption of distilled spirits as part of a healthy adult lifestyle based on evidence-based research and policy. DISCUS also powers Spirits United, a grassroots platform for the distilled spirits industry. Spirits United is comprised of a community of advocates united with a common goal: to ensure adult consumers can enjoy distilled spirits where they want, how they want, and when they want. Learn more at distilledspirits.org and spiritsunited.org.

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.

With an impressive legacy spanning over 30 years in the printing and label domain, Jack Vogel stands as a respected authority in the Spirits industry. For the past 23 years, he has been a steadfast and trusted advisor, contributing significantly to the evolution of label standards and practices. Jack's journey includes leadership roles at top label printers within the Spirits sector. Having transitioned into an independent consultant, he continues to channel his wealth of knowledge towards empowering brands to achieve excellence. As an original founding sponsor and advisor to organizations such as ADI (American Distilling Institute), ACSA (American Craft Spirits Association), and Artisan Spirit, Jack has played a pivotal role in shaping industry standards. At the core of Jack's professional philosophy is the belief in industry education as a catalyst for stability and growth. By imparting knowledge and insights, he contributes to the overall advancement of the Spirits label landscape.

Lallemand Biofuels & Distilled Spirits is the industry leader in supplying fermentation products and valueadded services to the distilled spirits industry. We specialize in the research, development, production, and marketing of yeast and yeast nutrients as well as a solid belief in education of the distilled spirits industry. A vital part of the alcohol production process, fermentation products from Lallemand Biofuels & Distilled Spirits have been designed and selected to create value by tailoring objective solutions to distillery needs.

Moonshine University is located in Louisville, Kentucky on the Beverage Campus with its sister company, Flavorman. Moonshine University offers a variety of classes for enthusiasts, entrepreneurs, industry professionals, and those seeking careers in the distilling industry. Our distillery was designed as part of our classroom, and all classes incorporate hands-on learning and sensory evaluation in order to provide a complete and comprehensive education. In addition to its knowledgeable instructors, Moonshine University hosts a range of renowned industry experts for specialized instruction and training.

Founded in France in 1897 and based in the USA for more than 30 years, Saverglass provides for the premium & super premium spirits and wines. Over the years, the Saverglass Group has distinguished itself by its undeniable quality of glass coupled with innovative decoration techniques.

Today, one of Saverglass’ main asset lies on its product offer: 110 original designs and 425 references which represent the largest selection on the market! Thirsty for genuineness, Saverglass has created exclusive bottles dedicated to Artisanal distilleries: The Craft Spirits collection is designed to convey the image of authentic, locally sourced and rare high-quality products. Recently, the Group has strengthened its presence and service offering in the U.S. by opening an ultra-modern bottle manufacturing and decorating plant in North America.

Southern Distilling Company is one of the largest artisan distilleries in the nation. We offer product development, contract distilling (standard and custom mash bill whiskeys, rum, and agave spirits), barrel warehouse aging, batching, blending, bottling, and co-packaging of award-winning products. We also keep an extensive inventory of aged bourbon and rye whiskey available year-round.

Our spirits are distilled in top-of-the-line Vendome Copper & Brass Works continuous column stills. Our product development services include working with you to perfect an existing recipe and consultations to help you create your own recipe. We can barrel and warehouse age your product to meet both short and longterm goals. At Southern Distilling Company, you get standout spirits that make brands unforgettable.

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

For over 60 years Tapi USA has produced cork stoppers and a wide variety of bottle closures. Family-owned and operated since its inception, our company continues to develop new products and enter new markets. Tapi USA is proud to support the growth of the artisan distillery industry and is honored to be the Bottle Closure Sponsor for Artisan Spirit Magazine.

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

Total Wine & More is the country’s largest independent retailer of fine wine, beer, and spirits. Our strength is our people. We have over 5,000 associates, who must demonstrate comprehensive beverage knowledge before they are invited to join our team. After coming on board, all of our team members undergo an extensive initial training program. We believe that an educated consumer is our best customer. We want to demystify the buying experience for our customers so they will feel confident in choosing the bottle that is perfect for them. Total Wine & More works closely with community and business leaders in each market it operates to support local causes and charitable efforts.

BEnEFACTOr SpOnSOrS

Led by Director of George Dickel & Luxury American Whiskey, Nicole Austin, the team at Cascade Hollow Distilling Co. continues the tradition of producing award-winning whisky at our historic distillery with high standards of authenticity and craftsmanship. George Dickel is behind some of the most beloved whisky of our time including Dickel Bourbon, George Dickel x Leopold Bros Collaboration Rye, award-winning Bottled in Bonds, the Cascade Moon series, and a variety of luxury variants like the rare, premium offering — Dickel Bourbon Aged 18 Years. Learn more about the incredible history and creativity that lives at Cascade Hollow at GeorgeDickel.com.

A LETTE r F r OM

THE ED i TO r :

The economy is giving me whiplash. Each new day brings a story about how strong things look, then you start talking to your industry friends who don’t know if they can attend a convention because the cost is just too damn high, or another distillery closes its doors for good. Everyone always talks about rising tides and lifting boats, but there is a storm slamming the fleet and some of those boats are sinking.

Thankfully, being a part of distilling organizations like the Society of Spirit has also allowed me to see those communities and individuals come together. When one of those friends couldn’t make it to a convention, in less than 4 hours a pass was volunteered. When a friend’s distillery had to close, the community reached out to check in and offer support. When a distiller and his wife had to face cancer together, a group of volunteers pooled time and resources to host a fundraising comedy show. In all cases the financial problems and personal struggles didn’t disappear, but the individuals were not allowed to face it alone.

I think this is my long-winded way of saying just that. We can’t solve everyone’s problems or save every friend in the industry. What we can do is support the individuals and not lose sight of the people. Associations and businesses are important, but they don’t really matter in the long run. It’s the people that make up those groups that we need to support and care about. I try to reach out to as many people and distillers as I can with the network we have, but if you feel like you have been left out, or need support, then never hesitate to contact me.

With that in mind, I encourage you to share your experiences, insights, and stories with us. Artisan Spirit and the Society of Spirit are platforms where we can navigate these challenges together as a community.

Also, I know I’m supposed to actually talk about the articles in this edition of ASM instead of just proselytizing, and in that regard we didn't not let you down. Lessons from the fuel ethanol world, GMO technology changes in beverage alcohol, new federal regulations to be aware of, freezing water pipes, economic reports (full circle, I know), and a spectacular distillation science and theory primer are just a few of the articles living in the pages of the Spring 2024 edition of Artisan Spirit Magazine. I hope you love reading it as much as we love creating it.

With greatest appreciation, Brian

QUARTERLY gUiLD & inDUSTrY REPORTS

A new year sees the state distilling guilds charging into fray with more legislative battles, fundraising events, and membership drives. Highlights include California’s fervent call to action for all its state distilleries, and direct to consumer continues to be the legislative goal nearly every state is aiming to conquer. I know I’ve said it before, but if you are not yet a member of your state guild, consider joining. It’s perhaps the single best way to help support this industry we all love

Brian Christensen Editor,

AMERICAN CRAFT SPIRITS ASSOCIATION

As 2023 was coming to a close, ACSA took a moment to reflect on the momentous occasion that essentially launched the modern beverage alcohol marketplace. December 5 marked the 90th anniversary of the Repeal of Prohibition and we commemorated the event with a special industry-wide virtual toast on Zoom. I was honored to be among the toast masters at

the event, along with renowned spirits authors Lew Bryson (Tasting Whiskey and Whiskey Master Class) and Amy Stewart (The Drunken Botanist). We'd like to thank all who joined us in raising a glass to our industry's past, present and future.

ACSA began 2024 with the judging for our annual craft spirits competition. More than two dozen judges convened at Ironton

Distillery & Craft House in Denver to evaluate whiskey, gin, vodka, rum, brandy, RTDs and distilled specialty spirits. They awarded gold, silver and bronze medals, as well as Best in Show and the Innovation Award honors to products submitted by craft spirits producers across the country. The medals were presented at our awards luncheon at ACSA's 11th Annual Distillers' Convention and Vendor Trade Show, February 26-28 in Denver.

We also presented medals for the Fourth Annual Craft Spirits Packaging Awards during the luncheon. The Craft Spirits Packaging Awards, generously sponsored by the Glass Packaging Institute, recognize excellence in

bottle, label, can and secondary packaging design across all major spirits categories.

The theme of this year's convention was “Moving Mountains to Help You Succeed”, with a focus on reaching new heights by working together to secure a bright future for craft spirits. The convention was the place where producers and the top industry suppliers connected to find solutions to specific business issues and complex challenges within the craft spirits community. Accomplishing this through education, on the exhibitor floor, and during multiple networking events.

Before the convention, ACSA in January unveiled the annual Craft Spirits Data

AMERICAN DISTILLING INSTITUTE

In 2023, American Distilling Institute (ADI) celebrated its 20-year anniversary. That’s two decades of celebrating the craft distilling community, from its humble roots as a handful of quirky iconoclasts to the engine behind distilled spirits’ remarkable rise. As we look towards 2024, we’re buoyed by the fresh energy and excitement in the industry, but we’re not losing sight of the fundamental challenges so many distillers face.

Despite its success, the fact remains: Craft distilling is a tough business. Increased competition, fewer opportunities for high-quality distribution, growing anti-alcohol sentiment, and shifting consumer behavior are all generating headwinds for distillers. We saw the

impact of those challenges in our annual distillery survey, which revealed a slight drop in the number of active U.S. distilleries for the first time since we began tracking them in 2003 — from 2,668 in January 2023 to 2,616 in January 2024. We all knew the industry couldn’t sustain double-digit growth indefinitely, and it was simply a matter of when, not if, new entrants would flatten off.

But it’s not all doom-and-gloom. Steadily improving legislative conditions and signs of generational transfer are bringing fresh energy into the industry, and consumer enthusiasm for distilled spirits hasn’t been higher in decades. The challenges craft distilling faces are the challenges faced by every maturing

Project. Conducted in partnership with Park Street, the Craft Spirits Data Project is a detailed report on the economic dynamics of the craft spirits industry, including overall sales figures, market trends and an analysis of our industry's economic impact. The findings were showcased at the convention, during a session presented by Park Street's Emily Pennington.

There will be much to talk about throughout 2024 and we're very much looking forward to sharing it all with you.

Cheers!

Gina Holman Founding Partner, J. Carver Distillery President, American Craft Spirits Association Board of Directors

industry — which is, itself, a testament to the industry’s overall success.

In response, ADI is ramping up our yearround educational offerings, including a new webinar series and more workshops. Our goal is to offer resources that help industry members at all levels of experience, from new entrants to experienced professionals, level up their skills, build their network, and thrive in the years to come. And our annual conference will be more robust than ever, with a full suite of workshops, summits, and master classes throughout the week. Please plan to join us in Baltimore, Maryland, this August as we embark on the next 20 years of craft distilling excellence.

Erik Owens President, American Distilling Institute

CRAFT MALTSTERS GUILD

The Craft Maltsters Guild is pleased to report 20 distilleries registered with the Craft Malt Certified™ seal. This program provides a key point of differentiation for producers

in a growing marketplace and connects local grain farming families with distillers and their customers. If you source at least 10 percent of your malt from craft maltsters,

you may be eligible to become Craft Malt Certified. Learn more at craftmalting.com.

Lallemand Distilling is your partner in the production of distinctive and unique spirits. Spirits are our passion, your success our motivation.

Knowing that fermentation is the corner stone of outstanding spirits production, Lallemand Distilling is committed to providing you with the highest quality Yeasts, Nutrients, Enzymes and Bacteria, backed by expert technical support and industry-leading educational programs to help elevate your creations to new levels.

At Lallemand Distilling, we don’t just supply ingredients; we forge enduring partnerships.

The international malt community gathered at the globe’s largest malt industry gathering at MaltCon2024 on February 23-24 in Davis, California. In attendance were professionals and researchers from across the grain supply chain, as well as media and craft malt scholarship recipients.

Dr. Patrick Hayes of the Barley Project at Oregon State University and Dr. Xiang Yin

of Boortmalt/Prairie Malt were the keynote speakers at MaltCon2024. They were joined by more than 20 other speakers who shared their expertise from across the industry — from seeding and breeding to malting, brewing, and distilling.

Recipients of the 2024 Malt Cup awards were announced during the MaltCon Awards Ceremony. This year a record number

of maltsters entered malt into this rigorously judged quality competition. Read about the winners at maltcon.online.

DISTILLED SPIRITS COUNCIL OF THE UNITED STATES

DISCUS Hosts Annual Economic

Briefing: U.S. Spirits Revenues

Maintain Market Share Lead of Total Beverage Alcohol Market in 2023

More than 70 media and analysts registered for DISCUS’ Annual Economic Briefing where we reported that U.S. spirits revenues maintained market share lead in 2023 as the sector reset following the robust sales spikes during the pandemic super cycle. In 2023, spirits market share totaled more than 42%, with steady gains over the past 23 years. This represents the second year in a row spirits supplier revenues have surpassed beer.

We reported that spirits supplier sales in the United States were flat (0.2%) in 2023 totaling $37.7 billion, while volumes rose 1.2% to 308.8 million 9-liter cases. The challenging sales environment is attributed to a number of dynamic market factors including difficult economic conditions with high inflation and interest rates reducing consumer discretionary spending; consumers returning to more normal routines and buying habits post-pandemic; and retailers and wholesalers putting a pause on reordering as they reduced inventory build-ups.

Presenting an overview of the spirits sales trends in 2023, Christine LoCascio, DISCUS chief, policy, strategy & membership, reported that despite the overall slowdown, the premiumization trend continued for some spirits categories in 2023 including Tequila/Mezcal and American Whiskey. LoCascio also reported that spirits ready-to-drink (RTD) products continued to grow in popularity in 2023 with sales up 26.8%, representing the

fastest growing spirits category by revenue.

Presenter Marten Lodewijks, head of consulting — Americas at IWSR Drinks Market Analysis — presented additional data on the overall RTD category, saying that, despite the hard seltzer craze we witnessed from 2017 to 2021 which was malt-driven, spirits-based products have actually grown faster, just off a smaller base.

Celebrating the Continued Suspension of the EU’s Tariff on American Whiskey

The Biden administration secured an extended suspension of the EU’s retaliatory tariffs on American whiskeys until March 2025. This agreement is welcome news for American whiskey exporters across the country, who were facing the possible reimposition and doubling of the EU’s tariff to 50 percent in the new year. DISCUS will continue to urge the Biden administration to secure a permanent end to all debilitating tariffs in disputes unrelated to the spirits sector. Until the threat of these tariffs returning is fully removed, the uncertainty will continue to restrict American whiskey export growth in our most important international market.

U.S. Department of Agriculture

Awards Distilled Spirits Council

$1.09 Million to Expand American Spirits Export Markets in 2024

DISCUS was granted $1,090,436 to promote American spirits in international

markets in 2024 through its partnership with the U.S. Department of Agriculture’s (USDA) Market Access Program (MAP).

DISCUS was one of nearly 70 agricultural organizations to receive MAP funding from the USDA in 2024. Our partnership with USDA in the Market Access Program over the past 18 years has played an important role in the growth of the craft distilling movement in the United States by helping small distilleries expand into international markets.

DISCUS began participating in the program in 2006 and has conducted spirits promotions in cooperation with USDA in more than 20 foreign markets, including Australia, Austria, Brazil, Bulgaria, Chile, China, Colombia, Czech Republic, Germany, France, Hong Kong, India, Japan, Korea, Romania, Russia, Singapore, South Africa, Thailand, Taiwan, United Kingdom and Vietnam. Since that time, total U.S. spirits exports have increased by nearly 145 percent, from $831 million in 2006 to $2.06 billion in 2022 (latest data available). Through the MAP program, DISCUS promotes the U.S. spirits sector by educating the hospitality industry, adult consumers and media in key international markets on the taste, heritage, and style of American distilled spirits.

Protection of Bourbon: 2023 Year in Review

Throughout 2023, DISCUS defended bourbon around the world through actively monitoring and guarding against improper trademark applications and inaccurate marketing claims.

Alice Blayne-Allard Executive Director, Craft Maltsters Guild

Read about MaltCon Awards winners

Read the DISCUS Annual Economic Briefing in full

DISCUS challenged improper usage of the term "bourbon" and secured several victories, most notably in China and India as seen in the following examples:

As a result of opposition from DISCUS, the Chinese trademark office advised that it has ruled against Class 33 trademark applications for “Three Body Bourbon” and “Breda Bourbon,” stating that the marks were likely to mislead consumers regarding the quality or origin of goods due to their similarity to “bourbon.”

Also due to opposition from DISCUS, the Indian trademark office advised that it has ruled against a Class 32 trademark application for “bourbon,” formally treating the mark as abandoned. India and China are important markets for bourbon and our continued trademark efforts add to the protections for “bourbon” going forward.

DISCUS is currently pursuing additional trademark matters in China, Canada, France, the European Union, India, and other nations. DISCUS is proud to protect this industry term and will continue to defend the reputation of bourbon internationally in 2024 and beyond.

Underage Drinking among American High School Seniors Reaches Record Lows in 2023

The National Institute of Drug Abuse released the 2023 Monitoring the Future study, revealing underage drinking continues to

decline long-term, and rates of consumption among American teens are at or near record low levels in 2023. Among high school seniors, lifetime, annual, current and daily alcohol consumption declined significantly from 2022 to 2023, and lifetime abstention among 10th and 12th graders increased significantly.

Past-month consumption reached record low levels among 8th and 12th graders, declining 34 percent and 35 percent, respectively over the past decade, and declined 42 percent among 10th graders. Binge drinking rates remained unchanged from 2022 to 2023 and below pre-pandemic levels.

Leslie Kimball, executive director of Responsibility.org shared, “I’m elated to see that more teens are abstaining from all forms of substance use, including drinking underage. Delaying the onset of alcohol consumption is a key factor in reducing risky behavior as kids grow into adults. This is a testament to the impactful work being done both by us at Responsibility.org and our partners to keep kids safe and alcohol-free. Conversations between parents and kids are making a measurable difference, and I’m heartened to see that kids are listening.”

New DISCUS Benefits: The Tasting Alliance & DISCUS Forge Partnership

DISCUS and The Tasting Alliance announced a new partnership that helps open the door to the world of spirits competitions and provides benefits to DISCUS members.

NATIONAL HONEY BOARD

National Honey Board on Quest to Find Best Honey Whiskey

Coming on the heels of another successful Honey Spirits Competition, the National Honey Board is proud to announce a new competition in 2024 that will seek to find the 10 best honey whiskeys and bourbons in the United States.

Honey whiskeys and bourbons have continued to lead the growing flavored spirits category, and this competition will settle once and for all which one is best.

This collaboration unlocks a 10 percent discount for DISCUS members in all competitions hosted by The Tasting Alliance as well as a 10 percent discount on the first year of DISCUS membership for craft distillers who are award winners.

Competition winners who join DISCUS gain a direct line to DISCUS experts who can provide support in the areas of exporting, advocacy and navigating the spirits industry. It's more than a partnership; it's a commitment to supporting and propelling spirits brands forward.

You could make a difference!

As many state legislatures begin their sessions, we need your voice to make a difference and help distilleries by advocating on key issues facing our industry. Join our community of advocates united with a common goal to ensure adult consumers can enjoy distilled spirits when, where and how they want at www. SpiritsUnited.org. Through Spirits United you will be able to easily contact your legislators to help support the growing distilled spirits industry and those that work in it. Take action at www.SpiritsUnited.org today!

Chris R. Swonger President & CEO, Distilled Spirits Council of the United States

We have enlisted an expert panel of judges to blind test the spirits and rank the top 10 of all that are submitted. Like all National Honey Board Competitions, there will be no entry fee. More details will be announced this spring. To submit your spirit, email alison@ honey.com.

Seiz Ingredient Marketing Representative, National Honey Board

Keith

Non-GN barley, assuring low levels of Ethyl Carbamate

Designed for all-malt whiskeys

Sweet & bready, with notes of honey

Available in whole kernel and flour

AMEriCAn STATE gUiLDS

CALIFORNIA

CALIFORNIA DISTILLERS ASSOCIATION

California is experiencing a rapidly changing economy and that is impacting distilleries. We are seeing breweries and distilleries closing or adjusting operations in dramatic fashion. The DTC conversation has played a huge part in this downturn. Our legislature has assisted us with temporary extensions, but many do not wish to invest heavily in a temporary privilege. There are so many voices involved in our legislative bill and yet there is no sense of actually working together. The small distilleries that actually need DTC are the smallest voice. We have spent three

sessions and hundreds of thousands of dollars of money we don’t really have and yet there is only a temporary extension to show for it. We hired an Executive Director, and she is reaching out to the DSP community to raise membership. The lifeblood of any organization is the membership.

To discuss these issues, the CDA is hosting its first post-pandemic event in Paso Robles. Our Annual Membership Summit will take place Thursday, April 18 through Saturday, April 20. The 3-day schedule includes CDA's membership meeting on Thursday, educational workshops & a dine-around on Friday, which will lead the weekend up to a public tasting event, "From the Barrel'' on Saturday.

COLORADO COLORADO DISTILLERS GUILD

The Colorado Distillers Guild held board elections recently to elect two new board seats. The current board is Lee Wood, President; Bobby Martin, VicePresident; Craig Engelhorn, Treasurer; Emily Rhoades, Communications; Stephen Gould, Legislative Affairs; and David Fishering ex-officio seat for the Colorado Spirits Trail. The two main priorities for the CDG in Colorado this year are to continue to support the Spirits Trail deployment and to prepare for the 2024 legislative session that opened January 10. In 2023, the Governor convene a panel of

industry stakeholders under the guidance of the Liquor Enforcement Division to review all liquor laws on the books and make recommendations to modernize, harmonize and clarify Colorado’s web of liquor laws. A panel of about 40 stakeholders was formed including our Legislative Affairs Chair Stephen Gould and they met over several months. The final result was a report sent to the Governor’s Office. Unfortunately, the report does not support many of the legislative priorities we had set and we’re watching the upcoming legislative session to see what recommendations make it into proposed bills.

The Colorado Distillers Guild is wrapping

MARYLAND

MARYLAND DISTILLERS GUILD

The Maryland Distillers Guild put on the Rye Revival in November of 2023 that drew in guests from around the country and featured noted rye experts and speakers such as

Todd Leopold, Carlo Devito, and Clay Risen. The event included a conference of sessions throughout the day that featured women in whiskey, rye in cocktail culture, rye varietals, and several sessions about rye whiskey and its special place in American History. The event

The CDA is excited to be working in partnership with the Paso Robles Distillery Trail to make From the Barrel one of the largest craft spirits tasting events in the state.

California currently has over 400 DSPs of all sizes, specialties, and license types spanning the length of the state from Etna down to San Diego. While our industry is more niche than wine and beer, we have more licensees than any other state in the U.S. The principle of "power in numbers" is a fundamental aspect of industry advocacy and representation, enabling distillers to wield greater influence, achieve shared goals, and effectively navigate the complex landscape of public policy and regulation.

up a third grant from the Colorado Tourism Office to support the development of our Spirits Trail. The current grant is going for content generation for Spirits Trail promotions which should be delivered in Q1 2024. The next challenge is coming up with the funding to get the content in front of prospective customers and encourage using the app to visit our member distilleries.

The CDG is also excited for the 2024 ACSA conference to come to Denver and we are involved in a variety of ways to welcome our fellow distillers and suppliers to Colorado. We look forward to seeing you in the Mile High City in February.

Lee Wood President, Colorado Distillers Guild Co-founder, Woods High Mountain Distillery

also featured a tasting event with rye whiskeys from distilleries around Maryland, Virginia, Vermont, Pennsylvania, and Colorado!

The guild is gearing up for the upcoming legislative session to fight for distillers' rights to deliver and ship spirits within the state as

Cris Steller Outgoing Executive Director, California Distillers Association

well as permanently removing the cap on the number of bottles sold at one time directly from distillery tasting rooms which stood at

three bottles pre-covid. The guild is working closely with the Brewers Association of Maryland and the Maryland Wineries

MINNESOTA

MINNESOTA DISTILLERS GUILD

The Minnesota Distillers Guild is excited

to host another consumer tasting event this spring 2024. In addition, we are working on plans for another successful MN Distillers Guild Booth at the Minnesota State Fair

NEW YORK

NEW YORK STATE DISTILLERS GUILD

The New York State Distillers Guild closed out 2024 with the successful launch of a new program supporting member marketing efforts. The guild helped bring member distillers to the first-ever Hoochenanny Whiskey Festival, organized by Iron Smoke Whiskey’s Tommy Brunett with the help of Art of Impact. Tommy’s music industry credentials helped assemble a dynamite musical lineup featuring headliners The Struts.

The Guild presented a well-received educational talk on “The Whiskey History of New York,” featuring Celina Perez of Great Jones Distilling, Brian MacKenzie of Finger Lakes Distilling, and moderated by Daric

Schlesselman of Van Brunt Stillhouse.

The event’s location in Geneseo, in the heart of New York’s Finger Lakes wine country, drew a high density of sophisticated consumers. Distillers reported quality conversations and strong sales. In addition to the distillers offering tastings and selling their own products, the Guild was there representing the organization as the premier source for information on New York spirits, and promoting consumer support of legislation that would enable direct-to-consumer shipping. We saw several people snap the QR code we provided right on the spot and send messages to their legislators.

The guild plans to repeat this success by helping event producers connect with New

OHIO

OHIO DISTILLER’S GUILD

We had an extraordinary end to 2023 with a record number of Ohio Distiller’s Guild events. Looking ahead, we have a big event planned at the North Market in Columbus, OH, on March 28. With another exciting guild event on April 6 at the Buckeye Lake Winery located at Buckeye Lake.

New to 2024, we're focusing on the Ohio Distiller’s Guild Trail across Ohio, stretching

from Cleveland to Toledo, and all the way down through Cincinnati. We still plan on bringing back the Henmick Farms event in the fall, which draws around 600 people.

Tailgating will be a big focus at the end of the summer and going into fall. The whole guild will be focusing on college and pro football 100%. One of our main focuses is, "Think local, Drink Local, Support Local.” A big initiative for us at the Ohio Distiller’s Guild is to support local charities that impact Ohioans.

Association to fight for the rights of the craft alcohol industry across the board in 2024.

Eli Breitburg-Smith

Head Distiller/Co-Owner, Baltimore Spirits Company President, Maryland Distillers Guild

highlighting the collaboration with local MN farmers, grains, fruits, botanicals and oak barrels used to distill and age award-winning Minnesota Craft Spirits.

Gina M. Holman

J. Carver Distillery, Founding Partner Minnesota Distillers Guild, VP

York distillers.

Other marketing programs on the books include development of a statewide passport program to help consumers find New York spirits producers wherever they are, a demographics study to learn more about our consumers, and a tent, signage and other materials that will help the Guild represent the industry at other organizations’ events.

By the time you read this, the Guild will have had its Annual Meeting of Members in the state capital, featuring a legislator reception and a lobby day. We’ll also have engaged with key executive branch officials. The Guild’s top legislative priority remains enactment of direct-to-consumer shipping legislation.

This past winter, many of our guild members launched holiday boxes. The boxes include a combination of a bottle of Ohio’s best spirits and a novelty item.

Currently there are almost 100 distillers licensed in the state of Ohio. Each year our guild continues to grow, which in turn, positively impacts agriculture in Ohio as well as countless local jobs. We are always looking for new members to join to continue the impact the Guild can make.

Seth Warren Buckeye Vodka VP of Sales VP of Ohio Distiller’s Guild

Teresa Casey Executive Director, New York State Distillers Guild

OKLAHOMA

OKLAHOMA DISTILLERS GUILD

This is the beginning of our second year,

SOUTH CAROLINA

SOUTH CAROLINA CRAFT DISTILLERS GUILD

The South Carolina Craft Distillers Guild may be small with its 21 distilling members and 11 affiliate members, but it is quickly growing.

The SC Craft Distillers Guild is working on building a legislative agenda for the 2025 Legislative Session. Since these agendas take a year or more to build, we are looking

and we have gained a few new member distilleries. More to report once dues are paid and renewed for all members. A membership and

recruiting committee was formed, and a legislative committee has been formed with its first meeting this month.

forward to hitting the ground in 2024 with forming a Legislative Committee made up of members of the SCCDG. This committee will oversee the actions of the legislative agenda heading into 2025. We plan to kick off the agenda building process at our annual first quarter membership meeting and Legislative Reception taking place on February 21, 2024.

This event is an opportunity for our members to get in front of members from both the SC House of Representatives and SC Senate.

TEXAS

TEXAS DISTILLED SPIRITS ASSOCIATION

The Texas Distilled Spirits Association had a successful 2023 legislative session. After ten years of advocacy efforts, the number of bottles a visitor to a Texas distillery can purchase has now doubled to four. This change in statute is especially important for our distillers who manufacture multiple products. Texas distillers are already reporting a higher number of sales from their distilleries.

The law has also changed allowing Texas distillers to pour samples at festivals, farmers markets, and similar celebrations throughout the state. Texas distillers can take product from their own inventory to these events without having to purchase the product from a retailer. Cutting down costs and allowing distillers to participate in more events will give Texas distillers more opportunities to market their products across our large state.

The members bring their distilled products and allow representatives of the legislature to sample some of South Carolina’s best spirits. This event not only allows distiller members to showcase their products with legislators but to also discuss opportunities for the future of the industry and how it impacts the economic growth of the Palmetto State.

The South Carolina Craft Distillers Guild is looking forward to a great 2024 as it continues to grow and expand!

Trenholm B. Hardison Executive Director, South Carolina Craft Distillers Guild

If you are interested in joining the Texas Distilled Spirits Association, please visit www.texasdistilledspirits.org/join-us.

Amber L. Hausenfluck SVP Government Relations — State McGuireWoods Consulting LLC

Jeffrey Alan Cole President, Oklahoma Distillers Guild

CRAFTING

nEW OppOrTUniTiES

n times of economic uncertainty, a common knee-jerk response is to buckle down and cut costs. While this is a valid reaction, times like these can also present opportunities to accelerate your brand through investment while others are stagnant.

According to a 2022 Forbes1 article, alcohol beverage consumption is resilient against economic recession as these products are considered “affordable luxuries” in the household. Your sales strategy should reflect this mindset. Here are three opportunities to take advantage of amid a potential economic downturn.

1INTRODUCE A NEW OFFERING

Introducing a new product or SKU can entice trial from new customers looking for alternatives and provide variety and the intrigue of something new for existing customers. Blending or finishing purchased spirits to craft novel beverages can be one way to fast track development of a new product offering. When others pull back on production, the bulk market opens up, giving you the opportunity to secure liquid that otherwise wouldn’t be available. However, creating new products can take time and energy that often must be put towards other business needs. Working with a company that does custom distilling and packaging of finished goods can be an easy button.

1 https://www.forbes.com/sites/bill_stone/2022/06/29/ are-alcoholic-beverages-recession-and-inflation-resistant/

We spoke to Monson Ranch Distillers and Corning & Company* — two companies that provide custom distillation. They provided a few details on their perspective regarding sourcing partnerships:

▶ Contract distillers can provide guidance at any point in your creative distillation process. Do you have a recipe? Great! They can help you perfect it. If you don’t have a recipe set, that’s fine too. Collaborating with them allows you to take advantage of their years of experience to uncover the flavor profile you desire. Once a recipe has been finalized, they can scale production depending on your exact needs and create spirits that are ready to bottle or are prepped to go through final distillation on your own still.

▶ They have the flexibility to provide small quantities — even as low as one tote — and the ability to grow your production as your brand grows. As a brand owner, this means you aren’t using precious still time (if you own one) on test products. Conversely, when your new product takes off, you have a partner that can react quickly and increase production. A sourcing partner can allow a company to increase their footprint without having to invest the capital and time to purchase new equipment or lease additional production space.

▶ Contract distillers provide a turnkey solution from concept to finished bottle. In addition to custom distillation, these companies can assist with packaging design, bottle sourcing, developing go-to-market strategies, and guidance navigating the three-tier system. Developing a relationship with custom distillers allows you to secure an entire team of experts in one fell swoop.

Partnering with other companies allows you to save time and production costs, and allows you to be nimble and start small when faced with new opportunities. Spend your time on strategy, building your brand, and crystallizing your vision for the future — let an expert pull the tactical weight of making your dream a reality.

*CF Napa is a creative vendor for Corning & Company and Monson Ranch Distillers.

REDESIGN/ REFRESH YOUR EXISTING BRAND PACKAGING

Often brands are hesitant to invest in a new design when there is reduced cash flow due to lagging sales. Many companies wait too long to make a change allowing their brand to lose even more market share, key placements, and consumer loyalty to competitors.

A new package design can provide a number of benefits:

> Reinvigorating distributors and sales-people with something new and exciting to talk about.

> Refining or redefining brand positioning; restaging the brand to compete more effectively against competitors.

> Hold or increase pricing and stave off discounting by retailers.

> Signaling existing consumers that you are investing in the brand and creating shelf-pop that can attract new consumers. A little bit of brand “buzz” goes a long way.

Redesigning your packaging to appear more premium and get noticed on shelf can provide a tangible boost in sales. If you can refresh your brand to look more premium than its price point, it will appear like a better deal in comparison to your competition.

Packaging, when done expertly, is a 24hour salesperson that invites trial by attracting new customers, reinforces the quality perception of your product while consumed, and assists consumers’ recall of your brand for repurchase and recommendations to peers. A package redesign is an investment but packaging is one of the least expensive places to invest to affect sales compared to many other mediums such as advertising and marketing. Both advertising and marketing can be costly and time-consuming endeavors and, unless you are one of the lucky few to garner a deal for in-store promotion, it has the huge disadvantage of interacting with your target consumer away from the point of purchase and when they are most distracted. However, packaging is directly and intrinsically tied to your product and brand, engaging your potential customer when they are ready to buy. In the long run, investing in a packaging redesign costs less and has a greater impact on sales.

3

SPEAK TO RETAILERS/ DISTRIBUTORS ABOUT NEEDS

As other brands begin to flounder, shelf space can become available. Distributors and retailers alike can become far more amicable to fill these holes in their offerings. Even if it means giving up a little margin to make a deal, the additional exposure and volume for your brand can lead to substantial sales growth.

It’s still possible the economy may see a recession so it can be intimidating for a small business owner, hitting the gas while others hit the brakes can leave you lightyears ahead of the competition when the economy stabilizes again. Now is the time to consider new products, line extensions and your packaging. Not only will your brand reap the rewards of these changes, but you put yourself in a more attractive position to distributors, potentially accelerating the growth and profitability of your brand.

Direct-to-Consumer Sales for Distilleries

i WAnT THE prODUCT, AnD i WAnT iT nOW!

Written by Lauren Voke & John P. Thomas, II

For many distilleries, the start of a new year is often a time to reflect on the prior year’s successes and focus on capitalizing on consumer trends and maximizing profits in the coming year. However, between creating products, fulfilling orders, negotiating distribution agreements, and maintaining active licenses, it can feel overwhelming to venture into additional business models by expanding operations, such as opening a direct-to-consumer (DTC) revenue stream. Yet, engaging in DTC sales may be more attainable than a distillery owner may think.

DELiVErY vs. SHipping

The push for new delivery options has accelerated since the COVID-19 pandemic when consumers sought the convenience of ordering alcohol beverages and consuming them within the safety and comfort of their homes. As a result, the pandemic triggered a series of emergency executive orders where states would temporarily authorize restaurants and bars to fulfill alcohol delivery orders as a creative business mechanism, helping retailers remain profitable in a time of mandated social distancing and limited in-person occupancy. Following the pandemic, many states passed legislation formally enacting laws authorizing some of the privileges extended to licensees during the pandemic. These

laws often formalize delivery rules and the functional requirements that licensees and third-party services must meet to be able to facilitate alcohol sales and deliver alcohol directly to the consumer. While this may seem like a welcome development for distilleries, it is important to distinguish between delivery and shipping privileges.

Engaging in DTC sales may be more attainable than a

distillery owner might think.

OBSTACLES AnD rESTriCTiOnS

The DTC shipping of spirits is a separate and distinct issue from spirits delivery. DTC shipping generally involves a distillery selling its product directly to the consumer and fulfilling the shipment from inventory on the distillery’s licensed premises. The distillery is the merchant of record and is responsible for getting the shipment to the consumer through a nationally recognized third-party carrier, such as FedEx or UPS.

Spirits delivery, on the other hand, generally involves a distillery selling its product to a consumer and utilizing a third-party delivery service, such as Uber Eats or Thirstie, to pick up the product from the distillery’s premises and deliver it to the customer’s residence. It is essential to understand the distinction between DTC shipping and alcohol delivery when reviewing state-level restrictions and guidelines because each method has challenges and nuanced regulations.

While exploring whether shipping or delivery options are available, there are significant restrictions that a distillery must keep in mind. Like most alcohol beverage laws and regulations, each state regulates spirits shipments and delivery differently. The jurisdictions that allow spirits delivery only sometimes allow DTC spirits shipping, and a few even prohibit any shipment or delivery of alcohol beverages. While many states have enacted legislation authorizing the delivery of alcohol, only a fraction of jurisdictions have statutorily authorized interstate DTC shipping of spirits. Even jurisdictions that have authorized interstate spirits shipping still set parameters that may nonetheless impact a distillery’s ability to facilitate interstate DTC sales of spirits.1

For example, Alaska allows resident and nonresident distilleries that produce less than 50,000 proof gallons annually to obtain a manufacturer direct shipment license, which permits the licensee to ship spirits to Alaska consumers.2 Similarly, Arizona allows craft distilleries (defined as distilleries producing less than 20,000 gallons of spirits annually), whether resident or nonresident, to ship spirits to Arizona consumers.3

1 Note that this list is not an exhaustive list of all applicable laws and regulations relating to DTC shipments. This list, and the information contained in this article, is not legal advice and should not be relied on as such. Always consult with an attorney before engaging in DTC spirits shipping.

2 Alaska Stat. Ann. § 04.09.370.

3 Ariz. Rev. Stat. Ann. § 4-205.10.

Other jurisdictions that permit similar actions, with specific restrictions, include the District of Columbia4 (with a limitation on the amount of alcohol shipped), Kentucky,5 New Hampshire,6 and Nebraska (each with separate licensing requirements for direct shipment).

Other states have more onerous restrictions. Rhode Island allows the direct shipment to consumers but requires that the consumer be physically present at the distillery when making the purchase, effectively prohibiting online sales.7

Vermont allows the direct shipment of ready-to-drink cocktails, but the cocktails must be less than 12 percent alcohol by volume and smaller than 24 fluid ounces.8 California allows resident craft distill-

4 D.C. Code Ann. § 25-772.

5 Ky. Rev. Stat. Ann. § 243.027.

6 RSA 178:27.

7 R.I. Gen. Laws § 3-4-8.

8 7 V.S.A. § 2(31).

eries to ship to local consumers but still prohibits nonresident distilleries from shipping directly to resident consumers.9

Because the consumer demand for DTC is steadily increasing, the alcohol industry will likely continue to see proposed legislation authorizing some mechanism of DTC shipping upon passing. In an increase from 2022, 87 percent of regular craft spirits drinkers want to be able to legally purchase craft spirits via shipping, and 81 percent of regular craft spirits drinkers who would be likely to have spirits shipped to them would make such purposes once a month or more.10 This points to a consumer base looking for expanded options for how they discover, purchase, and receive their distilled liquor products, and legislation is likely to follow.

9 Cal. Bus. & Prof. Code § 23504.5.

10 See 2023 Direct to Consumer Spirits Shipping Report, SOVOS ShipCompliant, available upon request at https://sovos.com/shipcompliant/content-library/dtc-spirits-report/.

rETAiLEr vs. DiSTiLLErY DiSTinCTiOnS

Another vital distinction between delivery and shipping revolves around the license type held by the licensee selling the alcohol being delivered or shipped. Alcohol delivery is generally a privilege reserved for retailers, whereas alcohol shipping is generally a privilege reserved for manufacturers. The ability for a manufacturer to ship spirits DTC is an exception to the three-tier system of alcohol sales, which requires alcohol sales to flow from manufacturer to wholesaler, wholesaler to retailer, and retailer to consumer. While DTC shipping laws recognize a consumer’s desire to have the ability to purchase alcohol beverages in other states that may not otherwise be available in the consumer’s home state, retailers generally cannot fulfill such orders based on the limitations surrounding interstate retail sales.

Regulatory agencies have also recognized a distillery’s legitimate business interest in conducting its own sales to consumers and have passed laws contemplating scenarios whereby distilleries sell directly to consumers. However, such privileges are generally

limited to face-to-face transactions at the distillery’s licensed premises. For example, Florida allows distilleries to sell up to 75,000 gallons annually of spirits so long as the sale occurs in a face-to-face transaction with the consumer at the craft distillery’s licensed premises (similar to Rhode Island).11 The face-toface requirement essentially prohibits a Florida distillery from shipping (or delivering) spirits to a consumer outside of a face-to-face transaction.

Because alcohol shipping is generally a privilege reserved for manufacturers, alcohol delivery is where retailers can get involved in selling alcohol to consumers for delivery at their homes. For example, when a consumer purchases a bottle of vodka for delivery, the sale is generally facilitated through a local retailer instead of the manufacturer that produced the bottle (even if the manufacturer is local). Manufacturers that deliver alcohol locally typically do so by holding another retail license that authorizes the manufacturer to conduct retail activities. As noted above, the licensure framework permitting such practice will vary significantly from state to state.

LOOKing AHEAD

With the growth opportunities surrounding the direct shipment and delivery of spirituous liquor to consumers, more and more distilleries are likely to start looking at how to utilize these developments to increase sales. However, it is essential to review each state’s individual

requirements, restrictions, and prohibitions before embarking on this path. DTC shipments and deliveries are nuanced, and consulting with a licensed professional can be an essential step before engaging in DTC shipment or delivery of alcohol beverages, whether you are a distillery or a retailer.

Lauren Voke is an associate in GrayRobinson’s Miami office and a member of the firm’s Nationwide Alcohol Industry Group. Prior to becoming an associate, Lauren was a law clerk supporting the national Alcohol Law Team where she developed an understanding of the three-tier alcohol beverage system, tied-house issues, trade practice compliance, and federal and state alcohol licensing. Her practice as an associate involves providing counsel on alcohol licensing and general regulatory compliance with a focus on complex regulatory matters concerning alcohol, tobacco, and gaming activities. For more information call (305) 420-3943 or email lauren.voke@gray-robinson.com.

John P. Thomas, II is an associate in GrayRobinson’s Tampa office and a member of the firm’s Nationwide Alcohol Industry Group. John works with all three tiers and all three segments of the alcohol industry, including substantial work experience with distillers. Prior to joining GrayRobinson and while in law school, John served as a senior judicial intern at the U.S. District Court for the Middle District of Florida for the Honorable Amanda Arnold Sansome. Subsequently, he became a gubernatorial fellow for the Florida Gubernatorial Fellows Program where he served within the Florida Department of Management Services. For more information call (813) 273-5046 or email john.thomas@gray-robinson.com.

OPEN ACCESS and available to the entire distilling community. Read all peer-reviewed articles online now.

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SPECIAL THANKS TO THE SPONSORS MAKING THIS POSSIBLE

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Distillery Ownership FAQs

t’s often asked, “What does it take to open a distillery?” Which then usually leads to many more follow up questions. So, we’re going to go ahead and answer some of the most common:

The two main questions you’ll need to answer before you get started are...

1. What are you going to make?

2. How much of it do you want to produce?

This may seem overly simplistic, but you won’t even be able to look at a building without knowing the answer to those two questions. Everything in your distillery will be based on those two factors. And “everything” and “as much as possible” aren’t acceptable answers. Do the research to define your market and know what that market will support. A business plan is a must.

How much does a distillery cost?

Distilleries, like cars, come in all shapes and sizes. Do you want a luxury sports car with all the bells and whistles, or do you want a used van? The difference in cost between these two choices are significant, and the same goes for a distillery. Cost will depend on a myriad of factors. In our experience, we’ve found that it always costs more than you originally think, but locking down as many details as possible in your research — before you make the first purchase — is going to make a difference. But, as a good rule of thumb, plan on around $750K to $1.5 million to start.

Don’t forget branding.

One of the most overlooked aspects of starting a distillery is the branding and marketing of your product. One might assume that a good product alone will have people beating down the doors to get a bottle, but this is not the case. You’ll need good packaging and branding to stand out from your competition, and also think of who is going to be selling the brand. If you have a distiller who is short on words and doesn’t like to talk to crowds, that’s probably not going to be the person who is out making the sales. Keep in mind that this will be an additional cost on top of actually opening the distillery.

What does it take to become a Master Distiller?

In short, earn it. There is no test or certification to become a master distiller, so anyone can use the title if they want. However, if you don’t know what you’re doing or release a bad product, then prepare to be mocked endlessly. There is nothing wrong with an alternative title like head distiller, and in most cases this will be a less contentious title. Spend some time making various products and mastering making one or two, then work toward the grander title.

is it too late to open a distillery? isn’t the market saturated?

Not yet. There is still room for growth right now. You just need to be thoughtful of your market and plan as you put your business together. Small- to medium-sized distilleries looking at bottle sales and distribution growth are slowing, but we’re seeing more distilleries opening a “brew pub” style where they are a small distillery but mainly focused on on-premise sales along with food.

is this much more difficult than opening a brewery?

Yes. Opening a distillery not only costs more than opening a brewery but you’ll also have to adhere to more codes, which means more inspections. And due to the higher proof of spirits, everything in and about your building will be held to a higher standard of safety, which translates to more time and capital. Not to mention you’re going to be paying way more taxes on spirits than you would for beer.

is there a place where i can buy used equipment?

The used equipment market can be unpredictable, but as distilleries start to scale up their operations more and more will be up for sale. Another alternative may sound morbid, but you can also keep an eye out for distilleries that are going out of business and beginning to liquidate. There can be opportunities to purchase equipment and even products at reduced rates. American Distilling Institute (ADI) is a good source for used equipment.

Can i start distilling at home?

No. It’s 100 percent illegal. I don’t care what your state law says, or what someone in your county government told you, it’s illegal to distill at home and that will not likely change in the near future. Mainly for two main reasons. First is the safety hazard of home distilling. Unlike beer and wine, it’s possible to make poison if you don’t know what you’re doing. Let’s not forget that you’ll have high-proof alcohol in vapor form in a pressurized vessel (AKA a bomb) — again, not very safe. Secondly, you might find yourself in some tax trouble. As you’re probably aware, the IRS gets angry if they don’t get their share of what you’re selling. If you want to learn more about distilling, there are numerous legal education opportunities available to take advantage of.

Should i cash in my retirement to do this?

No. Don’t do it. Don’t think about it. Don’t cash in your retirement, don’t take it out of Johnny’s college fund, and don’t take out a second mortgage to pay for it. The process of opening a distillery and building a brand is a very expensive and stressful endeavor and the last thing you need is to add the stress of risking your lifestyle and keeping your family happy and fed. Also, potentially working until the day you die is an added strain that you, and your family, don’t need. It may not be romantic advice, but it's practical nonetheless.

get some help.

There are plenty of great resources out there. We cannot recommend highly enough that you talk to some experts, take some distillery tours, and even chat to your local liquor retailers. In addition there are numerous state distilling guilds, and trade associations you can join and network though. This industry is unique in the fact that almost everyone you meet is willing to share and teach.

tips to effectively SELL spirits online

People have grown accustomed to shopping online for convenience and expect to buy anything they want from their phone or computer. Is it time to start selling your spirits online?

„ Over the next five years, e-commerce sales of beverage alcohol are expected to increase by $7.5B, to reach nearly $40B across key markets by 2027, according to a 2023 report by IWSR.

„ More than four in five regular craft spirits drinkers (81 percent) would be more likely to try new craft spirit

brands if they were able to purchase the spirits via direct-to-consumer shipping to their home according to a 2023 Sovos ShipCompliant survey.

„ It makes it possible for people all across the country to buy your spirits and become loyal fans.

„ Online sales are a crucial source of information, influence, and engagement for buyers and can provide a rich source of data to help improve sales across all channels.

There are compelling reasons to consider

selling your spirits through e-commerce. But before you jump into the fray, there are important considerations to address.

Think of selling online as you would getting ready to start selling in a new state. To open a new market you need to secure a distributor, arm them with sales materials, do distributor ride-alongs, etc. Ya gotta go where the consumers are with brand ambassadors working on-premise, doing instore samplings, and meeting with buyers. The same is true for successfully selling online. Ya gotta go where consumers are — online.

Pick a Platform

First, determine which online platform fits your needs best. What is the best avenue to fit your budget, is easy to work with, and matches your style?

There are effective online stores like ReserveBar and Seelbach’s that list thousands of spirits for sale. These marketplaces might be a good way for you to reach consumers.

There are also e-commerce providers that put online shopping capabilities right on your website.

Set a Marketing Budget

Don’t even think about e-commerce if you have not already earmarked funds for marketing online sales. The old saw, “it takes money to make money” is absolutely true when it comes to online sales.

The average consumer products company in the U.S. devotes 10.9 percent of total revenue to its marketing budget, according to the 2023 Gartner CMO Spend and Strategy Survey. Use that as a benchmark.

Connect with Your Buyers Online

There are several marketing avenues to catch people’s attention and purchase your products online. Here are a few marketing methods for lucrative e-commerce.

Search Engine Optimization (SEO)

Your website is an essential hub for online sales. Start your e-commerce journey by refreshing your website to make it easier for people to find it, easier to purchase spirits, and easier to sign up for your newsletter. Set a goal of getting your product pages among the top 10 results on search engines. Analyze the ranking metrics of your current pages to determine relevant keywords. Then update your product pages with those keywords in the product included in descriptions, titles, and meta tags. Add information like cocktail recipes and blog posts that add value to your audience and improve search rankings. It's important to optimize your website for SEO to drive more traffic organically to your online store.

Social Media for E-commerce

Chances are good that you are already using Facebook and Instagram to engage influencers, consumers, and industry folks with tantalizing images and videos of your amazing spirits. Social media is a great way to build brand awareness and attract people to your tasting room and events, and it is also an effective way to sell more products online. Once you are set up to sell online, make sure you let your followers know that they can easily find your spirits and have them shipped to them by periodically posting offers with links to your online store. Also collaborate with influencers by sending samples for review and running contests to spread the word to their followers.

Paid Advertising

Organic social media is fine, but posting on Facebook by itself isn’t going to lead to a lot of direct sales. Running pay-per-click (PPC) campaigns on platforms like the ubiquitous search engine, Google, and everyone’s favorite online watercooler, Facebook, as well as other online platforms, can achieve excellent conversion rates. Successful ads take a bit of know-how. If you’re into DIY, take some courses through Google Skillshop to up your game. If it fits your budget, hire an expert to design creative ad concepts that drive people straight into your online shopping cart. Ad agencies can run remarketing ads to target key demographics and create geo-targeted ads that drive traffic to your website store-locater.

PPC advertising not only can help you more effectively target the people who are most likely going to buy your spirits, but it's backed by data, is easy to scale, and offers a good ROI.

Email Marketing

If you’re not already sending newsletters to your fans, you really ought to. People who subscribe to newsletters want to hear from you to know what’s going on at the distillery, attend events, be the first to know about new releases, and yes, they want to buy your spirits. Platforms like MailChimp and Klaviyo can help you send attractively designed newsletters once or twice a month, segment your audiences, and set up automated emails that are triggered to keep customers engaged without turning them off.

Inspect What You Expect

An upside of online marketing is that each of these platforms provides a wealth of information to help you understand your customers better and evaluate campaigns to continually improve strategies for better ROI. There are several readily available metrics to evaluate such as click-through rate, conversion rate, leads generated, conversions (sales), appointments set, website visitors, brand mentions, impressions, engagement, and follower growth. Set goals to achieve results along the metrics that matter most to you and analyze campaigns at least monthly to ensure you are reaching your audiences and getting results.

Put it All Together

E-commerce ain’t no field of dreams. To be successful with online sales it takes choosing the right e-commerce platform, dedicating the right spend, and putting in the elbow grease to market your online store. Oh, and it takes patience. First impressions rarely lead to sales. In fact, only two percent of first-time website visitors will make a purchase. It takes an average of six to eight touches to close a sale. Taking a comprehensive approach to marketing where consumers are can help you achieve success with online sales.

Matt McGinnis is CEO and founder of Big Thirst. Professional keyboard jockey, infinity playlist curator, and washed-up rec league soccer player, Matt is the lead for the beverage industry’s most comprehensive sales, marketing, and consulting company. Armed with more than 30 years of global marketing experience, he has created award-winning campaigns for world leading brands in the U.S. and Europe including Lance Armstrong, Lollapalooza, Dell, Nokia, and Panasonic.

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2024ARTISAN SPIRIT OF THE YEAR

Colton Weinstein

WRITTEN BY READE HUDDLESTON /// PHOTOGRAPHY BY DEVON TREVATHAN

—Brian Christensen

It’s incredible to think we have reached year five of the “Artisan Spirit of the Year.” For this recognition we do things a little differently than other spirits or distillery awards. For the Artisan Spirit of the Year we do not recognize a distillery, or a product. We recognize one (ok sometimes two) exemplary distillers. In addition, the team of Artisan Spirit Magazine does not choose the recipient. Instead we gather a group of equally prestigious distillers and have them tackle the difficult task of picking one of their peers. That peer must be a person who deserves to be credited for their technical skill, leadership, willingness to educate, and for being an overall quality human.

This year, it is our great honor to recognize Colton Weinstein as the 2024 Artisan Spirit of the Year.

Thanks for sitting down and talking with me. Congratulations on being named Artisan Spirit of the Year.

Thank you, it is a ridiculous honor and I still don't really believe it. When Brian called me I was like, what are we talking about, this doesn't sound right, are you sure you have the right number?

(Editor note: During the call Weinstein specifically declared, “What? No way. You call with lies.”)

I actually answer Brian like that all the time. Well I guess your adoring fans want to learn a little bit about you, so tell me what brought you to the spirits industry? How did you go from a doe-eyed boy just starting out, to here, distiller of the year.

So luckily as a dough-eyed boy I grew up in Upstate New York in the Finger Lakes, which is east coast wine country. My first ever job, when again I was a dough-eyed boy, was cutting up pie tins and spreading peanut butter on them and connecting them to an electric fence that was attached to a vineyard, and obviously I said, “This is it for me. I can't do anything else with my life.” So that was when I was maybe 14 or 15. I think I had a small stint as a delivery driver for Pita Pit and other than that it's been wine, beer, cider, spirits.

That's amazing! So you started off in wine. Did you go directly to spirits or did you go elsewhere?

At that time I didn't even know it was a career option. I kind of figured that there are wine makers so it must be a career option. Then I found out as I started looking at colleges that fermentation science was an actual degree. I [realized], oh you can go to school for this. That's it now, I've got part two of my life planned out. Actually, I went to CU Boulder for my first year, because being under 21, I could get all my prereq classes that you have to take out of the way, and the Brewers Association is based there. I thought, well maybe I can weasel my way in and start working for them and get some experience, even if it's just writing or [gaining] knowledge of the industry. Turns out they only want 21 year olds, so sophomore year I transferred to Oregon State for their fermentation program.

When was your first job on the distilling side?

It was actually at Corsair where I still am. Okay so, at the end of college I did an internship with Corsair's old R&D department head. I suppose it was a one-man department, but he went to Oregon State for his Master's so he started an internship program and I did an internship. That was supposed to last, I think, six weeks but I turned it into three months, and then [I] had to go back and finish a semester and about halfway through [the semester] they called and offered me a job when I was done. I came back to Nashville right after I graduated college with a job, which is pretty awesome.

SELECTION GUIDELINES

Base Selection Standards:

› An individual (not a business)

› A distiller (active or retired)

› Having the fundamental skills in distilling, blending, fermentation, aging, etc.

› Recognized as a quality producer

› Distillery size is not a consideration (craft or macro)

› Distillery ownership is not a requirement

Education & Values:

› A steward of knowledge who educates passionately

› Fosters community

› Collaborates

› Not a “jackass” (aka, no history of shouting people down, pretentiousness, bigotry, sexism, etc.)

Innovation:

› Willing to push boundaries while still understanding and learning from tradition

› Not afraid to learn from failure

Advocacy & Leadership:

› A leader in legislative or community issues and regulations (state/federal/ guilds/associations)

› Industry advocacy to customers and others outside the boundary of the distillery

› Celebrity status within the distilling industry is not a selection requirement

So you start off at Corsair, and you're still with Corsair, but you've done a lot of traveling during your time as a distiller. Can you tell us a little bit about that? Tell me what you took away from that?

Through Corsair I joined the American Craft Spirits Association (ACSA) and particularly their spirits competition committee, and then behind the scenes helped to build the competition up. And just seeing that helped me. It was the biggest education, almost more than school. We won't knock Oregon State, but seeing what was out there, I [said], “wow there's a whole world of different kinds of spirits.” So, about 2020 I actually left Corsair to start [Liba Spirits] what we call a nomadic spirits company. A traveling spirits company that will travel around the world and rent extra time that people have on their stills, because as you know, most people aren't running stills 24/7. So there's always extra time, and people like making extra money, so we got started doing it. The first [spirit] was a gin we made in the Austrian Alps and then we made a rum in New Orleans. In 2020 it got a little hard to travel, particularly outside of the United States, but just really being able to see different systems and different cultures, how people set up production facilities and how they do their SOPs. There's a lot of similarities but there's always something I can take away, and bring back to wherever home is at the time. Then I came back to Corsair last year, maybe a year and a half ago; they were getting started on a build-out of a bulk contract facility. So I've been working through that with them for the past year and a half.

“I have only ever done this so I don't have a lot of experience with other industries, but we have a really good tight-knit community and that has been a large part of why I just can't leave and why I have no other life skills.”

— COLTON WEINSTEIN

Okay, what would you say has been the most interesting aspect of your career?

It's traveling. Being in Tennessee and Kentucky is the heart of bourbon country. That's what we see a lot of here. So that's how my spirit's knowledge was built up, and then as soon as I started traveling I was like, oh... they make their cuts like this, and this is how they infuse. Wait, they're not using corn? That's interesting! Also just talking to all the distillers that we get to meet. Particularly through ACSA and Good Guys and just being able to talk to people. And you know obviously, as I said, I have only ever done this so I don't have a lot of experience with other industries, but we have a really good tight-knit community and that has been a large part of why I just can't leave and why I have no other life skills. I could maybe be a mediocre plumber, that's about it.

Like all good distillers should be. So was there one person in particular that had an impact on your journey? Was there a mentor or someone in the industry that you just really looked up to?

I wouldn't say there's one person, there's probably 20 or 30 people. There's guys who I know by name and I've talked to a few times but are just so…they have been in it for so long and are so deep… and they have forgotten more than I know. Then there's sort of our closer knit community, my friends, we're all so passionate about distilling and it's all we want to talk about. I think that's where I learned the most, just forcing people to talk about spirits when they want to talk about other things. If we were sitting around a campfire and someone wants to tell ghost stories, I want to make sure it has something to do with a distillery production floor ghost story. I think we all have a few of those.

SELECTION COMMITTEE

Nicole Austin

DIAGEO – GEORGE DICKLE

2020 Artisan Spirit of the Year

Nicole Austin graduated from Manhattan College with a major in Chemical Engineering in 2006 before landing her position as a Master Blender for Kings County Distillery in 2010. She then joined The Oak View Spirits consulting firm, where she handled everything from raw material sourcing to contract negotiations. Nicole also served as a Project Commissioning Engineer for William Grant & Sons at the Tullamore Distillery in Ireland. She’s been a fierce advocate for the distilling industry as a founding board member of the American Craft Spirits Association and co-chair of Legislative, Convention and State Guild Committees. In her role as Director of George Dickel & Luxury American Whiskey, Nicole leads the strategic direction of Diageo North America’s Luxury American Whiskies, with a focus on Cascade Hollow Distilling Co. and its whisky brands

Tracie Franklin

GET SPIRITED CONSULTING LLC

Tracie Franklin is a whiskey educator, public speaker, brand consultant, and distiller who lives in Washington D.C. Tracie’s curiosity and dedication to spirits led to unforgettable opportunities to learn and distill alongside legendary whiskey personalities. She has obtained numerous whiskey and spirits certifications, and received her Diploma in Distillation from the Institute of Brewing and Distilling in 2023. With her diverse background in spirits and a commitment to inclusivity, Tracie is thrilled to share her experiences, skills, and insights as a mentor, consultant for small brands, and a Board Member for OurWhisky Foundation and Sip of Paradise Garden. Follow Tracie’s “Spirited” adventures at @spirited_tracie on Instagram.

Johnny Jeffery

WHAT THE CUTS

2022 Artisan Spirit of the Year

Johnny Jeffery is an industry consultant with 15 years in the spirits industry. He’s built, commissioned, and launched many facilities and brands and is proud to have participated in the selection of this year’s Artisan Spirit of the Year!

Todd Leopold LEOPOLD BROS

2023 Artisan Spirit of the Year

Todd Leopold received his diploma in Malting & Brewing from the Siebel Institute of Technology in Chicago in 1996. After graduation, he trained at the Doemens School in Munich focusing on the production of lager beers. He has apprenticed at several breweries and distilleries throughout Europe.

Chis Montana

DU NORD SOCIAL SPIRITS

2021 Artisan Spirit of the Year

Chris Montana is the owner of Du Nord Social Spirits in Minneapolis. A father of three, Chris has been described as "a Loc'd out gangsta set trippin banger" whose homies are down so don't arouse their anger (fool). If not eating pie, Chris is usually searching for pie and/or plotting world domination with the team of savages that actually run Du Nord.

Yes! Where do you see yourself going in the future in terms of spirits?

I'm at Corsair, but I still do the nomadic [distilling with] Liba Spirits. We're kind of ramping that up again. About five or six months ago we released a bourbon-based aperitivo, a bourbon Amaro type. We're starting to dive into that, taking our nomadic [distilling] idea and focusing it a little more in terms of a spirit type instead of just trying to make everything. So aperitivo and amaros, and I really want to do something like an agave-based one in Mexico, and a shochu-based one in Japan, and keep traveling, keep learning, guess I just don't want to get complacent and stuck in one place. What was the question?

Well I'll ask you a new one, so what has been your proudest moment so far of your career?

Besides being named Artisan Spirit of the Year?

Yes.

I suppose I should have prepared and expected this question, but I did not.

Don't worry I wrote all these on the back of a napkin anyway.

So honestly, I don't really want to dial it into just one; but I do a lot of consulting as well and helping people build out. The right time to hire a consultant is before you start building or maybe while you're building. Not after you've built your distillery and are running into problems. Almost never happens, but on the few occasions you do get lucky and do that, it's when you turn that facility on, and you know how to commission it and you know there's always of course a million problems, but you see it actually operating and it's working and spirits are coming off the still. Hey we just built this, and I helped.

“Ask as many questions as you can, and never feel like it's a dumb question because even if it is, you'll learn something from it.”

— COLTON WEINSTEIN

I completely understand.

All right, so speaking of that, if there's one thing you could say to someone starting out in this industry what would it be?

Keep asking questions. There's a lot of [knowledge] I found to be particularly helpful coming out of school. I know how mashing works, I know how enzymes work, I know yeast pitch rates, and all that. Then I start talking to our suppliers and asking them, hey what would you suggest? Granted they're of course yeast and enzyme salespeople so you cut their numbers a little bit, but they're so specialized and that's exactly what their whole business models are, so you're always going to pull out something. Ask as many questions as you can, and never feel like it's a dumb question because even if it is, you'll learn something from it.

That's great. So what part of this award makes you the proudest? There's all these different things that you're being recognized for: your knowledge, your willingness to help the community, your engagement, etc., etc. Is there an aspect of receiving this award that really makes you proud to be able to say you did that?

I think it would be...Yeah, I actually didn't know that the criteria was being part of helping the industry.

Would you like to hear the criteria real quick?

I guess that would be important.

So part of the criteria for this award is being engaged with the community and helping others. Why do you see it as important for distillers to lift each other up and share?

Knowledge! It’s a hard industry that has high barriers to entry. It's expensive, but everyone has a lot of passion and you don't want to kind of let those two things go too far apart.

The core characteristics are an individual not a business, a distiller active or retired, having the fundamental skills in distilling, blending, fermentation, aging, recognized as a quality producer, and is a steward of knowledge who educates passionately, a fosterer of community, a collaborator, and of course because Brian writes this, not a dick.

Well I think, obviously, hopefully, that last one. But the last two really. I think being recognized means that you're willing to get up there and help people even when it's not always convenient or easy for you. You can read a book and become a better distiller, but most people don't read books and decide I'm gonna help the guy next to me.

That makes sense, we asked you if there's anything you would say to someone starting out in the industry, but is there anything you would say to yourself when you first started out?

Oh yeah! Be patient. I know that distilling is kind of the practice of being patient, but it's a fast feeling industry until you've made this barrel of whiskey and nothing's going to happen to it for four years. So be patient.

Is there any last thing you would like to share or say?

I have not told my mother about this and she is one of the few [people] who actually pays Brian, I think, to get the magazine mailed to her house. So, I'm gonna see if I can set my dad up to live stream her reading the article and we can add it into this video.

“I know that distilling is kind of the practice of being patient, but it's a fast feeling industry until you've made this barrel of whiskey and nothing's going to happen to it for four years. So be patient.”

— COLTON WEINSTEIN

Harrison

Holditch, distillery co-founder and CEO, said he and his family grew up visiting the Florida panhandle town of Santa Rosa Beach, making lifelong friends and deep ties to the community, eventually making the move from Texas almost ten years ago.

For them, being a responsible and thoughtful business — including the sustainability initiatives that Distillery 98 tackles — began as simply being a part of Santa Rosa Beach.

“Even before [the distillery], seeing trash, you bring a bucket down to the beach and you collect plastic and things off the beach,” he said. “It’s a big thing in our community, and being a part of that, it really helps you at the end of the day to know that we’re doing a little bit of our part here and there.”

He and his brother-in-law (now head distiller) got to know the local brewer, and saw that there wasn’t a distillery in town. What started as a hobby in 2015 quickly grew into

“It’s been really cool working with the same farmer. We’ve got a handshake deal.”

a business venture; the distillery opened its doors in late 2018, stayed afloat through COVID, and in 2023 launched a first-of-itskind product, Half Shell Vodka packaged in a cardboard bottle.

They opened with a focus on white spirits, finding a local farmer in 2017 and buying his 30 acres of corn — grown organically, though not certified — every year since then. It’s not a crop often associated with Florida agriculture, but Holditch said they’re not far from farm country. “People think oranges in Florida, well we don’t have that many orange groves. We still get freezes up where we are,” he said. “It’s been really cool working with

— Harrison Holditch

the same farmer. We’ve got a handshake deal. He’s a good old boy from north Florida.”

They also tapped into a local equipment supplier in Stilldragon, keeping more of their business in Florida. After working in construction, the oil industry, and service jobs, getting immersed in the craft spirits world and the characters that inhabit it has been an adventure. “You meet some guys who are ex-nuclear engineers; you meet some backwoods guys. It’s definitely the most diverse industry that I’ve ever been a part of,” Holditch said.

It took time to settle in and find their way. They started off making “some craft-y vodkas, some flavored vodkas,” eventually opening

a tasting room, The Lost Change, which has helped to boost the business. Not that the sustainability efforts weren’t there, but it was something that happened without realizing it at first.

“At the beginning, it was just about making a product, not necessarily making money but let’s make a good business and provide for our family and have a good way of life, a fun way of life,” Holditch said. “It wasn’t until we started making these moves that we kind of look back and reflect. It was a natural thing for us, and I would like to think that’s just who we are as people.”

They landed on a cardboard bottle after seeing the scarcity in aluminum cans during the COVID-19 pandemic, where manufacturers were requiring high minimum orders and long lead times.

It got us thinking, ‘What happens if that happens with glass?’” he said. “All the while, we’re trying to be a little more eco-friendly. We’re always looking for ways to improve, and I’m always kind of frustrated about, you think of an idea, and ask, ‘Why is it only glass

and plastic?’ There’s no way that no one has thought of this.”

He reached out Frugalpac in the United Kingdom for samples of their Frugal Bottle, a Bordeaux-style 750 ml bottle produced using cardboard, with a removable food-grade bag on the inside. It was a revelation.

“I held it in my hands and my eyes lit up,” Holditch said. “This is the answer to my prayers, this is what I’ve been envisioning, and it’s actually being produced. It’s just over there in the UK right now.”

He said the bottle is made of 90 percent recycled material. Cardboard is lighter and more easily recycled, so the bottles can go right back into the supply chain and become

paper or some other product, and it drastically cuts the carbon impact of their packaging. They use aluminum caps, as well, helping to bolster the overall package’s recyclability and steering away from the use of cork.

Because it’s cardboard, he said there are still some consumers who are a little gun-shy about the packaging, but it’s proven to be very durable.

“We’ve bumped into it; we’ve dropped it from two stories,” Holditch said. “The one thing I tell people is, don’t get into a bar fight with it, that’s not going to do you any good. Probably don’t go swimming with it, it’s a cardboard bottle. But do you go swimming with glass bottles?”

“We’ve bumped into it; we’ve dropped it from two stories. The one thing I tell people is, don’t get into a bar fight with it, that’s not going to do you any good.”

— Harrison Holditch

There’s also an aesthetic balance to choosing what products are right for the packaging. He suspects that whiskey will always trend towards glass so that consumers can see the product, but there’s little to gain by looking at a glass bottle of vodka. “A clear bottle is a clear bottle, it’s a clear spirit, I don’t need to know what it looks like,” he said.

While some of the draw to the bottle comes from less tangible factors — theoretical or far-off things like recyclability, carbon footprint, or foreign forests — some of it is visceral. Contributing less glass and plastic on the beach, less glass and plastic in the ocean, is part of taking responsibility for their role in the community.

“We’re a beach town. You draw a straight line from us to the beach. It’s less than a mile,” Holditch said. “If we could get all of the plastic bottles out of our industry, how huge would that be? It would be ridiculous. I see it every day. Whenever I can walk the beach, I see more and more and more plastics, and more and more and more microplastics.

“Being able to take this down to the beach, take it to the pools, I’m so glad that we went down this avenue. You can be a leader in your community, and we felt like this was a good way that we could do that and be a voice in our industry. You can always try to do your part just a little more and more and more.”

They sent the first bottles out to their distributor, Breakthru Beverage, in March 2023, and feel that it’s making a splash with the consumers. “I think we have the ability to really make some noise and really draw attention with a single product and really pushing that forward,” he said. “I really do think it’s, in the sense of the Ball can, how there’s CocaCola and Sprite and Pepsi, but they’re all in that same aluminum can, I foresee this bottle being that, but we were the first spirit to say, ‘Hey, we want to do this, and we’re going with it, and no looking back’.”

“We’ve been doing some great sales already,” he added. “There’s other people out there looking to be more sustainable, looking for something like this, something different from the norm, something that they can be comfortable with purchasing and knowing that, ‘Hey, I’m doing my part’.”

While Half Shell Vodka has been a game-changer and remains their big focus,

“You can be a leader in your community, and we felt like this was a good way that we could do that and be a voice in our industry. You can always try to do your part just a little more and more and more.”

Distillery 98 also produces a white rum, some of which will go into the Frugal bottle.

They have a collection of ten barrels of corn whiskey aged in used cooperage as part of a barrel-share program with the brewery next door. “We’ll use a barrel, fill it, and send it over to those guys, and vice versa, getting all kinds of nontraditional flavors out of it,” Holditch said.

That whiskey will be released as single barrels, knowing that they may never be able to recreate a given flavor profile from one barrel or another. Part of the reason for that approach is their proximity to bourbon country. “If we put out a bourbon, people are going

— Harrison Holditch

to go, ‘I’ve had a better one in Kentucky, or this tastes like this in Kentucky’,” he said. “We really wanted to bring something new to micro-distilling. That doesn’t mean that one day we won’t put out a bourbon, but right now we really like tinkering with stuff, the untraditional avenues.”

They take a varied approach to their environmental initiatives, also. Cooling water from the distillery gets returned back to the local aquifer via their retention pond. Spent grain goes back to the local farmers for feed. The distillery offers a glass recycling program where consumers can bring in their bottles and get a discount. They have a rare ecosystem

nearby, dune lakes that are a mix of fresh and saltwater due to periodically breaking open to the nearby Gulf of Mexico.

“We’re teaming up with a local group where we walk these coastal dune lakes and clean up trash, all that stuff,” Holditch said. “We’re helping support our oyster beds around our area. We have some world-class oysters being grown where we live, so being able to protect those oyster beds is really important to us.”

To help bring attention to and support the local oyster industry, they use a mix of oyster shells and coconut carbon to filter their vodka. The carbon does the heavy lifting, but Holditch said the calcium carbonate in the shells contributes as well.

The distillery also partners with specific clothing brands because of environmental considerations, and he said they have “a lot of fun things” planned for 2024 and beyond, including solar panels on the distillery’s roof. “We’re trying to be as thoughtful in that sustainability as possible. Even just trying to get

“Our main focus is keeping our

natural resources in our area natural and clean and beautiful, from our dune lakes to our beaches to our oyster beds to our river systems, whether that’s cleanup days, parties that we do bringing awareness to it, that’s our main goal.”

people to think differently about recycling and carbon footprints and stuff like that, outreach in the community,” he said.

“I wouldn’t say that all these things are massive environmental changers, but we feel like if we can just do our part, then we can be part of the solution and not the problem, and every little bit helps,” he added. “Our main focus is keeping our natural resources in our area natural and clean and beautiful, from our dune lakes to our beaches to our oyster beds to our river systems, whether that’s cleanup

— Harrison Holditch

days, parties that we do bringing awareness to it, that’s our main goal. We’re trying to paint a picture with little brushstrokes.”

Just as with the Frugal Bottle, it’s big-picture stuff for Holditch, but also very personal. It’s being on the beach. It’s paddleboarding the dune lakes and the springs. It’s being a part of Santa Rosa Beach.

Distillery 98 is located in Santa Rosa Beach, Florida. For more info visit www.distillery98.com or call (850) 919-2400.

Unearthing UNIQUE FLAVORS

Written by SAILOR GUEVARA

Last summer, I wrote about American peated whiskey, focusing on Brother Justus Distilling Co. in Minneapolis, Minnesota. I began pondering how other U.S. distilleries were using their local peat and how these varying landscapes' flavors were showcased in the final product and sat down with Ari Klafter of Thornton Distilling in Thornton, Illinois, to learn more about another distillery sourcing local peat.

While studying at Heriot-Watt University in Edinburgh, Scotland, Klafter remembered seeing a graph of peat from different regions in Scotland. Then, while analyzing regional peat samples in a gas chromatograph, Klafter saw different clusters with his own eyes. “I had never seen it clustered chemically and recognized differences in these substances, not just anecdotal flavor characters. There are genuine differences in character.”

“We hear anecdotally that Islay peat is more phenolic and Highland peat is floral,” said Klafter. After this experience studying peat samples, it was easy for Klafter to understand why deposits from different regions would have such distinctive characteristics.

Photos provided by THORNTON DISTILLING

“Peats and silts in western Illinois have yielded the most detailed paleoecological record available in the midcontinent when late-Wisconsinan glaciers began to advance.”

— John Taft PLANT ECOLOGIST, UNIVERSITY OF ILLINOIS CHAMPAIGN-URBANA

Once he began distilling, it was always his intention to make single malt whiskey, and he has been laying down barrels for more than five years. Klafter started looking for a local peat source to experiment with Thorton’s whiskey, but it took some time to find. Klafter wanted to keep their ingredients as locally sourced as possible, so they contacted their local agricultural board and organizations to no avail. Eventually, they were connected with a private landowner in northwestern Illinois who had a large peat deposit on their property. Luckily for Klafter, the landowner was interested in the project and offered a barter, so Klafter and the crew harvested the peat.

Minnesota has more peatlands than any other state in the U.S. except Alaska. The

extensive, mostly unaltered peatlands of northern Minnesota are recognized regionally and internationally for their expansiveness and spectacularly patterned landscape. Peatland communities in the sub-boreal region of Minnesota and western Wisconsin have unique floristic composition, structure, and environmental characteristics. [1]

However, what unique characteristics are found in peatlands in other parts of the country, such as northwestern Illinois?

Thornton Distilling harvests its peat in an area connecting to the Mississippi River's banks that houses major peat deposits. Of the remaining wetlands in Illinois, most occur on mineral soils or a combination of mineral soils and highly decomposed organic matter termed muck (organic silts

— well-decomposed and indistinguishable plant materials). However, a specialized group of wetlands known as peatlands, although never widespread in the state, were locally common in the northern counties. The largest single peat deposit in the area was in the former Cattail Slough in Whiteside County, a valley extending about 12 miles with peat and measured to a depth of 30 feet. [2]

John Taft, plant ecologist at the University of Illinois Champaign-Urbana, stated in his 2009 book “Canaries in the Catbird Seat” that, “Peats and silts in western Illinois have yielded the most detailed paleoecological record available in the midcontinent when late-Wisconsinan glaciers began to advance. These deposits were analyzed for pollen, vascular-plant macrofossils, bryophytes, insects,

and stratigraphy. This area's peatlands were dominated by rich fen bryophytes and a diverse wetland herbaceous flora.”

This area of western Illinois has been mined for its peat since the early 1800s for fuel and, more recently, for peat moss and landscaping products. The area’s peat mining has come under fire recently as questions about the environmental impact of this mining have been raised. Although mining peat can have substantial environmental impacts, companies are also utilizing peat to solve ecological and environmental issues.

American Peat Technology (APT), out of Minnesota, has produced value-added products manufactured from peat since 2003 and continually seeks ways to make its manufacturing process more environmentally sensitive and sustainable. Using fossil fuels in the peat drying process is an environmental concern. In 2010, APT moved to use carbon-neutral, locally available, and cost-effective biomass to provide the bulk of its dryer fuel needs. [3]

This question seems to be considered with great care by the distilleries featured here. It seems doubtful that the amount of peat needed for craft distilleries to harvest for the foreseeable future will have a negative impact. However, this issue should be addressed responsibly by distilleries utilizing peat. There are countless articles on peat mining and usage in Scotland and how the whisky community deals with the historical process's environmental implications.

Ken Hedge, former surveyor for Boone County, Indiana, described the potential composition of the bogs in central Indiana. Hedge explained that the area would have been woodlands. Small parcels of ancient timber in the area point to what the ancient woodlands in Indiana may have looked like: One such parcel is Metzer Woods in Shelbyville, Indiana, where the land has been virtually untouched for generations.

Northern Michigan bogs have even more differences in their makeup, with more shrub-like vegetation with a close proximity to Lake Huron and Lake Michigan. Less than 300 miles apart, and you see vast differences in the materials that create the peat.

Illinois, known as the ‘Prairie State,’ was once a vast sea of prairie grasses composed of many species of grasses like big and little bluestem, indiangrass, Western wheatgrass, blue joint grass, and Virginia wild rye, to name a few. According to the U.S. Forest Service, “Before Euro-American settlers arrived in the early 1800s, the land, which is now Illinois, was covered with a 36 million-acre wilderness of tall grasses and wildflowers, wetlands, and forests. Of these 36 million acres, 21 were tall grass prairie. Today, less than 0.01% of Illinois' original 21 million acres of prairie remains.” [4]

When I asked Klafter what flavors and aromas he gets from his peat, he said the peat is floral, sweet, subtle, and delicate. Klafter’s next step was finding the right malting partner. Klafter partnered with Sugar Creek Malt Co. in Lebanon, Indiana. Sugar Creek Malt Co. is one of the few maltsters with a custom

smokehouse. They claim to have the most diverse list of smoked malts of any malthouse in the world, with over 40 different woods/barrels, herbs, and peat, and use the hot-smoke process.

Founder Caleb Michalke described his still-growing selection and Sugar Creek’s processes. “If a customer wants something we don’t already have and can get our hands on that will create a unique smoke aroma/flavor for your beer or whiskey, we will!” Their options read like a custom sushi menu. In addition to custom offerings, they have unique products like their list of Såinnhus-inspired (traditional Scandinavian) and other Old World-stye malts.

Michalke explained, “We converted the remnants of an old bank barn on our property into a Scandinavian-style malthouse. Grains malted here are estate-grown with stringent malting specifications. They are steeped in a

trough, spread out on a bare floor, and turned by hand to let heat escape; they are then laid over a wood fire to dry.”

In their effort to source local and incorporate local materials into their processes, Michalke says they wish to remain faithful to the custom farmhouse style process. They offer the traditional alder wood smoked malt, but they also have their own blend of Midwestern woods that closely resembles the light and sweet smoke of alder. With a birch and wild cherry blend, these malts are perfect for anyone trying to produce products like traditional Nordic ales. [5]

When we spoke about specifically utilizing Midwestern peat in Sugar Creek’s malting process, Michalke pointed to the specific makeup of this type of peat, “Midwestern peat is very loose, so it doesn't produce a lot of heat; it smolders rather than smokes. So, for cold-smoking peat, it's great. This process

PHOTO BY JESSICA MATUSHEK

delivers a more delicate and herbal character rather than a phenolic character, for example.”

These examples point to Klafter’s desire to find a maltster who could understand the nuances he wanted to achieve and capture the best flavors in the smoke. Klafter expects to have his peated products ready for bottling in three years after they mature in ex-bourbon barrels.

Alongside the burgeoning category of Southwest whiskey, with distilleries using grains, botanicals, wood, and

SOURCES:

other materials native to the Southwest, the creative and innovative nature of American craft distilleries continues to grow, and may foreshadow the potential for the most diverse spirit offerings in the world, produced in the U.S.

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

1. Minnesota Department of Natural Resources, Minnesota Scientific and Natural Areas, Patterned Peatlands. Available from < https://www.dnr. state.mn.us/snas/peatlands.html>

2. Taylor, Christopher A.; Taft, John B.; Warwick, Charles, Canaries in the catbird seat: The past, present, and future of biological resources in a changing environment, Champaign, Illinois :Illinois Natural History Survey, Publication 30. Chapter 5, Pp 79 [2009]

“Midwestern peat is very loose, so it doesn't produce a lot of heat; it smolders rather than smokes. So, for cold-smoking peat, it's great. This process delivers a more delicate and herbal character rather than a phenolic character, for example.”

— Caleb Michalke FOUNDER, SUGAR CREEK MALT CO.

3. American Peat Technology, Spirits & Whiskey, Torv RökTM, The Secret Ingredient to Cold-PeatedTM American Single Malt Whiskey. Available from < https://americanpeattech.com/spirits-and-whiskey/> [2023]

4. Forest Service, Midewin National Tallgrass Prairie, Nature & Science, Science In Action. Available from <https://www.fs.usda.gov/main/ midewin/learning/nature-science>

5. Sugar Creek Såinnhus Nordic Inspired Malts | Sugar Creek Malting Co. Available from <http://www.sugarcreekmalt.com/sugar-creeksaringinnhus-nordic-inspired-malts.html>

WRITTEN BY AARON KNOLL PHOTOGRAPHY BY REEMA DESAI BOLDES

The Modern Bar Cart podcast

A Conversation with

Eric Kozlik

Former bitters entrepreneur Eric Kozlik began podcasting in 2017 to promote awareness around his cocktail bitters brand. Since then, it has evolved, keeping what Eric describes as an “off-center curiosity” at its heart to highlight emerging trends in spirits, spirits production, and the ways that people enjoy those spirits.

The Modern Bar Cart Podcast has been recognized by The New York Times and Tales of the Cocktail for its outstanding podcast coverage of the spirits and cocktail communities. In the past year, Eric’s covered cutting edge research on bacterial strains as additives in rum fermentation, the ethnobotany of agave spirits, and why Izarra might be the next Chartreuse.

We sat down with Eric to learn more about what it takes to produce a high quality podcast series in 2024 and how to keep the content fresh for new and long-time listeners.

What is the origin of the The Modern Bar Cart Podcast? How and why did you decide to start a podcast?

Eric: I chose to start a podcast because I had a cocktail bitters brand, and this was back about around 2015. The cocktail revolution was well underway, but still had not leaked its way into the mainstream consciousness yet … every person I encountered at markets would ask, “What's a bitters?”

Education is the field that I came out of. I taught English Composition and Creative Writing at the University of Maryland … so I liked education. I like producing content, especially creative content. I also had a background in SEO (Search engine optimization). While I was doing these sorts of day jobs, doing marketing for law firms and SEO, I was listening to podcasts. Hmm. Okay. This is interesting. It's a collision of something I enjoy listening to in my personal time and something I know I can do, which is scale content.

How has The Modern Bar Cart Podcast evolved over the years?

[At first] it was very much, ‘Okay, I need to teach people how to make better drinks at home.’

Around 50 episodes, I started getting a little nervous. ‘We did the gin episode, can’t do that again. We did the Old Fashioned episode, can't do that again.’

So, it was at this point when I was listening to another podcast … somebody described their process as scraping Amazon for new books that are coming out.

[I learned] authors are pretty much obligated by their publishers to go out and promote their stuff. ‘Oh, that's interesting. I can get these people! These people have to talk to me!’

[Additionally] remote recording technology was getting a little bit better. It's not nearly where it is today — which is amazing — but it was getting good enough, to the point where I could, on a laptop, Skype with somebody and have them record their side of the interview.

I think it gave me superpowers. “Wow, this world is so big that I'm not going to run out of content as long as I maybe make a couple of tweaks and set people's expectations that there's going to be more interviews involved in this show.

You did an episode about ice many years ago, and then Camper English released The Ice Book giving you an opportunity to revisit ice.

So, the podcast was initially launched as a 101, as an intro course to certain topics.

When you start following a new podcast in

2023, most people won’t go back to episode zero and listen all the way through. So, a lot of people haven't heard my first episode on ice. So, it's not old to them, it's not repetitive. But it also allows me to take a “201” or “301” approach to certain topics.

One of the things that I do when people approach me wanting to talk about subject matter that I've already covered is insist on a novel spin on the topic; a great example is when somebody in the malting space recently wanted to do an interview with me.

I was like, “It's not a very good audio topic. It sounds a lot like somebody who just wants to talk to the handful of distillers who may listen to my show, and it doesn't really seem to serve my [diverse] audience.” But if you can find me something that is truly groundbreaking about malting that is happening … or if you can find me a truly weird angle that nobody's talking about, I don't care how weird it is, I simply want to talk about it in a way that hasn't been covered so far on my podcast and that may spark some genuinely new and interesting discourse in the community.

In some of your podcasts, you spark new and interesting discourse by stepping outside of the traditional bounds of the spirits community…

One of my favorite things to do is interview people who are not in the spirits and cocktail world about things that pertain to spirits and cocktails.

For example, I did a series on the Bloody Mary cocktail called ‘Breaking Bloody’ where I literally go ingredient by ingredient. This may seem pedantic or overly-granular at first, but that allowed me to interview a horseradish scientist to explain to me the mechanisms by which horseradish is spicy and how those are different from the mechanisms that make spicy peppers and hot sauce spicy.

I got my friend, John, who's a hot sauce guy to consume some egregiously spicy hot sauce on the show and just describe what was happening to his body. In the episode where I looked at umami, I interviewed a woman who runs a Worcestershire sauce company in the Midwest and discovered that Wisconsin is a hotbed for Bloody Mary activity — not just brandy Old Fashioneds.

These are some of the surprises you can uncover when you interview people who aren’t constantly beating the drum about a certain topic in trade publications or on social media.

Shifting a bit more to the mechan ics of podcasting, what does the pro cess for creating an episode of The Modern Bar Cart Podcast look like?

If I'm just recording an episode, it'll take me maybe an hour of my time setting up the episode and getting it scheduled.

It'll take me [another] hour of time to record the episode; It will then take me another hour to write my intro and outro. Record that, edit that, and get that sent off to my audio editor. So, here we're talking about three, three and a half hours.

Then it'll take my audio editor another hour of time [...] And then, you publish it and promote it … get everything plugged into the RSS feed, create the show notes page, write Instagram and Facebook posts. So we're looking at like seven or eight hours to put a piece of content out if we're not glossing over things.

In the current generation of social media, video is the dominant form of content. Why continue The Modern Bar Cart Podcast as an audio podcast?

When you add video on top of that … it increases the amount of time and resources at least two to threefold. And there's the additional learning curve of having to deal with learning new software and paying for… You have to get a terabyte external hard drive, and stuff like that, to be able to hold these giant files. You have to make a bunch of editing mistakes that you can't recover from or post. So it's a lot. Adding video is — no lie — a huge thing.

So I think that's the biggest hurdle. Content wise, even if you tell somebody who has done numerous podcast episodes, and who should be at the top of their field, which is bartending or doing something in the spirits world,

and even if that person has a PR agent who was supposed to have reminded them that this is going to be video edited, you'll still get people who don't have a good enough internet connection, or have a background that's so backlit and washed out that the quality is unpublishable. So, just to get to that 50 percent publishable in short clips on YouTube format is a heavier lift than you would suspect.

So, to the people who have amazing video podcasts and have the influence to be able to enforce their guests to optimize for that on their behalf, I salute you because that is still something that I'm working on solving.

Are there other reasons why one would want to be a podcaster in 2024?

This isn't my answer so much as it is the answer of another podcast that I really respect. I listen to the Tim Ferriss podcast, and one of the things that he recently said

is that “email is way more important than social media.” You control your email list in a way that you do not control social media because Facebook can wake up tomorrow, and Zuck can change his mind about something, and suddenly, a huge aspect of your influences suddenly cut off the knees.

Instagram, YouTube, all those platforms can change at the blink of an eye. Google even can change its algorithm to privilege certain types of information over others, what they can't do is they can't come in and take my RSS feed away. And yes, it is controlled by an audio host, but the audio host is not incentivized in the same way as the social media platforms to behave in those sorts of ways. Publishing a podcast, for me, is a way to maintain authorship and maintain the quality that's important to me in the content I create, the information that I put out for people to consume that is relatively bulletproof compared to the caprices of social media and other sort of big tech, highly manipulated platforms.

Of all the spirits and bar related content out there, what makes The Modern Bar Cart Podcast unique?

Emily Dickinson said, “Tell the truth, but tell it slant.” And I think that telling the truth, but coming at it from a bit of a crazy angle, or a less-than-traditional direction is at the heart of the The Modern Bar Cart Podcast. Because anybody could go to the Wikipedia page for something (the Bloody Mary, for example), and read you the ingredient list, but I think it takes somebody with my personal brand of divergent and creative thinking to go out and find the horseradish scientists of the world and convince them that, yes, their manager should give them an hour off to speak with me about the Bloody Mary.

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.

The Changing Landscape of GMOs in Beverage Alcohol

WRITTEN BY GABE TOTH

GMOs of the Future, Here Today

A NEW GENERATION of genetically engineered products are working their way into the beverage alcohol supply chain, but these aren’t the GMOs of 20 years ago.

New methods, such as CRISPR/CAS-9 technology, are allowing researchers to make more precise, targeted changes to a genome, and distillers may soon find ingredients that use these new techniques in their toolbox.

Some yeast labs are already offering strains that tap into the potential of gene editing. Berkeley Yeast in Oakland has made headlines touting their bioengineered yeasts. Omega Yeast in Chicago offers a variety of both traditional and engineered yeasts. Engineered yeasts, currently marketed primarily towards brewers, include a series that increases thiol content (as sulfur compounds, that’s probably not an ideal choice for distillers), a group that eliminates diacetyl production, and yeasts that are tweaked to be POF (phenolic off-flavor) negative.

Modifying organisms is nothing new to human culture, from unintentional or unconscious crop and animal selection reaching back to prehistoric times to more intentional efforts such as Robert Reid working in the late 19th century to improve his namesake yellow dent corn that’s become a staple of domestic corn production. As the 20th century reached its midpoint and the nuclear age arrived, researchers increasingly relied on mutation breeding — using powerful agents such as chemicals, x-rays, or gamma rays to induce a higher rate of mutations in an organism, then sifting through the results to find the desirable trait they’re looking for and breeding it into existing stock.

Modifying organisms is nothing new to human culture, from unintentional or unconscious crop and animal selection reaching back to prehistoric times to more intentional efforts.

The first methods for recombinant DNA — the insertion of DNA from one type of organism into another — were developed in the 1970s and 1980s, with products beginning to enter the market in the ’80s and ‘90s. (Recombination can be illustrated by the often-exaggerated research effort to insert genes from flounder into tomatoes to improve frost tolerance. It’s worth noting that no fish-mato was ever brought to market or even pursued beyond the initial research phase.)

Most GMO crops currently on the market were created through the insertion of genes using strains of Agrobacterium as carriers, though additional methods include microinjection, microprojectile bombardment, and others of varying applicability and efficacy. There are a relatively small number of crops (14, according to the updated USDA list at https://www.ams.usda.gov/rules-regulations/be/bioengineered-foods-list) currently approved for food consumption in the United States. However, these crops often represent an outsize proportion of the market, resulting in widespread usage of GM foods and byproducts. A majority of the domestic corn crop is Bt modified. Soon after the release of Bt crops, in 1996, the first glyphosate-resistant (Roundup Ready) crops began to appear on the market, a portfolio that now includes soy, corn, and sugar beets. On the other side of the coin, scientists working to address malnutrition released Golden Rice in 2000 to help combat vitamin A deficiency, a major scourge in the developing world.

Corn is probably the most likely ingredient for distillers to find in their supply chain, and GM sugar cane has made significant inroads among growers and is increasingly available.

Products like bioengineered yeast, though, differentiate themselves from older types of genetically modified organisms through the use of CRISPR and related technologies, which allow researchers to cut DNA at a specific site, combine a new piece of DNA with RNA that will deliver and insert the new gene into that location, and stand back to see if it works.

Omega Yeast has a selection of yeasts that have been edited to include a gene that creates alpha acetolactate decarboxylase (ALDC), which reacts with acetoin precursors to prevent diacetyl production in the yeast. It’s a gene that’s pulled from the bacterial world, genetically a cross-kingdom transfer, as Shaner observed. (“We’re more closely related to yeast than yeast are to bacteria,” he said.)

In practice, it’s a little more complicated than a quick cut-and-paste; if he took the gene from a bacteria and just dropped it straight into a yeast cell, it wouldn’t work. There are different codons, sequences of DNA or RNA for specific amino acids, for the same enzyme that bacteria prefer and that yeast prefer, as well as other control machinery such as promoter and terminator genes that the new gene requires. But these things are largely known, and can even be ordered by mail.

Shaner marveled at the advances in technology and availability since finishing graduate school in 2006. “Just in that amount of time, the stuff you can do and order and how cheap it is has advanced rapidly,” he said. Such an order may range from hundreds to a few thousand dollars.

“To be honest, I don’t know why (engineered yeasts) wouldn’t be on the spirit side. Because of the fact that you’re going through a distillation step, there’s obviously no DNA ending up in the final product.”

— Lance Shaner OWNER, OMEGA YEAST

Older approaches often leave extraneous DNA in the genome, or the organism is left with an extra gene compared to the original, but the precision offered by more recent technologies has even prompted the USDA to propose new guidelines for engineered organisms, according to Pat Hayes, Oregon State University professor emeritus of barley breeding and genetics.

“It all hinges on the idea that this mutation could have occurred naturally,” he said. “The argument is that unlike Roundup-ready corn, where the gene that is conferring resistance to the herbicide traces to a bacteria, and the corn actually has an extra gene for the Roundup Ready trait, in the case of a CRISPR knockout, you are causing a change in the sequence in the DNA, and the argument has to be that sequence change could have occurred naturally, because mutation is a naturally occurring phenomenon. It is the basis for evolution and the occurrence of natural and artificial selection.”

Because of this ease and precision, geneticists like Lance Shaner, owner at Omega Yeast in Chicago, have been able to go into the well-understood genome of Saccharomyces cerivisiae and make changes that brewers may be looking for. One approach has been to tackle diacetyl, generally considered an off-flavor in beer, acceptable in very small amounts in specific styles and undesirable otherwise, at a genetic level.

“You basically have the gene synthesized so that it’s got the codon preferences of yeast, but ultimately encodes for the same ALDC enzyme that it does in bacteria,” he added. “Molecular biology has advanced to the point where we can literally order these sequences, just go online and order a gene that’s got all the sequence in the order that you want to make it.”

Shaner described distilling as ripe for improvement though the use of engineered yeast. He said the majority of fuel ethanol is produced using genetically modified yeast, with all necessary conversion enzymes already inserted into the yeast’s genetic code.

“They are essentially packaging the yeast with all the enzymes already built in,” he said. “You can put it in a corn mash and it does the conversion as well as the fermentation to alcohol. They don’t think twice about it, because it’s not a food product.”

Omega doesn’t see much business from distilleries, the exception being primarily from rum distillers who are looking for estery, expressive yeasts (though not necessarily engineered yeasts), but he sees opportunities to potentially tweaking different esters or other yeast byproducts, things like ethyl acetate, isoamyl acetate, or acetone.

“To be honest, I don’t know why (engineered yeasts) wouldn’t be on the spirit side,” he said. “Because of the fact that you’re going through

a distillation step, there’s obviously no DNA ending up in the final product.”

Another opening may be for a distiller who wants to create a POF+ yeast, one that can create the 4-vinyl-guaiacol sweet-spice note that’s a defining part of many rye whiskies. Most yeasts have a gene to create that note, though many brewers yeasts have been selected over the years for a broken version of that gene. Belgian yeasts tend to have it intact.

“Say you had a yeast that you otherwise liked the characteristics, but it didn’t make 4VG. That would be an easy thing to repair to give a particular yeast that you otherwise liked that trait,” Shaner said. “We’ve got a couple of strains where we did the opposite of that. We’ve got Belgian yeast where we wanted to convert to something that would be more appropriate to American IPAs and things like that, and we broke that gene in a Belgian yeast. It’s just a single nucleotide substitution.”

A project like that, he said, would take “maybe a month” for Omega to provide a functional yeast that had been engineered for the tweaked gene and run through their testing protocols. That generally involves verifying within the genome that no unintended changes were made, in the case of a POF+ gene or the ALDC gene, that only involves the inclusion or exclusion of genetic material already approved as safe.

“Whole genome sequencing has gotten so cheap and fast that you can do that. You can literally sequence the whole genome and see that the only change that was made was the change that you intended to make,” he said. There are also other methods, Shaner said, such as fingerprinting the DNA to look at the patter produced to ensure there was no dramatic, wholesale reorganization of the genome. From there, it’s a matter of brewing up a fresh batch of wort and letting the new yeast go at it. “We assume it’s going to (work), then we just give it a try,” he said.

When it comes to barley, wheat, and other cereal grains that a distiller might be interested in, things aren’t as straightforward. To begin with, not all varieties will take to genetic modification, according to Hayes.

“Even back in the day of doing genetically modified organisms, it was discovered that there are relatively few strains of barley, a few strains of wheat, a few strains of corn, that are amenable to transformation, and that’s because of whatever thousands or tens of thousands of genes are responsible for all of those behaviors in a tissue culture system and the receptivity to the foreign DNA,” he said. “The long and the short of it, in barley, for years we were restricted to Golden Promise as the variety you could transform.”

Researchers found themselves performing various experiments with Golden Promise, now including using CRISPR to modify Golden Promise, but they were always left with a version of Golden Promise. For all its cachet and reputation for flavor, it’s not a varietal that performs up to modern agronomic standards, so it was a tough sell to bring the new variety to a breeder who would have to spend 15-20 years cross-breeding that new trait from the Golden Promise into a more desirable variety.

Along with being stuck making a myriad experimental versions of Golden Promise, there is an underlying issue of genetic complexity. Because of the larger and more complex genomes that constitute these plants, there is an inevitable issue with unintended consequences.

Barley is a diploid, constituting two homologous sets of

chromosomes, a genome about 500 times larger than yeast. When Hayes worked with other researchers to use CRISPR to make a hulless version of — what else? — Golden Promise, what he playfully called Naked Promise, it was what he called “a gee-whiz, let’s-see sort of experiment,” a purely academic exercise that allowed him to create a variety-neutral experiment where only the husk or lack thereof is a variable. “It’s a geneticist’s dream to be able to target something like that, and then ask a serious question. Our results will be limited to the Golden Promise background, but if we get hulls out of the picture completely in Golden Promise, this is what happens to the flavor,” Hayes said.

A colleague in the UK performed the transformation (the first stage of these experiments still includes the classical GMO process of using Agrobacterium to insert the DNA as part of the CRISPR genetic machinery), grew the subsequent generations of Naked Promise and showed that the genome contained no CRISPR remnants, at which point Hayes was able to legally import the seed to the United States.

“We plant the stuff with some great enthusiasm and anticipation, and early on in the growth season we start to see that the CRISPRed versions compared to the GP that we have adjoining them have a very different color,” he said. It’s an army green versus the bright chartreuse color of happy non-mutant spring barley. “As the crops developed, the CRISPR versions, they were certainly two rows, they resembled Golden Promise, but they obviously weren’t right. They were a little puny, there was some sterility in them.”

It turns out that they had gone too far up the genetic chain of command. The research had targeted a gene that was regulating the gene that encodes the gum that helps to bind the husk to the seed, rather than the gene that encodes the gum.

“The gum gene, to my knowledge, is not known. Or at least, it’s not published,” Hayes said. They had mistakenly targeted a structural gene, one of a class of genes that regulate the expression of other genes, rather than a regulatory gene that turns a specific factor, such as encoding an enzyme, on and off. Sometimes it’s just serendipitous, you just get it; other times, it’s a learning experience. And then there are times, he said, “You just go, ‘Life is short, I’ve gotta walk away from this.’ It was a humbling experience.”

“CRISPR is going to be brilliant when you know the gene, when you know what sequence you want to hit, but even then, you may find the genes just don’t act alone, even major genes, that they’re modulated by other genes throughout the genome that you’re also going to have to think about addressing somehow,” he said.

The issue only becomes magnified when dealing with wheat. While barley is a diploid — containing one pair, two homologous sets, of chromosomes — wheat has an even more complex genetic background. Modern wheat began thousands of years ago with the crossing of biploids einkorn and spelt, creating the tetraploid (four sets of genes) emmer, which later crossed with a wild grass Triticum tauschii to create the modern hexaploid T. aestivum, aka wheat, with its six sets of genes. This complicated genetic history makes genetic engineering much more complicated.

“I would encourage every barley breeder, geneticist, who has the opportunity to either develop in house or establish a collaboration where you can use CRISPR as a proof of concept.”

— Pat Hayes PROFESSOR EMERITUS OF BARLEY BREEDING AND GENETICS, OREGON STATE UNIVERSITY

“If a diploid has a gene family that has 100 members, then in hexaploid wheat there may be 300 members,” Hayes said.

“When you insert a CRISPR into a diploid, you can predict the results and what’s going to happen, because you’ve got two targets. In the case of the wheat, there are actually going to be six targets, and they may be slightly different and you may not be able to predict exactly what’s going to happen. It’s not just a fear of unintended consequences, it’s a definite reality.”

As a result, the new USDA guidelines for crop development using CRISPR refer explicitly to diploid plants, because of this issue. “Not that you can’t CRISPR polyploids, but you’re going to have to prove that you have altered only the gene that is present in one of the genomes that wheat has,” he said.

So while CRISPR, on its face, offers a great deal of control and precision, its use remains limited by the sphere of human understanding regarding the genome as a whole or the complexity of genetic interactions.

“As long as your trait is controlled by a single gene, and the gene is known and its functions are known, then you’re ready to go,” Hayes said. “Where CRISPR is not immediately applicable is to most traits that we’re interested in, which are called quantitative traits, like yield or winter hardiness or a lot of the more durable disease resistances, those are controlled by several or multiple genes, and CRISPR is not a way at this point to efficiently target a whole set of genes or a gene network.”

Beyond that is the impact of the environment on genetic expressions, the “nurture” side of the equation. That’s a controlled environment for yeast, Hayes noted, offering predictable outcomes.

“You take a plant that has a much more complex genome, and those plants are going to be grown in every place from the Front Range of Colorado to the purple prairies of the Dakotas and on to the east coast or something, who knows how something is going to behave in each of those different environments. You just have to determine those empirically,” he said,

Ultimately, it still may come down to profitability, though. He noted the cost of intellectual property and licensing the technology as significant hurdles to taking a CRISPR barley to market. “Barley is such a low-margin crop, anyway, and if you start selling your seed with a royalty of 15 cents a pound instead of three cents a pound, people are going to walk away, no matter what the trait is, unless the person contracting that barley is going to tell the farmer, ‘We’re going to pay you three times the current going market price for your crop, because it has this novel trait,’” he said. And beyond that are the logistics and difficulties of trying to control the seed and keep it within authorized channels.

Ironically, while the regulatory framework in Europe remains unfriendly to genetically engineered organisms, the research on CRISPR

and other types of genetic manipulations is very active commercially and privately, country-by-country and via Continent-wide institutions.

“I would wager that there are a host of products just sitting on the shelves in various laboratories that are of direct commercial potential for malting, brewing, and distilling, just waiting for a change in the regulatory system, and they’re in a position through the market analysis to say, ‘This trait is worth it’,” Hayes said. “There’s definitely a pipeline established there.”

No matter the country or the resources behind it, though, it’s a research pipeline that might shorten the potential time to market, generally 10 to 15 years, by a year or two. There’s a dramatic generational lag for grain compared to microbes. Where a yeast lab might turn over 15 generations in a month, a barley program will turn over one generation per year in the field, up to two or three in a greenhouse.

Hayes wryly noted the commentary around CRISPR — ‘It’s easy to do and high school kids can do it in the garage’ — and added in the need to fund post-doctorate research capacity for subsequent years, lab capacity, and a continuing plant breeding program. “It is a protracted and expensive exercise, no matter how we look at it,” he said. CRISPR lowers the bar to entry, but it’s still very high. Nonetheless, he believes it’s a valuable resource for researchers.

“I would encourage every barley breeder, geneticist, who has the opportunity to either develop in house or establish a collaboration where you can use CRISPR as a proof of concept,” he said.

Questions remain, though, about public acceptance.

On the yeast side, labs like Shaner’s are being up-front about the technology and the approach they’re using. He said they haven’t experienced pushback, but they are working with a self-selecting group of customers who are comfortable with what they’re buying.

“We are very transparent with exactly what we’re doing, what we do to ensure safety, to help our customers understand what it is we’re doing, what the yeast does and how it was made,” he said, though he recognized that there still remained the potential for a stigma around bioengineered ingredients. “I would say Monsanto kind of poisoned the well for how people see these because of their corporate practices, going after farmers and stuff like that. I think a lot of GMO hesitance was born out of that.”

The American Malting Barley Association —or more accurately, its lobbying arm, the National Barley Improvement Council — doesn’t seek funding for gene-editing research explicitly, but rather works to help fund barley breeders and trust that they’ll use the best and most appropriate tools available.

“We really do feel like there is opportunity with that technology to advance barley breeding, and we’re excited about it,” Ashley McFarland, AMBA vice president and technical director, said. “I know that these technologies are being used in other plants and species and yeasts.

What we’re not using genetic editing for yet is the actual production of new varieties. There’s been questions: Is this a genetically edited barley variety? No, that’s not happened yet. But I wouldn’t say that it’s not something that might happen.”

She said the organization still needs to have conversations with industry members and consumers to understand where stakeholders stand, particularly whether there is consumer support, hesitation, or opposition to genetically engineered barley.

“Are people differentiating that from genetic modification? Because there certainly is a consumer hang-up on genetically modified things, whereas we see gene editing as a much different technology, much different applications, but I don’t think we fully understand yet if the consumer base really understands the difference and if they’re willing to have products genetically edited,” she said.

If that differentiation can be made, or if the or if the customer can be sold on the upside of a new bioengineered crop, then there may be an opening for such varietals to find success. McFarland suggested that sustainability might be a valuable avenue.

“Can we use GE to make barley that’s more resilient to drought and less reliant on irrigation? That’s gotta be a win for everyone,” she said. “Or, when we think about our carbon footprint, can we produce a barley on less nitrogen? Nitrogen is a huge contributor to greenhouse gas emissions. Can we identify those varieties, develop those new varieties through genetic editing? We’ve got to figure out how can we apply this technology to develop new varieties that are really going to prove that sustainability benefit.”

A big part of that will be developing winter-hardy malting barley varietals. Having barley that goes into the soil in the fall, sets root and helps anchor the soil over the winter, and matures in the spring helps to lower erosion and preserve soil nutrients. “We’re just really behind on developing new (winter) lines, because we’ve been a spring-based industry for so long,” she said. “Those are the ones that are going to hold a lot of promise, let us do more on less inputs but also provide a lot of sustainability opportunities by being an over-wintered cereal grain.”

At the Wisconsin Crop Innovation Center, one of a handful of USDA-certified seed labs around the country, associate director Alvar Carlson sees the highest demand — about 80 percent of their clients — for biotransformations on big-budget crops such as soy and corn. They tend to already be transgenic, are broadly used for animal feed, and each

account for about 90 million acres annually.

“The size of the prize dictates how many people it draws,” he said. “If you become a breeder of herbs, you probably work on more than one herb. If you’re a breeder in corn, you have 20 or 30 people beside you, shoulder to shoulder working on corn.”

Among other crops, he’s seen demand for transformations on the banana. The Cavendish banana maintains an overwhelmingly dominant position in the market, but is at risk of being wiped out by Panama disease. “Needs tend to drive things,” he said, noting the potential to “save the economies of an entire subset of nations. When the Cavendish goes, it’s gone.”

Small grains like barley, wheat, and rye aren’t at risk of going extinct, though. They’re also food products, with less of a buffer for the consumer.

“Wheat is going to have a long haul for people to accept transgenic wheat. Barley might have that stigma, as well,” Carlson said. “Barley might be too close to flour, too close to wheat. It might be too close to people’s comfort zone.”

He said the genome is understood well enough that researchers are identifying various targets, and a successful attempt might make its way to market quickly. The regulatory climate is shifting towards making genetically edited products easier to release — the FDA approved the first-ever treatment using CRISPR gene editing on patients late in 2023 — and he said the WCIC has been involved in transgenic projects for large malting barley labs.

He pointed to the release of the Pinkglow pineapple, a pink-hued pineapple made via the genetic manipulation of lycopene, which gives tomatoes their red color and occurs naturally in the fruit. “It doesn’t really add any benefit, as far as I can tell. It’s not better. It’s just pink,” he said. “Well, people are paying $30 for a pineapple.” It may or may not be a harbinger.

“Maybe you’re only two to five years away from seeing something that’s being discovered today. It’s not that bad, it’s not that far away, but it’s not tomorrow,” he said. “Someone is eventually going to put their toe in the water, and then you’ll find out. If the public accepted it, it could be out there pretty quickly.”

Gabe Toth, M.Sc. is lead distiller at The Family Jones’ production facility in Loveland, Colorado and an industry writer focusing on the beer and spirits worlds. With a background in journalism, he has written books on floor malting and fermented food, as well as numerous articles for Artisan Spirit, The New Brewer, Brewer and Distiller International, and several other publications. He holds brewing and distilling certificates from the IBD and a master’s from the Rochester Institute of Technology, where his graduate studies centered on supply chain localization and sustainability. When not distilling or writing, he can be found gardening, messing around in the kitchen, or relaxing in the mountains. He can be reached at gabetoth@hotmail.com.

The regulatory climate is shifting towards making genetically edited products easier to release — the FDA approved the first-ever treatment using CRISPR gene editing on patients late in 2023.

THIS IS THE WHEY

A Durham, NC, woman takes an unconventional path to distilling

WRITTEN AND PHOTOGRAPHED BY CARRIE DOW

After almost two decades of buying and selling other people’s products as a wine and spirits importer, both with her own company and for others, Tina Williford wanted to make something of her own. Only one problem: She didn’t know what to make.

“I went to the UK and started looking at programs for cheese making,” explained Williford at her downtown Durham, NC, distillery Liberty & Plenty. “I did cheese making

in the UK to cheese making in Italy, but at the same time I also took a lot of other classes.” She entered programs on butchery, baking, and chocolate making. “I learned a lot about processes and small-batch manufacturing.”

That training also included a few classes at the Institute of Brewing and Distilling in London where a chance conversation with a fellow student sparked her curiosity.

“When I took that one distilling class in England,” she continued, “I was sitting next to this gentleman from Isle of Mull (Scotland). His family were like, the generational family that made cheese. They have a very famous cheese — Isle of Mull Cheddar. I said, ‘So what’s a cheese maker doing here?’ Because

that’s the reason I was there.”

The gentleman told her that someone came to the island with a still and the intention of opening a distillery, but the project never got off the ground. The person left the island, and the still, behind.

“He said, ‘We were thinking we would make vodka,’” Williford described. “‘Make vodka?’ I said, ‘Will you use the grains there?’ and he said, ‘Oh, no, no, no. We’re going to use the whey.’ I was like that is incredibly fascinating. I’d just done all these [programs on] different types of yeast on cheese and thought, I need to learn more about that.” She learned the importance of yeast for making both products.

“Say you were producing a cheddar versus a

blue; you might use different types of yeast to create each product. Some (yeast) are more heat sensitive than others. Some that are thermolytic you can do at a higher temperature. Some are used in combination. All these thought processes I use in what we do [in the distillery] … Yeast are a big component of what we do because they add flavor. They all behave differently. That’s the same way as cheese making.”

Changing course, she then attended Scotland’s prestigious Heriot-Watt University and their year-long MSc in Brewing and Distilling, a master’s program that includes a “substantial research project.”

“We have to write a dissertation as part of the master’s program,” she explained, “so I decided I was going to write mine on whey and whey as a base spirit for gin making.” It was an eye-opening experience that altered her cheese-making career path.

“The behavior of gin, all those botanicals, on that base product is very different to what you see in wheat-based products. It behaves differently in the still and it creates different

flavor profiles because of all the different types of components that are within the spirit itself.”

“In writing the dissertation, I visited some distilleries in the UK that were using whey in their spirits. In Cork, Ireland, there’s a company called Black Cow and they make gin based on whey. I came to find out that Bailey’s uses whey spirit in making their cream liqueur.”

Her education led her to open a distillery in her home state of North Carolina where she makes whey-based vodka and gin alongside traditional rum and whiskey. Opened in 2022, Liberty & Plenty Distillery — named for the two mythic women featured on the North Carolina state seal — started with Slate Belt Vodka, a combination of corn- and whey-based neutral spirit, which they source from a company in the dairy belt of upstate New York.

She redistills her sourced spirit to reach a higher proof before redistilling it again. “Even after we redistill it, it still retains a lot of those natural tendencies in the raw materials,” she said. Combining corn- and whey-based spirit

provides the balance she’s looking for, noting that the corn provides sweetness while the whey delivers creamy vanilla.

Sourcing spirit was a decision she did not make lightly, citing several factors, including the FDA’s extended rules for working with dairy.

“I mean the amount of cleaning that you have to do in the dairy industry is almost insurmountable. You’d need a separate facility just to do that,” she said.

For many reasons few US distilleries use whey. Vermont Spirits used to make White Vodka but stopped several years ago. TMK Creamery in Oregon has an on-site distillery that makes a product called Cowcohol using their own leftover whey, but the distillery is more of an add-on designed for both reusing a waste product and diversifying their product line. The lack of whey-based distilling in the US compared to Europe is surprising considering the amount of whey US dairies produce — one pound of cheese produces roughly nine pounds of whey.

North Carolina’s declining number of

dairy farms also took locally sourced whey out of the equation. According to NC State University, the number of North Carolina dairies has dropped from 250 Grade A commercial dairies in 2013 to 140 in 2020. “There are [distillers] who are doing it from scratch,” she said, mentioning Wheyward Spirits (California/Oregon) as an example. “Will we ever get to the point where we can do it ourselves? Only if we can find a dairy to work with.”

Williford gets her neutral spirits from New Age Renewable Energy (operating as Cayuga Ingredients). “[They’ve] built a very large still business because New York is a cheese-making state and they’ve taken it to the manufacturing stage,” she noted.

After completing the distillery build-out, she began making her own whiskey from North Carolina heritage corn, but not wanting to wait out the aging period, she also sourced bourbon that she then blended and aged for a short time in Muscatel barrels

recently licensed a rickhouse in Wilson, NC, and is preparing to install new equipment in that location to supplement her tiny Durham facility. She also created a rum called Cap & Cane using a combination of fancy molasses and evaporated cane juice. And the wheybased gin that started her down this path?

Williford said, “It’s close.” She expects the first style — Whirly Garden Navy Strength Gin — to be released in early 2024; she’s spent years refining her processes to get the gin where she wants it. She uses a gin-making technique called multi-shotting, a process that super-concentrates the botanicals into an extract or concentrate that is added to the diluted and filtered whey-based spirit and then diluted with water. She doesn’t think it’s a common technique in the US, but it works best for her.

Experimenting with different methods and spirits is what started Williford onto the distilling path and she continues to find new ones. She adds that after taking a trip

“It’s so artisanal. It reminds me of garagiste winemaking in the 80s,” she said, wistfully referencing her wine background. Garagiste alludes to a period when some upstart winemakers began experimenting with non-traditional production techniques in their garages.

“I got that bug, but my husband had to pull the reins back,” she said laughing. For now, she will keep converting the uninitiated to the wonders of whey spirits. One of her favorite methods is placing a flight with samples of Grey Goose, Belvedere, and her own Slate Belt Vodka in front of naysayers.

“When I talk to people about this, they say, ‘Well, Grey Goose is my drink of choice’,” she explained. “Then I put it in front of them and say, just smell. You don’t have to taste it, just smell.”

“And if they smell it, then usually they’ll taste it,” she added with a knowing smile.

That is the way of the whey.

HDO THE RESEARCH

UN D E R

STAN D iNG

STAN D iNG UN D E R

SPIRITS REVIEWS

aving been a reviewer of spirits, bitters, barware, and cocktail books, I hope to help demystify a few topics in regards to reviews and reviewers, and, more importantly, helps you decide where to put your money and resources when getting your products reviewed and/or evaluated by various individuals and companies. Which reviewers should I send a bottle to? This covers a number of matters, including that exact question.

This last step can make securing the cash needed a challenge. The nature of distilling — particularly the “hurry up and wait” nature of distilling aged spirits — can make obtaining a traditional bank loan difficult. This hurdle can compel distillers needing help to start or even grow their business to turn to alternative funding strategies.

DO IT YOURSELF OR FARM IT OUT?

The easy choice is to hire a public relations or advertising firm to do it.

The easy choice is to hire a public relations or advertising firm to do it. They can identify who they want to target for you and handle all the logistics (and legalities) of shipping, follow up and, of course, press releases to accompany the bottles and announcements. They will send you reports on who they sent the bottles to along with transcripts and links to the reviews.

The downside is this can cost thousands of dollars between their fees and shipping costs. You also have little control as to where the samples go beyond suggestions. Yes, they have established lists and experience on how to do this, but if you are a smaller producer you may want to do your own research and do it yourself. Also you can build personal relationships with some reviewers and better understand them and, potentially, your markets.

When you have a list of potential reviewers, dig in further. How good are their reviews? Are they thoughtful, well written and descriptive? Does their style reflect what you want to be known for or reflect how you and your company want to be known? Are they down to earth, scholarly, discriminating, or do they simply like anything that anyone sends regardless?

Someone who is a die-hard Islay fan is not guaranteed to enjoy your mesquite smoked, sheep manure smoked, or god knows whatever else smoked bourbons.

Something a lot of people don’t think about is to read their portfolio of reviews and see if your product fits with their tastes. Be cautious about sending someone who has traditional standards or definitions of style or taste something that is experimental or new to that category. For example, sending New World- or Western-style gin (not London Drystyle juniper dominant gin) to someone who is a fan of traditional gin probably won’t like it, and you just wasted the cost of shipping a bottle of your precious spirit for a scathing review. Same applies to smoked products: Someone who is a die-hard Islay fan is not guaranteed to enjoy your mesquite smoked, sheep manure smoked, or god knows whatever else smoked bourbons.

Same applies to flavored whiskies, vodkas, and RTDs.

KNOW YOUR AUDIENCE

Along with your initial research, look at the reviewer’s past work for discernible trends. You also might get some small measure of respect from the reviewer. Maybe it’s my jaundiced read of such reviews but the more samples that someone like that gets of products they loath seems to engender more venom as time goes on. It’s not clear if they are insulted that you did not do your research or it is cumulative exposure, but some show a definite trend in whole new adjectives and sentiment “Makes me long for the sweet release of death” etc., when discussing having to review products they have a history of dislike for.

Ideally, look for people who have a fair amount of viewers and audience reach, speak intelligently, and do not write like jerks. Again, some research and asking around is a good start.

THINK LONG TERM

Ideally, look for people who have a fair amount of viewers and audience reach, speak intelligently, and do not write like jerks.

Plan ahead for how your product reviews in certain webpages or publications can make your brand look, even if it is a positive review. An example of questionable brand positioning is a review site that did not rate using stars, numbers, or olives to rank products, but spinning oxycontin tablets — no brand wants a ranking of five spinning oxycontin tablets! Same applies to mindless gushing enthusiasm and sites that may reach underage viewers.

Next time we will tackle the subject of what tasting competitions and judging may make sense for your brand to enter in.

Christopher Carlsson is a journalist, photographer, certified Cognac educator, professional spirits judge and consultant, writer, mixologist, adventurer, and social activist. You can find him at spiritsreview.com.

NO PASSWORD NEEDED

Speakeasy Co. Hopes to Improve Connections Between the Craft Sector and the Consumer

Written by Rich Manning

Photography by Jose Alonso

Getting a bottle of booze from Point A to Point B is a simple enough formula. There’s little ambiguity in the fixed points: We know Point A is the distillery and Point B is the consumer. The connecting path, however, comes festooned with curves, hurdles, and landmines. Reforms to straighten and smooth this pathway is a top-of-mind topic in a post-COVID world. This is particularly the case in the craft sector, where smaller brands tend to face a few extra obstacles.

It's an issue that Speakeasy Co. aims to fix. The San Diego-based technology and e-commerce company co-founded by self-proclaimed “misfits on a mission” Josh Jacobs and Michael Bowen focuses on building data-driven online marketplace strategies and white label carts that bring craft distillers and prospective customers together in the online space. However, it’s a mission that only came about after they straightened their own pathway.

UNWINDING THE ROAD

Speakeasy Co. launched in 2015 as a cocktail subscription box. While their service ultimately produced drinks, its goal was to turn customers on to the growing variety of spirits hitting the market. “We figured a subscription box was one of the best vehicles to drive liquid to lips,” Jacobs explained. “Our minds were blown away by the lack of access these brands had in getting to market, so we felt we

found a way to help brands get the opportunity to connect with more people.”

Jacobs and Bowen soon realized that properly meeting their objective demanded a bigger solution than shipping boxes of airplane bottles of booze with cocktail recipes. This was theoretically a challenge in its own right; while the two were passionate about the growing craft spirits sector, they were data analytics pros and not booze industry veterans. While they knew there would be hurdles, they didn’t necessarily realize their height.

In their case, however, ignorance was bliss. Their background in data analytics equipped them with a disposition to seek out logical, practical solutions that made sense, even within an industry riddled with holes in its own logic. Their lack of experience also allowed them to pursue these solutions ambitiously, unencumbered by jaded feelings that may arise from having a comprehensive knowledge of industry laws and regulations. This combination is something the duo grew to appreciate as they went along. “As we moved forward, we realized that the industry was a ball of emotion and confusion. We could see what, why, and how people would get disheartened,” Bowen stated.

“If we weren’t so new to the industry, the obstacles we would have faced at first may have been intimidating,” Jacobs added.

Their bright-eyed, learn-as-you-go approach radically transformed Speakeasy’s business model into a three-tier compliant e-commerce platform that takes a very active role in connecting the craft sector with the consumer. This involves selling bottles

through their website as an order fulfillment center, but it also leans into other forms of brand partnership, such as offering services like website development and email marketing to promote brand awareness. The company also leans into data analytics to help brands develop a clearer picture of how to grow and who to target, a service that Jacobs feels has robust growth potential. “Providing brands access to basic data like what sells and where is it selling is such a game-changer, but it’s just step one,” Jacobs said. “Now, we’re starting to use data to inform brands on how customers respond to labels, advertising, and other things.”

THE SPECIAL SAUCE

When you hop onto Speakeasy’s website, you’ll encounter a smattering of big labels and well-known craft brands when you peruse their library. You’ll also notice that a sizable chunk of the labels tends to be newer craft spirits, brands with limited traditional distribution, or brands poised to make the leap into mainstream consciousness (Exhibit A: Frey Ranch, a brand that’s rapidly evolved into a darling among whiskey geeks). Keep poking around, and you’ll find a few rare, limited edition, and collectable bottles. Most of these bottles tend to be different from the Pappys and the Blantons that compel whiskey “taters” to gather around the back of the neighborhood liquor store when the delivery truck shows up every Tuesday morning. Instead, they’re usually the special bottles from craft distilleries that are still comparatively underground and

free from collector hype — stuff you may only know exists because you visited the distillery and left wanting to try whatever they produce.

The store’s selection allows craft distilleries to potentially improve their penetration within the superpremiumization trend, where people buy less volume but drink better, more interesting juice. The limited-edition items can also offer unique forms of consumer connection for distillers, whether they form the link by alleviating the frustration of bottle inaccessibility or simply offering something that looks funky and experimental. Then there’s the X factor that a new-to-you or hard to get craft spirit can deliver, which can’t necessarily be measured in data metrics. “People want to feel cool,” Jacobs said. “When it comes to spirits, there’s nothing cooler than opening a singular, unique bottle and offering a new experience to share with others.”

BY THE NUMBERS

Like any service related to the distilling industry, Speakeasy Co. isn’t for every brand. Some smaller labels or brands looking to stabilize may not find room in their budget for Speakeasy’s $699 minimum monthly fee or shipping costs, which may cost upwards

“We don’t want to solely exist because of today’s regulatory standards.”

JOSH JACOBS Co-founder, Speakeasy Co.

of $20 to $30. Still, the data demonstrates Speakeasy Co.’s model is potentially a viable strategy for distilleries that are ready for growth. The nearly 300 brand partners experienced a gross market value (GMV) growth of roughly 100 percent in 2023. The company’s marketing services resulted in a 190 percent average return on ad spend (ROAS) for their marketing services partners, and their year-to-date marketing client GMV is up 150 percent in 2023 compared to 2022. This growth has allowed them to set their sights on partnering with bigger brands in addition to various players in the craft sector.

Jacobs also points out that they built it with fluidity in mind. Specifically, the model contains enough flexibility to shift with the legal

ebbs and flows that may impact the industry over the next several years, whatever they may look like. “We don’t want to solely exist because of today’s regulatory standards,” he said. A malleable model isn’t exactly shocking considering the source. After all, Speakeasy hit the market as a cocktail subscription service nearly a decade ago. But even if the model changes a little or a lot, its mission of getting bottles from the distillery to the consumer will remain constant. It’s a mission that was originally launched by a couple of misfits. Considering their success, it feels safe to say that they fit in with the industry rather well.

Visit www.speakeasyco.com for more information.

Speakeasy Co. founders (left to right) Josh Jacobs and Michael Bowen.

As the craft distilling industry grows, so too has its use of personal information. Craft distillers may not think of themselves as being in the data business, but they make wide use of personal information to promote and sell their products and understand market trends.

The challenge is that regulations governing the collection and use of personal information are changing rapidly. Emerging state, federal, and international laws impose new obligations on all types of businesses, including craft distillers, regarding personal information and give consumers new rights regarding their data. Craft distillers must stay informed about those changes and adapt.

Data privacy is not an issue that distillers have traditionally considered, but it is essential to understand going forward. With this in mind, we offer six priorities for distillers when evaluating their data management practices.

Emerging state, federal, and international laws impose new obligations on all types of businesses, including craft distillers, regarding personal information and give consumers new rights regarding their data.

VACY

Written by Ben Robbins and David Rice

1 U n DE r STA n D YOU r DATA

Consider the diverse ways that your business uses personal information. You use it to process and fulfill customer orders in person and on your website and to engage in market research to understand consumer trends, develop products, and promote those products. You receive it from business contacts, suppliers, employees, and independent contractors. You share it with vendors who you rely on to support your business. All of these situations raise potential data privacy concerns and regulatory obligations.

The first step in understanding your legal obligations is determining what personal information your business has and how it is used and shared. This is easier said than done and will involve many different departments of your organization — sales, marketing, human resources, management, and contracting.

One way to do this is to create a data map, which is a visual representation of the flows of data around your business’ systems. By identifying basic information about your data — including what kind of personal information you collect, who it is collected from, what consumers are told when it is collected, how it is used, how long it will be retained, and how it is shared — your business can better assess the legal risks associated with its data management practices.

Pay particular attention to sensitive personal information, which typically includes consumer social security numbers, financial account information, precise geolocation, racial or ethnic origin, religious or philosophical beliefs, union membership, genetic data, sexual orientation, biometric information, and health data. Sensitive personal information typically receives more significant protection from applicable privacy laws and regulations and may involve additional requirements regarding its storage and processing.

pri VACY LAWS

A pp LY

Depending on the location of your business, its employees, and its customers, a range of different privacy laws may apply. Data privacy in the US, except for certain situations and industries, is fragmented across jurisdictions. The primary federal regulator is the Federal Trade Commission (FTC), which has authority over unfair and deceptive acts and practices in commerce. If your privacy policy misrepresents how you collect, use, and share personal information, the FTC may initiate an enforcement action on the basis that you are misleading your customers.

There has been a flood of new state data privacy laws over the past several years that impose obligations on entities that collect personal information and exceed certain financial or data collection thresholds. For example, the California Consumer Privacy Act (CCPA) applies to entities that collect the personal information of more than 100,000 California residents, have over $25 million in annual revenues, or obtain 50 percent or more of their revenue from selling the personal information of California residents. Other states have different thresholds.

Currently, California, Virginia, Colorado, Connecticut, Utah, Iowa, Indiana, Tennessee, Montana, Florida, Texas, Oregon, Delaware, and New Jersey have generally applicable privacy laws that are in effect now or will be in the next year or two. And new states continue to join the list.

Privacy laws can differ in the types of data they protect. For example, most state privacy laws apply only to people acting in a personal capacity. That is not the case in California where the CCPA also applies to personal information collected in a business or employment context.

Once you know what laws apply to your craft distillery business, you can understand your obligations under those laws. One of the primary obligations is to post a privacy policy that describes the collection, use, and processing of consumer data. Typical information that businesses subject to the privacy laws listed above are required to post in their privacy policies includes:

› The categories of personal data being processed;

› The purpose for processing;

› The categories of third parties to which the business may disclose the personal data;

› The categories of personal data shared with third parties;

› How consumers may exercise their rights and appeal adverse decisions;

› Notification of material changes to the privacy policy; and

› An email address or other online contact mechanism by which consumers can reach out about questions regarding the privacy policy.

The rights that consumers may exercise include the ability to opt out of certain types of data processing, including the sale of their data, the use of their data for targeted advertising, and certain profiling. Compliance with these laws typically requires creation of a webpage that allows consumers to “opt out” of these types of data processing.

There are many exceptions and a lot of details and nuance that we have omitted, but this will give you an idea of the types of obligations that exist.

Craft distillers, like all companies, cannot function without engaging third-party vendors to perform essential operations that those companies are unable to do themselves. These include vendors that coordinate email marketing campaigns, provide data analytics, handle payroll, and provide cloud services. Those companies must share personal information with those vendors for them to do their work.

When your customers’ or employees’ personal data is shared with a third party, it is exposed to privacy and security risks. Third parties may use the personal information you provided to them in unanticipated and unapproved ways, like to develop their own services or even sell the data. Vendors may not maintain adequate access controls, thus allowing employees unfettered access to your customers’ and employees’ data. Their security safeguards may not keep pace with emerging cyberthreats, exposing your business’ data to a security breach. They may share your personal data with their own vendors you have never heard of.

It is important to require vendors to use personal information in accordance with legal obligations and the commitments you made to individuals in your privacy policy. In some cases, this may involve incorporating legally required contract terms in your vendor agreements. You should also understand the vendor’s security practices. Not all data is sensitive, so the appropriate level of protection will vary based on the nature of the personal information.

5 MA in TA in in FO r MAT i O n SECU ri TY

Your vendors are not the only ones who need to keep your data secure — your company must do so as well. Failure to protect personal information adequately can lead to regulatory enforcement. For example, in 2022, the FTC filed a complaint against a major online alcohol marketplace after allegations that the company’s security failures led to a data breach exposing the personal information of about 2.5 million customers. The FTC ultimately entered into a consent decree with the company that contains detailed obligations about security practices. The best practice is to have a written information security program that is appropriate for the personal information that your company collects before any regulatory inquiry.

6 STAY in FO r MED

Ultimately, craft distillers find themselves in the same position as many consumer-facing industries in that they must adapt to new and changing data privacy laws and regulations that are complicated and in some cases vague. It can be done, but your business should make it a priority to avoid surprises.

DWT's Privacy and Security team regularly counsels clients in the alcohol industry on how their business practices can comply with state, federal, and international privacy laws. Please contact us if you need assistance with these complicated and important issues. This article does not constitute legal advice and is instead intended to provide a general overview of emerging legal trends.

David Rice is a data privacy and security Partner in the Seattle office of Davis Wright Tremaine LLP. David leverages more than 20 years of experience in privacy and security to guide clients through the challenge of complying with rapidly multiplying and complex federal, state, and international data protection laws. David counsels clients in many different industries, including cloud services, business-to-consumer/B2C, marketing, communications and networking, app development, health care, entertainment, gaming, sports, artificial intelligence (AI/ML), and education.

Ben Robbins is a data privacy and security associate in the Seattle office of Davis Wright Tremaine LLP. Ben advises clients on a variety of legal issues in the technology and privacy space, including compliance with federal and state data protection laws, children’s privacy issues, and artificial intelligence (AI/ML).

What is the Value in Spirits Competitions?

Important questions to ask before entering judging programs

Who are the judges?

It's judging season again and distillers and brand reps can expect to have their inboxes flooded with deadline notifications. For most producers, the objective in entering spirits competitions is to increase sales through publicity and the impression of quality produced by receiving an award.

There are about a hundred spirits competitions and sorting through them can be a daunting task. While several components should be considered, a good place to start in determining if a competition program is a good fit are these three factors — judges, cost, and opportunities for promotion.

Reading between the lines on the list of judges is a good place to start. They are a critical component of every judging program. Most competitions publish a list, and not publishing one is a red flag.

Do you recognize the names? What are their backgrounds? Are they truly professionals or is it a liver cross-training group?

Someone you are trying to reach may be listed — an influential bartender or wholesale buyer. Perhaps there is someone you know who likes your spirits, or perhaps the opposite. If many of the same names appear on multiple programs, this is an indicator that competition organizers consider them reliable judges. How will it benefit your

brand to have these people become aware of your products? How beneficial would their tasting notes be?

Philosophies on selecting judges vary with every competition. The New York International Spirits Competition (NYISC) makes it a selling point that its judges are trade buyers — wholesalers, retail buyers, and bar-program managers: i.e., the people who have a direct ability to create placements.

“The key thing that separates my spirits competition from all other competitions,” said NYISC founder Adam Levy, “is my philosophy of trade buyers-only judging. Trade buyers know what consumers really want.”

The Barleycorn Awards, however, are judged by spirits journalists. Founding partner John McCarthy reasoned, “Barelycorn is the competition that is by the spirits-communicators industry. That’s who we are. We are the journalists. We are the authors. We are the spirits educators that preach to these brands. We are also a collection of the most sought-after people, particularly by brands and their publicists that want us to talk about their product, and it can be very difficult to get

Written and photographed by Andrew Faulkner

Disclosure: Andrew Faulkner was the lead architect of the American Distilling Institute’s Spirits Judging program and is the Managing Partner of the New Orleans Spirits Competition presented by Tales of the Cocktail Foundation.

our attention.”

The American Spirits Council of Tasters (ASCOT) relies on the reputation of its judges to provide credibility. Founder Fred Minnick employs some of the best palates in the industry and picks them from his personal experience and extensive contacts rather than from their resumes.

When I was running the American Distilling Institute Judging of Craft Spirits (ADI), diversity of experiences among judges on a panel was considered key. At least one (sometimes two) distillers were on each panel, with one journalist, and at least one retailer, bartender, or distributor.

The same protocols were initially adapted by the nascent American Craft Spirits Association (ACSA) for their judging program. More recently the ACSA increased the placement of distillers on their panels. Both of these competitions focus on craft spirits.

On the opposite end of the spectrum, the 25-year-old SIP Awards seats “consumer-only” judging panels, arguing that the consumer’s taste is the one that ultimately matters.

Most competitions seem conscientious about sorting spirits into similar categories, though the back rooms can often be secretive and difficult for an outsider to gauge. And most competitions rate spirits without regard to price.

Sorting Spirits

Most competitions seem conscientious about sorting spirits into similar categories, though the back rooms can often be secretive and difficult for an outsider to gauge. And most competitions rate spirits without regard to price. The assumption is that they are simply rating the juice in the bottle and a potential buyer can factor in the price. The idea is that, if a sliding scale causes a better-quality spirit to be reduced in score because of its price, it can yield a false impression to the purchaser.

Others have the opposite philosophy. ASCOT and NYISC are among those that use price as an important factor in separating the spirit categories.

“If I walk into a liquor store, I have a price in my head.” Levy explained. “I say, ‘I want to spend $50. What do you recommend?’ The buyer or the person on the floor should tell me the best thing for that price.”

In the room where it happens

The COVID-19 pandemic also introduced a new twist to competitions: remote judging, This is where organizers send samples to the judges for evaluation in their home or office. While most programs have gone back to in-person judging, the ASCOTs and Barleycorn Awards use this as the preferred method. Remote evaluation allows the judges to explore the spirits in their own environment with familiar glassware where they are accustomed to the ambient aromas.

“One of the beautiful things about doing this remotely,” McCarthy noted, “and giving a person the time to do that, is giving that person the time to work at a pace that their own palate can best hold. I think that’s very, very important.”

Setting their own pace helps judges to avoid palate fatigue, which can happen when tasting too many samples in one day. And remote tasting avoids being influenced by the conversation of other members in their panel. This is because conversation between judges can be a double-edged sword. The power of suggestion may sway some judges into finding the same things in a spirit, or thinking they recognize a brand. On the other hand, it can also help judges notice a flaw that they might have missed.

One key advantage to in-person tastings is, after judging is completed, the judges get to see not only spirits they tasted but also the spirits that went to the other panels and find interesting products they may not have sampled during the competition.

“When we’re in person, after we do the

whole judging, they get to go behind the curtain and there’s another hour, two-hour hang. Everyone is picking up the bottles,” said Levy. “They get shocked like, ‘Oh my God, It’s this?’ or ‘I found something new.’ And we’ve had many, many producers find an importer, find a distributor, from being in our competition.”

Some products may be less suited for remote judging. Gins may lose aromatics when parsed out into smaller sample bottles. Single-serving, carbonated RTDs would go flat if transferred to another container, while shipping in original packaging would reveal the brand.

The New Orleans Spirits Competition (NOSC) is transitioning this year to a hybrid system in two rounds. The preliminary round, held remotely, will determine scores and tasting notes. The six top-scoring spirits in each class are invited for a public judging at Tales of the Cocktail, the largest gathering of bartenders in the world.

An audience of industry professionals will be served the same flight as a panel of four judges and eavesdrop on the conversation as the panelists determine best of class spirits. The bartenders, wholesalers, and journalists in the audience do not get to take part in the conversation or vote on the winner but they do get to taste the top six spirits. After the judges reveal the best of class spirits, the winners are revealed and comments opened up to the room. The complete list of medalists are announced at a tasting the following day and broadcast through the Tales of the Cocktail mailing list, Imbibe magazine, and social media.

What do you get?

With the words of Pete Shelley and the Buzzcocks buzzing in my ear — “What do I get? Oh oh oh. What do I get?” — the first question to ask when wondering if your spirits company should enter a competition is: What do you want to get out of it?

Answers may vary but can include medals to hang in tasting rooms, certificates for the wall, personal satisfaction, bragging rights over the competition, validation to partners that the venture is on the right track,

bottle stickers, publicity, tasting notes, social media posts, magazine articles, POS material, introductions to buyers, and the opportunity to network at awards banquets. It’s up to each brand owner to determine the worth a certain competition has to offer them.

Most competitions provide a medallion and certificate to represent awards. A few charge a nominal fee to furnish physical awards. Others provide an upgraded award for the price.

ASCOT gives impressive statuettes to their top award winners and makes them available for medal winners to purchase. The Barleycorn Awards makes similar trophies available for purchase by medalists. Both competitions use statuettes from the same manufacturer that makes the Oscars and Emmy awards.

Tasting notes

One of the greatest benefits a competition can offer both winners and non-winners are tasting notes. Tasting notes are valuable to producers for the creation of POS materials and product descriptions. A lack of tasting notes is frustrating for entrants, especially non-winners because they have paid hundreds of dollars in fees, packaging, and shipping, and without an award, they will never know what went wrong or how to improve.

Judge selection has a tremendous impact on tasting notes. If the compilation of verbiage for websites, advertisements, and POS material is the goal, wordsmiths, such as reviewers, marketers, and journalists, are more apt to provide an eloquent, enticing set of words to use.

For DSPs who are

in product development, tasting notes are a good way to receive impartial third-party feedback regarding quality. Let’s face it, friends and distillery groupies are more likely to blow smoke up youknow-where to make sure the whiskey river doesn’t run dry.

If product development is the objective, panelists who are themselves producers may provide insight into improving process, flavor, mouthfeel, and overall quality. Distillers who want to use tasting notes for product development should steer toward tasting panels composed of other producers and away from those stacked with bloggers and influencers.

If product development is the objective, panelists who are themselves producers may provide insight into improving process, flavor, mouthfeel, and overall quality.

You’ve just won a medal!

Now what?

More important than physical medallions is the publicity that surrounds them. The addons that come with the award help get out the message. Digital badges for social media posts, POS materials, websites, and packaging have the opportunity to reach more eyeballs than physical awards.

A large part of the discussion on distilled spirits happens in the digital world. Competitions reaching out through social media can create buzz around a brand, reaching new followers and boosting sales. Some competitions charge for these assets. Others do not.

Bottle stickers promote medal earnings to a larger audience. A gold sticker on a bottle may be the determining factor in a purchase decision, but it also comes with a cost in both time and money. As producers try to shave pennies from the packaging expenses of glass, labels, and closures, the addition of a sticker includes its costs and an extra step in the bottling line.

Incorporating the medal’s likenesses into packaging design provides the same message. While the label redesign has an up-front cost, it provides long-term savings over affixing individual stickers.

The 1904 St. Louis World’s Fair is renowned as the birthplace of the ice cream cone but may be better known because of a gold medal

adorning the side label of Jack Daniels Old No. 7. A good many of us probably got our introduction to spirits competitions by seeing this medal still promoted more than a century after its award.

Many competitions provide medallion artwork free of charge. Some, such as the San Francisco World Spirits Competition (SFWSC), charge a licensing fee. The Beverage Testing Institute (BevTest) has a sliding scale on use of their logo. The entrance fee grants permission to use BevTest award logos for packaging, web site, POS material, press releases, unpaid social media posts, and trade magazines without additional charge. However, a license to use these logos for a variety of other channels — paid social media, advertising in consumer print publications, broadcast television, YouTube or billboards — varies from $1,000 up to $20,000.

“We do license our logo specifically for consumer media. It’s included for free on any kind of packaging or brand web sites or press releases, or even trade magazines. The only thing we charge for is if they do a big advertising campaign,” said BevTest President Jerald O’Kennard. “There’s no license to use the individual results, only the logo. Everyone is entitled to use their results accurately with no license, period.”

BevTest is the oldest North American spirits competition and the first to provide tasting notes to the entrants. BevTest began evaluating wine in 1981, and added beer, cider, sake, mead, and spirits in 1994. Instead of a single annual competition, BevTest evaluates a single spirit class per month in their office/laboratory, eventually going through each spirit type over the course of a year.

promote the winners? What is the publicity machine? Are they associated with an event? Do they have an awards ceremony that provides an opportunity to promote and network, or just a reading of names on a vlog shot at the corner bar?

Whisky Magazine produces a special issue to promote the winners of the World Whiskies Awards. NYISC publicizes its awards through the Alcohol Professor website. BevTest publishes its reviews through Tastings.com, their consumer-facing website, which receives a million hits annually. The connections between the Barleycorn Awards and media are baked in, as are ASCOTs media connections.

“It matters to the trade because our judges are so reputable,” said Minnick. “I have an incredible PR team that pushes it out. We’ve been on The Today Show with our award winners. We get ‘em looks all around the world, whether it’s newspapers or a blog or something else.”

Worldwide publicity is great for established brands, but bigger is not always better. A small brand or startup may not have enough supply to fill the demand created by national and international awards. Smaller regional competitions may fit a strategy for controlled growth into new territories.

For instance, a brand looking to expand into Southern California may focus on the San Diego Spirits Festival International Bottle Competition. This smaller competition announces the winners at the San Diego Spirits Festival, a public tasting in La Jolla, providing an introduction to the industry folks and spirits aficionados along the Southern California Coast.

What have you done for me lately?

Another component that adds value to an awards program is the publicity that comes with it. What kinds of outreach does the competition provide to further

Las Vegas has two competitions: the TAG Global Spirits Awards, run by modern mixologist Tony Abou-Ganim and tequila guru Julio Bermejo, and the Las Vegas Global Spirits Awards.

A producer may expand internationally by targeting countries that fit their marketing plan. The Melbourne International Spirits Competition, also run by NYISC’s Adam Levy and judged by spirits buyers, may help a brand get started in Australia. Levy’s other spirits competitions — the Berlin

“Spirits competitions are the closest thing we have for a grading system as far as quality.”

— Fred Minnick Founder, American Spirits Council of Tasters (ASCOT)

International Spirits Competition and the Asia International Spirits Competition — can help brands get a foothold on new continents. Tailoring contest entries to target regions may be an effective way to compliment a marketing strategy.

What do you want from life?

Or at least from a spirits competition …

Some spirit competitions are known for awarding far more medals than the average, awarding more than 80 percent of the entrants, and giving gold (or double gold) to almost half.

In 2021, for instance, SFWSC awarded 3,098 medals from “more than 3,800 entries,” which implies the exact number of entries is between 3,801 and 3,899, or the percentage of medalists is approximately 80 percent. The web site for that competition displays 782 gold medalists and 712 double-gold. Just shy of 40 percent the brands entered received a gold medal or higher. But for some entrants that’s ok.

When I was running the ADI program, more than one distiller asked, “Why should I pay you $200 [at the time], when I have less chance of winning, and I can pay San Francisco $400 [at the time] and I’m pretty sure I’m going to get a gold medal?”

The point is well-made. For a consumer looking at a sticker on a bottle and deciding if they want to buy it, there may be no difference between IWSC and the SIP Awards, while an industry professional, such as a wholesaler, retailer, or bar manager, may shrug off a competition with a reputation for awarding most entrants.

What’s the cost?

Entry fees for spirit competitions vary greatly. The oldest and one of the most reputable spirits competitions, the International Wine and Spirits Competition (IWSC) is also one of the least expensive. Entries fees are £170 plus VAT (and shipping), or approximately $200 depending on the exchange rate. US producers should factor in the cost of shipping to London.

SFIWSC, BevTest, and SIP Awards are all priced at $550, and most other competitions sit between those two amounts. Entry to Wolfram Ortner’s World Spirits Awards weighs in at a whopping €1,100.

Figuring out how a competition fits into your marketing strategy is a complex equation full of unknown variables. Eventually, a brand owner has to balance the cost of entry against the chance of earning a medal and multiply by the perceived publicity to determine the anticipated benefit.

Spirits competitions are another tool in developing and marketing spirits. While many brands ignore them, others consider them an essential part of getting the word out to a larger audience.

“Why are they important? You gotta understand that we don’t have a grading system for spirits. What I mean by that is, if you take a look at … beef. If someone wants to buy a steak, they know that the US government has a certified grading system; select, choice, or prime. And the spirits industry has nothing like that.” said Minnick.

“Spirits competitions are the closest thing we have for a grading system as far as quality. Now you can take a look at all of them out there and decide which ones you want to enter. But the notion that they are not important is simply false. Your average consumer doesn’t know what to look for, and that one little medal from a competition can matter.”

Andrew Faulkner was Managing Editor of Distiller magazine for six years. In 14 years at the American Distilling Institute he coordinated curriculum for Hands-on Distilling Workshops, helped plan the Annual Spirits Conference and Vendor Expo, and was the architect of the ADI’s International Judging of Craft Spirits. He is the co-author, along with Bill Owens and Alan Dikty, of “The Art of Distilling Whiskey” (2019, Quarry Press) and has edited six books on distilled spirits.

The BEAUTY of a BOTTLE

PART ONE: THE BARTENDER’S PERSPECTIVE

Written by Rich Manning

Photos provided by Fords

Gin

A spirits bottle should tell a story and it should also be functional. Which one is most important may depend on whom you ask: the bartender or bar manager running an on-premise account or a proprietor of an off-premise account. In the first of this two-part series, we look at the on-premise side, highlighting a bottle that was not only built for on-premise functionality, but also manages to reference the bar scene’s 21st century renaissance along the way.

It's common to see a bottle of Fords Gin at a bar. It’s a go-to gin within the bartending community because it’s terrific juice that justifies its own slogan as “the cock tail gin.” but that’s only part of the reason. Examine the bottle, and you’ll start noticing a few reasons why it’s a mainstay in wells and back bars. Its round, partially indented shape doesn’t command much shelf space. Its pour spout is easy to grab from a well. Its lightweight and ergonomic design adds control and efficiency when mixing a drink. The inventory strip on its side informs bartenders just how much is left in the bottle.

These elements aren’t there by happenstance. They’re the product of brand founder Simon Ford working closely with bartenders to develop a gin bot tle that fits their needs from a liquid and functionality standpoint. Some of the ideas that emerged from this collaboration stuck. Others failed to land. “Some of the prototype bottles went wrong,” Ford said. “We experimented with a thicker neck and the use of green glass — we thought bartenders may reuse the green glass bottles for lime juice, but it didn’t work. Early on, we tried a BMX bike grip on the neck, but it messed up everybody’s hands.”

Eventually, the right combination of liquid and design hit. Twelve years after it launched, Ford still views his namesake gin through a collaborative filter. “Fords Gin isn’t so much part of the spirits industry, as it is part of the hospitality industry,” he said. “It’s the result of all the feedback we received from bartenders.”

Such collaboration allows Fords to occupy a unique place in history. The bottle and its contents reference key figures that evolved the craft cocktail scene toward its modern-day revival. The late Sasha Petraske, who founded the game-changing bar Milk & Honey in New York’s Lower East Side, encouraged Ford to make a cocktail-focused gin. Dale DeGroff, the father of the modern cocktail movement, was in the room when Fords landed on the gin recipe they’d use. Eric Alpern, who founded the Tales of the Cocktailwinning Los Angeles bar The Varnish with Petraske, suggested the pour spout’s shape. Lynette Marerro, co-founder of the prominent national cocktail competition Speed Rack, came up with the idea of the inventory strip.

These touchstones uniquely intertwine Fords with cocktail culture and the on-premise sector, to the point where the bottle provides a glimpse into the cocktail scene’s latest evolution. However, Ford views the bottle in much simpler terms. “I look at the bottle and think, ‘This is just a bottle of gin,’” he said. “But this bottle of gin has paid my rent for 12 years.”

“Fords Gin isn’t so much part of the spirits industry, as it is part of the hospitality industry. It’s the result of all the feedback we received from bartenders.”

— SIMON FORD Founder, Fords Gin

“A bottle’s design really influences where it can live at a bar.”

— ADAM FOURNIER Bar director, Spago in Beverly Hills

The FORM of FUNCTIONALITY

Fords Gin’s connections with the bartending community make it an ideal jumping off point for a greater conversation about bottles, bartenders, and bar programs. Such chatter naturally gravitates toward bottle design, and what does and doesn’t work in an on-premise situation.

“A bottle’s design really influences where it can live at a bar,” explained Adam Fournier, bar director at Spago in Beverly Hills. “One of the biggest complaints out there is when a bottle contains great juice, but it takes up three spaces on your shelves. Their design may stand out, but they may not fit.”

A weird bottle shape can also hinder efficiency in several ways. It may be too bulky to properly fit in a rail. A funky pour spout can make it difficult to handle. These are big issues, particularly in an era where high-volume cocktail bars are expected to whip up sophisticated drinks.

“I have refused to use certain bottles in my well because of their design,” said Ali Martin, partner of The Up & Up in New York City’s Greenwich Village. “A starfish-shaped bottle may be pretty, but if it’s impractical, I can’t use it in my program because it won’t work for me.”

Design can also cause a unique separation in their on-premise or off-premise success. A bottle that’s easy to grab and pour may

not move the needle much at the liquor store, but it could be a darling among bartenders. Conversely, an oddly-shaped or artistically sculpted vessel that doesn’t work in the well or can’t fit properly on a shelf may make a killing in the off-premise sector, because the home bartender or at-home spirits enthusiast doesn’t need to worry about keeping it in a well or banging out drinks in a speedy fashion. “Take a bottle like Clase Azul Reposado Tequila. It’s great for retail, but it’s not as great for bars because it’s hard to pour,” Martin said. “A bottle like Reyka vodka, or any type of bottle in a classic burgundy wine bottle shape with a longer neck, is much easier to use in a bar setting.”

“A bottle can sometimes tell two different stories,” Fournier stated. “A bottle of Louis XII is a symbol of luxury off-premise, but it’s a nightmare on-premise.”

A MATTER of PERSPECTIVE

Functionality can often be the prime mover of a bottle’s success in an on-premise account. But aesthetics can also play a role in its place at a bar. An elegant bottle that fits properly on the shelf can help tell a bar’s story. These bottles may not always be destined for the well or abundant usage, but they can help cajole business from a bar in different ways. “A back bar should be a selling tool,” Fournier explained. “Spago is a fine dining restaurant, but its bar is an entry point that allows people to dip their toe into the space and feel it out. For me, using bottles to build a display that creates a certain flow and aesthetic can help a guest get comfortable with the surroundings.”

At the same time, a pretty bottle cannot compensate for ugly juice. Bartenders tend to be more forgiving of a poorly designed vessel holding delicious spirit than a functional bottle with lousy liquid inside. In other words, it’s what’s inside that matters most. It’s an axiom that Ford fully understands all these years after launching a bottle partially made by bartenders and fully made for bartenders both professional and amateur. “The number one reason a bar director picks a bottle is because of the liquid inside,” he said. “Once they make that choice, then they’ll notice the second part of the story. Our bottle’s design may get us one or two extra accounts here and there, but the quality of the gin always comes first.”

What kind of bottles get included in an on-premise program can also depend on the perspective of the individuals making the decision. Martin was a bartender at the Up & Up before she became a partner, so her decisions on what bottles make the cut partially stem from her days behind the stick. She acknowledges this mindset may not be shared by all bar owners. “I want bartenders to be fast and free mov- Rich Manning is a freelance food and drink writer based in Fountain Valley, CA. He lives about 15 minutes south of Disneyland, but he hasn’t gone there in ages — he’d rather visit the nearby breweries and distilleries instead. You can check out some of his other written hackery by visiting richmanning.pressfolios.com. He can be reached at richmanning72@gmail.com.

New Disclosure Law Impacts Distilleries and Other Alcohol Manufacturers

WRITTEN BY STACY C. KULA AND CHRISTINE M. GREEN

A new federal disclosure law effective this year will require many companies, including distilleries and other alcohol manufacturers, to report beneficial ownership information to the federal government. Unlike many of our country’s disclosure laws, this one has a broad reach and focuses on smaller companies.

This is the first time our country has had this type of disclosure law in place. In many instances, complying with the law will be relatively straightforward, but doing so will be an administrative inconvenience and another cost of doing business for alcohol manufacturers. Although not so very different from what is already required to be reported to the Alcohol and Tobacco Tax and Trade Bureau (TTB) and state Alcoholic Beverage Control (ABC) agencies, it is important to understand whether your business is subject

to these new reporting requirements and the civil and criminal consequences of failing to properly report.

NEW DISCLOSURE LAW

The disclosure law was enacted as part of the Corporate Transparency Act1 and requires companies to report information about themselves and their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), which is a bureau of the U.S. Department of Treasury. The purpose of the law is to identify companies that are used for illicit and criminal activities like money laundering, tax fraud, and terrorism. The law subjects most smaller companies to the reporting rules. Many distilleries, rectifiers, bottlers, warehousemen, and other alcohol manufacturers are within this group. Some larger companies that already report

1 See 31 U.S.C.A. § 5336. A federal district court recently held that the Corporate Transparency Act is unconstitutional and that the government is unable to enforce the new law against the particular plaintiffs in the case. See Nat’l Small Bus. United v. Yellen, Case No. 5:22-cv-1448-LCB (N.D. Ala. March 1, 2024). Despite this holding, most companies will need to comply with the new reporting rules unless future guidance or law says otherwise.

In many instances, complying with the law will be relatively straightforward, but doing so will be an administrative inconvenience and another cost of doing business for alcohol manufacturers.

beneficial ownership and other information to the federal government in some manner will be able to take advantage of exemptions from reporting. For example, publicly traded companies that are subject to various federal disclosure rules are not subject to the new law.

According to FinCEN, the information reported will be stored in a secure, nonpublic database. Although the database is not available to or searchable by the general public, FinCEN will permit government officials at the federal, state, and local levels access to reported information for national security, intelligence, and law enforcement purposes. Many expect that the IRS will not be shy in making use of the available data.

REPORTING COMPANIES

The new law applies to all corporations, limited liability companies (LLCs), limited partnerships, and any other entities formed or registered to do business in the United States. This includes foreign entities from outside the United States registered to do business in a state. A company subject to the law is called a “reporting company.” Most typical trusts are not treated as a “reporting company” subject to the new law. The law does not differentiate or distinguish based on industry. So a corporation that operates a distillery2 and a corporation that rents real estate are both subject to the reporting rules.

2 For the sake of ease, the authors primarily reference distilleries by way of example in this article, but the disclosure requirements of the Corporate Transparency Act can also apply to rectifiers, warehousemen, bottlers, wineries, breweries, and other alcohol manufacturers.

EXEMPTIONS

The new law exempts 23 specific types of companies, but these companies are already subject to certain federal disclosure laws. They are companies such as publicly traded companies, banks, insurance companies, and some tax-exempt entities. Unfortunately, there is no exemption for distilleries and other alcohol manufacturers despite the fact that the TTB collects similar (and frankly more) information than what these companies will be required to report to FinCEN.

There is also an exemption for “inactive companies,” but there are conditions on what is considered “inactive.” Therefore, do not assume that just because you forgot to renew your annual report one year with the Secretary of State that you are off the hook to file under the Corporate Transparency Act. To be considered inactive under the new law, a company must be in existence for more than one year; not be engaged in active business; not be owned directly or indirectly by a foreign person; not, in the preceding 12-month period, have experienced a change in ownership or sent or received funds in an amount greater than $1,000; and not otherwise hold any kind or type of assets, including an ownership interest in any corporation, LLC, or other similar entity.

Most relevant for distilleries, the law exempts “large operating companies” from reporting. A “large operating company” means a company that meets all of the following criteria:

› Has more than 20 full-time employees in the United States

› Has a physical operating presence in the United States

› Filed a tax return for the previous year showing more than $5 million in gross receipts or sales (from U.S. sources); for an entity that is part of an affiliated group of corporations filing a consolidated tax return, the $5 million threshold is assessed at the group level

Some distilleries may be able to fit within this exemption and forgo reporting to FinCEN. In addition, subsidiary companies that are controlled or wholly owned by a distillery that is an exempt “large operating company” would also be exempt from reporting.

WHAT MUST BE DISCLOSED

Reporting companies must disclose information about themselves and their beneficial owners. A reporting company must disclose its full legal name, any trade names or “doing business as” (DBA) names, complete U.S. address, state (or foreign jurisdiction) of formation, and federal EIN (employer identification number). This would be a good time to take inventory of all of your trade names and DBAs filed with the TTB and Secretary of State to be sure they are properly identified and filed.

For each beneficial owner, a reporting company must disclose the following information:

› Full legal name

› Date of birth

› Complete address

› Unique identifying number from an acceptable identification document such as a passport or driver’s license

› Image of the identification document

Alternatively, a beneficial owner may obtain a unique “FinCEN identifier,” which a reporting company may report in place of the above separate pieces of information about a beneficial owner. A beneficial owner is not required to obtain a FinCEN identifier. If a beneficial owner obtains a FinCEN identifier, the beneficial owner must update the information tied to the identifier anytime there is a change to the information.

BENEFICIAL OWNERS

The new law has a very broad definition of the term “beneficial owner.” The law looks

through corporate ownership structures to reveal who the individuals are that actually control the company. A beneficial owner is an individual who, directly or indirectly, satisfies one of two tests:

Test #1: Exercises substantial control over the reporting company; or

Test #2: Owns or controls at least 25 percent of the ownership interests of the reporting company

The reporting company must identify any individual satisfying either of these tests in its report to FinCEN. There is no maximum number of beneficial owners who must be reported.

Under Test #1, an individual will be treated as a beneficial owner if the individual is any one or more of the following: senior officer of the reporting company, has the authority to appoint or remove senior officers or board directors, is an important decision-maker, or otherwise has any other form of substantial control over the reporting company. An “important decision-maker” is someone with substantial influence over decisions regarding significant business contracts, major expenditures or investments, or corporate structure. Under Test #1, the individual does not have to be an owner of the reporting company to be treated as a beneficial owner. For example, if a distillery’s Chief Operating Officer has no equity stake in the distillery, the Chief Operating Officer nevertheless would be considered a beneficial owner.

For Test #2, the new law defines the term “ownership interests” broadly to include not only traditional types of equity, such as stock, LLC units or membership interests, and partnership interests, but also profits interests, convertible instruments and warrants, stock options, restricted stock, voting rights, and any other contract or agreement used to establish ownership. For nontraditional types of ownership interests, determining whether the 25 percent threshold is satisfied is challenging. Additionally, under Test # 2, an

Do not assume that just because you forgot to renew your annual report one year with the Secretary of State that you are off the hook to file under the Corporate Transparency Act.

You may find that the beneficial ownership information reported to FinCEN does not completely mirror the information reported to the TTB or governing state ABC agency.

individual may be treated as owning at least 25 percent of the reporting company by virtue of holding ownership interests in another company that directly holds the ownership interests of the reporting company.

You may find that the beneficial ownership information reported to FinCEN does not completely mirror the information reported to the TTB or governing state ABC agency.

REPORTING DEADLINES

Depending on when a company was formed (or first registered to do business in the United States if a foreign company), the deadlines for filing the initial report with FinCEN differ:

Distilleries with a reporting deadline of January 1, 2025 need not rush to file their initial disclosure report. FinCEN will likely publish several updates in the months to come and adopt additional guidance on the mechanics of reporting. Rushing to report could lead to erroneous filings that have to be corrected.

Although the FinCEN filing is not an annual requirement, anytime there is a change in the information disclosed to FinCEN, an updated report must be filed within 30 calendar days of the change. Additionally, if an inaccuracy or mistake is found in the report, the reporting company must correct the inaccuracy within 30 days after becoming aware or having reason to know of it. During the course of a year, lots of different types of transactions or events could trigger an updated filing. Anything from hiring a new senior

officer to an existing beneficial owner moving and having a change of address could trigger an updated report. Other events include beneficial owners gifting or selling equity and a reporting company implementing an employee restricted stock or option plan or issuing convertible notes.

Reports and updates may only be made electronically with FinCEN. Although FinCEN has advertised the electronic filing system and database as secure and not available to the general public, many believe that the system lacks critical security features and inevitably will suffer breaches, even inadvertent disclosures by government workers with access to the system.

COMPANY APPLICANTS

For reporting companies created or first registered to do business in the United States on or after January 1, 2024, they must also identify a maximum of two individuals serving as “company applicants” and disclose the same pieces of personal information for these individuals as for beneficial owners. A “company applicant” is the individual who directly files the document forming the company (or registering the company to do business). If more than one person is involved, then another individual who is responsible for directing or controlling the filing will also be identified as a company applicant. In many cases, the company applicants will be an attorney or other advisor working with a distillery on forming a new company.

PENALTIES

For reporting companies that fail to comply with the new law, FinCEN can impose significant penalties. The willful failure to report complete or updated information may result in civil penalties of up to $500 for each day the failure continues or imprisonment for up to two years and a criminal fine up to $10,000. Senior officers of a reporting company that fails to file may be held personally liable for the failure. Despite these significant

penalties, there is a safe harbor for inaccurate reports. If an inaccurate report is voluntarily corrected within 90 days of the original report, no penalties will be imposed.

PRACTICAL TIPS FOR DISTILLERIES

For most reporting companies, the most challenging aspect of complying with the new law will be obtaining and maintaining the beneficial owner information. Distilleries and other alcohol manufacturers are already subject to comprehensive reporting and disclosure requirements by virtue of their federal and state alcohol permitting. In theory, collecting and updating the information needed to be reported to FinCEN ought not be very different from what the TTB and governing state ABC agencies already require be reported. To prepare for this, distilleries should consider the following:

› Start identifying the beneficial owners and do not forget senior officers and individuals who have control and make decisions but may not hold any ownership interests in the distillery. For distilleries with complex corporate structures, developing a robust organizational and ownership chart may be helpful.

› Review all company governing documents and agreements, such as an operating agreement or shareholders’ agreement, and consider adding language contractually binding beneficial owners to provide their beneficial owner information on a periodic basis (such as semiannually) and immediately as it changes. This may involve reviewing employment agreements as well for any individuals who exercise substantial control but are not otherwise equityholders.

› Consider requiring beneficial owners to obtain a FinCEN identifier. This will push the burden of updating the personal beneficial owner information away from the distillery and onto the

beneficial owner. The distillery would still need to maintain an updated report, correctly identifying any beneficial owners, but the personal information about each beneficial owner would be maintained by the individual beneficial owners themselves.

› If the distillery will be reporting the personal information for any beneficial owners rather than their FinCEN identifiers, the distillery should hold that information securely and implement secure sharing methods. Holding this information in common email systems may leave it susceptible to a security breach. Some distilleries may want to review their insurance policies and consider coverage for security breaches of personal information.

› If the distillery believes that it may qualify for an exemption, such as the “large operating company” exemption, the

distillery should start to document its qualification and ensure all criteria for the exemption are met. Also, the distillery should regularly revisit the exemption requirements to ensure that it has not lost the exemption through, for example, attrition of employees or loss of sales.

› Because of the likelihood of sharing personal information across federal and state agencies, coordinate who files, or create coordination among filers about, the proper information to be reported to each agency so that there are no

erroneous discrepancies in the various filings a distillery makes with the TTB, state ABC, IRS, Secretary of State and now FinCEN.

› Don’t forget to look for future updates that FinCEN may publish in the months to come, potentially adopting additional guidance on the mechanics of reporting.

DISCLAIMER: This article is intended to be a source of general information, not an opinion or legal advice on any specific situation, and does not create an attorneyclient relationship with our readers.

Stacy C. Kula is a member with the law firm of Steptoe & Johnson PLLC, where she focuses her legal practice on the alcohol beverage industry, hospitality, tourism, and corporate law. She is the Alcohol Team Leader and Hospitality & Resorts Team Leader at the firm. She can be reached at stacy.kula@steptoe-johnson.com or 859-219-8222.

Christine M. Green is a member with the law firm of Steptoe & Johnson PLLC, where she is a business and corporate attorney focused on tax planning and compliance. She can be reached at christine.green@steptoe-johnson.com or 412-504-8140.

THE SECrET’S OUT

El Tequileño’s American Success Has Been Decades in the Making

When I interview a distiller, I’m usually the one asking the questions. This wasn’t the case with Antonio “Tony” Salles, master distiller and distillery manager of El Tequileño in Tequila, Mexico. About two-thirds of the way through our discussion for this story, he asked, “You’re based in the LA area, right?” I answered in the affirmative.

“Go to any Mexican restaurant with a bar program in LA and talk to the people about El Tequileño,” he said. “Chances are they’ll tell you that our brand is what their family used to drink back in the day when they lived in Mexico. They’ll also say how great it is to have it available here, and how happy they are that

it’s back in their lives.”

The reunion between consumer and brand Salles referenced is a key part of El Tequileño’s American narrative. The family-owned distillery has been producing tequila since 1959, but it’s only been available in the U.S. since 2019. This gap justifies El Tequileño current tagline “Mexico’s Best Kept Secret.” Yet this may need to change soon. The distillery’s secret is becoming an open one.

A TrADiTiOnAL FAVOriTE

I have yet to take up Salles’ restaurant challenge due to a combination of my busy

schedule and my penchant for indulging in the LA area’s robust street taco scene. But a couple of trips to Mexico this past year provided enough evidence to convince me he’s likely correct. El Tequileño is indeed popular south of the border, so the notion that folks emigrating from Mexico to Southern California would carry fond memories of the brand — and be excited by its availability in the States — fits the narrative.

Its appreciation within Mexico also seems to strengthen the closer you get to the village of Tequila where El Tequileño’s distillery stands. This is the brand the locals drink — no small feat considering there are nearly 1,700

“They’re surprised by the taste. Sometimes, they’ll ask me, ‘Is this tequila?’

I’ll tell them that’s what tequila tastes like when enjoyed properly and responsibly.”

A n TO ni O “TO n Y” SALLES

distiller and distillery manager of El Tequileño

registered tequila brands to consider. Part of the reason why is the critically acclaimed village cantina La Capilla, Tequila’s oldest bar. The unfussy, slightly dusty hideaway is the birthplace of the Batanga, a refreshing cocktail made with blanco tequila, lemon juice, and cola. Bar Founder Javier Delgado Corona created the drink with El Tequileño Blanco in 1961, and the base spirit remains unchanged to this day.

This unique connection to the village that bears the spirit’s name gives El Tequileño homegrown clout, but it also makes them a unique authority to evangelize the merits of properly produced tequila — something that’s increasingly important as the brand makes further inroads in Southern California and beyond. It’s a position Salles relishes. “One of my favorite things about sharing El Tequileño is seeing people’s faces the first time they try it,” he said. “They’re surprised by the taste. Sometimes, they’ll ask me, ‘Is this tequila?’

I’ll tell them that’s what tequila tastes like when enjoyed properly and responsibly.”

Master

UniQUE rECOgniTiOn

El Tequileño’s still-growing status isn’t by accident. The slew of awards the brand has earned since hitting the American market has plenty to do with their emergence. Of course, such increased exposure comes at a rather serendipitous time, amid a domestic agave spirits explosion. It also comes at a time when tequila enthusiasts have simultaneously grown more curious about tequila while becoming more weary about the onslaught of celebrity tequila brands.

While the notion of entertainers slapping their signatures on bottles elicits eyerolls from some agave aficionados, Salles doesn’t necessarily see the celebrity tequila boom as a dreaded movement. “Unfortunately, people think that celebrity brands have to be bad, but that’s a bad way to look at things,” he said. “Celebrity brands get

more people out of other categories like vodka and into the tequila world. Besides, if a tequila is made with quality and passion, it will be good, whether a celebrity is involved or not.”

Salles has become popular among tequila connoisseurs who understand and appreciate his approach to making tequila. It’s a philosophy that eschews the shortcuts of additives and leans into family tradition, the latter of which produces eyebrow-raising results. In addition to their line of 100 percent agave spirits, El Tequileño produces a mixto tequila, El Tequileño Blanco, consisting of 70 percent blue agave and 30 percent brown and white sugars. It’s the same mixto they’ve produced since 1959, and it’s the juice Corona used to create his Batanga way back when. This carries significance because agave snobs routinely treat mixto as a five-letter word. El Tequileño’s version tends to get a pass, if not outright praise.

A COnnECTiOn TO CUErVO

El Tequileño carries another open secret in their back pocket. Its founder and initial distiller was Don Jorge Salles Cuervo, Tony’s grandfather and a descendent of Don Jose Antonio de Cuervo — yes, that Cuervo. While this factoid can be deduced by visiting their website, the brand is cool with it residing in the “if you know, you know” camp; they have no plans to use the family connection to build marketing schemes. El Tequileño wants to be their own entity as opposed to being the next big brand with a story conflated by slick ad campaigns and country music lyrics. “I enjoy telling people that we’re part of the same family, but I also tell them we’re not from the same industry,” Salles stated. “We share the same heritage and that same knowledge, but we went our separate ways. They’ve grown bigger than us, and that’s fine. We still see ourselves as a small family-owned company that takes care of our own legacy.”

Most tequila distilleries are contracted to distill for a variety of companies under different ownerships, which is why there are about 140 distilleries throughout Mexico yet nearly 1,700 registered tequila brands. El Tequileño produces their brand and their brand only. This concentration on a single

entity lets them tell tequila’s story through a hyper-specific viewpoint, which gives them a perspective other brands don’t necessarily have. It also organically draws curious interest from those who know about typical tequila production. Salles appreciates this attention, but he has no intentions of keeping it to himself. “Who we are and what we do has given us an opportunity to be an authority, and people may listen to us more,” he said. “However, while our aim is for people to like our brand... it’s also important for us to tell people that there are other tequilas for them to try.”

inTErnATiOnAL FLAir

In 2017, Canadian distribution firm Paradise Spirits purchased El Tequileño. They’ve since come up with a few ways to spill the beans about the tequila’s goodness. They carefully expanded the distillery in 2018, doing so in a way that scaled up production without sacrificing traditional processes or introducing shortcuts. The following year, they launched La Casa Salles, an elegant boutique

hotel adjacent to the distillery. A stay here makes it easy to check out the production firsthand via a guided tour. Its location within Tequila makes it equally simple to see the relationship between the brand and the village. This includes La Capilla, which sits roughly a half-mile from the distillery.

The combination of expanded production, the hotel, and growing critical acclaim means the brand’s current slogan will indeed become obsolete down the road. As they outgrow the tagline, Salles sees El Tequileño growing into something that’s more important than their juice. “When you win awards, you get the ability to start telling the world about what you do because people start to trust you,” he said. “This can help us become ambassadors for agave spirits, where we can engage with people, help them grow their knowledge, and encourage them to compare our bottles with other brands. These things can only help the world of tequila grow even more.”

El Tequileño is located in Tequila, Jalisco, Mexico. Visit www.tequileno.com for more information.

PHOTOGRAPHY ON THIS PAGE BY RICARDO ARRELOA

LESSONS FROM A SISTER INDUSTRY

LEArning FrOM FUEL ETHAnOL

Almost every distiller knows that ethanol can be used as fuel. Indeed, there are probably quite a few lawnmowers or hedge-cutters that have been modified to run on excess ethanol from stills. However, what few beverage distillers realize is that fuel ethanol producers are some of the largest distilleries in the world, and that they have made serious advancements in the art and process of distillation. There is a lot that beverage producers can learn from the fuel industry, and the goal of this article is to highlight some of their more interesting innovations and methods.

COOKING GRAIN

One of the basic differences between beverage and fuel ethanol producers is how they each handle mashing. Like beverage alcohol producers, fuel ethanol producers must cook their grains in order to gelatinize the starches and make them available for saccharification. However, unlike beverage alcohol producers, which commonly use either a mash tun or cereal cooker to accomplish this, fuel producers prefer to use something called a jet cooker.

A jet cooker, also called a hydroheater, is a piece of equipment that mixes steam with grain slurry to create a high-shear and high-pressure environment. Jet cookers can operate at temperatures in excess of 120 degrees Celsius and their high-shear nature causes the starch granules in grain to literally rip open. This helps to expose the maximum amount of starch granules to saccharification enzymes, and jet cookers are extremely efficient at processing large amounts of grain in very short periods of time.

lead to off-flavors. They also have high installation costs, and operating jet cookers can be complicated and dangerous. Finally, they require specialized maintenance and significant support equipment to keep them operating at full capacity.

FERMENTATION

Fermentation for fuel ethanol has some striking differences from beverage ethanol. The goal of fuel ethanol fermentations is to produce the maximum amount of alcohol in the minimum amount of time. This means that most fuel ethanol fermentations will seem wildly high and out of control when compared to beverage fermentations. It is not uncommon to see fermentations as high as 20 percent ABV in a plant scale fermentation and 23 percent ABV in lab tests in just a few days. To accomplish these types of high-gravity, high-alcohol fermentations, fuel producers utilize a number of interesting tools and methods.

The first of these methods is predictive fermentation management. Although many fuel ethanol producers use genetically modified yeast that can operate at much higher temperatures and alcohol contents than the standard beverage distiller’s yeast, they are still beholden to the fundamentals of yeast biology. That means that if yeast get too hot or cold, or run out of a vital nutrient they are likely to die out and cause a stuck fermentation. For fuel producers, a single stuck fermentation could result in thousands, if not millions, of dollars of loss, so it is vital that they prevent them. Many fuel producers will use computer models of fermentations to predict possible problems before they can occur. These models can tell them when to raise or lower the temperature and when the perfect time will be to add nutrient.

Fuel ethanol producers are some of the largest distilleries in the world and have made serious advancements in the art and process of distillation.

Although jet cookers are incredibly important for fuel ethanol producers, they have not yet gained popularity with beverage producers for several reasons. Firstly, because jet cookers operate at very high temperatures there is a possibility of scorching the grain, which could

Another way that yeast can get overwhelmed is if they are exposed to too much sugar too quickly. This is especially likely early in the fermentation when the yeast is just coming out of the lag phase and are exposed to the large amounts of sugar available in fresh mash. In order to combat this problem, fuel ethanol producers will often not dose all of their enzyme into the mash. Instead, they will add some during mashing and then slowly dose the enzyme during fermentation to maintain a consistent sugar level. This helps to keep the osmotic stress of the fermentation down and ensures healthy yeast.

Finally, fuel ethanol producers also monitor and control infections differently from most beverage distillers. In most beverage distillation plants, infection by lactic acid bacteria and other microbes is rather common and sometimes even desirable. Beverage distillers tend to monitor for infections using organoleptic testing and rarely, if ever, plate samples for identification. Conversely, for fuel ethanol producers any level of infection represents lost yield and therefore money; which means it must be dealt with. Fuel ethanol producers are constantly monitoring for infection and have recently begun adopting handheld DNA sequencers, such as the MinION by Nanopore, to screen tanks for bacterial infection. If a fuel ethanol producer discovers an infection within a tank, they will often use antibacterial agents such as penicillin to try and eradicate it before it can spread.

DISTILLATION & PURIFICATION

As most distillers know, ethanol-water solutions have an azeotropic point at about 95 percent ABV. This means that there is no way to distill a product above 190 proof using standard practices. However, for ethanol to be usable as fuel it needs to be very pure; indeed, the standard minimum concentration of fuel ethanol is 99.5 percent ABV, which is why it is referred to as anhydrous ethanol. In order to produce this level of purity, fuel producers have come up with a number of methods to help them attain their goals.

Like most large beverage distillers, fuel ethanol producers use continuous column stills to produce their products. However, unlike beverage producers, who are concerned with flavor, fuel producers are only concerned with purity. Therefore, fuel column stills are designed to remove as many congeners as possible from the distillate. These stills often run with a vacuum, have multiple columns, and operate using a technique called “azeotropic distillation.” Azeotropic distillation uses chemicals such as benzene or cyclohexane to artificially break the ethanol-water azeotrope, thus allowing the collection of very pure ethanol. Although this method helps to create an incredibly pure product, the chemicals used can be dangerous, and it is energy-inefficient. Therefore, many fuel producers have upgraded their systems to use molecular sieves to purify their ethanol above the azeotropic point.

Molecular sieves are porous materials that have uniform small holes that allow specific target molecules to adsorb into them. In the case of the fuel ethanol industry the most common type of molecular sieves used are known as zeolites Type A. These zeolites are made from aluminosilicate crystals and have pores that are roughly three angstroms wide. This small of an opening means that when a mixture of ethanol and water passes through the zeolites, only the water molecules can adsorb to the pores, leaving the ethanol to continue forward. This method of purification produces a highly concentrated ethanol vapor both safely and efficiently.

FINAL THOUGHTS

The fuel ethanol industry originally grew from the beverage ethanol industry, and without a doubt the two are closely related. However, over time fuel ethanol has evolved to become its own unique field of study, one that beverage producers would do well to learn from. This article has only highlighted a few of the different methods that fuel ethanol distillers utilize. Hopefully it will inspire beverage producers to research more about this sister industry.

Reade A. Huddleston, MSc. in Brewing and Distilling, is a beverage industry consultant based in Tampa, Florida. He is fascinated with all things drinkable and is always searching for strange and forgotten spirits. If you would like to contact him about said spirits, or anything else, please email him at ReadeHuddleston@gmail.com.

pUBLiC rELATiOnS Playing A Different Game

Written by Jason Barrett

The modern craft spirits industry is an incredibly dynamic, ever evolving, and competitive market. Growth in our industry is being driven by several factors, including consumer interest in craft spirits, popularity of craft cocktails, and an increased interest in premium products. Today, competition remains high, both within our industry and from other beverage categories. All these factors mean that there is a constant need for craft beverage producers to differentiate themselves in this increasingly crowded and volatile marketplace.

One way to help your brand stand out is through a solid public relations strategy. But what is PR, really? According to the Public Relations Society of America, “Public relations is a strategic communication process that builds mutually beneficial relationships between organizations and their publics.”

PR can be an incredibly valuable tool for craft spirits and distilling companies of all sizes and one that we at Black Button Distilling have used extensively — and we see the results. One of the reasons we utilize public relations is because of its high return on investment (ROI). The cost per customer impression is much lower than most opportunities to buy media. PR also carries significantly more impact with consumers than traditional advertising.

Any solid public relations strategy should be aligned with your business strategy, as PR can help achieve specific business goals. So, before you jump into strategy, determine your objective.

Common PR Objectives

Build brand awareness: First and foremost, PR can help craft spirits producers raise awareness of their brand and, with time, establish their brand as a leader in the craft spirits industry. This can be done through a variety of strategies and tactics, such as pitching stories to the media, organizing events, and developing social media campaigns. PR can help earn positive media coverage in local, regional, national, and/or trade publications that helps create “buzz” around your brand and can also be especially helpful around the launch of a new product.

Expand into new markets: PR can help craft distillers expand into new markets by building relationships with media, influencers, and other stakeholders in those markets. But remember your target audience. There’s no point in sending a press release to the media in Texas if your primary customers are in California. Always keep your intended audience — and their preferred communication channels and media consumption habits — in mind.

Generate positive word-of-mouth: PR can help get people talking about your brand and related products and partnerships. This can be done by securing positive reviews from reviewers, influencers, and consumers. When we launch a new product, we actively seek out reviews and then use those reviews to help us and our partners sell the product.

Introduce new partnerships: What good is a new partnership with another brand if no one knows about it? Use PR to get the word out among the media and other key audiences. But, before you communicate about your partnership, make sure that both brands sign off on the communication to avoid confusion and make sure everyone is on the same page. Be sure that the way you describe your partnership aligns with the way your partner would describe it and be sure that the timing of your announcement works for both parties.

Build relationships with key stakeholders: PR is vital to building relationships with stakeholders like the media, distributors, and retailers — relationships that can be key to success in this industry. To build these relationships you could be prepared with earned media placements and backstories that you can share to demonstrate knowledge, connections, and status in the industry — which in turn shows that you can be a trusted partner.

Managing Crisis: PR is also helpful during times of crisis, something we learned at the start of the COVID-19 pandemic, when we were called upon by our state government to make hand sanitizer on a massive scale. We used our connections in the media to source new suppliers of critical ingredients, and to direct consumers on how to purchase these much-needed supplies in a safe and sane manner. We also worked with local and state legislators to get key laws changed in short order so our team could conduct this important work quickly and efficiently. If we had not had many years of trusted relationships built up with the local media, I do not think that these things could have happened.

Increase sales: PR can help companies to increase sales by raising awareness of the brand and in turn, driving traffic to the brand’s website and retail locations. Our distillers have been featured on numerous local morning shows to demonstrate how to make cocktails at home. Each time, this has driven an increase in placements in the local area as well as an uptick in DTC orders in that location.

Once you know what you want to achieve through PR, there are several different PR strategies and tactics that craft spirits and distilling companies can use. The best strategy for any company depends on a range of factors, including the company's objective, target audience, and budget. PR can help achieve specific business goals

Common PR Strategies

Media relations: Media relations is the process of pitching stories to the media about the company and its products, in the hopes of securing positive coverage. This may include mailing out samples to critics at spirits publications in the hopes of earning a positive review or sending press releases out to a range of media, depending on the story and your objective. Media relations is a cost-effective means of reaching many different audiences. It also carries essential authenticity and legitimacy that may not otherwise be seen through paid messaging.

Today’s media and messaging environment is incredibly crowded and very segmented. Building relationships with members of the media is an important part of public relations and should be an on-going process.

TIP : Develop — and use — a strong brand story. Your brand story is what makes your company unique. Once you develop your brand story, make sure you tell it — share it with the media and consumers. It will help people remember your brand, tell it to others, and help them come back to you in the future.

We’ve consistently pitched and placed stories in local, regional, national, and trade press. We’ve held press conferences and ribbon cuttings. Our media relations strategy has led to great success for us locally — we have been in every local paper, on every TV station and most radio stations — as well as nationally. All of this earned media coverage helps to build brand awareness among our target audiences.

Events: Events can serve as newsworthy items to also earn media coverage. Examples of events can range from tastings and cocktail classes to larger festivals. These types of events can introduce your brand to a new audience.

TIP : Don’t forget to pitch your event to the local media and be prepared if they plan to cover it

TIP : Create a social media content calendar in advance and plan your content ahead of time to avoid last minute scrambling for content.

Social media: Craft brands can use social media to share news, promote events, and interact with consumers and build relationships. Social media can be daunting for marketing teams that have limited resources. Remember this: you don’t have to be everywhere. Identify your target audience and go where they are. The Pew Research Center produces a Social Media Fact Sheet that provides great data about who uses what social platforms.

Influencer marketing: Influencer marketing is the process of partnering with influencers to promote the company's products. Influencers can be bloggers, social media personalities, or other experts in the industry. Influencers range from micro-influencers with a small but engaged audience to macro-influencers with a wide reach but lesser engagement. Consider your strategy and what you want your outcome to be.

TIP : Do your research and partner with influencers that align well with your brand and will expose both your brand and the influencer to new audiences. A win-win

While PR is but one tool in the modern distiller’s toolbox, it is often overlooked as brands are looking to scale and grow. No matter your needs or your objective, the value of public relations is high, so it’s worth the time and investment to find what works best for your brand. While some may be intimidated by the prospect of working with a large agency (especially if you don’t have a large budget), PR can also be handled in-house. Public relations practitioners can be hired full-time as part of your marketing department or can be contracted out either on retainer or on a project basis. I would encourage each craft spirit operation to give more time and attention to how PR can help you grow your business in 2024.

Jason Barrett is the Founder/Master Distiller of Black Button Distilling, the first craft distillery in Rochester, NY since Prohibition. This summer, Black Button Distilling is celebrating a decade of crafting grain-to-glass craft spirits. A New York State Farm Distillery, Black Button Distilling is the first distillery in New York to obtain the New York State Grown and Certified status for commitment to locally sourced ingredients and high standards of quality. Named New York Distillery of the Year (2016 & 2021) at The New York International Spirits Competition, Black Button Distilling has produced more than million bottles of spirits and has been named to the Inc. 5,000 list of fastest growing privately owned companies four times. To learn more about Black Button Distilling, visit www.blackbuttondistilling.com.

APRIL IS ALCOHOL RESPONSIBILITY MONTH.

SHOW

DISTILLATION SCIENCE & THEORY

Boiling Points, Azeotropes, and the Subtle Art of Distillation

Written by NICOLE SHRINER, PH.D.

Distilling can be described as both an art and a science. On one hand, distilling is a physical process in which compounds are separated by a difference in boiling points. On the other hand, a distiller can express their unique skills in various ways to create a product with distinct flavor and aroma. For this article, we will focus on the science and engineering concepts that describe the distillation process. The main goals of distillation are to concentrate the flavor, aroma and alcohol created during fermentation and to remove the unwanted compounds, in particular methanol. To achieve these goals and distill a flavorful product without any harsh congeners, we first need to understand the concept of

‘boiling point.’

For a pure substance, a sharp boiling point usually exists. For example, is it common knowledge that water boils at 100 degrees Celsius (212 degrees Fahrenheit) at sea level. The elevation is important because the atmospheric pressure changes with altitude. For every 500 feet increase in elevation, the boiling point of water is lowered by around one degree F. As we move away from sea level there is less atmospheric pressure, resulting in less energy required to boil the water. When a second compound is added to water, say ethanol, the boiling point of the mixture will depend on the phase equilibrium (or relationship) between the components.

On one hand, distilling is a physical process in which compounds are separated by a difference in boiling points.

On the other hand, a distiller can express their unique skills in various ways to create a product with distinct flavor and aroma.

Every solution, whether a mixture or a single component, has a bubble point and a dew point. As a liquid is heated, the temperature at which the first bubble is formed is called the bubble point. As a vapor is cooled, the temperature at which the first drop of liquid is formed is called the dew point. For our practical example, the boiling point of pure water is 100 C while the boiling point of pure ethanol is 77 C. It would be easy to assume that a mixture of 50 percent ethanol and water would boil at the midway point, around 89 degrees Celsius. If ethanol and water were what we call an ‘ideal’ mixture, then this would be true. Unfortunately, ethanol and water have a unique vapor-liquid equilibrium relationship making this assumption not true. The actual boiling point of a 50 percent ABV mixture of ethanol and water is 84 degrees Celsius.

Ethanol and water as a mixture have what we call an azeotrope. An azeotrope between two components makes it impossible to separate completely with normal atmospheric distillation. To be thorough, I should mention that the complete separation of ethanol and water is possible through other means including vacuum distillation or by the addition of a solvent to alter the azeotrope. The reason for the existence of an azeotrope is found at the molecular level. Without going into too much unnecessary detail, the water and ethanol molecules have attraction towards one another making it

more difficult to separate than ideal mixtures of other compounds. A boiling point diagram can help, as seen in the boiling point diagram for ethanol and water above.

The orange dotted line is the liquid line, while the blue dashed line is the vapor line. To determine the boiling point for a corresponding mixture of ethanol and water you start on the x axis, the dew line, and follow it vertically until the vapor liquid line is reached. Then that point is followed horizontally to the corresponding temperature on the y axis. As you can see below, at zero percent ABV ethanol, the boiling point is 100 C, or pure water. Now if we move to a 30 percent ethanol mixture, this mixture would boil at 86 C. This diagram can be used in the reverse as well. If we know a vapor is at 90 C then we can use the equilibrium data to tell us that the vapor would be at 70 percent ABV, while the liquid would be 20 percent ABV. This is what happens within a distillation column. Every time the mixture is heated enough to become a vapor, the vapor becomes richer in ethanol.

If we follow the curves through the increasing amount of ethanol we see that somewhere around 95 percent ABV, ethanol and water can no longer be separated. This is the azeotrope.

In the simplest form of distillation, we have the mixture getting heated to a vapor which is then condensed back into a liquid and collected into what we call the

The beauty of spirit making is that every distillate will be different, allowing for creativity and individuality in the spirits world.

distillate. As we add more contact area or stages for the vapor to condense and then re-vaporize, the resulting distillate becomes increasingly more rich in ethanol. In theory we call these equilibrium stages and in practice we call them trays. The more trays in a distillation step up, the higher the ethanol concentration in the distillate.

So far we have discussed a two-component system consisting of ethanol and water. However, yeast not only produce ethanol, they also produce other volatile compounds that will vaporize and condense with the ethanol throughout the distillation. The first class of compounds to vaporize in the mixture will generally be the ones with the lowest boiling point. These compounds are acetone (56 C), acetaldehyde (68 C), and methanol (65 C) among others in small concentrations. As the fermentation is heated, these compounds, along with ethanol and water, will travel through the distillation system and be condensed first. We call this distillate volume the heads cut. Without taking a proper heads cut, the product will be very volatile and have a harsh taste, similar in sensory character to nail polish remover. The first distillate to come off the still may be the highest in ethanol content, but also the highest in methanol and should therefore be disposed of or set aside for later re-distillation. This is why people are commonly concerned with methanol poisoning or ‘going blind’ from a batch of distilled alcohol.

As the pot continues to heat, the most volatile components leave the system and we can collect what is known as the hearts cut. This cut will have primarily ethanol and water but also trace amounts of other compounds like higher alcohols and esters that have similar boiling points to ethanol, or that have a strong affinity to ethanol. The congeners that come through during the hearts cut have generally positive sensory attributes.

Through the hearts cut, the temperature in the pot will continue to increase and therefore the flavor will change. In fact, if you separated small amounts of hearts cuts throughout the distilla tion, they would all likely smell and/or taste dif ferent. The combination of all the congeners in the hearts allow for a unique depth of sensory character.

As the pot gets increasingly hotter, compounds with higher boiling points will start to vaporize and come through to the distillate. The heavier compounds are called fusel oils. Fusel oils in clude isopropanol (82 degrees Celsius), butanol (117 degrees Celsius), isoamyl alcohols (131 de grees Celsius) and others. These compounds are generally unwanted in distillates. They feel oily and taste bitter/astringent. While there is still a high concentration of ethanol in the tails, we still want to separate this volume from the hearts, or we will have an off-tasting product. In aged prod ucts, more fusel oils are tolerated because they can participate in aging reactions over time. So, it depends on what product the distiller intends to make.

The art of distillation comes from the way the distiller chooses to make those cuts and the fer mentation broth they are distilling. Outside of the cuts, the variables that distillers can use to manipulate the distillate include fermentation parameters, the finishing options including bar rel aging, filtration, and other flavor alterations. Some distillers prefer to have an extremely clean distillate, which can sacrifice some final product volume, while others choose to make wider cuts knowing they will be aging for a long time or blending with other products. The beauty of spirit making is that every distillate will be different, allowing for creativity and individuality in the spirits world.

Dr. Nicole Shriner is an academic specialist at Michigan State University. She holds a BS and PhD in Chemical Engineering from Michigan State University and a Master Brewer Diploma from Siebel Institute of Technology and Doemen’s Academy in Munich, Germany. She teaches all courses in the Fermented Beverage minor which include brewing, distilling and winemaking. She manages the fermented beverage analysis lab at Michigan State through which she completes analyses and facilitates research with industry members from raw ma terials to final fermented beverage product. Nicole has compiled a total of 11 years of experience working at, or with, distilleries, breweries and wineries.

Good day to you, dearest readers of Artisan Spirit Magazine,

Today we are talking about frozen pipes! Exciting, I know. Take a deep breath, relax, and sip lovingly on your beverage. All will be made known in due time.

It is that time of year when most of us are experiencing that seasonal shift from warm and mild conditions to much cooler temperatures. Cool enough, in fact, that liquids that we don’t worry about in the warmer months can become quite cold and actually transform into solids. You already know that when liquids freeze into solids, expansion occurs, and if that expansion takes place in a confined space, such as a pipe, bad things can happen.

Interestingly, did you know that the damage from a frozen fire suppression sprinkler system can be just as extreme and cause an equivalent amount of damage, if not more, than a fire? It is true, and I have witnessed it firsthand. In one instance, at a distillery that shall remain nameless to protect the innocent, a fire suppression system that was located in the upper portion of the attic lost its heating element, and went unnoticed. The pipes slowly froze causing

fractures up and down the extensive lines in the attic, and come time for the big thaw later that month … Whammy! A flood of biblical proportions. OK, maybe not biblical, but it was a doozy.

The resulting damage was significant. Not only because a majority of the sprinkler system needed to be removed and replaced, but the resulting water damage was massive. We are talking about sheetrock needing to be removed, buckled wooden floors, water mitigation on a gigantic scale, equipment damage, as well as subsequent mold and mildew issues in the lower portion of the building months

later, not to mention the amount of downtime and revenue losses. It could have ended tragically, but thankfully several months later all was set back in order. This was due to the proper insurance coverage being in place.

In this example we see how something so simple as the natural phenomenon of liquid freezing and expanding can cause severe damage. How in the world can you protect yourselves from such a heartache? Do you even know if you would be so fortunate as to have the coverage in place to take care of such a travesty? Let’s find out!

It all starts with a base level of understanding of your insurance policy. A word to the wise, if you do not have this understanding, do whatever is necessary to get an understanding. A standard insurance policy is broken out into several parts, the first of which is the Declarations Page. This little gem is pretty important as it will show you each of the coverage lines that you are being insured for as well as the associated premium. Now, I am not going to go through the anatomy of a policy at this time, maybe in a subsequent communique, but on this page you should see something along the lines of “Property Coverage Part,” “Ultimate Cover Coverage Part,” or some other fancy name for Property Coverage. If it is on the Dec Sheet, the cool people term for the Declarations Page, and there is a premium charge shown, then you have property coverage. WOOHOO, right?!?!?! Not so fast.

Not all that glitters is gold. Although you may have property coverage listed on the Dec Page, the coverage is broken down further than that in the policy’s Property Section. There are three different types of coverage forms that you can be covered under. Those three forms are Basic, Broad, and Special. Each form has its own form number (Basic is CP 10 10, Broad is CP 10 20, and Special is CP 10 30) which makes it easier to identify, which is nice. Here is where I take a quick sidebar and state that some insurance folks are not always on the up-andup, and to lower your premium (possibly up to 30% less), and win your “biz”, they may do things like sell you a Basic peril’s coverage. It is cheaper, and can look like a good deal, but it is usually not. Basic coverage is just that, Basic. It only covers eleven named perils, of which, Sprinkler Leakage due to freezing of plumbing is one of them, but it is still missing a key component. I will demonstrate the issue here in a moment, but first, here are the eleven perils covered in a Basic Form Policy:

= Fire

= Lightning

= Explosion

= Windstorm or Hail

= Smoke

= Aircraft or Vehicles

= Riot or Civil commotion

= Vandalism

= Sprinkler leakage

= Sinkhole collapse

= Volcanic action

You see that the Basic Form has “Sprinkler Leakage”, so you are all cool, right? Wrong. It specifically says “Sprinkler Leakage”, but under the Basic Perils Coverage Form (CP 10 10), here is the definition:

“Sprinkler Leakage, meaning leakage or discharge of any substance from an Automatic Sprinkler System, including collapse of a tank that is part of the system. If the building or structure containing

the Automatic Sprinkler System is Covered Property, we will also pay the cost to:

a. Repair or replace damaged parts of the Automatic Sprinkler System if the damage:

(1) Results in sprinkler leakage; or

(2) Is directly caused by freezing.

b. Tear out and replace any part of the building or structure to repair damage to the Automatic Sprinkler System that has resulted in sprinkler leakage…”

And it goes on to detail what some certain terms mean. Point being, it will pay to “tear out and replace any part of the building or structure to repair damage to the automatic sprinkler system”, and the system itself. Notice that they never once mention paying for any other resulting damage to your equipment, the rest of the building, or anything else. That is the gotcha, right in the fine print. The issue becomes the specific language of the coverage form. They will pay for this and that, and it looks like sprinkler systems that freeze are covered under the Basic Form, and

they are, but the rest of the damage is not covered, it is just for the sprinkler system. In order to be covered for any resulting damage from the sprinkler system leakage, you need at least a Broad Form (CP 10 20) to cover such an event, and better yet, a Special form (CP 10 30). Do you know which you have? You should, and you better.

Under the Broad Form, you get all of the eleven perils covered on the Basic Form plus three more, and these additional three are huge. The additional covered perils are:

= Falling objects

= Weight of snow and ice

= Water damage

Again though, not so fast. Water damage in this instance specifically says it does not include discharge or leakage from an automatic sprinkler system. It also says that it will not cover loss or damage caused by or resulting from freezing unless you did your best to maintain heat, or you drained the system and shut off the water supply. Basically, they will cover the frozen and broken sprinkler system, as well as the resulting water damage from said frozen sprinkler systems under the Broad Form, as long as you tried your best. It still seems kind of like a crap-shoot though.

That brings us to the king of coverage forms. The platinum, jewel encrusted, triple diamond, ruby, gold star, coolest coverage form possible. Yes, the Special Form (CP 10 30).

A. Covered Causes Of Loss

When Special is shown in the Declarations, Covered Causes of Loss means direct physical loss unless the loss is excluded or limited in this policy.

Huzzah! Finally, a no nonsense coverage form. I always like to say that under this form, everything is covered… unless it’s not. A little insurance humor. Seriously though, unless there is specific exclusionary language listed under the Exclusions Section of the coverage form, you have coverage. Does that include sprinkler leakage due to frozen pipes, and all resulting damage? Pretty much, but read your exclusions.

Now you have a pretty good understanding of what to look for to make sure you are protected. Take it from a guy that has been doing this a long time, once you need the coverage, you better make sure it is there, or it can be business ending.

As well, do you know if the valuations for your building, or contents in the case that you are leasing, are correct so that you can be made whole? What kind of valuation are those items based on? Is it Actual Cash

Value? Replacement Cost? Agreed Value? So many nuances, so little time. What about the time element of being shut down whilst the clean up and repair takes place? Do you have Business Income and Extra Expense coverage on your policy?

These questions are not meant to frighten you, or to be used as scary stories to keep children inline, but they are queries to make you ponder as to what you really know about

your insurance coverage. Treat your craft spirit business like your baby. You have put your blood, sweat, tears, and a sizable amount of money into your business, including a decent amount in insurance premiums, so you best make sure the coverage is worth it. Insurance policies can easily be one of your top ten overhead expenses, and often they are just thrown in a drawer, or filed on your computer, never to be seen again, trusting that all is right within the confines of the pages of the policy. Perhaps more thought and understanding should be given to knowing what is and is not covered prior to tucking that policy snuggly away until renewal time rolls around next year. Until next time, dear reader.

Stay Vigilant, Aaron Linden

a.k.a. Insurance Man

Aaron Linden is a professional purveyor of insurance policy products proposed to protect people proactively against perceived perilous perils and pitfalls, primarily. He has been in the insurance industry for 23 years, has specialized in craft spirits insurance for the last 15 years, and literally wrote the book (ok, the insurance forms) on spirits coverage for many insurance carriers.

Santorini’s Canava Distillery

Transporting visitors to a time before the tourists.

Human settlement on the Greek Isle of Santorini goes back five thousand years. It’s a history filled with tragic natural disasters and epic conquests, but that’s easy to forget when visiting this bustling tourist destination. As today’s Santorini is besieged by jet-setting Instagrammers and cruise ship passengers by the tens of thousands every year, what gets lost among the restaurants and resorts is that before Santorini’s recent

tourism boom, island life was about simplicity and struggle. A local ouzo distillery houses a museum to show visitors what that life was like before the world ‘discovered’ Santorini.

Canava Distillery, in Mesaria on the eastern slopes near the main port of Fira, was founded in 1974 by Evagellos Lygnos; the distillery had roots in Santorini’s wine industry because Lygnos first worked for the Venetsanou family winery in the 1960s. A ‘canava’ was a

room inside Fira’s famous cliffside cave houses where families stored wine and coal. Today these cave houses are high-end hotels with infinity pools.

After learning an ouzo recipe from a distiller from Smryna (now Izmir, Turkey), Evagellos opened Canava and taught his son Loukas the ropes, with the youth making his first ouzo batch at age 11. In 1997 Loukas took over and today Canava remains the

WRITTEN AND PHOTOGRAPHED BY CARRIE DOW

island’s only distillery. Loukas has worked hard to increase the distillery’s financial footing, enabling him to move into a new location in 2012. However, as he modernized the production equipment, the ‘old ways’ of island distilling and wine making sparked his imagination.

“From a young age I admired old objects,” he explained. “My dream was, alongside the distillery, to create a museum that would take people on a journey to the Santorini of yesteryear.” As a young man, he collected antiques and painstakingly restored old furniture. In 2015, Loukas opened his museum.

The Canava Distillery tour starts inside the distillery’s main entrance in a large, high-ceilinged room with old wine and spirits equipment along the walls. Artemis, the tour guide, says that in the old days vineyards made both ouzo and wine but today are separate industries. She shows tour groups a grape scale from 1931 that, when full, holds about 50 kilos of grapes. Above it on a small shelf is an ‘alcoholmeter’ from 1900 that was used to make a “very small distillation,” but was probably used much like alcoholmeters today — to calibrate alcohol content.

Artemis explains that while Canava’s production facility was new to the island, ouzo

and wine were not. Santorini is famous for its dry white wines made from the assyrtiko grape, an indigenous grape that has grown on the island since ancient times.

“If we want to make ouzo, we use first grapes, but only from assyrtiko. Assyrtiko is the best quality grapes on the island”

Despite ouzo being Greece’s national spirit, Santorini didn’t have a commercial distillery on the island until Canava opened; the spirit was historically made by families in small batches with leftover must — grape juice containing skins and stems — from grape pressing, originally done in giant vats by human feet and later by donkeys that circled mechanical grape presses, both of which are on display.

The next room is set up like a Victorian dining room, with a China hutch and a large, wooden table surrounded by chairs. Old Lygnos family photos hang on the walls and an old foot-peddle sewing machine is in the corner. Over an invisible sound system, ragtime piano music plays.

“Here we can see a little room and furniture from the start of the 19th Century,” Artemis said. “We see some oil lamps that they used before 1969.” Santorini didn’t fully have electricity until 1974. In the next room is a large copper alembic still.

“From a young age I admired old objects. My dream was, alongside the distillery, to create a museum that would take people on a journey to the Santorini of yesteryear.”

— LOUKAS LYGNOS, Canava Distillery

called tsikoudia, procuring must from area vineyards. As is tradition, star anise is added to what is called the ‘first boil’ and then they run it through the still again for a second distillation. Star anise cannot grow on Santorini so they import it. On site is the tiny Germanmanufactured still Evangellos used when he first made ouzo for his family and friends; although he has new, industrial-sized equipment, Loukas maintains his father’s classic ouzo methods of slow distillation.

The distillery uses island grapes to make both ouzo and a spirit similar to raki

Tsikoudia is also slow-distilled from 80 percent assyrtiko grapes and the rest from the island’s aidani and athiri varieties, and they distill it four times to create a much stronger, higher-proof spirit. Down a flight of stairs the path ends in the middle of four different doorways.

“Here is a place like a small village and around we have four houses,” said Artemis.

Left: Once they began exporting wine to pay for wood, islanders began making wine barrels of their own. This room in Canava's museum shows the tools they used.

Below: The museum's dining room featuring oil lamps.

The first door is a traditional cave house door, painted bright blue with white walls and bluetrimmed windows. “For many years most of the houses was inside the mountain with one room like a bedroom and another a small living room. Many times, the kitchen and restroom was outside in a small courtyard with sunflowers around. The colors were blue and white — our Greek colors, our flag colors.”

The next door is a tall ornately carved wooden door painted light sage green with decorative iron details on the front. “Then there were the mansions. In every village you’d find two or three houses like that. Many rooms inside, expensive furnitures, paintings, and outside a very big courtyard with exotic flowers.” The mansions were owned by sea captains, politicians, and winery owners. “And now hotel owners,” she laughed. When asked why the doors were painted a different color than the traditional blue, she laughed again. “Because it’s a rich house! They want to be more different.”

The third door was a village coffee shop door, plain and painted dark green with a shop sign above and café tables and chairs on either side. Back then, coffee shops were places where men, mostly from poor families, gathered after they’d finished their work day. Inside they rested, played games, and imbibed on the locally produced ouzo and wine.

The last door is unadorned. It looks abandoned and Artemis’ voice turned somber.

“This house wants to remember us on a bad day because on 9th of July in 1956 a very strong earthquake is done here.” She’s referring to an eight-point magnitude earthquake that killed 53 people and injured 100, causing

so much damage that most of the islanders lost their homes. Many then left for mainland Greece as Santorini fell into poverty. But things changed in the 1980s when Europe’s wealthy yacht owners discovered the island’s hospitality and natural beauty. Hotels sprouted up in the 1990s as more Europeans began arriving for summer holidays. The rest of world arrived on giant cruise ships in the 2000s, creating the popular tourist destination that it is today.

From the room of doorways, the tour leads down a hallway with small rooms on each side. Each room contains a variety of Old World wine-making equipment. One item is a bulky wooden grape press with a hand written card on top that reads “year 1700.”

“You know Santorini is a small island. Only a rock; it never had a forest,” Artemis explained, standing next to a large bag draped over a wooden trunk. “So when people started to make wine, they have no wood to make barrels. So they put the wine in that sack named ‘touloumi.’ It is from goat skin.” The card next to it reads “year 1670.”

However, the ingenious islanders sold their wine to mainland Greece and France, using the proceeds to buy wood and began making their own wine barrels with the tools of that trade displayed in the next room.

Around a corner is a hallway lined with old photographs of people with donkeys hauling sacks and baskets of goods up and down the cobbled steps of Fira from the early 1950s.

The last photograph was taken after the 1956 earthquake with all the buildings in rubble. Around another corner is a medium-sized still from 1881. One more corner ends up inside the coffee shop, which was also the village grocery store. Along one wall are shelves displaying old grocery items from the 1950s. There is also an old stove and an ice box, the precursor to the refrigerator. Loukas’ attention to detail is astonishing.

Back in the tasting room Loukas is demonstrating a laterna, a Greek hand-cranked music box popular in the late 1800s, filling the vaulted space with carnival music. During the tasting Artemis gives a lesson not just on how ouzo and tsikoudia taste but how islanders drink it.

“Mostly we drink ouzo with seafood. Meat food, tsikoudia. Seafood, ouzo. We’re drinking tsikoudia by mid-food because you need to have a bit of a strong (full) stomach. We are putting inside a glass two or three pieces of ice and it’s more better. It is smoother, cleaner.” That somewhat dispels the myths of Greeks throwing back shots of ouzo from the movies.

For Loukas, the museum is a passion project. “It is a great joy and satisfaction for me to show visitors how people lived on the island before it gained this fame.”

Canava Distillery is located in Mesaria, Santorini, Cyclades, Greece. Visit www.canavasantorini.gr for more information.

Above: An old still from 1881 in Canava's museum.

Right: The Copper alembic still used to make ouzo and tsikoudia at Canava Distillery.

MAINTAINING LIFE SAFETY SYSTEMS

Part Two Frequency

In the Winter 2024 edition of Artisan Spirit Magazine, we provided an overview of the requirements and necessity for maintaining critical life safety systems within your facility. Part two of this segment will dive further into the frequencies for inspections and testing following the initial acceptance by the local Authority Having Jurisdiction (AHJ). Some of the procedures may be completed in-house, while others are required to be conducted by qualified individuals or companies. However, the owner holds the ultimate responsibility of maintaining all systems within the building. You should consult with your local inspection and testing company or obtain the specific codes and standards to become knowledgeable about the specific criteria as each type of life safety system is unique. The most common types of life safety systems which will be discussed, include:

> Automatic Sprinkler Systems and Fire Pumps

> Fire Protection Tanks

> Wet Chemical Extinguishing Systems (I.E. Kitchen Hood Suppression Systems)

> Fire Extinguishers

> Fire Alarm Systems

> Fire Doors

> Emergency Lights

> Exit Signs

Your local Authority Having Jurisdiction, which includes building code officials and fire marshals, should be contacted to determine their specific inspection, testing, and documentation requirements.

CODE/STANDARD REQUIREMENTS

Your local AHJ, which includes building code officials and fire marshals, should be contacted to determine their specific inspection, testing, and documentation requirements. Local AHJ requirements may vary in specific criteria including code editions, addition/amended requirements, and documentation reporting. While many AHJs require documentation to remain on site, some may also require submission of documentation within specific timeframes. The most common codes and standards utilized for the previously mentioned life safety systems include: Life

Fire

Fire

Wet

Fire

Fire

Emergency

INSPECTION FREQUENCY

Inspections of life safety systems typically involve visual inspections to verify these systems are in proper working order. This may involve inspecting components for damage, tampering, obstructions, obvious failures (leaks, dents, etc.), and improper placement. Depending on the type of life safety system, qualified individuals/ companies may be required to conduct inspections; however, some systems may be completed by owners and/or staff in order to reduce costs.

Automatic sprinkler systems, fire pumps, fire protection tanks, and fire alarm systems require qualified individuals/companies to conduct visual inspections as many systems involve components which require knowledge and training to verify operational compliance. Inspections of fire extinguishers, wet chemical extinguishing systems, fire doors, emergency lights, and exit signs may be conducted by qualified individuals/companies or owners/staff as they do not require extensive knowledge or training.

The table below is a general overview of the inspection frequencies for the various life safety systems. Some systems may require components to be inspected at different intervals (monthly, quarterly, semi-annually, or annually), with the most critical components at shorter intervals. This table will assist you in establishing a budget and contract with qualified individuals/companies and also preparing your own internal inspection program. Type

Manual Pull Stations, Duct Smoke Detectors, Special Suppression System Controls, Visual and Horn Appliances

TESTING FREQUENCY

Life safety systems testing goes into further verification that the systems are operationally ready if an emergency were to occur within your facility. Testing typically requires intrusive procedures to simulate emergency conditions and verify complete operation, such as flowing sprinkler water, activating smoke detectors, and visual/horn appliances, etc.

At the risk of sounding redundant, automatic sprinkler systems, fire pumps, fire protection tanks, fire extinguishers, wet chemical extinguishing systems, and fire alarm systems require qualified individuals/companies to conduct operational tests as these systems are complex and often proprietary and require extensive training. Testing of fire doors, emergency lights, and exit signs may be conducted by qualified individuals/companies or owners/staff as they do not require extensive training.

Similar to the inspection table, the table below is a general overview of the testing frequencies for the various life safety systems. Since a majority of these systems need to be conducted by qualified individuals/companies, it is highly recommended that detailed procedures be provided by the contracted company so you may understand the impacts on your facility’s operations. Testing of systems during normal working hours may interrupt your daily operations or present potential issues if patrons are present. Often these systems are tested off hours to avoid confusion and/ or disruption.

DOCUMENTATION

Documentation of inspections and tests is critical to verify that each system is in prop er working order and that you are meeting local AHJ requirements. The types of doc umentation vary depending on the system, and the noted NFPA codes provide detailed guidance and sample reports which may be utilized. Automatic sprinkler systems, fire pumps, fire extinguishers, wet chemical ex tinguishing systems, and fire alarm systems often require tags or stickers at the main system locations to provide immediate veri fication that the systems have been tested or inspected in accordance with their required intervals. Detailed test reports should also be kept on site and readily available for review. Other systems such as fire doors, emergency lights, and exit signs only require testing logs which should remain on site. Contact your local AHJ to determine if these detailed re ports need to be submitted for review in addi tion to keeping them at your facility.

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

Distilling may be your dream, but it may not be your whole life. After running a distillery for several years, the owner or partners of the business may be ready to start a new chapter. If a distillery has been operating for a while, one would hope that the business has reached profitability and is successful in the eyes of the owners and employees. In some instances distilleries have grown so successful that the business is viewed as a competitor to larger brands. Competing with big brands can lead to the opportunity for your business or brand to be acquired by another company. An acquisition can allow the distillery to make a big leap forward in growth.

EXiT STrATEgiES FOr CrAFT DiSTiLLErS

MErgErS

A merger is not the most common type of distillery sale, but they do happen. In the case of a merger two similar businesses combine forces to become one company. The two companies may continue to outwardly appear as two separate businesses but share resources. In a successful merger the two companies can share sales dollars, marketing resources, larger economies of scale, and human resources. A merger can considerably lower the overall cost of doing business for two companies that operate similar businesses.

Although some people start distilleries with the intent for the business to become a legacy, there are times when a legacy is not the best long term choice. When the opportunity knocks on your door to sell for big bucks, many people will open the door and invite the opportunity in. Let's take a look at some of the ways a distillery can be sold, then cover a few real world acquisitions and how they came about.

ACQUiSiTiOnS

An acquisition is when either controlling interest or complete ownership of a business is bought by a larger company. After an acquisition the business can go in many directions. Most often the distillery being acquired continues to operate with guidance and resources from the new parent company.

LiQUiDATiOn

The choice to sell a distillery through liquidation can occur for many reasons, but what is guaranteed is that it will see a much lower sale price than an acquisition. It is risky business to start a distillery and they do not always go as planned.

In a liquidation the distillery assets are sold. This means the sale of all distilling equipment and inventory of spirits, and sometimes the distillery’s brand as well. The bright side of a distillery liquidation is that there is strong demand for used equipment in the market right now. This means that used equipment can sometimes be sold for more than the original cost to purchase it. This can potentially allow the owners who are selling a distillery to recoup some of their losses via equipment liquidation.

BUSinESS VALUATiOn

Now that we have covered the three common ways distilleries are sold, let’s determine the value of a business. For a distillery to be acquired it must first be valued. Valuing a business involves assessing various factors to determine its worth. There are quite a few different methods on how to determine the value of a business. One of the most appealing methods of distillery valuation is using case sales. Case sales can be viewed as a measure of health and potential revenue of the business. A multiplier is applied to annual case sales that determines how much

the business is worth. For this method to work it helps to have sizable and growing annual case sales. A distillery or brand often, but not always, becomes attractive for acquisition when it is selling more than 10,000 cases (9 L) annually. There is not a set standard value per case of spirits, but the average among recent acquisitions is around $1000 per case. This is not the only way to place a value on the business, so let's look at a few other ways.

EBITDA is an accounting term commonly used in business valuations. It stands for Earnings, before Interest, Taxes, Depreciation, and Amortization. This measurement is a tried and true method for a business valuation across many industries. When using EBITDA as a measurement, the business is often worth 3 to 6 times their annual EBITDA. The challenge that can occur with this measurement is that businesses can utilize accounting methods to reduce EBITDA which can reduce tax liability. Accountants will work their hardest to keep this number low. This can create an issue with a proper valuation as EBITDA may not paint a true financial picture of the health of the business. In some instances this method of valuation will likely produce a much lower valuation of the business versus using the case sales multiplier. The least attractive option to value a business is to measure assets minus liabilities. This method is commonly used if case sales or EBITDA do not produce an attractive sale number for the owners. Distilleries are an extremely capital intensive business and often have extensive capital tied up in aging spirits and equipment. If the business is not quite thriving we will often look to this method to create a reasonable valuation number for the business.

pOSiTiOning TO SELL

There are many moves a business can make to attract a potential merger or acquisition.

If the owner of a distillery is considering the sale of the business, whether via merger or acquisition, there is much to prepare for. One of the best investments a business can make to increase potential value is to increase case sales. I know, it's easier said than done. The distillery’s valuation based on case sales will inherently increase as case sales increase. This approach must be considered carefully as growing case sales requires sales investment and it is critical to grow in a way that is sustainable and creates recurring sales. When case sales are looked at as a method of valuation, those evaluating the business are looking at sales over multiple years. Showing consistent growth in sales year over year is key here. If sales have inconsistent spikes followed by a lull, it is far less attractive. One way I've seen businesses achieve strong case sales growth is through chain stores. In some states, chain stores, such as grocery stores and Walmart, sell massive amounts of spirits. If your business can secure good placement with chain stores, there is opportunity for that chain to move pallets of your spirits.

To position your business to be acquired, you must know the profitability of your business and the revenue centers that

have good margins and room to grow. If resources are focused toward aspects of the business that generate strong profit margins, the business will be more attractive to potential buyers. Often the business area that has the largest room for growth is sales through distribution. Partnering with your distributor to find growth opportunities can be fruitful, if well executed.

An essential business aspect that will increase the potential for acquisition is repeatability. When the owner is involved in every aspect of the business, then daily operations are not repeatable for the new owners. Creating repeatable processes with written operating procedures that can be implemented and completed by any staff with proper training is essential for the business to thrive after an acquisition. Starting now, creating written operating procedures to disconnect the owner from some aspects of the business will make it far more attractive.

The opportunity to sell your business can have huge potential, when well positioned. Selling for hundreds of millions may be a stretch, but your business has value and if done right you can see an excellent return in selling it. In the meantime keeping a strong focus on your distillery and celebrating your successes will keep it on the right track to grow and be prosperous.

Kris Bohm is the owner of Distillery Now Consulting. When Kris is not talking about distilling you can find him sipping pale ale and telling lame dad jokes. Contact Distillerynow@gmail.com for more info.

The James B Beam Institute at the University of Kentucky

Developed Through a Shared Commitment Between the Bourbon Industry and the University Of Kentucky

Written by BRAD BERRON and SETH DEBOLT

F or over 150 years, the state of Kentucky’s flagship land grant school, the University of Kentucky, has served communities and the economy in its tripart mission of education, research, and service. Shared commitment between the bourbon industry and the University of Kentucky has led to the development of The James B Beam Institute at the University of Kentucky.

The Beam Institute leverages the university’s rich intellectual resources, and its leadership is derived from four main disciplinary colleges: The Martin-Gatton College of Agriculture, Food and the Environment; Pigman College of Engineering, Gatton College of Business and Economics and the College of Arts and Sciences (Figure 1 –Schematic in disciplines supporting distilling industry). The Beam Institute’s strength therefore is the technical reach and breadth of more than 65 engaged, transdisciplinary faculty members recognized as James B Beam Institute Faculty Fellows.1

In development since 2012, the technical support and educational services available via the James B Beam Institute for Kentucky Spirits have been intentionally formalized through a series of higher education accreditations and industry working groups. The institute offers:

> Research, development, sensory and technical problem solving. The Beam Institute supports contracts for both proprietary/confidentiality-protected research or non-proprietary and non-confidential research. Faculty are also well positioned to take on a diverse array of emerging topics.

Figure 1. Transdisciplinary reach of the Beam Institute. Multi disciplinary capacity of the University of Kentucky has active research and education built by 65 active James B Beam Institute faculty fellows in the Departments of Food Science, Agronomy, Biosystems and Agricultural Engineering, Hospitality and Tourism Management, Agricultural Economics, Grains Center for Excellence, Materials and chemical engineering, Mechanical Engineering, Electrical Engineering, Mining Engineering, Civil Engineering, Chemistry, Geology, Social responsibility, Biochemistry, Microbiology, Marketing and supply chain, Economics, Quantitative methods, Management and leadership.

> Safety programming.

The Beam Institute delivers a Distillery Safety Training Series in partnership with Eastern Kentucky University.

> Annual industry conference. This gathering is convened in partnership with the Kentucky Distillers Association to serve the American spirits industry with salient technical content and networking. Advanced technical content covers all dimensions of the industry, featuring production, research, commercial, and sustainability content.

> Annual career fair. This event fosters the next generation of distillery workers in partnership with many major regional and international distilling brands.

> Extension services.

The institute performs on-demand site visits, webinars, regional seminars, and workshops. These tap into our deep bench of faculty fellows who work with farming producers, powder post beetle remediation, warehousing issues, distillery operations, faults, engineering challenges, and commercial foci.

> Education through formal coursework.

The Distillation, Wine and Brewing Studies Certificate Program focuses on the main beverage alcohol industries of the state and is offered in person or online. A range of education options provides all students with the ability to find their career in the industry. Beam Institute faculty also offer specialized master’s and PhD programming in their respective disciplines.

Figure 2. A) Independent Stave Company Boswell Family Barrel Warehouse. Comprises 600 barrel capacity for maturation research and education. B) James B Beam Institute for Kentucky Spirits. Comprises two classrooms, a laboratory and a 7500 square foot distillery space with four fermenters and a 12 inch column still built by Vendome Copper and Brass Works. Located at 1320 Nicholasville Road, University of Kentucky, Lexington 40546.

> Apprenticeship program.

The Beam Institute developed innovative apprenticeship programming in partnership with Beam Suntory. The apprenticeship program is tailored to the specific educational needs of target employee groups.

> International partnerships.

A memorandum of understanding with the Scotch Whisky Research Institute serves as a vehicle for cross-Atlantic partnerships. Existing collaborations are clustered around production, agricultural, and sustainability themes.

> Unsurpassed facilities.

The Beam Institute at the University of Kentucky houses the world’s largest teaching and research distillery and maturation facility (Figure 2, Image of facility). This facility is the centerpiece of spirits industry training for the next generation and provides industry-relevant learnings from research.

The mission of the James B Beam Institute for Kentucky Spirits (Beam Institute) is to “lead the global advancement of the American whiskey industry through workforce education, scientific discovery, environmental sustainability, community and social responsibility.” As a not-forprofit land grant university institute, the Beam Institute is committed to service and welcomes the distilled spirits community to visit, learn, and collaborate with us.

The Beam Institute is committed to service and welcomes the distilled spirits community to visit, learn, and collaborate.

If you have any questions about the program, please email Brad Berron at brad.berron@uky.edu or Seth DeBolt at sdebo2@uky.edu.

FUn rESTOring THE “ FACTOr ”

WRITTEN BY DOUG HALL

FACTOr FACTOr FUn FUn

DDDistillery founders have had a rough ride over the past few years. In good times, founding a craft distillery is challenging. However, more recently it’s been challenging times 10! From the chaos of the pandemic to the rising cost of goods to the struggles hiring and maintaining staff, it’s exhausting.

DiST i LLErY @OUr

When we founded our distillery, my co-founder Joe Girgash and I agreed to two fundamental rules:

rULE #1 — Don’t put Doug or Joe in jail

rULE #2 — Have fun

Rule #1 is important because state and federal governments are our business partners whether we like it or not. As such, this is not an industry where you can wing it with all the rules and details. It’s one of the few industries in the world where every drop of alcohol needs to be tracked and accounted for.

However, the focus of this article is on Rule #2 because I and many others went into the craft distilling business to have some fun. In our case, our focus was on creating bourbon that competed with the best of the best, and inventing new business models and systems that enable us to make above average profits. Most of the time this works. However, the grind can wear me down. That includes the grind of the complex three tier distribution system. The grind of never-ending supply chain issues. The grind of running a distillery with lots of mechanical equipment that breaks down.

With that in mind, my 2024 New Year’s resolution is to increase the Fun Factor for myself, my co-founder, and our team. To do that I have made it a point to find time for four tangible things I enjoy about my business.

1. i’M gETTing BACK TO MY r&D rOOTS TO rESTOrE THE JOY.

As the CEO, I am responsible for many things that don’t bring me joy, but need to be done. To increase my fun I’m making time each week to do the part of the business that I love the most; escaping to the R&D lab in our distillery. There I try experiments on new types of wood finishing, new blends, and new processing methods. I do the type of bold and creative experiments that Joe and I did at the start. However, like most of my experiments, there are failures and successes at the same time. They fail because they don’t taste amazing. They succeed because each experiment makes me smarter.

i’M HAnging OUT WiTH OUr rAVing FAnS EACH WEEK TO rEMinD ME WHY WE ArE HErE.

I am making it a point each week to spend time doing nothing but greet and serve customers at our Innovation Lab & Bottle Shop taking a turn leading one of our bourbon or cocktail experiences. Seeing the excitement on customer faces ignites within me great joy. It makes the grind all worthwhile.

3. WE ArE “VApOriZing” prOBLEMS, nOT FiXing THEM.

Part of my philosophy is focusing on improving our systems of operations in finance, production, sales, and marketing. We firmly believe in the teachings of business management and quality expert Dr. W. Edwards Deming who says, to paraphrase, that 94 percent of problems are due to the system, 6 percent are due to the worker. As our distillery continues to grow, it’s easy to lose sight of this. Systems that are not optimal can be accepted as “good enough”. And they are until they inevitably grow into major problems. This year the entire team is focused on vaporizing problems by identifying root causes. When we do this the problem vaporizes and is never to be seen again. This is fun! The alternative is trying to patch the problem or working harder to get around the problem. This then becomes a reoccurring pain that drains everyone’s energy.

4. STOp THE STUpiD, STArT THE SMArT.

Both Joe and I are taking time to teach our team members both what to do and why we do it that way. Once the employees have learned our systems, we then challenge them to make our systems smarter. We teach them to say something when they see a work process, system, or tool that is “stupid” and coach them on finding and validating a smarter way of working. This focus on fixing the system instead of blaming the worker ignites energy. There are few things more fun for Joe and I than seeing the joy on a team member's face when they have created and implemented a smarter way of working.

So what are you waiting for? Get up, get out, and restore your Fun Factor!

Doug Hall is the co-founder and CEO of Brain Brew Custom WHISKeY, WoodCraft Bourbon Blender Franchising and founder/chairman of the Eureka! Ranch. He has spent 40+ years creating and commercializing innovations for companies such as Nike, Walt Disney, Diageo and over the past 22 years The Macallan of Scotland.

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TONIC

A TONIC FOR EVERY SPIRIT FAMILY

The Tonic collection forges a whole new style, taking on a colorama pop design reminiscent of the audacious traditions characterizing the 1980s Memphis movement With Tonic, design is a game As for the rules, well that’s up to talented distillers of whiskey, rum, vodka, gin, tequila, and other spirits! And if Tonic’s lines and volumes seem understated, it’s only to offer versatile containers capable of bringing out the unique aura of each spirit.