A Booze of One’s Own: The Micro Distillery Boom

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What’s that you say? Your product is locally produced, hand-crafted and highly intoxicating? Please, just take my wallet.

Micro-distilleries—also called craft distilleries—make relative thimblefuls of spirits compared to companies like Jack Daniels. As with any other “craft” good, the products’ main selling point is typically the process: where they’re made, what unexpected ingredients are used, how small and special each and every batch is. And these businesses, buoyed by America’s artisanal love affair, are popping up across the U.S. like corks at a wedding reception.

According to an industry analysis presented on April 3 at the American Distilling Institute (ADI) Conference, there were roughly 50 micro-distilleries operating in 2005; today there are about 250 spread among 45 states. And in ten years time, there could be 1,000 little stills churning out potent potables. “The renaissance has happened to wine, beer, bread, vegetables … even sauerkraut,” ADI President Bill Owens says of the craft revolution. Now, he says, is simply spirits’ turn, with the industry poised to imitate the rise of craft beers that America experienced in the ’90s.

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Although there’s no across-the-board production cap, craft distilleries are usually considered to be those that make under 100,000 gallons of spirits in a year. Outfits like Bacardi, by comparison, can produce more than 100,000 gallons in a day. One of the driving forces behind the current boom was state legislation passed during the last decade that distinguished between these sizes. Prior to 2003 in New York, for example, there was only a Class A distillers license, which allows a business to produce as much hardstuff as they like for a fee of $50,800. Today, there is a Class A-1 license, which allows distillers to annually produce up to 35,000 gallons for $1,450.

That kind of discount can make all the difference for a startup trying to open its doors. And other relaxed legislation may make the difference between surviving and thriving. The next wave of lobbying from micro-advocates is for states to allow on-site tastings, as they do with small wineries and breweries, as well as on-site retail sales. Tourism is a huge boon for small craft-companies—a natural fit for an industry in which transparency is often the point.

The analysis was produced by Michael Kinstlick, an asset-manager turned craftsman who studied micro-wineries while getting his MBA at the University of California—Berkeley and now runs Coppersea Distillery in New York. He, like many who have gotten into the micro-business, is embarking on a second career, and he says that the craft boom is largely limited these days by the talent pool: The requisite business models that were missing a decade ago are there, but because the spirits industry has long been dominated by a handful of enormous companies, the army of master-distillers needed to meet demand is not. “Yes, there are a couple of folks starting up where the guy worked at Jim Beam for 12 years and then decided to strike out on his own,” Kinstlick says. “But for the most part, they’re boot-strapping.”

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One way to circumvent that problem is by returning to the industry’s auxiliary roots. Kinstlick traces American craft-distilling to the work of a couple grape-based California outfits in 1982. A decade ago, Owens says, many micro-distillers were still set up at wineries, producing products such as brandies on the side. Recently, breweries have gotten into the game, using their infrastructure and know-how to make spirits like whiskey, one of the quickest growing micro-categories.

The range of products being produced by micro-distilleries, however, goes far beyond the standard spirits. Consumers can buy anything from pear-based eau de vie in Pennsylvania to artisanal moonshine in Arkansas. And if you’re feeling thirsty, you can check out this map from ADI or this directory to help locate some near you.

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5 comments
CraftersGlass
CraftersGlass

@microshinerHow long have you guys been around?  Just flipped through the magazine.  Would love to get a hard copy!