The boom of small-scale spirit distilleries in the US

Written by reagan alexander
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Craft distilleries find right mix to compete

The boom of small-scale spirit distilleries in the US
Spirits made on a small-scale are coming into focus, and they're muscling the big boys along the way. (Martin Poole/Photodisc/Getty Images)

It wasn't long ago that you would walk into a bar and you could safely guess which eight whiskeys were on the shelf. Now you go into a bar and they'll have dozens, even hundreds of whiskeys, and a lot of them are from craft distilleries.

— Scott Bush, founder and president, Templeton Rye Spirits

The modern marketplace has never been kind to the little guy. Since mass production and mass consumption became the golden rules of capitalism, anything deemed mom-and-pop was doomed to go the way of the dinosaur, only without the widespread interest in their demise. Now, however, a trend has emerged that embraces the ethos of early America in its sense of craftsmanship, community and love of the underdog. Raise your glass to the small batch, the little spirit that could. Small-scale made spirits and the distilleries that produce them are enjoying a renaissance not seen since the days of Prohibition, when they were often -- and illegally -- the only game in town. This time, though, it's not a reform movement pushing an unpopular amendment to the Constitution prohibiting the "manufacture, sale, or transportation of intoxicating liquors" that's driving the trend. Instead, small-batch spirits and other kinds of alcohol are finding a foothold in the marketplace through a willingness to embrace the strange bedfellows of tradition and technological innovation. Although some major distillers are producing speciality products in limited volume called small batches, the true inheritors of the mom-and-pop mantle are the small-scale distillers embracing the craft of making whiskey.

Technology has fueled revival

The boom of small-scale spirit distilleries in the US
Micro distilleries are giving the drinking set more choices. (Oli Scarff/Getty Images News/Getty Images)

In a twist -- pun intended -- the same force that had a heavy hand in driving small-batch distilleries to the brink of extinction is now playing a major role in their revival. Technology, which created the assembly line and a faster-bigger-better mentality, looked to be the death of the craftsman, but now the two happily go hand in hand.

"Technology is driving the resurgence of the small-batch, artisanal spirits," said Carter Reum, who, along with his brother, Courtney, left jobs at Goldman Sachs to launch VeeV in Los Angeles, billed as “The World's First Acai Spirit.”

"Consumers are able to spread the word to friends and colleagues who, more often than not, are like-minded in their tastes, and if you can sift through everything out there, people have real voices to share things that they've discovered," Carter Reum said.

Instead of relying on coffer-draining marketing or glacial word-of-mouth, it's the gospel of the blog, the tweet and the Facebook. Without the advertising budgets of the big alcohol companies, artisanal upstarts are readily embracing the opportunities that social media have to offer.

"It used to be that you discovered a product like VeeV and you go and tell your neighbour, or the guy sitting next to you at the bar," Carter Reum said. "But now you can ‘like’ something and broadcast that to a thousand people with a click of a button."

Tradition attracts consumers

As powerful as free, smart-bomb advertising via social media may be, the foundation of small-batch liquors' burgeoning popularity remains the history behind the products. The story infuses the liquor with a sense of tradition and a spirit of camaraderie between distiller and consumer.

"My great-grandfather was an entrepreneur during Prohibition," said Scott Bush, founder and president of Iowa-based Templeton Rye Spirits. "I worked in banking, and I would come home for the holidays and hear the family stories about Great-Grandpa making whiskey and sending it into Chicago and I thought, 'Wow, that's such a great history, I'd love to see if we can do that again.’ ”

Not the pirating part, of course, but the MIT business school graduate couldn't resist the siren song of resurrecting the original recipe of the rye whiskey manufactured by men like his great-grandfather in the 1920s.

"I think everyone wants their own brand and their own story," he said. "I was drawn to that, and I think people are interested in that, and the big guys have been so slow-moving and lacking in creativity that a lot of the craft distillers are getting a lot of well-deserved attention.

"It wasn't long ago that you would walk into a bar and you could safely guess which eight whiskeys were on the shelf," Bush said. "Now you go into a whiskey bar and they'll have dozens, even hundreds of whiskeys, and a lot of them are craft ones."

While bathtub gin and moonshine may be things of the past, even the newer kids on the block revel in the narrative, seeing it as a way to both inform their customers and further distance themselves from the mass producers that saturate the liquor market.

"When we launched in 2006, we started out of the back of our car," Reum said, with a nod to his and his brother's journey from Wall Street to the street. "We do things in a sustainable and eco-friendly way. It's something we really believe in, and all of this matters to consumers more and more rather than just having another flavoured vodka from one of the big guys."

Smallness is a virtue

While the powers that be in the spirits industry may have grown complacent, the niche markets that spirits such as VeeV and Templeton inhabit are attracting some expected but unwanted attention.

"Some of the big companies responded by throwing their product into a single cask for a week and then suddenly think that it's similar to ours," Bush said. "But the consumers aren't buying into that, and the uniqueness of the craft products is still the driving force of this trend."

Even when the big producers get it right, as in the case of Jim Beam, which also owns the popular small batch bourbon quartet of Booker's, Baker's, Basil Hayden's and Knob Creek, "small" is a relative term. Knob Creek, though aged for nine years, sold about 150,000 cases in 2007, while yearly sales of Bush's rye labor of love are around 3,000 cases.

"The alcohol industry is absolutely dominated by five or six very, very large companies," Bush said. "The best thing we have going for us is that they can't age whiskey any faster than we can."

Offering innovation and a distinctive product in a mostly homogenous market sounds good, but it's still an uphill battle, VeeV's Reum said.

"It’s no surprise that it's played out in a David versus Goliath sense, that Absolut Vodka's last two flavours were acai and a combination of oolong tea and elderflower," he said. "But we live by the fact that we have built a following that bought into the brand, bought into the story behind it and that we're a different type of company."

Like all relationships, it's a leap of faith, on the part of the consumer as well as the distillery. "Our core consumer is loyal not just because of taste, but because of the quality and our story," Reum said, "and we can't think that we're going to lose our customer base every time someone comes out with a mass-produced copycat product."

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