Fifteen years ago, the number of craft distilleries in the U.S. barely topped 20. By 2010, there were 90, and today that number is edging toward 1,000.1 The craft spirits industry is riding the wave of public enthusiasm for distilled spirits and locally sourced foods and beverages.
Overall revenue in the distilled spirits market—including the industrial-sized brand-name distilleries—has increased significantly in the past 15 years, reaching an all-time high of $4.2 billion in 2014, according to the Distilled Spirits Council. The craft distillery share of that revenue was $400 to $500 million, representing about 1.7 percent share of the spirits market by volume.1
Nicole Austin, master blender at King’s County Distillery, Brooklyn, N.Y., says there has been a significant shift in market trends since the late 1990s. “In the ’80s and ’90s, during the height of the appletini cosmo drink, people weren’t caring or asking questions about how things were made or where they came from or even distinguished what was good or what was bad. It was just, ‘I want the purple drink or the green one.’”
Now, things are different, agrees Ralph Erenzo, co-founder of Tuthilltown Spirits Farm Distillery, Gardiner, N.Y.
“The general market itself began to be inclined toward handmade goods, to know where they are coming from, to know what they are made of, and to know the people who are making them. And they were insisting on higher quality,” says Erenzo, whose distillery was the first in New York State when it started operation in 2005. “Suddenly, vodka started falling off and there was a new generation of drinkers who were exploring whisky and aged spirits again. We never anticipated the kind of success we have had.”
This change in general tastes has benefitted the distilling industry, which has undergone extraordinary development in a very short period of time, he says.
Pouring Quality into Craft Spirits
Quality in craft spirits is rightly measured by taste. “With every batch, what is most important to us is whether it meets our flavor profile and deciding whether we would want to drink this and whether it is a quality product,” says Andrew Tice, head distiller at House Spirits Distillery, Portland, Ore. “A lot of our best tools for that are our experience and tasting the product every day.”
Maggie Campbell, head distiller and vice president at Privateer Rum, Ipswich, Mass., says that craft distillers have a unique relationship with their customers. “People understand that we are a small handmade product and that, if we want to make it better, we will make it better. But with that comes the commitment that if it is not better, we have to be willing to throw it away.”
Coaxing out the desired flavors requires aging spirits in barrels from different places in the warehouse and then blending spirits from different barrels to get “this large spectrum of character,” Campbell explains.
“When the spirit is fresh off the still, we call that the primary flavor. At that stage it will taste like a fresh cut green apple.” Secondary flavor development happens when both the flavors from the wood and the spirit can be tasted. “And eventually when it has enough age to it, that fresh cut apple will begin to taste like dried apple peel and that oak flavor will begin to taste like caramel and vanilla and lavender. We call that tertiary flavor development. It is like imagining a fresh fruit becoming a dried fruit. That’s how we know that the flavor has actually matured,” Campbell says.
For Austin, skillful blending is key. “The number one thing I focus on for quality control is determining, after the barrels have matured, which ones are ready to come out and which barrels are going to be blended together to create the product. Blending is a lot about nosing and tasting, knowing what you are aiming for, setting rules and parameters for yourself, being committed to not taking a shortcut and just dumping barrels in a tank because you have got to bottle,” she says.
The art of spirit making is the nosing and tasting rather than a scientific analysis. “There is no scientific test for delicious. So much of that process is the brain making sense about what it is smelling, putting together vanilla, cinnamon, and fruit smells, and interpreting that to mean apple pie. That’s where the artistry comes in,” Austin says.
Flavor Begins in Ingredients, Oak Barrels
Selecting high quality ingredients is the first step in quality and consistency. Craft distilleries are known for being willing to experiment with a variety of ingredients to build in unique flavor. Corsair Distillery in Nashville, for example, uses quinoa in a whiskey and has started its own malting facility so that it can establish specifications for malting, according to distiller Colton Weinstein. Corsair buys barley but is hoping to start growing its own in the future to have even more control over the quality of the raw ingredient.
Achieving consistency of ingredients is a concern, Erenzo says, given that each batch of raw material is different. A distiller may start with one crop of rye and the next season have a different crop, grown during a different weather cycle. “That’s where the blending comes in to get your desired flavor profile,” he says.
Distilling begins with selecting ingredients, of course, but it’s in the charred oak barrels where the spirits are aged that the flavor notes develop. Getting enough of those barrels can be a challenge, however. The rapid growth in craft distilleries began at about the same time as the housing slowdown, a slowdown that trickled down to the wood harvesting business and led to a shortage of dried oak for coopers, who could not keep up with the increasing demand for aged barrels.
Erenzo says that when Tuthilltown started distilling spirit, it was one of only about 10 in the country, and getting barrels wasn’t much of a problem. Now, with between 700 and 800 distilleries operating in the U.S., cooperages are working around the clock to keep up with the demand, and some have an 8-month waiting list.
The wood in the barrel comes with its own history—whether it grew slowly or quickly, its age when cut, whether it was air dried or kiln dried, how long it sat in the cooper’s yard protected or unprotected, or how it was charred. Barrel making is an art, distillers say, and a good barrel isn’t made in a day.
“You can’t get around the fact that it is a natural product, and you can’t get around the fact that when you fill it in September or in November, the weather will be slightly different, even if all the barrels are kept in the same room together,” Austin explains. But those differences are desirable because the finished product should not have just one note. “You build that complexity by bringing those barrels together.”
Temperature interacts with the wood barrels during the aging process. If whisky is placed in a barrel in October, it will take longer to age than if it is placed in the barrel in May because the temperature will drop during the first months of aging, according to Erenzo. Tuthilltown has no climate control in the building where its barrels are aging, so “whatever happens outside is what is happening inside, which is absolutely necessary,” he says.
A barrel is charred so that the sugars in the wood are caramelized. When the barrel is filled with a spirit, the barrel warms up, the wood expands and sucks the liquid spirit, a solvent, into the wood. The solvent then dissolves the sugars and tannins and colors that are in the oak. When the barrel cools off, the wood contracts and pushes the liquid back out into the barrel. “So that hot-cold cycle is very important because that is what causes the exchange between the liquid and the wood,” Erenzo says.
Tuthilltown now ships some freshly emptied barrels used to age one of its whiskeys to a maple syrup producer in Canada. After the maple syrup has been aged in the barrels for 4 to 5 months, those barrels are shipped back to Tuthilltown where they are refilled with rye whiskey. Both the maple syrup and the whiskey benefit from this exchange of flavors, Erenzo says.
Thomas Mooney, CEO and co-founder of House Spirits and president of the American Craft Spirits Association, says that, unlike craft brewers who must control temperature to ensure the quality of their products, craft distillers want that variation. “Whiskey matures at a better rate and gets to a better place if you have temperature variation. What a craft brewer tries to avoid is what we actually look for.”
According to Weinstein, temperature control is also not an issue in storage and shipping. Keeping a distilled spirit out of direct sunlight is a good idea, but temperature ranges will not affect the quality of the spirit even after it is bottled.
Ensuring Safety
Although the alcohol content of distilled spirit is a sanitizer on its own, safety concerns are considered paramount within the industry. Campbell, who has an extensive background in Hazard Analysis and Critical Control Points, or HACCP, understands the various ways that contamination can be introduced into the product. Every barrel must be visually inspected and smelled for the presence of sulfur, taint, and even a dead animal; any bag of ingredients with even a small tear should be thrown out.
Staff must be trained about safety protocols for using ladders and chemical cleaners. No sparks or flames can be allowed in the building, and welding repair must be done outside the building. Every hose pump should be rinsed with reverse osmosis water; all of the fittings must be cleaned after every use and then stored; every bottle must be inspected before filling.
“People who are around stills and high-proof alcohol tend to be pretty aware of the danger. But it’s the little things that many people don’t think about, such as ladders, chemical cleaners, and cleaning materials,” Campbell says.
Most craft distilleries have not yet caught the attention of OSHA, but the potential for an inspection is always present. Monthly training at Privateer Rum focuses on preventing accidents, and the company has compiled a safety notebook that includes the ”near misses” that could potentially have been serious accidents.
Challenges of Small Volumes
There are advantages and disadvantages to operating a distillery on a small scale. A certain number of employees are needed to make distilled spirits, but there can be a point at which a company becomes staff-heavy without the sales to cover those costs. Purchasing of grain and other essential ingredients and barrels is more expensive when a distiller can only buy in small volumes. Without enough storage space, bottles and other supplies cannot be purchased in large quantities, driving up costs.
According to Mooney, there is a lot of overhead associated with running the distillery and compliance with federal, state, and local regulations. “We know we will never have the cost structure of a large brand, which is why you rarely see our brands at comparable prices.”
Austin says there are many inefficiencies of labor because of the size of craft distilleries. “A distillery 100 times the size of us may have only 20 percent to 30 percent more staff.” Big distilleries are also in a stronger negotiating position with distributors because they operate on a bigger scale, she says.
Disposing of waste is a huge operational and safety issue and an expensive one for smaller operations, comments Erenzo.
“Almost no distiller that gets into the business thinks about waste, but it’s one of our biggest and most expensive problems,” he says.
Meanwhile, getting rid of thousands of gallons of spent mash requires trucking it somewhere because it cannot be spread on the ground or dumped into the municipal waste system. An expected revision of a Food Safety Modernization Act, or FSMA, proposal that spent grain intended for animal feed must first be inspected and then packaged will be welcomed by the industry, he says. For large distilleries with huge quantities of spent grain, selling it is another form of revenue; for craft distillers disposing of it is only an expense.
There are advantages to operating a small distillery that offset the disadvantages, one of the best being that these operations can be “very agile,” according to Campbell. “If I want to change something or tweak something, it’s very easy, whereas in a large distillery we wouldn’t be able to do that. We get to question what we do and try out new things.”
“Our advantage is that we can be more nimble,” Mooney says. “We can create products and test them out here, and there are no layers of bureaucracy to go through. We look for all the ways that being small is an advantage and that allow us to make things with greater care.”
References
- Distilled Spirits Council 2014 Industry Review. New York City. Feb. 3, 2015. Accessed Sept. 3, 2015.
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