It’s no secret that there’s been an explosion of new craft distilleries across the United States in the past decade. The exact figures are difficult to pin down, with the Distilled Spirits Council reporting 750 “micro distilleries” in 2015, up from 92 in 2010, and the American Craft Spirits Association (ACSA) tabbing a total of 1,280 “active craft spirits producers” in 2015. The American Distilling Institute (ADI) predicts an additional 1,000 net entrants in the craft distilling industry over the next five years. Perhaps even more intriguing is that certain geographic areas have become hot spots for craft distilling. As part of its Craft Spirits Data Project, the ACSA indicated that more than half of the country’s craft distillers are located in just ten states.
For whiskey that means its presence has been stretched far from the traditional home base of Kentucky. These new hot spots can be found in some cases around a particular city, such as Chicago and San Francisco; across an expansive and populous state, like New York and Texas; or spread through an entire region, as in the Pacific Northwest.
There are indeed specific geographic areas where distilling has taken deep root. There are even individual states which have more distilleries than the entire country had only five years ago. “We have 118 distilleries in the state now,” says a laughing Matt Hofmann, master distiller of Seattle, Washington’s Westland distillery. “And it’s growing more all the time.”
Why Certain Regions Turn into Distilling Hot Spots
“Although I think one of the milestone achievements of the craft community is that there is now craft distilling in every state, there’s still certainly a skew toward certain states and I think that exists for a couple of reasons,” says Tom Mooney, former president of the ACSA and also co-owner and CEO of Portland, Oregon’s House Spirits. In addition to House Spirits and Westland, the Pacific Northwest is also home to whiskey distilleries such as Dry Fly Distilling, Clear Creek, and Rogue Spirits, to name just a few.
The reasons why a state or city may become a distilling hot spot will vary from one to the next. In some cases, it can be linked to an area’s history of craft brewing. “We are in Oregon, which has a generations-long tradition of making beer,” explains Mooney. “Making malt whiskey, which begins with making beer, is a very natural thing to have in Oregon, it’s a very natural thing to have in Washington. I think you’ll find that malt whiskey as it matures is concentrated around places which have a beer heritage.”
Hofmann also believes that to be the case. “Serendipitous” is how he describes the fact that they are distilling in Washington. “We have the brewing influence on us here in the Pacific Northwest,” he says. That means there’s an established local supply chain that distillers can tap into, from farmers to maltsters. “It’s a big part of the ecosystem here,” says Hofmann. “Really you couldn’t ask for a better group of people to be involved. And that’s just here in the Pacific Northwest. We’ve got it good here, but there are other equivalents across the United States.”
Another reason that an area may become a whiskey hot spot is something Hofmann calls “cultural terroir,” simply the attitude and approach of its people. “I think it’s all cultural,” he says. “I think there’s something in the culture of certain places that has kind of a can-do, hands-on sort of attitude.”
Bruce Joseph, master distiller at Anchor Distilling Company, believes that factors into San Francisco’s burgeoning scene. “I was reading something the other day, really, about the first modern farmers’ markets in the United States that started in the Bay Area in the 70s,” he says. “There’s just this long history of food, wine, beer, and distilling. I think it’s an area where there’s tons of interest in how things are made, where they’re made, what they’re made out of. It’s just an area that is accepting and interested in new things.” Consider that the Bay Area is home to two of the very first craft distilleries in the country, Anchor and St. George Spirits. Today, it’s also home to the likes of Sonoma Distilling, Spirit Works distillery, and Stillwater Spirits.
“Then there’s places like upstate New York, where you also have a great tie into agriculture,” says Hofmann. “I think, fundamentally, distilling is an agricultural endeavor.” Certainly the folks at Hillrock Estate and Orange County distilleries would agree; both grow their own grain. New York State has plenty of other notable whiskey distilleries, such as Tuthilltown Spirits and Catskill Distilling Company. A trip to the city offers a number of craft distilleries, including New York Distilling Company and Kings County distillery.
Once an area has proven local consumer demand and successful distilling predecessors, the next wave of distilleries follows along. “In going from 1,000 [craft distilleries] to 5,000, a driving force will increasingly be where there are local consumers interested in these products,” says Mooney.
“I think when you start seeing a few successful urban distilleries in an area, other people want to get involved too,” says Dr. Sonat Birnecker Hart, president and co-founder of Chicago’s Koval distillery. In addition to Koval, the Chicago area is also home to FEW Spirits, Quincy Street distillery, and Chicago Distilling, among others.
Beyond that, what may increasingly play a role is being able to find the correct human resources; the right people for the right jobs. “Over time there might be an effect of where the talent is,” says Mooney. “Because the sector has grown so fast, distilling talent is relatively difficult to find…. So you have a lot of interest in being in a place where there’s abundant distilling talent. Or fermenting talent; people who come from wine or beer.”
That talent has to be learned somewhere, and that’s another reason why Chicago has become a hot spot. Koval offers workshops that bring people from across the country and around the world to Chicago for distilling instruction and training. “In the last six or seven years, we’ve had over 2,500 people at our workshops,” Birnecker Hart says. As the stateside representative of Kothe, a German still manufacturer, Koval has assisted with the setup of new craft distilleries.
The Importance of Local Legislation
State, and in some cases county and city-level regulations factor quite heavily in determining which areas have hot spot potential. Oregon is one of the top craft distilling states largely because of state-level legislation and regulations that make it more feasible to be a craft distiller, according to Mooney. “Where craft distillers are has more to do with state-level legislation, so you can just survive your first year as a craft distiller.”
Another challenge is getting product on the store shelves. “Oregon made it very easy for craft distillers to get distribution,” says Mooney. He identifies distribution as the biggest challenge for any craft distiller. In Oregon, it’s less of a problem; unlike in control states, where the government has a lot of say over the distribution of spirits. “The fact is they don’t build more shelves. That means that every local product that gets distribution took the spot of something else,” Mooney explains.
Another component fostering the growth of distilling hot spots is the ability to sell bottles from an on-site tasting room. “I would say states that don’t allow bottle sales out of a tasting room will tend to have very few craft distilleries,” says Mooney. “How do you even make it when you can’t start by selling what you’re producing out of your own facility? So you’re going to find much less craft distilling activity in a place that doesn’t allow bottle sales; that’s a big one.”
Anchor has been a licensed distillery since 1993, so while the problem of startup survival is not one they face, Joseph recognizes the importance of the issue. “I think for a small distillery, that’s huge to be able to sell at retail, out of your gift shop or tasting room, that kind of thing; instead of everything you make needing to go through a distributor,” he says.
Birnecker Hart was pivotal in actually getting Illinois law changed to allow distilleries to offer samples and to sell on-site. “I think that since that legislation happened and allowed craft distilleries to retail on-site, whether in the form of a store or in the form of a bar, you’ve seen an incredible proliferation of distilleries,” she says. “Particularly those that have the distillery-bar model. That’s sort of similar to brewpubs. I think as the industry grows, there will be more of a division between distilleries that focus on distribution and those that are more restaurant or bar-oriented. The nature of those businesses are different.”
Mooney agrees, and believes a shift in business models will be seen. “You’re going to see some separation in terms of craft distillers with national or even export ambitions versus a much larger number of craft distillers who want to be a great local business, and those can all coexist really nice,” he says. “The average volume of a craft distiller is about 3,000 cases, which means the average revenue is well under a million dollars,” explains Mooney. “Which makes, from a business standpoint, a craft distiller more the size of a food truck than even the size of a restaurant. So these are small businesses with primarily local appeal.”
After distribution and on-site sales, fire codes and construction regulations loom as major legislative hurdles. Opening a distillery isn’t easy, but it can be more difficult depending on the local jurisdiction and safety regulations, according to Joseph. He adds, “It can run into tons of money.”
How much money is “tons” of money? “It doesn’t sound like a big deal, but it could be the difference between you building a new distillery for $300,000 or the same distillery for $3,000,000,” offers Mooney. “That ten-time difference can come just from the city’s building services department.”
Fire codes simply haven’t caught up to the distilling boom, and a key factor is the classification of ethanol. “The fire codes, and a lot of the building safety codes that most jurisdictions use, don’t have any specific provisions for distilleries,” says Mooney. “Ethanol is chemically very, very different from other flammable substances that cities worry about; that makes it much easier to manage and safer. You can put an ethanol fire out with water, you can’t do that with a chemical fire. We constantly run up against city officials who have to approve distillery plans, who aren’t super well-versed in the world of building distilleries, or who aren’t well-versed in the differences between ethanol and other flammables.
“Jurisdictions that have gone out of their way to educate themselves on this tend to be easier to build in and much less expensive to build in,” he continues. “Jurisdictions that haven’t become as enlightened have become very difficult to open a distillery in, and sometimes people simply move away because it’s just impossible. So increasingly, that will be a factor in determining where people want to build. But I would argue you only build once, you have to deal with distribution every day. So the distribution issues and the ability to sell bottles out of the tasting room are in the long run much bigger issues, and those are state-level matters.”
The Development of American Whiskey Terroir
Cultural terroir may help spur on a particular region’s interest in and demand for distillation, but as specific areas continue to develop, distinctive American whiskey terroir characteristics will emerge.
“For us, here in Washington state, one of the great things is we have a perfect barley-growing climate. Cold, Scottish, rainy, wet climate,” says Hofmann. Westland is seeking to showcase its terroir at every step of the production process. “The combination of Washington State barley, Washington State peat, Pacific Northwest oak, that’s what we have a real possibility for here,” he says.
“Whiskey more than any other spirit lends itself to that regionalization,” says Mooney. “Whiskey has a very strong sense of place. It’s not just the country, it’s the land; the specific place that the grain comes from, how it’s treated, where the barrels come from, and what forests those trees grew in…. Whiskey is a great spirit for expressing everything that’s great about craft spirits production.”
Across these different hot spots then, expect to find different regional characteristics taking shape. “The conditions for aging; they’re much different than a barrel that’s sitting in Kentucky,” says Joseph. Anchor’s warehouse, according to Joseph, has a fairly consistent temperature of 50 to 60 degrees year round.
Hofmann forecasts that unique styles will develop from one region to another. “You can definitely see a scenario, like what they’re doing at Balcones, with scrub oak, or Sante Fe Spirits, with mesquite-smoked malt, you could see twenty years from now how you got this southwest-type smoked flavor,” he suggests.
Meanwhile at Balcones, another point of regional differentiation shines through as most important. “I could see the Texas climate being a significant factor into Texas spirits because of the heat,” says head distiller Jared Himstedt. “Texas spirits are going to have a pretty heavy wood-influenced character unless you’re really careful to avoid that. So that’s a type of terroir that will affect Texas spirit.”
There’s no replacing the history and size of brands in Kentucky or Tennessee, but when it comes to American whiskey, it’s time to give the rest of the country it’s due as well.