The Future of Boutique Distilleries

     

Because of my two blogs deal with whiskey, from time to time I am called upon by start-up distilleries for images and sometimes for thoughts.  Two years ago the Delaware Valley Fields Foundation asked me to come to a convention of boutique distillers, held at the Philadelphia “Phillies” ballpark. I was part of a panel discussing the history of rye whiskey-making in Pennsylvania.  It was a fascinating experience, allowing me to talk to a number of young people about their business plans and the first of several encounters with distilling start-ups.

Opening a distillery and expecting to make a living at it is a tricky business.  Unlike boutique breweries where the beer can be drunk almost as soon as it is produced, real bourbon and rye must be aged at least four years by law and a proprietor easily could go broke waiting.  There are interim strategies, e,g. making and selling “moonshine” —clear whiskey— or flavoring as gin the clear liquid that comes out of the tubes.  But competition is heavy in both areas. I left the convention worried about the futures of those starry-eye young people.

As in the case of Sagamore Spirits Distillery of Baltimore, Maryland, it is best to have a millionaire owner such as Kevin Plank, shown here.  He is the CEO of Under Armour Corp., high flying manufacturer of sports and casual attire, including footwear.  Sagamore’s public relations people were in touch with me for ideas on a gallery devoted to Maryland’s rich whiskey past.  For several years the distillery has been up and running at Baltimore’s Port Covington, where the cruise ships anchor. Shown below, It is the first part of a envisioned $5.5 billion development there to include a new headquarters for the Under Armour, residences, stores and recreational amenities. The distillery currently is open for tours and for tastings.

Until recently, however, the whiskey bearing the Sagamore labels was NOT made on premises, but in Indiana at a conglomerate-owned distillery that makes whiskey for a host of start-ups.  Meanwhile Sagamore’s product was aging to the desired four years.  Plank’s distillers are not trying for top shelf status, competing with quality national brands of longstanding. Theirs is not “sippin’ whiskey.” Instead they emphasize using their ryes in mixed drinks and cocktails.  It is priced accordingly, with a fifth generally available in the $35 to $50 range.  While probably losing money for Mr. Plank initially, Sagamore has a good longterm strategy for profitability.

The Jos. A. Magnus Company of Washington, D.C., is on a more worrisome track.  Having seen a post of mine about Joseph Magnus of Cincinnati (shown here) on my Pre-Pro Whiskey Men website, his great-grandson, Jimmy Turner, a former sports agent, was in touch with me several years ago about his vision of reviving the Magnus brand name on whiskey.   

Although I was cautionary, Mr. Turner has been successful in finding sufficient investment to install a distillery in a vacant warehouse in Northeast Washington, hired a young, confident looking distiller named Brian Treacy to run it, and has placed his Joseph Magnus Straight Bourbon Whiskey in liquor stores including Northern Virginia where I live.

This distillery also is making gin and, I assume, some moonshine.  But like Sagamore Spirits, while the Magnus D.C. distillation is aging the required four years to be marketed as bourbon, it has contracted with the Indiana outfit for product.  Unlike the Baltimore oufit,  Magnus has priced its whiskey as a top shelf bourbon, selling for as much as $90 a bottle.  Even after its own distillation has sufficient age, breaking into the Woodford, Wild Turkey, Pappy Van Winkle circle will be extremely difficult without the national advertising those brands can afford.  I hope the best for the Magnus Distillery but with trepidation.

My final distillery has neither a rich underwriter like Sagamore nor a distinguished pre-Prohibition pedigree like Magnus.  It is the Flying Buck Distillery of Augusta, West Virginia.  It is the brainchild of Jim Gearing, a retired federal employee and wine maker, and his partner, Jimbo, an organic farmer and barbecue griller who lives off Route 50 east of Romney, WV.  Compare their distillery building here with Sagamore’s above.

I recently attended a tasting of Flying Buck liquors, presided over by Gearing, who clearly is a master of taste when it comes to alcoholic beverages.  As can be seen from the bottles here, the partners are experimenting with various flavors of moonshine, including fruit-flavored “Apple Pie,” barreled “Naughty Oak,” and plain “Spirit Whiskey.”  The taste of each was unexceptional to me (others invited to the tasting seemed more enthusiastic).  The problem is the intense competition:  Every boutique distillery in America seems to be making moonshine and trying to market it.

The one Flying Buck product that tickled my taste was its “Raspberry Starshine,” a cordial that, as the label here shows, combines red raspberries with herbs and spices.  There may be real prospects for it.  Although Brown-Foreman, a major liquor company,  has sold the French raspberry liqueur “Chambord” in the U.S., Gearing believes it is no longer available.  As a result the marketplace may be wide open for Raspberry Starshine.  Right now Flying Buck is attempting to get the aperitif placed in the state liquor stores of Virginia.  P.S.  I bought a bottle.

If these stories have a common theme, it is that unless one has a “deep pockets” owner like Kevin Plank, the future prospects for the great majority of boutique distilleries is problematic.  The positive side is the prospect of their bringing new and desirable spiritous products to the marketplace, just as the craft breweries have broadened the taste of Americans in the matter of beer.