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Craft spirits distilleries are slowly making a comeback

January 24, 2014
| By Pat Evans |
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At one point in U.S. history, there were more than 5,000 distilleries.

Following Prohibition that number plummeted to 12, as “mega” distilleries such as Jack Daniel’s and Jim Beam forced others out of the newly opened market.

Now, the number has grown to more than 350 distilleries in the United States, as both entrepreneurs and major distilleries create brands to ride the craft alcohol wave. According to the American Distilling Institute, the number of craft distilleries is expected to grow to more than 1,000 by next year.

Just as Michigan has seen the wine, beer and cider industries grow at a quick pace, craft spirits also are starting to gain steam. Michigan has more than 30 licensed distilleries, good enough for sixth in the nation. The state ranks fifth in number of breweries.

Industry professionals hope the distilleries will both add to and capitalize on craft liquids tourism.

The same consumers drinking local beer and wine are looking for locally made liquors, said Mark Fellwock, co-founder of Coppercraft Distillery in Holland. Although Coppercraft’s main product will be whiskey, it’s starting with vodka, rum and gin as the whiskey ages.

“(The industry) shares a lot of similarities because people are pulling (for) and looking for that local product again,” Fellwock said. “We’re going to find a similar consumer.”

New distillers popping up, such as Two Birds Artisan Spirits, Valentine Distilling, Coppercraft and others, are taking advantage of legislation passed in 2008 that make distilling in Michigan much easier.

The path to getting consumers to try craft spirits often begins with cocktails, said Brad Kamphuis, distiller at New Holland Brewing, which entered the distilling game several years ago.

“It’s much more palatable than drinking whiskey neat,” Kamphuis said. “Cocktails are a good avenue for craft spirits. It’s a whole different animal, too — people really get into that.”

It’s not that getting consumers to drink craft spirits neat — without mixer or ice — is difficult, he said, but it may require education.

Although the mega-distillers are generally bound to traditional standards, Michigan’s craft distillers can have some fun with the spirits.

“We’re not bound by any sort of tradition, by any means. We can do whatever we want,” Kamphuis said, citing New Holland’s Hatter Royale, which is a hopped whiskey.

Distilleries are generally harder to get up and rolling because of the capital required to buy the stills, and then going through the process of getting a license, which requires nearly everything to be in place, from the building to the still. Then it takes time — sometimes more than two years — for the product, such as whiskey, to be ready for market.

“You’re running the business for a year without making any product,” said Walter Catton, Fellwock’s co-founder at Coppercraft. “Then you start the clock when you hit the barrel, and you can’t wind the clock back to lay down more. So you have to lay down as much as you can in the beginning so you can meet that future demand and have product available.”

As consumers become more knowledgeable and ask questions about where and what they eat and drink, the quality of the product becomes more important, as well. Just as with the craft beer industry, if a distiller puts out a bad or mediocre product, not only is the business in danger but the entire industry suffers.

“You need all of us to be producing quality spirits, or it can create a ripple effect for everybody,” Catton said. “I think that there’s always that opportunity to introduce a spirit that’s not to that quality, but the community of distillers is quite supportive of each other.”

Although craft spirits may never catch up to the popularity of craft beer, Fellwock said they are going to continue to rebuild the industry that helped build America.

“(The industry) is still growing 30 to 40 percent every year,” he said. “We’re right at the cusp of where it starts to take off.”

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