In Focus: The Craft Distillery Dilemma

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Whiskey is in full swing. After a century filled with prohibition and a decade of declining sales whiskey in America is reaching its zenith. With a wide variety of options and rye making a surging comeback the choices seem endless. Almost every major player has their own limited edition or special bottling and the slowly increasing prices of bourbon and rye are met by consumers wrapped up in the everything whiskey. Like the craft beer movement that began in the 80s there has been, now for a few years, a growing craft distillery movement growing in America. This is giving us, the consumers, an ever larger range of products to choose from.

Unfortunately there is one problem. The number of craft distillers, just like craft brewers, will eventually succumb to the old Darwinian axiom of survival of the fittest. The market just can’t sustain all these start-ups. But unlike the craft brewers the craft distillers are in a precarious situation.

The craft beer movement was started with a desire for change. The big three (Anheuser Busch, Miller, Coors) were putting out a product virtually indistinguishable from one another. So the brewers started experimenting with home brews and coming up with drastically different beer with stronger ABV and wide flavor profile. This is what set them apart, this is what gave them a piece (albeit very small) of the market. People were looking for change in a giant field of sameness and where beer is not as time-consuming to make, brewers can pump out more quality beer to keep the cash flow coming in and their business afloat. Now I personally think the ones that started early or developed a quality brand will be the ones here in 5-10 years.

The problem whiskey makers face that brewers do not is the maturation of the whiskey. Whiskey needs time, there is no getting around that. The passing summers and winters it spends in the barrel help it develop its complex flavor and aroma. Some of these big distilleries have been around for decades and some even longer so they have stocks of well aged even super-aged whiskeys they can put out on the market. Now more age doesn’t necessarily mean better but like us (well most of us) it’s more refined the older it gets. Micro distilleries don’t have the money or resources to allow their whiskey to sit and age for years. So what a lot do is source from other bigger distilleries. MGPI (formally LDI) out of Lawrenceburg, Indiana supplies a lot of rye whiskey to various brands like Bulleit Rye, Templeton Rye, High West, Redemption and various others. Since a lot of micros source from only a handful of bigger distilleries, there goes their angle of ‘change from the other guys.’

The ones that don’t source their whiskey usually age their own whiskey in smaller barrels. The standard size is 53 gallons so aging in 5, 10, 15 gallon barrels give their whiskey more volume to surface area contact. The idea is that you get more wood interaction in less time. Now there was some controversy last year after a ‘failed’ Buffalo Trace experiment criticizing the use of small barrels. You can read all about it here. Now while small barrels will give you different flavor profile from a traditional bourbon profile some even with the use of small barrels come out tasting very brash and untamed because they are still only put in for a few months to year or two. And if the goal is to compete with traditional tasting bourbon or rye it won’t end well for the small barrel guys, in my opinion.

There is one last option micro’s could use to help them find a niche in the market and that’s experimenting. If you can’t compete with traditional flavor or well aged bourbon then do something completely different. Standard grains in American whiskey are corn, rye(or wheat) and barley but there is no reason to stick to just these three. Corsair, for example, has done a marvelous job of messing with various grains and giving consumers a whole new type of whiskey to choose from. The other type of experiment micros have done is finishing their whiskey. I wrote a topic on finishing. Finished in wine barrels or beer barrels have given the micro’s product a distinction. Again though the big guys have caught on and are doing some experimenting of their own and they have a lot more stock to play around with and refine before putting out to market.

The advantage craft beer has is its product is seen as superior to big guys so people don’t mind spending a little more for a better product. Unfortunately because of the way whiskey is made the craft whiskey is usually not seen as a superior product and people don’t want to spend more for it. I don’t want to be seen as someone who is against the craft movement because honestly it is a fun time to be a whiskey fan right now. The little guys are putting out some strange and interesting products, some really good and some really bad. The craft movement is also good because it forces the big brands to stay on their toes and keep from falling into a state of monotony. There are definitely some great craft whiskeys out there and the movement should be taken seriously but because of the nature of the beast that is whiskey the survival rate of micros isn’t very high.

If you’re out there reading this and would like to support your local craft distillery here is a state by state list of various craft distillers — Craft Distillers List

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