New Legislation Reawakens the American Spirits Business

New Legislation Reawakens the American Spirits Business

New Legislation Reawakens the American Spirits Business

Micro-distilleries breaking through the shot-glass ceiling

By Bailey Berg

Ryan Burchett looked completely at ease standing behind the bar. It was only 1 p.m. and the former meteorologist just pushed up the sleeves of his navy blue fleece and drew a bottle of hooch and two squat sniffer glasses from the shelf.

As he poured the rich, honey-colored liquid, Burchett described the spiced grain and delicate fruitiness of the drink. He highlighted the fact that it was entirely handmade in the room through the window behind him.

“All the grains are even grown within 25 miles of here, and all the other ingredients are local, too,” Burchett boasted.

But Burchett isn’t a bartender. And he certainly wasn’t slinging your average Jack, Jim or Jose. He and his brother Garrett are co-owners of The Mississippi River Distilling Company. He was describing their signature Cody Road Whiskey, just one of the craft spirits they proudly pour at their distillery on the main street of LeClaire, Iowa.

And why shouldn’t he be proud? On either side of the bar in their tasting room stand two tall shelving units filled with awards, articles and accolades for their signature products. Not bad considering the brothers only jumped into the DIY distilling fray three years ago, after new Iowa legislation made it easier to sell small-scale spirits.

Prohibition might have made distilling illegal over 75 years ago, but with continued changes in the liquor laws not just in Iowa, but in the entire Midwest, the Burchetts have joined a growing rank of craft distillers across the region that are poised to start a renaissance and tip the market in their favor.

The Start of a Renaissance

“We’re about to completely change the landscape,” said Bill Owens, president of the American Distilling Institute , an organization geared toward small-batch, independently-owned distillers. Owens said there are roughly 530 licensed distilleries across the United States, up from the 70 functional ones just 10 years ago. “We already saw that renaissance with food, beer and wine,” Owens said. “Now, it’s the spirits industry’s turn.”

Plenty of state legislatures seem to agree with him. In the last year alone, Washington, New Jersey, California, Kentucky, Pennsylvania, Florida and Texas have enacted new laws making it easier for distillers to set up shop and sell their wares.

Many Midwestern states have joined the party. New laws have allowed Iowa, Wisconsin and Michigan distilleries to offer free samples. Customers in Iowa can even purchase liquor in-house, unlike before when they’d have to go to a state-owned liquor store to get their hooch. Minnesota just decreased its yearly distillery-licensing fee from $30,000 to $1,100 and now offers limited samplings. Kansas residents couldn’t even distill anything until a few years ago. In fact, it has gotten so easy to launch a commercial distillery that industry leaders, like Owens, think there could be as many small-batch liquor companies as there are craft brewers now.

“Many of the barriers to entry have been removed over the past several years,” said Chris Burnette, president of Mad Buffalo Distillery in Missouri. “It is now much easier to get licenses and costs a lot less money. In the past, you would have needed a minimum of a million dollars or more to get started, even with a small operation.”

New Micro Mecca

“The idea is that we want to get people attuned to the craft as a whole, and get people aware that there are quality products being made in their own backyard,” Mississippi River Distilling’s Burchett said. “We think as more people start doing that, the revolution that you’ve seen in the beer industry will happen in the spirits industry.”

In 2013 alone, Iowa micro-distilled spirits revenue accounted for $6.6 million of the $255 million in spirits revenue in Iowa. Though that only amounts to 2.59 percent, Jamie Siefken, manager of Cedar Ridge Distilled Spirits in Swisher, Iowa, said it’s a huge leap from just a few years ago.

“There was almost $300 million in annual revenues in 2005 for spirits in Iowa and 100 percent of that was imported,” Siefken said. “We’re giving people the option of having something locally made.”

That option is one of the main selling points for the distilleries. America’s love affair with all things artisanal sells, especially when it is coupled with a great story like that of the immensely popular Iowa distillery, Templeton Rye . Templeton’s namesake whiskey is connected to notorious gangster Al Capone — it was reportedly his drink of choice during Prohibition — and that liquid heritage has made it easier for the distillery to tap back into the industry. The brand recently sold its millionth bottle.

Hayes Kelman, managing partner at Dodge City Distillery in Kansas, thinks people also delight in localism.

“People take pride in spirits produced in their state,” Kelman said. “They like supporting the little guy and seeing small businesses succeed.”

Siefken thinks it makes most sense to distill in the Midwest, especially Iowa, because of the region’s corn abundance.

“You specialize in the quality of goods you have around you,” Siefken said. “Corn is the No. 1 grain used for distilling spirits in the world, not just Iowa. Because we have such high quality grains, we can make a better quality product.”

Moving Forward

Even though the Midwest has eased plenty of the restrictions regarding distilleries, there are still serious hurdles. The biggest issue is most distilleries in the Midwest can’t serve cocktails. Microbreweries can have taprooms where customers can sit, sample the goods for hours and then take a few extra bottles home. Distillers just want their customers to be able to do the same.

“If you can do things like that, people are more likely to come out and see us,” Siefken said. “Considering how much corn we have, we should be a bigger player. It would help us compete.”

The Burchetts are actively working to try to change Iowa’s current laws so they can sell their beverage by the drink. They believe that alone could help grow the industry as a whole.

“As more and more states start to relax their rules and regulations, you’ll see more and more craft distilleries,” Burchett said.

That’s something we can all drink to.