The Great Debate: Should A Craft Distillery Purchase Already-Made Spirits?

Flying Dutchman Distillery in Eden Prairie, Minnesota // Photo by Aaron Davidson

Flying Dutchman Distillery in Eden Prairie, Minnesota // Photo by Aaron Davidson

The term “craft” is ambiguous at best. This is especially true when it comes to the world of spirits. With the surge of smaller-scale distilleries taking root in Minnesota and beyond, more attention is being paid to not just the final bottled product but the ingredients used to make it. Several spirits companies purchase neutral grain spirit or aged whiskey to produce their products. Our question: Should a craft distillery purchase already-made spirits, or should they make all their spirits in-house?

Defending the practice of buying already-made spirits is Heather Manley, founder and CEO of Crooked Water Spirits, which is based in Minneapolis, Minnesota, and partners with Yahara Bay Distillery in Madison, Wisconsin, for its whiskey. Opposing the practice is Christian Myrah, founder and head distiller at RockFilter Distillery, a grain-to-glass distillery in Spring Grove, Minnesota.

Heather Manley // Photo by Caitlin Abrams, Mpls St. Paul Magazine Heather Manley // Photo by Caitlin Abrams, Mpls St. Paul Magazine

One distillery’s vision is not another’s. We can’t and shouldn’t be the judge of that. A distillery should have any options available to make the products they envision. The distillery is the one that must stand by their process and products; we as consumers simply choose to buy them or not.

Most start-up distilleries can’t compete with the efficiency of a macro-production facility. These large spirit houses have been making solid products for years. They have more experience and greater purchasing power, have received multiple awards for their efforts, and supply a ludicrous amount of whiskey and NGS (neutral grain spirit) across the country.

It’s important to understand that if you take barrels from a single macro batch of spirit, ship one to every corner of the country, and age them for two years under different conditions, they will all taste different due to many variables. Small distilleries very often source these quality base products to create their own expressions. Craft, to me, is how a distillery develops a product (sourced or in-house) to become their own with defining unique characteristics through a vision they can articulate with transparency and authenticity.

High West Distillery is a fine example. They have been transparent about their process—sourcing from multiple distilleries and blending to create four flagship whiskeys that did very well (the company sold for $160M in 2016). Sourcing allowed them to enter the market and eventually start making some products in-house—the ultimate hybrid success story. As founder of Crooked Water Spirits, I took a similar path. I created our award-winning bourbon in 2014 by leveraging the straight bourbon of several distilleries, using the equipment at Yahara Bay for production.

Since we cask-finish all our bourbons in custom barrels, sourcing made sense. Our finishing barrels put a full-bodied inflection on the bourbon, making the effort and investment of a custom mash bill unnecessary to us. Putting our own creative and labor-intensive finishing techniques on our bourbons makes them distinctively unique to CWS. On the flip side, we also make from-scratch products in-house. Our standard: nothing is sourced and put right into a bottle. That option doesn’t align with my value on innovation and quality, nor is it a route that inspires me. I believe a healthy relationship with sourcing makes sense in terms of efficiency, time, finances, and quality. But I also believe it’s the distilleries that put their own creative imprint on their product (sourced or not) that will be the ones who thrive.

Sourcing doesn’t mean lack of passion or talent—it means the distillery can focus on what’s important to them. Sourcing a base spirit in no way limits my experimentation. In fact, it allows me to grow, flex, and build off our successes. I know the profiles I appreciate and the levers to pull to create the expressions I believe people will enjoy. With limited time and resources, it allows me to remain nimble and competitive, take chances, embrace innovation, and enter the market with our ideas. Without that “sourced” bourbon, it would have taken years to start a distillery, learning on my dollar, and more than likely having to take on investors that would have invariably altered the nimble creative business model I value so highly. Today we are in six states with nine products that have garnered 45 gold and silver medals nationally—while remaining investor-free.

Let’s put a bottle in a brown bag and take marketing out of it. What really matters? Taste. The distinctive profile. The viscosity. The finesse in the process and finish. If the taste is bland, consumers won’t care about the distillery’s inspiring blood, sweat, and tears story—they more than likely won’t buy it again. But if it tastes remarkable (even if they find the origin story lackluster) they’ll likely buy it again because the product provides a note-worthy, enjoyable experience. What is heavily weighed is having a product that tastes above par and reflects market pricing.

Sourcing and producing locally when possible is a no-brainer in any industry. Regardless of a distillery’s strategy, we are all contributing to the community and economy of Minnesota. In my observation, successful distilleries are passionate about their vision of differentiating products and can speak to them from ideation to completion. We are in a glorious and awe-inspiring position to wit and delight those who imbibe spirits. Whatever the path, let’s not let them down.

Christian Myrah // Photo by Kristine Jepsen Christian Myrah // Photo by Kristine Jepsen

With more than 1,500 distilleries in this country, the liquor store shelves are getting crowded and consumers have more options than ever when purchasing spirits. There are many different business models in the spirits industry, which ultimately results in many different kinds of spirits.

But what is considered craft? Distilling is a craft in and of itself. Buying already-made spirits and bottling and selling them under a unique name is not.

I do believe there are allowances and exceptions in this sourcing debate. In the case of gin, the distiller is showcasing their botanical recipe. Therefore I can see how purchased neutral grain spirits are more of an ingredient—a blank canvas to layer something unique on top.

For the purpose of this discussion, I am going to focus mostly on whiskey because that is what we make here at RockFilter Distillery. The act of making whiskey is a craft, but is it a craft to sell whiskey you don’t make? If you’re transparent about it, then no harm no foul—you’re just selling a craft product that you didn’t craft. What many consumers don’t realize is there are companies out there who buy whiskey from Midwest Grain Products (MGP) in Indiana and do nothing to it except bottle it and put their name on it.

On every bottle of spirits it’ll say one of two things somewhere on the label—either “distilled and bottled by” or “produced and bottled by,” followed by the company’s name and location. If it says “distilled,” the company literally did all the work of distilling and crafting that product. If it says “produced,” the company most likely sourced the product. They may have done something unique like filtering, blending, or barrel-finishing, but they did not actually distill that product.

In many ways, this is an issue of terminology. There are a lot of words and phrases spirits companies use, but many are unregulated and used disingenuously. For example, all whiskey is made from grain, so every distillery that is mashing, fermenting, distilling, barreling, aging, and bottling is a “grain-to-glass” distillery regardless of whether or not they put those words on their label. But you also see plenty of spirits companies use farm images in their marketing, and use the phrase “handcrafted,” and you’d think this whiskey was distilled in a barn and delivered with a tractor—when in fact it was ordered from Indiana.

There are marketing companies that will source already-made spirits, add a cool story and a pretty label, call it “craft,” and consumers will buy it either because they don’t understand or don’t care about how or who actually made it. For a distillery to source whiskey, then source a unique used barrel in which to “finish” their sourced whiskey, and then put their name on it and call it “crafted” is a bit disingenuous. The final product may be a unique, interesting, and excellent whiskey, but there is really no craft in its creation.

People today are more concerned than ever about where their food comes from and how it was raised or produced. The same is also true in the spirits world. At RockFilter Distillery, we control the process of whiskey-making from the time the seed goes into the ground right up to the time it goes into the bottle. Not every distillery can do this, but it is an advantage we have as a farm distillery. We pride ourselves on authenticity and transparency. We make and sell our product with honesty and integrity, and there is a certain terroir and sense of place to what we make.

The problem isn’t so much with the various strategies of making whiskey, but rather with the way the process is being related to consumers. The word “craft” is being used to sell spirits to consumers who think it means one thing when in fact it could mean a number of things that are not so obvious. We as distillers of craft spirits have a responsibility to the consumer to be transparent, and if a craft distillery is selling sourced spirits without being deceiving, then let consumers decide for themselves.

The word craft, by definition, is an activity involving the skill of making things by hand. The bottom line is that a craft distillery should stay true to their craft. It’s on us as distillers to be honest and open—and the results of our craft will speak for themselves.