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Encouraged by consumer tastes and state history, industry forms guild
Wesley Case | May 8, 2015
Standing before six strangers, Blackwater Distilling CEO Christopher Cook holds forth on the tale of Sloop Betty Honey, his company’s first flavored vodka.
The narrative contains a local hook: While much larger vodka brands use artificial flavors to create new products, Sloop Betty Honey is infused with raw butter bean honey from the Eastern Shore. The story elicits nods of appreciation, and soon enough, the audience steps up to the tasting bar — located less than 30 feet from the company’s customized 500-gallon still — to taste the spirit firsthand. Moments later, credit cards are swiped as bottles of Sloop Betty exchange hands. Cook hopes he just turned a few more customers on to his modest operation.
The Whiskey Process
GRAIN: Everyone makes whiskey differently, but the starting point is the grain (such as corn or rye), which acts as the base for the “mash.”
MASH: The mash is a combination of milled grain and water that is heated in a vessel, or a mash tun, to break down the yeast in the grain’s sugars.
FERMENT: The mash is cooled and yeast is added to begin the fermentation process, which can take roughly a week.
DISTILL: The liquid is transferred to a still, which is heated to boil off the liquid’s alcohol and leave the water. The resulting vapor passes through a condenser and is cooled. The liquid exiting the still is clear, and has a very high level of alcohol content. Some refer to it as moonshine.
AGE: Whiskey aging — from where and how it is stored to the process’ duration — is a hot topic in the industry. All agree aging whiskey in a cask adds to the characteristics and overall flavor to the final product.
BOTTLE: After aging, the product is ready to be bottled and purchased for consumption.

“Every person that comes through here is going to hear that backstory,” Cook says during a lunch break between tours. “Inevitably, their eyes light up and they are actually like, ‘Wow, that’s really cool.’ Those are going to be repeat customers for us.”

For Blackwater Distilling and the other growing number of micro-distilleries making small batches of spirits in Maryland, it is an exciting time to be in business. Eleven Maryland distilleries formed the Maryland Distillers Guild in February and hired experienced local-business advocate Kevin Atticks, moves that may push craft distilling to follow in the footsteps of recent alcohol trends like natural wine and craft beer.

In resurrecting a Maryland craft that dates back to the 1700s, producers are now exploring beverages as diverse as rice whiskey and grappa. Under Armour CEO Kevin Plank is perhaps the most public face of Maryland’s craft distillers. Even Seacrets, the popular Ocean City bar and restaurant, is set to make its own rum, gin and vodka later this summer.

The Maryland distillers’ output is tiny — this year, it will be a fraction of a percentage of what’s produced by Jack Daniel’s. But they say that level of growth is not their aim; they believe they have good stories to tell, and sell, their spirits.

For Atticks, the main purpose of the guild is “quite simply, to ensure that Maryland is a great place to open a distillery and to make sure Maryland gets back on the map.”

A history of whiskey

Maryland was once synonymous with rye whiskey and, after the Civil War, trailed only Kentucky and Pennsylvania in whiskey production.

“It’s just woven into the fabric of Maryland, and what makes Maryland special,” said Burt Kummerow, outgoing president of the Maryland Historical Society.

But then came taxes, poor harvesting conditions, shifting tastes and, most famously, Prohibition. In 1983, the state’s final distributor of Maryland rye shut its doors for good.

Decades later, the new wave of local distillers is interested in producing its own rye. Given the state’s history and the aging process of most whiskey, these companies are taking their time, they say, in hopes of getting it right.

Saint Michaels’ Lyon Distilling Company has, to date, made fewer than 300 bottles of rye whiskey, according to co-owner Jaime Windon, who is also president of the Distillers Guild.

For Blackwater, producing rye has always been the goal, Cook said, even as it sells Sloop Betty vodka and its latest spirit, Picaroon Rum. (The hope, he said, is to start selling rye later this year.) A sample of Blackwater’s un-aged whiskey featured a prominent woodsy flavor that should appeal to rye fans.

Atticks said that while local distillers tap into Maryland history, producers “are very specifically distilling something from their cultural heritage,” Atticks said. Recently, a local distiller talked to him about making rice whiskey, typically associated with Thailand. He also cited Fiore Distillery’s production of Limoncello liqueur and grappa brandy as odes to the owners’ Italian heritage.

At Blackwater, Cook is moved by personal, family and regional history. Meeting a D.C.-based attorney who fled 80-hour workweeks for a career in blacksmithing inspired him “not to be satisfied with the status quo.”

Blackwater’s first product, Sloop Betty, features an illustration of a pin-up girl on the bottle, which Cook said is a nod to his grandfather, a World War II pilot. Cook said the vodka shares the name with a ship the pirate Blackbeard took over while sailing on the Chesapeake in the 1700s. Even the steel caps feature script letters from Maryland signatures on the Declaration of Independence, Cook said.

Details like these help the craft distilleries separate themselves from larger companies, said David Corsun, director of the Knoebel School of Hospitality and Management at the University of Denver. He described craft distilling as a “booming” industry gaining market share nationally.

“The mainstream brands are actually seeing some decline in sales,” Corsun said. “Just as [consumers] want farm-to-table and local product on a plate, there’s an increasing desire to have local product in a glass. The whole idea of craft distilling is a sexy thing.”

Sexy, but also free to interpretation. “Craft distilling” is a buzz term that lacks a true definition. (Corsun’s take: “typically smaller-batch production, high-quality ingredients and the goal of producing a refined, high-quality product.”)

Regardless, “craft” appeals to consumers willing to spend more on products they believe they can trust, Corsun said. (A fifth of Sloop Betty vodka costs $28.99 at the Blackwater Distillery. Lyon’s rum and rye products cost $33-$85 onsite.)

Customers are drawn to flavor profiles, experiences and craft distilleries’ backstories, Corsun said.

“What’s the backstory behind Absolut [Vodka]? There’s no hook there,” he said. “As long as people are seeking those kinds of experiences … and are interested in the stories and people behind the products, the movement will continue to grow.”

In 2000, there were 26 craft distilleries in the U.S., according to Andrew Faulkner, editor of Distiller Magazine and vice president of the American Distilling Institute. Last year, the number reached 600.

“That number will grow,” Faulkner said. “We’ve been publishing the number of distilleries will reach a thousand by the end of the decade. We’re prepared to say it’s going to reach a thousand in the next two, three years. It’s accelerated.”

Nationally, craft distillery sales account for less than 1 percent of total spirits sold across the country.

All newer distilleries hoping to secure retail shelf space must deal with an increasingly crowded market, said Tom Mooney, president of the American Craft Spirits Association.

“Many of them are not ready to outsell what’s sitting there right now,” said Mooney. “The large producers … [are] doing what they need to be doing, which is protecting that space.”

Craft distillers, Mooney said, must get retailers to look beyond sales figures.

“Who is the consumer who comes in to look for that [craft] bottle?” he asked. “If that consumer is a much more attractive consumer or one they want to retain, then that’s the reason they could have that bottle on the shelf.”

There is also a massive gap between craft distillers and the big names in production, measured in “proof gallons,” a standard set by the Alcohol and Tobacco Tax and Trade Bureau.

In 2015, the seven members of the guild currently distilling (others are in the process of obtaining permits, Windon said) are on pace to produce about 22,400 proof gallons. By comparison, whiskey brand Jack Daniel’s will produce more than 40 million proof gallons in 2015.

“We like to joke that the big guys spill more on their floors in a day than we make in a year,” Windon said.

For those interested in joining the state’s distilling industry, research, money, equipment and patience are significant requirements, Windon said.

For an example of distilling in simplest terms, Baltimore-based Louthan Distilling’s whiskey production begins with a combination of milled grain (for theirs, it is corn from the Eastern Shore) and hot water, Len Louthan said. The resulting “mash” ferments for roughly a week and then is heated in a still; the steam, containing alcohol, is cooled.

That clear moonshine is about 80 percent alcohol. To smooth out the taste, water is added and a charcoal filtering process occurs. Finally, the whiskey rests in a jar of oak shavings for six weeks.

While it cost Lyon “under $100,000” to get started, many craft distilleries spend “at least a million” to begin producing, Windon said.

An aspiring distiller must secure a lease in a location zoned for manufacturing. Then it’s on to obtaining the federal Distilled Spirits Permit, several state permits and label approval from the U.S. government.

And then there’s equipment, from a brew pot and a fermenter to a hydrometer that measures the amount of alcohol in a spirit.

Most companies will have six months to a year before they begin selling a spirit.

“It’s kind of an arduous process,” Windon said.

In 2011, Blackwater became the first fully licensed distillery in Maryland since 1972. Since then, companies like Lyon, Louthan and Rockville’s Twin Valley Distillers (makers of rum, vodka and whiskey) have joined the fray. All are members of the guild.

Atticks was an obvious choice for the guild’s executive director because of his record as the head of the Maryland Wineries Association since 2002, said Windon.

Atticks lobbied for a change in state law that has allowed wineries to participate in farmers’ markets, which he said led to increased brand awareness and sales increases. The hope, according to Atticks, is to get distilleries into these areas as well.

“It’s not the sales at the [farmers’] market that did it,” he said of the success local wineries saw. “It’s the brand awareness and getting the word out like, ‘Hey, we’re here — this is great stuff, and it’s local.'”

Through the legislature, Atticks also helped small businesses like Fiore Winery, Springfield Manor Winery and Cassinelli Winery expand to distilling.

Among Maryland distillers, Windon feels a community forming.

“We need to keep asking ourselves going forward, ‘What are our individual concerns, but what is going to be best for the whole industry?'” she said. “We want to get as many opinions and voices together in one room.”

They will need a larger room soon. Lost Ark Distilling Co. — Howard County’s first distillery — will open later this year in Laurel, and the city-based Baltimore Whiskey Company hopes to follow suit.

Then there is Sagamore Spirit, the forthcoming distillery backed by Under Armour CEO Kevin Plank.

While craft distillers are mainly focused on growth within Maryland and surrounding states, Atticks said he could see Sagamore reaching consumers across the country.

“Because of the name recognition and the other businesses they’re involved in,” Atticks said, “[Sagamore] has the potential to have a larger scope and larger distribution.”

Officials at Sagamore indicated to Atticks that they would join the guild in the future, he said. (Through a spokesman, Plank declined to discuss the company’s plans.)

The local product

Michael Boldosser first tasted Lyon rum more than a year ago at a birthday party where he met Windon and her partner and head distiller, Ben Lyon. From that point on, the 58-year-old Easton resident was sold.

He prefers drinking the rum with ice, and once in awhile, he pours it on vanilla ice cream.

“Any time we’re down in St. Michaels, we just pop down and have a taste and have a chat” with Windon and Lyon, Boldosser said.

“If the product wasn’t as good as it is, I wouldn’t go back,” he said. “If Ben and Jaime weren’t as personable as they are, I might go buy it in a store or I might not go buy it all.”

Brendan Dorr, bar manager of B&O American Brasserie and the president of the Baltimore Bartenders’ Guild, said he has noticed a spike, especially in the past two years, in consumers requesting specific, small-batch spirits in their cocktails.

“It’s pretty wonderful to see the consumer is becoming more educated as far as what craft spirits are out there,” Dorr said.

Given the choice between a locally produced spirit and a comparable name-brand version, Dorr said he would choose the former each time.

“I would definitely stand behind a local product,” he said.

Del. Charles Barkley, chair of the state House of Delegates’ Alcoholic Beverages Subcommittee, believes “the state’s pretty much on board” with growing the distilling industry.

“People seem to kind of like the idea, and I don’t know any reason not to,” Barkley said. “You’re basically talking about economic development. … Anything that can grow things and give us more jobs, I think that’s a good idea.”

The guild’s plan, Atticks said, is to identify legislation members would like to see updated or tweaked — like permitting distillers at farmers’ markets — and to bring it to the General Assembly’s attention.

Bill Pencek, the assistant secretary of the office’s division of tourism, film and the arts, said tentative plans have been sketched out for his office to work with the Distillers Guild as well. They previously spread awareness of the wine industry, Pencek said, by marketing “wine trails” across the state.

“We envision the same kind of thing with the distilleries,” Pencek said.

As the guild establishes itself more, its members see the importance of growing as a whole rather than as individual companies.

A self-described “idealist,” Windon laughed off claims of competition among guild members.

“People ask us, ‘Oh, who’s your competition?’ Are you kidding me? We are so far away. Until we have, I don’t know, 100 distilleries in Maryland, then maybe we’ll have competition,” Windon said. “I selfishly just want more Maryland products on my liquor shelf.”