Ten Tips for Microdistillers

Crack open this essential manual to start distilling your own spirits.
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At a recent vodka tasting, I was fortunate enough to sip among the glowing faces of pioneers who had made it in an industry -- microdistillery -- that friends and family questioned their mental stability for entering.

"We have no business plans, no books, no courses," says Bill Owens, president of the

American Distilling Institute. "All of us are like the kid with his tongue stuck to the flagpole."

Ten years ago, there were no microdistillers in the U.S. Now there are 88 nationwide, with countless applicants lining up to be the next to own a small commercial craft distillery, or microdistillery.

So how do you break into this world, where you're your own boss and liquor flows from your indie still?

These 10 tips may be the closest anyone has come to an industry manual. Take it from those who have been through the still.

1. Learn to be called crazy.

"There are a lot of us whose brains don't work right," jokes Owens, who pursued a lucrative career as a professional photographer before he went off the deep end.

Owens opened America's first brew-pub, Buffalo Bill's, in Hayward, Calif., in 1983, and judging from the burgeoning popularity of microbrews in the last 20 years, it's not crazy to look at microdistillers as leading a renaissance.

Ralph Erenzo agrees. He and co-owner Brian Lee, a former high-level electrical engineer, founded

Tuthilltown Spirits in Gardiner, N.Y., the first whiskey distiller in the state since Prohibition. Erenzo's sudden strange career urge didn't completely throw his friends -- after all, he had a lucrative career as a professional climber, doing promotion stunts and opening a rock-climbing gym -- but they still guffawed. Now they're gawking, as Erenzo and Lee's whiskey retails for about $40 dollars a pint.

2. Choose your location wisely.

Look for a place that's alive with educated young people, stresses Owens. The safest bets are California and Oregon, which have always been first in wineries and brewing.

Erenzo loves living near Manhattan, his major market. "After I finish boxing and labeling, I put

the spirits in my car and drive to New York City."

3. Don't play it safe.

If the thought of trailblazing and setting the tone of an industry fills you with more anxiety than excitement, the microdistilling business is not for you.

According to Owens, one of the biggest positives is not knowing what to do. "

Distilling for Idiots

hasn't been written yet," he says. Distillers getting into the game have to rely on their creativity and push the envelope of their ingenuity -- a challenge that entrepreneurs like Owens and Erenzo relish.

Erenzo calls his research into new spirits invaluable. "We've had the luxury of selecting which

products go out there."

4. Start small.

Three years ago, Erenzo knew nothing about distillation. Now his product is sold in 80 locations up and down the Hudson River.

After reading all the material available on distillation, Erenzo recommends starting with a single 400-liter still and hiring as little help as possible.

Tuthilltown Spirits' entire cash investment is just under $300,000, with no substantial debt, but Erenzo and Lee did everything themselves, including plumbing and welding.

"It is indeed possible to bootstrap the development of a small distillery," Erenzo says.

5. Work with what you have.

Owens says about half the people in the business already own a winery or brewery, but for those brave souls who don't, look for property that can be easily converted.

Erenzo turned a historic gristmill on his property into a distillery by staying simple and resourceful, and keeping everything on the same floor.

"We've heard nightmare stories of people underestimating the costs of putting the pieces in," says Erenzo, who assembled his still without a manual (although one wasn't included).

6. Prepare to promote.

Making liquor is the easy part; selling it is hard. Be able to wear both hats well, advises Owens.

Erenzo, who hand-delivers his hooch to New York City establishments, says potential clients are relieved when he tells them he is not a liquor salesman. "Retailers

usually never meet the guys that make the stuff they sell."

His strength lies in his knowledge of the product -- he can easily explain its unique merits to clients. "I've had bartenders at very high-end restaurants asking how I get the colors in there," Erenzo says.

Erenzo has been selling his spirits only since last March, but his one-man sales and delivery team has passed $100,000 in sales.

7. Keep your friends close and your clients closer.

Meet others who have solved the problems you are about to face -- craft and trade shows are great for this -- and be creative about networking.

After Erenzo invited the staff of the gourmet restaurant

Blue Hill in Tarrytown, N.Y., to a distillery tour, the restaurant sold more vodka than any other one that carries Erenzo's spirits. For a small business with a limited budget, word of mouth is a powerful weapon.

8. Learn to love the fine print.

According to Erenzo, many states are now rewriting their archaic alcohol laws, but it still takes two and a half years to get a distiller's license in New York.

"We're in the industry ... we have to pay attention," says Erenzo, emphasizing the importance of becoming a regulation nerd and memorizing all the fine print of your licensing class.

Decide on the size of the investment early on, and avoid the temptation to hire a pricey attorney, says Erenzo. Bite the bullet and slog through the licensing paperwork by yourself, "understanding that the regulatory process is at least as difficult as it is to make good alcohol," he adds.

9. Know when to wholesale.

"You think you're powerful, look at wholesalers," says Erenzo. Don't invite them in too soon, he cautions.

Wholesaler laws keep big companies like Grey Goose and Jack Daniels form becoming monopolies, but unfortunately they hurt small distilleries.

So Erenzo applied for and got a wholesaler's license, which allows him to sell directly to stores and promote his small brand better than a salesman could.

Despite horror stories of goods getting lost in warehouses, Erenzo says his products now have enough visibility and cash flow to go the wholesaler route.

10. Cater to the locals.

"You're making this ... from our stuff? I want it," said one of Erenzo's potential clients.

"People are looking for things

in which they can identify the source and

that they know something about," says Erenzo, whose spirits use all-local products like apples from neighboring town Stone Ridge and corn from central New York.

New York State suburban and rural communities are rapidly losing their farmland to housing developers and need a way to add value to their crops, he continues. Distilleries are more than willing to help, while also bringing in valuable tourism.

High-end retailers are catching on and setting aside shelf space for small-batch liquors. "People are looking through cases for the lowest numbered bottle," says Erenzo. "The less there is, the more people want it."

Erenzo offers a final caution: "If you're in the start-up business, you better love it, or everything will suffer."

In the microdistillation industry, if you're not ready to take the plunge, don't get your feet wet.