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Consumer Perceptions


cowdery

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This question is derived from the discussion about my recent blog post, but I thought it would be better asked in a new thread, because I think it will take the discussion in a different direction.

Several people have mentioned producers who merely buy, bottle and market somebody else's product in the guise of a micro distillery. Maybe they add something to GNS to make a gin or a liqueur, not through any kind of process but simply by mixing together purchased flavorings, colorings and sweeteners. Likewise, producers who buy finished whiskey and either blend it with finished whiskey from other sources, or with GNS. While in some cases there may be actual blending involved, in most cases they are just mixing together one whiskey and GNS to make an American blend.

These producers always have been part of the industry mix. They're called rectifiers, even though some of them have "Distillery" or some variation in their name.

I submit that, taking the nation as a whole, the majority of consumer product impressions involving products the consumer believes to be micro distillery products are actually the products of rectifiers. I say this because as primarily marketing companies, these are the people who have the best distribution. I thought long and hard about naming some names, but most people here probably know who they are, or at least who some of them are.

Some of them have stills. Some of them may have fired that still up on occasion, but nothing they are selling came out of that still.

The answer is usually that quality will out, but I'm concerned that these guys, because of their marketplace footprint, could make it more difficult for true micro distillery products to get established.

One of the problems is price. If all you're doing is bottling GNS, or adding some flavor concentrate to GNS and bottling it, you can sell that product for 13.99 or 17.99, whereas the true micro product probably will be at least twice that.

Do you guys think this is a threat to your industry? If you do, what can be done about it?

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what can be done about it?

Ralph's DEFINING "CRAFT" DISTILLERY thread has moved us towards a fairly reasonable definition.

ADI is an estabished entity that I'm guessing could use some more revenue to maintain a real staff position.

Putting the two together, ADI or a similar entity might consider offering certification of "Craft" status. Essentially, a seal we can slap on bottles and a certification we can describe in our materials. It's very rudimentary self-policing, and I'd guess it'd provide only modestly effective differentiation at best, but it is an answer to your question.

A charge of a few hundred dollars a year for the distillery certificate plus a minor charge per product certified could cover a part-time position for the certification body, provided there was strong participation from the small distillers.

As a related alternative, working with TTB labelling/the BAM to officially restrict use of certain terms would be more concrete, more difficult, and more dangerous. But perhaps worth discussion.

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Well said Chuck!

I think the public needs to be educated on the subject.

I'd like to say there should be laws also but we all know where all the money and lobbyists will stand on this.

I think it is very much like the big brewers who come out with a beer under a fanciful name and try to pass off their horse urine as real micro beer.

Eventually at least some of the public got wise, didn't buy those brands and supported craft beers and those who didn't want to know and couldn't tell the difference continued to buy swill, thinking they were getting better product. Their loss - at least they don't spend the money on a quality product and feel ripped off because they like their swill better.

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Chuck,

Well said.

I think we are wresting with 2 things here. An intense desire to get taxes lowered. Under this objective it seems as if we have adapted the term "small spirit producer." This is an all inclusive term (possibly too inclusive) designed to add horsepower to the legislative effrot.

The second issue is what is a craft distiller? As a grain to bottle manufacturer, I'm pretty sure we would qualify. Beyond that, it's all speculation that has no easy answer. Practically everyone wants the ability to use the term as it has some value in the marketplace, but it won't if we allow the lines to be blurred to the point where we are at with "small spirit producer" on the legislative side.

ADI was designed to be an organization that supports small distilling. One would think that actually includes some participation in the distilling process beyond simple blending and/or bottling.

Don

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This is an all inclusive term (possibly too inclusive)

Understood and agreed. I was thinking "out loud" while typing, and glossed over the evolution in that discussion.

Chuck's point is well taken. I'm not sure locking down language would be fair and effective, though it's the first thing that comes to mind to answer his question of "what can be done".

Setting aside any one term and any one definition, is there any real merit to the community seeking to actively protect some word of value as a term of art? Language is a slippery thing.

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Some of them have stills. Some of them may have fired that still up on occasion, but nothing they are selling came out of that still.

The answer is usually that quality will out, but I'm concerned that these guys, because of their marketplace footprint, could make it more difficult for true micro distillery products to get established.

One of the problems is price. If all you're doing is bottling GNS, or adding some flavor concentrate to GNS and bottling it, you can sell that product for 13.99 or 17.99, whereas the true micro product probably will be at least twice that.

Do you guys think this is a threat to your industry? If you do, what can be done about it?

This seems like a topic that could be a "Pandora's box", but is valid. Does one differentiate between strict rectifiers and those that due to the constraints of space and capitol use GNS as "A clean slate" for re-distillation (I've heard that term used by a couple of guys)?

I've always believed that the market would root out inferior products but am a little cynical; i.e. the fact that there are only 6 major distilleries in the U.S. and all those different labels. Heaven Hill is the prime example.

With me though, I don't care that Henry McKenna single barrel comes from the same juice as Evan Williams. I care about which tastes better.

So with "Craft" distillers, I've found that those who are using their stills for temporary storage instead of as stills have products that are lacking in a decent flavor profile. The bigger picture to me is that the guys that mash their own grains are apt to make it known, and the public is becoming more aware of the process.

I guess what I'm saying is, or asking, how big of an issue is it if an industry in its infancy quarrels over semantics of "Craft", "Micro" or "Small"?

I do agree that it isn't right for people to lie or even be vague about their processes.

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There are people who have bought stills, yet aren't using them? That's downright weird.

We had the identical discussion about Sam Adams et. al. (contract brewers) way back in 96 at the Siebel Institute (brewing school in Chicago). It was interesting because there was an engineer from Coors as well as their Head Taster there, and they brought in the about-to-be-released Blue Moon Wit beer (which was being made at FX Matt at the time) for the class. The Coors guys were interested in what we thought.

The long and the short of it from my classmates, who included guys from the as-yet little guys like Deschutes, Full Sail, and Old Dominion, was a. who cares?, and B. even if we did care about contract brewers who were making it appear as though they were brewers when they were just a marketing firm, what could we do? Blow marketing dollars telling the public otherwise? Waste of $$, IMHO.

I'm in agreement with a and b above, even after nearly 15 years. IMHO, it's a waste of time worrying about what others are doing...or not, apparently.

I'd rather not give the contract guys a tax break, but it's unlikely that we could efficiently legislate that into a reality.

Just my opinion.

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The public has a varied and (as far as I can tell) a generally flawed perception of distillers/distilleries, and what we do (or in my case, aspire to do). When I tell people of my work towards starting a distillery (using the word "distillery"), I've lost count of how many ask me "what kind of beer are you going to make?" I've even gotten one "you can't do that, it's illegal!"

I guess what I'm saying is that the misconceptions appear to greatly outweigh the truth. Ignorance, marketing, and even urban legend [1] carry a profound influence on the public as I see it. That can be a boon for the unscrupulous. It can be a hindrance for we who create something that should be appreciated for its intrinsic qualities. A prime example of that would be the absinthe market. [2]

I remain a little cynical about educating the general public/consumer base. I'm not inclined to believe that the person shelling out the retail price of our product cares whether it's distilled, blended, continuously or batch distilled, column or alembic, infused, macerated, julienned, or deep fried. Not to mention, in getting the word out, when does education begin the slippery descent into propaganda? Is it already there in some fashion or another? Does it matter...SHOULD it matter? And ultimately, does it make a difference in the sustainable viability of our individual facilities?

As far as a threat from the less involved products goes, I think that's just the nature of business. High quality/high cost products will eventually become infiltrated with the corner cutters. As with any business, marketing and advertising are an absolute necessity. It appears (at least to me) that shaping the consumers' perceptions, both for the truth behind where the spirit came from as well as effective marketing/PR to get the information in front of them is a perpetually intertwined, neverending uphill battle.

What do I mean? I don't remember by now. I'm with Denver...what is worrying about it going to positively accomplish? Perhaps one more thing in our marketing plan, most likely.

Cheers,

Paul

[1] The ones I can think of off the top of my head

- Jaegermeister is made with deer's blood

- absinthe is a hallucinogen/aphrodisiac/identical to THC

- Goldschlager's gold flakes are added to create microscopic cuts in the stomach lining so you absorb the alcohol quicker and get drunk faster

[2] I just recently learned that absinthe is so expensive because it uses an extract from the nearly extinct wormwood tree. No, really, it's true...I read it on the internet!

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We have decided that educating all the drinking public is out of the range of our pocketbook and perhaps a waste of time anyway, after all "least common denominator" is not the kind of market we want to attract. We set out to educate one customer and one bartender/retailer at a time. The "general public" is far to large a market for the micro-distiller anyway.

But to Chuck's point, perhaps in the future we can sort out who does what with which spirit, but for the time being we must keep things simple and straightforward. Yes there are rectifiers out there bottling under names that are no more than that, a "brand", selling cheap. And until the term we all agree upon is accepted and we protect it, that practice will continue and no way to sort out the real distiller from the rectifier in the public's perception.

Don's term "grain to bottle" is a clear statement of the type of producer he is. We are that type too. Perhaps this phrase "grain to bottle" is a good one to protect and use to describe the products of those who produce this way. I would include it on our labels, it says it all. And for another distiller to use the phrase, it would mean they are either going the true micro-DISTILLER route or they are lying, in which case they risk Fed reaction under truth in advertising.

That said, the term "micro-distiller" as we are attempting to codify it, would preclude major distiller/rectifiers from bottling and being included in the community of micro-distiller (annual volume limit). That will not prevent them pirating the term for their own marketing purposes, unless it is a protected term (which ADI should adopt and protect). It would strengthen the term and its protection if the Fed and States would adopt the term as we are defining it, and add the term to the COLA vetting process, ensuring it is not included on a label if the distiller does not meet the criteria. That is, if we want the Fed regulating such things, not sure we do.

Once we all agree to the extent we can, the next step would be to develop the different categories within the ADI membership: blender, rectifier, etc. But for the time being, we can not afford any level of schadenfreude. Let those who would "cheat" go ahead, feed them rope and eventually they will hang themselves (after all, what true Micro-Distiller can afford hundreds of thousands to promote a brand nationwide, no less actually keep up with demand). And in the end it's what's in the bottle and how the consumer receives it that will determine the success or failure of any new brand. Some cheaters will slip through, it is the nature things. But we can not determine our future based on what they will do or not do.

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I try to educate everyone I talk to, one-on-one. Also I write about it whenever possible. With a daily audience of around 75,000 on Slashfood.com and some days higher when our parent site, AOL links to us, as high as 275,00 and even higher (last month we had 652,000 discrete page views on one day) I figure the word about micro-distilleries is getting out there. It will take time but any education is good. I agree about not wasting too much time on the 'general public' but tailor it to your audience.

By the way, I love the term 'grain to bottle' (and fruit to bottle) and plan to use it myself. Both in my writing, and on my products. They are the three words that convey the essence of what an artisanal/micro-distillery is.

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My presentation at the AHA National Conference a few years ago was entitled 'From Branch to Bottle'. But then I like alliteration.

'From Grain to Glass'?

The idea I'm pushing with the Cider and Perry Assoc. is to develop the marketing side, it's Brand, into something valuable for its members. And then limit access to branding use, endorsements, expos and shows, and competitions to producers (or maybe just products) that meet the Association's production criteria. The Three Counties Cider and Perry Assoc. in the UK does something like this.

Then when folks at shows ask 'Why isn't X here', it gives you an opening to explain the practices and philosphies you're trying to promote.

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Don's term "grain to bottle" is a clear statement of the type of producer he is. We are that type too. Perhaps this phrase "grain to bottle" is a good one to protect and use to describe the products of those who produce this way. I would include it on our labels, it says it all. And for another distiller to use the phrase, it would mean they are either going the true micro-DISTILLER route or they are lying, in which case they risk Fed reaction under truth in advertising.

I like this statement, too. If we try and use the TTB to apply this "grain to glass" to COLA's, I'll be pushing very hard to force distillers who wish to use phrases to testify to the integrity of the production of their spirits to use only agricultural products and water. That means that natural "flavorings", gibberellic acid, and stand-alone enzymes are out. If we're going to go all the way, let's go all the way. Your still, water, and what you get from the ground. That's it.

This is just my opinion.

I will say, though, that I don't like leaving guys like Pacific Distillery out of such claims. It's a Distillery in the PFNW that is actually growing and curing the herbs that they use for absinthe production. For your grain to glass folks, that's like growing your own barley, and floor malting it into distiller's malt on-site. There aren't any of the grain to glass folks doing that, so far as I know.

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For your grain to glass folks, that's like growing your own barley, and floor malting it into distiller's malt on-site. There aren't any of the grain to glass folks doing that, so far as I know.

I see what you are getting at, but...

How would you expect any distillery, let alone micros, to grow their own barley and malt it to fall under your definition? It would take 3000 to 100,000 acres of farm land to produce enough barley malt/corn/wheat/etc to operate in most cases (and all of the tractors and equipment associated with it).... then purchase/build an entire malting facility to handle that (millions of dollars). I don't see the correlation between that and growing your own herbs. Not even on the same level at all IMHO.

Rheinheitsgebot comes to mind when mulling over this "grain to glass" classification in a way.

FWIW: Copper Fox is malting their own barley. I'm sure there are others.

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Heh. No, I'm not saying that we should have to grow our own barley. I'm saying that we if we are using grain for our mash, and we're touting "craft", we shouldn't be using enzymes out of a pail. And the Rheinheitsgebot is exactly what I was thinking of, thank you.

Good on Copper Fox. That's really cool.

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There seem to be some concerns about majors trying to grab the tax break, if granted, but if the tax in question is the Federal Excise or a state equivalent, that is based on still output and only paid by the actual distiller, so that's not really a problem. I don't think we've been talking about any other taxes, like ordinary state income or property taxes, where you're not likely to get a break anyway. The break, if granted, will be on the excise and that only applies to the "real" distiller.

"Grain to bottle" is a nice phrase and good shorthand, although I can imagine someone rationalizing that they can be "grain to bottle" even if they sub-contract the actual distillation or some part thereof. I suspect getting any change made to the Federal Standards of Identity will be daunting, but that doesn't mean the term can't be effectively used. That's one of the very good ways to use this Forum and this community, to agree on terms like that and how you will use them. At some appropriate point, ADI could develop a marketing code and provide a certification to any producer who agrees to follow the code. Then it will be up to the community to police itself, by which I mean each other.

As my own thinking has evolved, I think there are a lot of different, legitimate ways to be a craft spirits producer, but there will be fakes too, as there always have been. The DBA system has long been a joke among enthusiasts.

One thing I know about education is that you can only effectively teach anything to anyone if the person is ready to learn it. Some consumers actually prefer pretty lies to boring truth.

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I'm partial to the "grain to bottle" phrase as a general description of the character of an operation. I do not think getting any qualifers into the COLA process is the solution to the problem of qualifying someone as "traditional". There is a certain amount of self-policing needs be done by the industry. The scope of any term is very important.

In a comment above, Denver suggested that 100% Agricultural raw materials means nothing but, to the exclusion of enzymes and any other additives of process. I think we have to be practical as well as true to form. The fact is that criteria can be carried to absurd proportions if one goes as far as to exclude added yeast for instance. Are natural flavorings derived by an infuser acceptable? Is Fermaid okay? How about buffers used to control pH?

Let's stay practical as well as true to the basic form as possible under our limited circumstances. How many can afford a malting room and staff to cook the sprouted barley? Who wants to depend on naturally occuring airborne yeast? These are interesting and historic processes, but they are not practical or cost effective in the modern world. It could be said that GNS is from agricultural raw materials. So let's keep it real shall we?

We must all educate our customers so they understand that a small producer is more like a stand alone specialty baker than a Wonder Bread plant. The vast majority of drinkers may never "get it". We are finding best results in educating the barmen and wait staffs of our restaurant customers. We invite them to the distillery and show them why our product is special. They not only become our very good customers, but they also become our best salesmen and introduce it enthusiastically to their customers. That said, it is not neccesarily true that the consumer should or can be brought around to small spirits en masse. As I said, some will never "get it". That's why our goods are special, rare and costly. They are appreciated by a smaller customer base. I guess the message is focus, focus on your product and your customer and don't be afraid to tell him/her WHY your spirits are unique.

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