Craig Martin

A Craft Distillery that is not a "Craft Distillery"

14 posts in this topic

My name is Craig Martin and I currently am a Peace Corps Volunteer in Peru with only a few weeks of service left before I am done. I have been working for the past two years down here and there are so many opportunities in this country that I have decided to remain in country to open up a "craft distillery" which specializes in macerados de pisco (Pisco is a Peruvian brandy distilled from grapes).

The thing is that at the beginning of production, I will be purchasing Pisco in bulk from a supplier to make my macerados / infusions. My long term vision is to purchase a stake in this supplier after I raise / save enough capital so that I can vertically integrate my business into a legitimate "craft distillery". 

My question is this: what do you call a business which buys spirits in bulk and then creates their own macerados / infusions? I know the term "craft distillery" does not quite cut it but I am at a loss for words.

Does anybody have any suggestions?

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There are companies in the U.S. doing the same. They buy product, whiskey, vodka, NGS, and add flavors, age, bottle,...

I would call them "Bottlers" using other,s spirits to build a Brand, but technically I believe they have a distillery license.

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Thank you for the reply's. I was simply gonna name the business XXX Macerados Artesanales (XXX Craft Macerados) but the thing is down here this whole craft industry or movement does not exist. I will be a trailblazer for sure in this regard. I recently saw this definition within the forum:

 

Quote

- CRAFT BLENDED SPIRITS are the products of an independently-owned and operated facility that uses any combination of traditional and/or innovative techniques such as: fermenting, distilling, re-distilling, blending, infusing and warehousing to create products with unique flavor profiles. Craft blending is not merely mixing high-proof spirits with water or sweetening.

So, basically I will be a craft blender of liqueurs? 

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No one has a license to dictate how the word "craft" is used.  "Craft" connotes more than it denotes.  That means that craft is what you say it is, not what some "they" say it is.  Various organizations, ADI included, want to give private definition of the term, but they have no ability to enforce their notion of what "craft" should be.  

That statement is not meant as a value judgment;  it is a statement of fact as I see it.    

Here are my value judgments.  

You talk about buying bulk spirits to make infusions.  When you infuse, you alter the character of the base product.  Arguably, and I'm ready to take the flack on this from the craft community, neutral spirits produced in large, industrial stills and then used to produce small lot gins by distillation or maceration, are probably better to use as a gin base than neutral spirits produced by small distillers in stills that strain to make 190 proof.  

 A neutral pallet on which to paint provides you the opportunity to create an imaginative products by, say, multiple fractional distillations, that take time and attention, and to blend those products in imaginative and even "artistic" ways, which requires a sensory pallet.  Those with good sensory pallets can certainly "craft" better products than a those, like me, who have no taste at all.  

Speaking of pallet, let me argue by analogy, which is always dangerous, because analogies always will fail in some regard.  But, does anyone worry about whether Picasso or Cezanne or Monet or .... whoever, you name the artist ....made their own paints and wove their own canvases.  Of course not.  It is how they applied the paint to the canvas that matters.  It is their vision, their skill, their ingenuity, their energy that add up to "genius." Their work transcends that of producers of craft art, and a person who blends or infuses spirits or wine skillfully, can transcend craft distillers and winemakers who do so with a heavy hand.  So why worry about tags.  .

Worry about what gets into the bottle.  Consumers can then decide if you are an artist that transcends or a small distiller calls itself craft, for no other reason than it is small.  

Just be honest in the story you tell.    

And, for the record, as far as US regulation is concerned, you will be making liqueurs only if the product you put into the bottle meets the US standard of identity for liqueurs.  they are " products obtained by mixing or redistilling distilled spirits with or over fruits, flowers, plants, or pure juices therefrom, or other natural flavoring materials, or with extracts derived from infusions, percolation, or maceration of such materials, and containing sugar, dextrose, or levulose, or a combination thereof, in an amount not less than 21/2percent by weight of the finished product." 

That definition matters, but it does not change the quality of the product either.  

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Man @dhdunbar you dropped some fire on that post! That was definitely the word that I needed to hear. You were so right by telling me to focus on:

1) what goes in the bottle

2) not letting other people define me or my business

3) stay honest with the story I tell

I really appreciate the straight to the head shot of information. Muchas gracias senor!

- Craig Martin

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Craig, 

If I were you I would be thinking of trying to make some interesting bourbons there not trying to compete with the old Pisco families.  I lived in Peru for 8 years and subsequently I have moved to Argentina and then become interested in setting up a distillery here.  But in Peru there are hundreds of different types of corn and a thriving craft beer industry so you can get other grains to make different whiskies.  While your at it there is no-one in Peru making top quality gins with Local botanicals.  Peru has about 10% of the Amazon forest and there is still a lot of knowledge up in the mountains of local herbs and flowers.  You could make some gins that are great tasting and sell them to the tourists coming in and out. The same with bourbons.  

Anyway I am going to set up my distillery here in Mendoza Argentina, then I will do one in Chile and I am trying to get a mate in Lima to start one as well.  The key to anything in Peru is getting the upper middle class to buy it and flogging it to the tourists.  there are about 1.8m tourists a year go to Peru and most of them go in and out of Cuzco and Lima. 

Cheers and have a great ceviche for me. If you want to talk about this some more PM me.  

Matt 

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When making liqueurs, infusions, macerations I always consider the base GNS as an ingredient. Other than the urban millennial hipsters, how many bakers do you know that make their own chocolate chips?  The COGS of absinthe is obscene in comparison to nearly any other spirit, yet the cost of the GNS is about a dollar (probably less),  two if your neutral base is grape. It's hard for me to tell a prospective client that "that matters".

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The term for this in the USA is a "rectifier", which applies to anyone that purchases spirits and then further processes it to make a liquor, by redistilling, blending, or flavoring, and then bottling it. If redistilling, you could still label the product as "distilled by", and call yourself a "craft distiller".  But if you are not distilling, the "craft distiller" moniker technically should not apply. You could call yourself a "craft spirit producer", for example. The distinction is actually a legal one in the US Basic Permit: "PROCESSING (RECTIFYING) DISTILLED SPIRITS AND WINE" is one of the three things you can apply to do with the permit, the others being distilling or warehousing. Most of us check all three boxes, and our permit covers all three. But the distinction of being a "distiller" or not would only show up in the approval of a label, with regards to the "distilled by" versus "produced by" on the label. Gin and absinthe are typical examples of products that could be produced by a rectifier by redistilling spirits with botanicals, and hence could use the "craft distiller" moniker honestly. But if you are making infusions that are not redistilled, you would use the "produced and bottled by" on the label, and really should use something other than "craft distiller" as a moniker. I like "craft spirit maker" myself.

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Bluestar is correct about the legal designations.  But the term "rectifier," or its variants, now appears only in the Federal Alcohol Administration Act regulations, parts 1 (permits) and 5 (labeling).  It does not appear in part 19, the distilled spirits plant regulations.  It was banished, so to say, when congress eliminated the separate excise tax on rectification.  If I recall, correctly, that was in the early 1980's.  And prior to that, distillers could also be rectifiers.  Small players who only rectified and/or bottled were commonly called "bottling houses."  Few of them professed to craft.   Most made well products that sold on the bottom shelves in liquor stores.

In part 19, "rectification" has become "processing," which also includes bottling, etc.  TTB approves the registration required by part 19 for distillers, warehousemen and processors.  Although it will approve a registration as a distiller or warehouseman only, a processor must also be either a distiller or a warehouseman.  So, in the United States, if you do not distill, but do conduct processing operations, then you must also register as a warehouseman.  

This terminology has not yet found its way into the permit and labeling regulations of parts 1 and 5.  The permit provisions 27 CFR 1.21, provide that "no persons, except pursuant to a basic permit ... shall ... engage in the business of distilling distilled spirits ... or rectifying or blending distilled spirits, or bottling or warehousing distilled spirits."   If this were rewritten in the language of part 19, it would say that except pursuant to a basic permit, no person shall engage in the business of distilling, warehousing or processing distilled spirits. 

Part 5, the labeling regulations, make repeated references to "rectification," or variants thereof (the terms occur 11 times), but the regulation does not define what the term means, either within the definitions section, 5.11, or in the definitions section of part 1, section 1.10.  The regulations rely on the meaning of the IRC regulations at the time the FAA regulations were written.  

So, if you are qualified to do business, as a distilled spirits plant,  in the United States, you may be dubbed either a processor or rectifier, depending on which regulation you are reading, but the bottom line is that there are no longer any operations conducted on bonded premises that are identified as "rectification."  It is all processing.  In my early years in college, we had a sophomoric expression, "It's all semantics."  In this case, that is true.  

To further confuse, the mandatory statements of name and address allow for different statements depending on the operations you conduct.   The bottler must state that they are the bottler.  The bottler also may state that it is the distiller if it distilled the spirits, either by original distillation or by redistillation in the processing account.  If the bottler is also the "rectifier" of the spirits, it may state in addition to the mandatory bottled by statement, that it blend, made, prepared, manufactured or produced the spirits, depending, as the regulation states, on whichever term may be appropriate to the act of rectification involved.  By regulation, "rectified by" is not among the optional terms.  I do not know what TTB does in practice (who does?), but rectify is not among the optional terms listed in the beverage alcohol manual either.  

I'll leave it to you to determine the differences between manufacturing, producing, making, and preparing, and what specific operations make one more appropriate than the other.  I think TTB does not care.  I think if you conduct a processing operation, as defined in part 19, then you could claim the right to use any of them.

But this is all very far removed from the character of the spirit that is in the bottle.  It is intended to inform the consumer.  Long explanationslike this speak volumes, I think, to whether it actually does so.  It takes a wonk, i.e, someone who takes an excessive interest in minor details of policy, to even try to get this straight.  I take that interest because as a consultant, if I do the wonky work, I free others to do the real work without fear of getting crosswise with TTB.  

Finally, let me ask a few questions?  Who in the public knows the difference between 'produced by" and "distilled by?"   Would the number who know be even 1% of the purchasers?  And among those who do know, what percentage would make the purchasing choice based on the distinction?  You may want to point this out as a part of your marketing, but I think you market to a small percentage of buyers, in most cases probably to those who come to your tasting room or find you on social media, i.e., those who are inclined to participate in your story to begin with.  You don't have advertising budgets that allow you to sway public opinion.  This leads to a final observation.  I'm not sure that casting aspersions at small companies that hold forth as craft players, whatever the circumstances, is good for the craft market you are trying to build.  But about that I'm over my head.  I'm a regulations wonk, not a marketing wonk.  .  

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DHDunbar has flushed out the skeleton I presented, admirably. My only comment is that the difference between "distilled by" and "produced by" may not be understood by much of the public, but it is by those in the business (mixologist, etc.), and it is the criteria the ADI uses to determine if you can register your product as "Certified Craft Spirit". Now, whether that is noticed by the public is another matter.

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On 7/23/2016 at 11:17 AM, dhdunbar said:

Bluestar is correct about the legal designations.  But the term "rectifier," or its variants, now appears only in the Federal Alcohol Administration Act regulations, parts 1 (permits) and 5 (labeling).  It does not appear in part 19, the distilled spirits plant regulations.  It was banished, so to say, when congress eliminated the separate excise tax on rectification.  If I recall, correctly, that was in the early 1980's.  And prior to that, distillers could also be rectifiers.  Small players who only rectified and/or bottled were commonly called "bottling houses."  Few of them professed to craft.   Most made well products that sold on the bottom shelves in liquor stores.

In part 19, "rectification" has become "processing," which also includes bottling, etc.  TTB approves the registration required by part 19 for distillers, warehousemen and processors.  Although it will approve a registration as a distiller or warehouseman only, a processor must also be either a distiller or a warehouseman.  So, in the United States, if you do not distill, but do conduct processing operations, then you must also register as a warehouseman.  

This terminology has not yet found its way into the permit and labeling regulations of parts 1 and 5.  The permit provisions 27 CFR 1.21, provide that "no persons, except pursuant to a basic permit ... shall ... engage in the business of distilling distilled spirits ... or rectifying or blending distilled spirits, or bottling or warehousing distilled spirits."   If this were rewritten in the language of part 19, it would say that except pursuant to a basic permit, no person shall engage in the business of distilling, warehousing or processing distilled spirits. 

Part 5, the labeling regulations, make repeated references to "rectification," or variants thereof (the terms occur 11 times), but the regulation does not define what the term means, either within the definitions section, 5.11, or in the definitions section of part 1, section 1.10.  The regulations rely on the meaning of the IRC regulations at the time the FAA regulations were written.  

So, if you are qualified to do business, as a distilled spirits plant,  in the United States, you may be dubbed either a processor or rectifier, depending on which regulation you are reading, but the bottom line is that there are no longer any operations conducted on bonded premises that are identified as "rectification."  It is all processing.  In my early years in college, we had a sophomoric expression, "It's all semantics."  In this case, that is true.  

To further confuse, the mandatory statements of name and address allow for different statements depending on the operations you conduct.   The bottler must state that they are the bottler.  The bottler also may state that it is the distiller if it distilled the spirits, either by original distillation or by redistillation in the processing account.  If the bottler is also the "rectifier" of the spirits, it may state in addition to the mandatory bottled by statement, that it blend, made, prepared, manufactured or produced the spirits, depending, as the regulation states, on whichever term may be appropriate to the act of rectification involved.  By regulation, "rectified by" is not among the optional terms.  I do not know what TTB does in practice (who does?), but rectify is not among the optional terms listed in the beverage alcohol manual either.  

I'll leave it to you to determine the differences between manufacturing, producing, making, and preparing, and what specific operations make one more appropriate than the other.  I think TTB does not care.  I think if you conduct a processing operation, as defined in part 19, then you could claim the right to use any of them.

But this is all very far removed from the character of the spirit that is in the bottle.  It is intended to inform the consumer.  Long explanationslike this speak volumes, I think, to whether it actually does so.  It takes a wonk, i.e, someone who takes an excessive interest in minor details of policy, to even try to get this straight.  I take that interest because as a consultant, if I do the wonky work, I free others to do the real work without fear of getting crosswise with TTB.  

Finally, let me ask a few questions?  Who in the public knows the difference between 'produced by" and "distilled by?"   Would the number who know be even 1% of the purchasers?  And among those who do know, what percentage would make the purchasing choice based on the distinction?  You may want to point this out as a part of your marketing, but I think you market to a small percentage of buyers, in most cases probably to those who come to your tasting room or find you on social media, i.e., those who are inclined to participate in your story to begin with.  You don't have advertising budgets that allow you to sway public opinion.  This leads to a final observation.  I'm not sure that casting aspersions at small companies that hold forth as craft players, whatever the circumstances, is good for the craft market you are trying to build.  But about that I'm over my head.  I'm a regulations wonk, not a marketing wonk.  .  

that was an excellent read. thanks for the effort

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