On-site sales: distillers who sell certain spirits ONLY at the distillery?

[sudeva]

Hi to everyone out there in the spirit world. I am curious about examples of craft distillers restricting some (or even all) products to on-site sales. I am aware of some distillers that have a few super-small-batch/seasonal/special spirits that they sell only on-site for practical/promotional/just-plain-fun reasons. I am not, however, aware of any distillers that sell wholly on-site, i.e., you would have to be physically present to purchase anything they make whatsoever. I imagine this might exist in the case of distilleries that happen to be 1. in states where direct-to-consumer spirits sales at the site of production are allowed, and 2. too young and/or small to have any wholesale distribution, and for whatever reasons do not offer shipping.

While it's easy enough to track down, say, a number of distilleries in the Northeast that make brandy, one can't exactly do the same sort of data-mining to find producers who restrict their sales in these ways. So I was wondering if you good folks out there might be able to think of artisan distillers who do this. I should mention that I am a journalist whose interest in craft distilleries has, up to this point, been entirely that of a private consumer. And though my interest remains primarily personal, I have started to look into craft distilleries/microdistilleries with a professionally oriented curiosity—which is why I'm spending more time pondering somewhat obscure questions like this one. So fair warning that this post may wind up being the basis for some article research.

To take one example of a mixed-bag on-site policy: San Juan Island Distillery in Roche Harbor, WA, has very limited distribution—aside from on-site sales, four (nearby) stores in Washington State carry their products, though some spirits (e.g. seasonal gin) are sold exclusively at the distillery. The distillery does not ship to individual buyers, though at least one of the stores that carry their spirits will ship, providing a back door for Internet/phone orders. (Granted, SJID has been in business barely a year and a half and has more than doubled their product line in the past thirteen months, so it remains to be seen how their distribution will grow and change. But when I dropped in on the proprietors last year, they were emphatic that their decision not to ship was in large part a philosophical matter.)

So:

—Is anyone aware of distilleries where some (or even all) of the products are limited to on-site sales? If so, why do they do so?

Thanks!

[Mash]

Well ...my distillery, being new, is in the business of making and selling to any legal customer. With that said, if the local population, and or tourist flow can support and purchase all that I make, then that's one less headache. I would certainly entertain a small batch spirit but the issues of COLA and formulation may make that not worth while.

[rumfarmer]

I would certainly entertain a small batch spirit but the issues of COLA and formulation may make that not worth while.

Mash: Can you discuss a little more about the headache of doing small batch stuff? With the online TTB systems, I would think the process would be pretty straight forward. Sorry if this is a naive question. I have yet to submit anything to COLA or a formulation yet. In fact, I only just submitted the COLA registration yesterday.

To the original post, I fully intend to sell only direct to the consumer from my distillery at the onset, which is allowed in my State. This could change in time, but the margin from direct-to-consumer sales makes reaching profitability much easier, IMHO. It is always possible to fall back to the standard wholesale model if the tourist don't come. This would be unfortunate, but it allows a secondary approach should my assumptions be wrong.

[Napa Valley Distillery]

Sudeva,

I may be able to give you some insight on this topic from a completely different point of view which may help your research and possibly your journalistic endeavors, that is, from distillers who are unable to realize their full potential as a result of being limited to selling only through distribution. For instance, many of us here in California are unable to make some unique small-batch products that consumers want to buy but cant do so because distributors don't want to carry them.

As a distillery owner myself and as the current president of the California Artisanal Distillers Guild, I can share with you some of the challenges our members face by not being able to grow internally as a result of these restrictions. I can also give you some info on the legislative challenges associated with trying to get changes made to our states 80-year old alcohol laws.

To make it completely fair, we've recently gotten some very serious legislative support and have even had some very constructive dialogue with our distributors about the benefits of operating tasting rooms and selling direct to consumers, so things seem to be progressing in the direction here in California that would ultimately help the overall American craft-distilling industry.

For more info visit our guild website at cadsp.org or contact me directly.

Arthur Hartunian

Napa Valley Distillery

[Roger]

The idea of concentrating our efforts on products to be sold only at our "soon to be" tasting room also appeals to me, as we are locating in a tourist market. I have been asking questions of various parties on how we essentially "get around" the burdensome and time consuming issues involved in COLA by taking advantage of the Exempt status available to products not intended to be sold in international or interstate transportation.

Such flexibility would allow for virtually limitless creativity and diversity in product offerings.

So far I have had little success in learning how this can be done. Most producers are more interested in how to make the same thing every time, for consistent wholesale (also known as consistent lower price point) sales.

[sudeva]

Thanks to all responders so far for your insights. Arthur, when I first started poking around this subject I was indeed very surprised to learn of California's restrictions—especially given the intuitive desirability/viability of having distillery tastings and direct sales dovetail with the strong tourism industry that already exists in the state's wine-producing areas. Roger, please do post an update here if you make progress toward the exempt status that would allow the flexibility you describe.

[Bier Distillery]

So far I have had little success in learning how this can be done. Most producers are more interested in how to make the same thing every time, for consistent wholesale (also known as consistent lower price point) sales.

I'm also interested.

Does this form apply?

http://www.ttb.gov/forms/f510031.pdf

[bluestar]

Yes, we do a split business. Although eventually some of the items that we only intended to sell in the distillery retail shop we ended up giving to our distributor because they really wanted it. Sometimes it is not worth it, because sales in nearby retail locations can easily cannibalize our distillery retail sales. So now, we have told our distributor for the very limited items, where our margin and production is small, we will provide a limited quantity to them, but not at the full wholesale discount rate, maybe half that. That way, they can get it in small quantity to the special restaurant or small retail shop where price is not an objective given the exclusivity, but it is not possible to do wider retail distribution. What we would like to see in our state is limited quantity retail-to-retail sales allowed: that is, a retailer could at least purchase the product from the distillery shop at retail for resale, at least for on-premise consumption.

[Bier Distillery]

Do you apply for COLA approval for things you only sell at your distillery retail shop or do you use the exemption form? It seems that if you only make 10 gallons of something, getting a label for it through COLA would be a real PITA.

[Hewnspirits]

I too am curious about the prospect of doing some seasonal super limited runs that would only be sold in our retail/ tasting area.

Would love to hear from anyone who does the COLA exemption for similar situations.

[bluestar]

So far, we COLA everything.