When That 'Local,' 'Craft' Liquor You Pay Big Bucks for Is Neither

[stevenstone]

http://www.theatlantic.com/magazine/archive/2013/06/distilling-deceit/309308/

[PeteB]

If a businesses can make money by diluting and repacking bulk spirits that is OK with me as long as it is specified on the label.

But don't even hint with words or by omission that it is hand crafted or even "small batch" as the active component was mass produced.

The following snips from the article sum it up for me

"The hard-core, “grain to glass” distillers grow their own grain and do their own distilling, blending, aging, and bottling. That’s an expensive way to make a bottle of liquor, and the product is priced accordingly. So, understandably, they get a bit grumpy when competitors buy alcohol by the railcar and then repackage it as a “vodka handcrafted in (whererever)”

"And some people—people like me, for instance—would argue that when it comes to vodka, the true craftsmen are the marketers, not the producers."

[TetonDistillery]

If a businesses can make money by diluting and repacking bulk spirits that is OK with me as long as it is specified on the label.

But don't even hint with words or by omission that it is hand crafted or even "small batch" as the active component was mass produced.

If that were the case, could anything that sells 600,000 cases per year still be "Handmade"?

http://titosvodka.com/

Maybe it used to be, but I don't see how they can still be putting that on the label with a straight face.

[porter]

The board looks rather quiet. Well that's probably going to change with this reply.

From the comments section of the linked article......

"We define those producers who distill their own spirits onsite as "micro-distillers" and those who use neutral grain spirits in their small batch products as makers of "craft spirits" So, the industry appears to classify them differently, why not the government?

And that's why the feds need a different classification for bottlers and distillers. The current license system is a complete joke. There's nothing you can say that would justify lumping someone standing next to a still, making the cuts that trademarkes their brand, lumping them with those who simply rebottle spirits. Whether the end result is good or not doesn't matter. It's the process used that needs to have individual licenses or brackets in the current system. The system is seriously flawed and the feds don't really give a d...n about it, as long as they get their taxes and under the table payments from the big boys. But we know that isn't going to change easy. So....................

So if ADI really wants to do something constructive try getting some legislative changes made to weed out the mixed products from the distilled products by changing the COLA requirements We all know education won't do it, and fighting the mega-distillers is a lost cause. Let's see some true fight to get COLA requirements on labels to promonately say "Non-Distilled Spirit Drink" or something to that effect. If you buy NGS and run it through a still or do it from mash, it's a distilled product. If you simply re-mix a product, and it never sees a still in your shop, it is a Non-Distilled product and should carry a very plain marking of such on the front panel. Changing the COLA would still keep a single DSP requirement for those who do both mixing and distilling. You would simply have to be more truthful when marketing so the customer education would be satisfied.

Only the remixers could possibly disagree with this. Right.......................................

[bluestar]

Except the fed classification is not about quality of spirit or manufacture, it is about revenue for manufacturer/bottler/rectifier and its safeguards. Don't expect the feds to get into this argument. If you want some classification for labels to be standardized, the best chance would be to do so through a national organization.

[Rickdiculous]

Also, it would be a bit of a problem to try and get the words "Non-Distilled Product" on any label the TTB uses. They are taxing Distilled spirits. Whether we like how they bottle it or not, NGS is a distilled product.

[porter]

Except the fed classification is not about quality of spirit or manufacture, it is about revenue for manufacturer/bottler/rectifier and its safeguards. Don't expect the feds to get into this argument. If you want some classification for labels to be standardized, the best chance would be to do so through a national organization.

And that's where a group such as ADI comes in with their high power lobbying to get the labels changed. Or is ADI just not interested in helping the small DSP holder grow? You can't fight the mega guys but you can keep the smaller ones on an even playing field with their fellow small DSP holders.

Also, it would be a bit of a problem to try and get the words "Non-Distilled Product" on any label the TTB uses. They are taxing Distilled spirits. Whether we like how they bottle it or not, NGS is a distilled product.

'Bottled product made from mixing alchohol with flavor ingredients and enhancers. .' That better?

The subject of what to put on the label is up to the legal eagles to come up with. The idea first has to be presented to the TTB. What you want on the label is secondary. They still get the tax on the distilled product, it's just that the finished product gets true labeling.

[Kristian]

Every time I interact with them I can't hardly get a straight answer let alone the same answer from 2 different people. So leaving it up to them to solve your wording dilemma after you present your idea is going to make you mad (like insane, not angry). Because what we have right now is their design.

It's a lonely place being the only person who does things the "right" way. If you isolate yourself from all of the small producers, whether they distill or not then it's you vs the world of Diageo and Beam Global, etc. By the way, they are grain to bottle. And they'd love nothing more than for us all to cannibalize each other.

[TetonDistillery]

I don't think ADI has any interest in lobbying or regulations.

The American Craft Distillers Association (ACDA) trade group has shown an interest in establishing common standards and entering the activist / lobbying role that our industry needs.

[tipk99]

Newbie question here, but don't you legally have to have a commodity statement on your label if you use commodity product in your spirits per BAM chapter 1 section 12? So, wouldn't that have to show on the label if you are just flavoring NGS, or even if you are just blending some NGS with some original distillation? Or is there some way around that that people are exploiting, and that's the problem?

[nick jones]

Newbie question here, but don't you legally have to have a commodity statement on your label if you use commodity product in your spirits per BAM chapter 1 section 12?

Legally speaking, the BAM is not the law. If you want to read the law, you should read the United States Code and the Code of Federal Regulations. Think of the BAM like Cliff notes of the law: it's got some stuff, but not everything, and it is sometimes just plain wrong. You should re-read that section; it is little more than a definition.

Without getting too deep into these labeling arguments, how about we all just decide to stop using meaningless marketing BS on our labels. "Handmade" what does that mean, that each of 600,000 cases was made by a single child in a third-world sweat shop "by hand"? Does "Filtered six times" mean that I put it through three pairs of socks?

If we all start putting real stuff on our labels, that actually, really, truly means something (something meaning some specific thing, not some vague, meaningless thing), then perhaps our consumers will begin to appreciate our honesty, and be glad that we're not just force-feeding them what they mistakenly already believe.

But who wants to bet on that? Who was it who was just talking about fantasyland?

Nick

[stillwagon]

We live and operate in a free market system. Do we really want more rules and regulations? The idea behind our system is that creativity, innovation, hard work, and a superior product should prevail. If we ask the government to do our job for us then we are working for someone else again. I know we have to pay the taxes, but that is more or less in any business. I prefer the least amount of interference in how I run my business the better. Doing the footwork, educating your potential customers, networking in your area, doing the tastings, competing with your product, and finding those niches to explore and exploit, is what makes entrepreneurship fun and interesting. I don't think fine print on a label can replace that.

[jwymore]

We live and operate in a free market system. Do we really want more rules and regulations?

If the customer is being blatantly deceived I would say yes ....

[daveflintstone]

99 percent of consumers do not read the label closely enough to notice, and 99 percent of those that do won't know what it means anyway. Most people I speak to don't even know what a distillery is; "what beer do you make?" is the most common question, which I received again today. And you want to add more required nonsense to the label.

I can't believe anyone in their right mind wants more regulation. Thank god these ridiculous ideas have not a chance in hell of success. There is something to say for bureaucratic inactivity after all.

[bluestar]

The American Craft Distillers Association (ACDA) trade group has shown an interest in establishing common standards and entering the activist / lobbying role that our industry needs.

And the way you do this, if you can, is to create a set of basic principles that at minimum all members agree they would abide by. Then self-police as part of membership. Then membership would be something meaningful to advertise. But this is hard to do, if also the group is meant to be the broadest representative for the industry. It is almost as if we would need two different organizations: a trade association that represents all small ("craft" in the broadest sense) distillers, and perhaps a guild, that sets standards for operations and definitions.

[cbenoit]

I don't share the view that it's "more" regulation if you aren't increasing the number of agency "adjudications" (in the broad admin-law sense; basically anything an agency does).

For example, I wouldn't consider it to be a new burden if TTB gave the same weight to the words "Produced by" that "Distilled by" already enjoys. Entities that bottled others' spirits would write "Commissioned by [entity name]" instead.

[Rickdiculous]

Without apology I am going to repost something I wrote the last time this came up, because I think it is still relevant:

While I really find these topics to a complete waste of time and energy on everyone's part, after reading it all I have a few thoughts. It would be nice if everyone told the truth, it would be even better if most of the public even cared. Look at your liquor store, the stuff that sells the most is not what we are making. One day it may be.

But simply, there is no right way, or wrong way. Most of this is just posturing and the standard human need to be better than someone else. Let's continue to complain about people doing something we don't like. If they make it big was that a slap to you? If you make it big does it show them up? I like the way Warren Buffet is a rich man. He dogs no one, drives an average american made car, lives in a modest house in a middle class neighborhood in Nebraska. The richest man in the world has absolutely no need to show anyone he is, because he knows it and doesn't waste a minute thinking about anyone else. There are too many liars/cheats/misleaders etc to waste your time on it.

Make a great product however you want, Promote it the best you can, Take absolute pride in it, take the fortune that comes with grace, and the misfortune (if you are the unlucky one) with dogged determination to move on.

As far as the TTB is concerned, I would guess the reason there are definitions were market and producer driven not formulated by the TTB, or any entity it was before, for their own purposes. That said, their concern is the collection of $13.50 per proof gallon. How they get it? who makes it? and who buys it? is of little concern to them. These definitions do not change the amount of ethanol in a 750ml bottle at any proof. I don't think for a second they are going to spend a minute deliberating on how to define what we do, because it is not part of their equation. It is only a part of ours and our need to be special. Quit worrying about definitions, define yourself, be bold and fortune will favor you.

[Lenny]

Rick,

You've made some solid statements, but I feel like you might be missing the point.

This is not about posturing or trying to be better than anyone else. It's about letting the public know what they are buying — who they are buying it from — and why it was made the way it was. It's about producer integrity and transparency.

Look at your liquor store, the stuff that sells the most is not what we are making. One day it may be.

100% spot on. So lets just say for sake of conversation that 5% of spirits that are sold form a liquor store are from the small guys (it's likely way smaller of a percentage). That 5% of the public opting to buy a bottle of juice made by the small guy is doing so with full intention of wanting to try something local/small-batch/unique/etc. And guess what... that small percentage of the public - THEY DO CARE. If a non-distiller producer (big or small) brands their bought/bottled product in such a way that they are swaying that minority customer into thinking that they are indeed buying something made by a local distillery, do you not see why the actual small/local distillery would become frustrated?

There's no real issue to be taken with the bottlings that high west, smooth ambler or even larger outfits like compass box are putting out there. Those guys know how to blend some booze! There's a lot of pride to be taken in being a high level blender of spirits. And in the case of the above named non-or-partial spirit producers, the public is not being duped into thinking that this stuff is anything other than some great whiskey.

I don't know what the answer is and I don't have the time to focus on much more than just trying to put out the best product I can — but that doesn't change the fact that there is some shady shit going on in the industry with the clear intention of deceiving the craft/micro/whatever interested public.

[rumfarmer]

I have picked probably the most expensive place in the US to do a farm-to-bottle(glass) distillery. I truly grown my own sugarcane, harvest it by hand (I have help), juice it at the distillery, ferment and distill all in one place. Land, water, labor, energy...the list goes on and on. EXPENSIVE, especially in Hawaii. It is up to me to make a great product and convince the market that my price point is justified by what I do and how I do it. I, for one, do not want the government getting further involved in an already over-regulated industry to help me tell my story better. I can tell my own story. And, if someone else has a better story than me, or can convince the consumer that my price being 2X that of a molasses based rum is rediculous , then they deserve success because I miscalculated. If someone else can trick the consumer and poach my sales, then I again have failed to carry my message properly. This is an industry of entrepreneurs. The risk is high. Nothing will be handed to you without hard work, dedication, and a little luck. Better to have success on your own terms, IMHO. No more regulation.

Just my 2 cents.

[zeiss]

My name is Robert Contreras from Napa Valley Distillery. I've been working on my distillery since 2007. Check out my equipment on napavalleydistillery.com I will be distilling spirits. Note to Arthur Haroutiounian AKA Arthur Hartunian you are a re-bottler. Quit calling

yourself a distillery.

[zwithers]

I worked for Whistle Pig for the first few years they were going, and I have to say as much as I wish that people did, the average consumer does not really care who is making the booze. Even while the rest of the company was avoiding addressing the issue that we were selling canadian rye I was having no problem telling everyone exactly what we were doing, and really no one cared. People got pissed when they had been told that it was made in Vermont and found out it was not later. But as long as I was straight with them from the get go there were zero sh##s given. Now they will actually have a huge distillery on site and be making grain to glass whiskey as well (only a tiny percentage of what they will actually sell) but it doesn't matter. The image is there, the quality is there. They will sell Albertan rye forever and thats just fine with the Japs who are getting the cut at the end.

And the truth is that from the perspective of the industrial players the craft movement is just a new marketing force that they have to either buy or supply. And that is not a conspiracy. That is coming directly from the horse of the mouth. And the truth is that they can do it because they are infinitely more efficient in their production, vertically integrated, and incredibly well funded. They actually do keep tabs on who is growing and who is looking strong in the craft sector and actively pursue various methods of bringing everyone into the fold one way or the other. Chip Tate is a good example. Whistle Pig almost went that way, but the owner is even crazier than Chip, so he managed to hold his stake.

In all honesty not only would I disagree with any new regulation, but I would like to see the whole industry hugely less regulated. Especially for guys doing grain to glass.

[bdkolstad]

I'm with Smoogdog! If anything we should be working together to lobby state/city governments to lessen the regulations and requirements for distilleries. I have an inspector who is telling me I can't put a floor trough in my distillery because it will encourage high-proof alcohol to go down the drain.

[Skaalvenn]

I'm with Smoogdog! If anything we should be working together to lobby state/city governments to lessen the regulations and requirements for distilleries. I have an inspector who is telling me I can't put a floor trough in my distillery because it will encourage high-proof alcohol to go down the drain.

That's ridiculous.

I hardly had to do anything for my buildout except to appease some basic/easy/cheap GMP requirements for the department of agriculture. I lost a lot of sleep in the days before each of our inspections but in the end the inspections were an absolute breeze.

However, just a few miles away in another city I've heard of some distilleries going through a complete nightmare of BS with the city.

I think the hardest part about opening a distillery (especially on a budget) is the great unknowns in regards to local/state requirements and inspectors who choose to go far above and beyond what is required.