Retail
Still Life
By By Wes Simons May 25, 2010
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Dennis Robertson, co-founder of |
Already a mecca for craft beer and
varietal wines, Washington has opened its doors to craft distilleries and
invited a host of midnight moonshiners to step up and vie with big national
distilleries for precious liquor store shelf space.
Dry Fly Distilling in Spokane and
Soft Tail Spirits in Woodinville are leading the charge, and with solid marketing
know-how and a superior local product, they hope to bring Washington to
national distilling prominence.
The idea for Soft Tail, the first
craft distillery in western Washington, was born on a 2000 trip to Italy where
co-owner Dennis Robertson saw grappa being made from grape skins. Robertsons
stonecutting business shared its building with a winery, and he wanted to take
advantage of the excess grape material. The idea was shelved because of
business commitments and the difficulty involved with obtaining a distillery
license.
But because of recent changes in
the law, Robertson foresees a boom in the spirits business. Its a natural
progression, from microwineries to microbrewers to microdistilleries. I think
its happening not just in Washington but across the United States, he says.
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Related: Grape Spirit: The refinement of Dry Tasting: The editorial team |
Prior to 2008, Washington
distilleries, of which there are few, had a hard time promoting their product
because they were not allowed to provide samples to customers. In 2008, Dry Fly
helped push legislation through the state senate allowing sampling and direct
sales to customers, as well as lowering the licensing fee. Kent Fleischmann,
one of the founders of Dry Fly, felt that beer and wine producers had a much
easier time making their product available. We wanted to level the playing
field, Fleischmann explains.
Dry Fly got its start on a
fly-fishing trip when Fleischmann and his partner Don Poffenroth were drinking
a bottle of what Fleischmann calls inadequate vodka.
Fleischmann and Poffenroth were
tired of drinking low quality liquor, especially when they didnt know where
the ingredients originated. We wanted to make spirits better, Fleischmann
notes.
He felt it was important that
craft distilleries produce a high quality product while supporting local
industry, so he added a stipulation to the bill that a craft distillery must
use 51 percent Washington-grown products.
The craft distiller law originally
set maximum production at 20,000 gallons per year and made it illegal to offer
tastings offsite. An amendment passed in early 2010 allows offsite tasting at
special events and production up to 60,000 gallons, or approximately 300,000
fifth bottles.
Washington is a control state,
meaning that the state Liquor Control Board has control over the sale and
distribution of alcohol within its borders. This arrangement can be
advantageous to smaller distilleries because the state decides which brands are
stocked in stores and prefers to promote local products.
The liquor board watches its
bottom line, but the main concern is control, not turning the largest profit
possible. It is more likely to favor a local organization than, for example, a
national supermarket chain would be. Because craft distilleries must use
Washington produce for at least half the ingredients, the state economy
benefits from putting local liquor on the shelves.
Fleischmann and Poffenroth both
came from marketing backgrounds before moving to Washington to open Dry Fly,
and that experience helped create a buzz about Washington distilleries. They
knew the importance of name recognition, especially in the alcohol business
where consumers can be extremely loyal to a particular brand. They partnered
with an ad agency to help establish their brand and compete with bigger
companies.
The first step in Dry Flys
marketing campaign was to identify its customers. We wanted to make sure that
we reached out to our target audience, which we thought was going to be between
35 to 55, with the biggest part coming from the older group, Fleischmann says.
It turned out that the largest portion was actually younger consumers. Theyre
out there looking for a better product, he adds.
Soft Tail is building its brand
more slowly than Dry Fly, without professional marketing help. Right now,
were just capitalizing on little milestones like first craft distillery in
western Washington and first apple vodka in Washington, Robertson says.
Were hoping to open a second tasting room/distillery soon and I hope that
were going to be the first craft distillery in Washington that has two
locations.
The next step for Soft Tail is to
follow in Dry Flys footsteps and push its product into the national
marketplace. The distillery is currently in talks with a couple of different
distribution companies. Thats the volume we need to really make a difference
in sales, Robertson says.
Soft Tail and Dry Fly both started
up in similar fashion, with the owners paying for expenses out-of-pocket and
with a line of credit. Starting a distillery doesnt require a huge warehouse
or distribution center, but it does need capital in order to market and create
a product. Based on initial sales and expected growth, Robertson says he
expects to make his initial investment back during Soft Tails third year. Dry
Fly has a few small investors, mostly friends and family whom Fleischmann and
Poffenroth wanted to be a part of the business. As they look to expand, though,
the potential for larger investments looms.
As of March 2010, there were more
than 25 issued or pending craft distillery licenses in Washington, and
Robertson thinks the state could easily support a large number of distilleries.
I hope that everybody does
something a little different, he remarks, citing the subtle differences
between Soft Tails apple vodka and Dry Flys wheat vodka. He predicts that
some of the license applications wont be completed because of the effort
required for licensing and overhead costs.
If even half of the distilleries
applying for licenses see a grand opening, its possible that Washington could
add distillery tour to its list of activities. Hundreds, if not thousands, of
people come to Woodinville to taste wine every year and Robertson foresees
Washington offering something similar for distilleries. Im hoping for an
array of different products that will offer a spirit or distillery tour similar
to what they now have for the wineries, he says.
Washingtons wines are highly touted, and its
spirits are earning similar recognition. Dry Fly won double gold medals for its
vodka at the 2009 San Francisco Spirits Competition and Soft Tail took home a
bronze. Robertson is pleased that there has been so much support locally and
regionally for the industry. Im glad to see it happening; everyone at this
time is interested in quality first. Washington should be noted for some
quality spirits.