Hard liquor business made easier in Washington

Finely crafted spirits have become a new frontier for food-and-drink aficionados.

Forget wine and microbrews.

Local liquor is coming.

Imagine: Absinthe made in Everett, vodka distilled in Spokane, limoncello from Mattawa, whiskey aged in Ellensburg.

Renowned winemakers, scrappy microbrewers and imaginative entrepreneurs are laying the groundwork now to make small-batch, craft-distilled spirits the next big thing.

It’s all part of the “gourmet-ification” of liquor, a movement and opportunity many states, including Washington, have seized to bring in tourists and to boost local agriculture.

Soon, thanks to a new law passed by the state Legislature, consumers could — for the first time since Prohibition — find themselves tasting and buying bottles of spirits right where they’re made, whether that’s gin from a new distiller on the Everett waterfront, finely aged brandy from a Marysville winemaker or one-of-a-kind vodka made from potatoes grown in Mount Vernon.

While it’s already possible to hit Il Bistro Vino in downtown Everett for a vodka tasting, someday soon the restaurant’s selection of more than 100 vodkas could include multiple bottles from Washington.

In the United States, there are more than 125 independent spirits producers in 38 states, including numerous small-batch operators in Oregon, California, Colorado, Michigan and New York.

They pride themselves on “hand-crafted,” locally inspired hard liquors.

Bendistillery in Bend, Ore., for example, offers Crater Lake Vodka as well as Cascade Mountain Gin, accented with “wild, handpicked juniper berries from the Central Oregon high desert plateau.”

State loosens the reins

When it comes to locally made hard liquor in Washington, however, would-be distillers, including farmers, entrepreneurs and investors, have been stuck in a state of modified Prohibition.

Every drop of spirits consumed in the state must pass through the state liquor control board’s distribution warehouse in Seattle, followed by state-controlled liquor stores, one factor, among others, that has kept many people out of the booze-making business.

Microbrewers and winemakers in Snohomish County said the changes in distillation laws, including lower annual licensing fees, sampling freedom and some direct sales, could eventually lure them into distilling.

“Whiskey or bourbon is basically distilled beer,” said Bob Maphet, one of four co-owners of Diamond Knot Brewing Co. in Mukilteo. “We could technically make beer and instead of selling it as beer we could distill it, which basically takes just the alcohol out of the beer and creates a spirit.”

Whiskey, like many dark liquors, typically requires aging, however. Clear spirits, such as gin and vodka, usually don’t.

“We might actually be more interested in something like vodkas or rums,” Maphet said, adding that many women don’t like beer, but might be interested in spirits and mixed drinks. “It’s about offering customers more options.”

John Bell, owner of Willis Hall wines in Marysville, said he has his hands full right now with his line of boutique wines. But he would love the freedom to experiment with brandy or perhaps a fortified dessert wine, which would require neutral grape spirits, a form of brandy.

“Until now, I’d have had to buy this from sources outside Washington,” Bell said. “Now, perhaps, I can toy with the idea of making it myself from my own wine, for my own wine, a truly estate-crafted beverage.”

Greg Osenbach, co-owner of Whidbey Island Winery, said adding a spirits operation to his already demanding vineyard would be a challenging but enticing prospect. Less-than-perfect vintages could be distilled into brandy.

“If I had another day or two in the week, I could easily see a brandy or a grappa or maybe distilled spirits for a port-style wine,” he said.

Then there’s gin.

“The process is fascinating and the equipment very alluring in a sort of alchemical way,” said Osenbach, who majored in chemistry. “It would definitely be a big tourist draw.”

Sen. Chris Marr, D-Spokane, introduced a craft-distillery bill in January on behalf of the state’s lone licensed spirits producer, Dry Fly Distilling in Spokane. Its companion bill, sponsored by Rep. Alex Wood, D-Spokane, passed both houses easily with only one “nay” vote and received Gov. Chris Gregoire’s signature March 20.

Dry Fly’s owners, who started distilling vodka, gin and whiskey last fall, couldn’t be happier.

“We’re kind of the coolest kids on the block,” said Kent Fleischmann, who founded the business with a fishing buddy, Don Poffenroth. “They said it couldn’t be done.”

Microbrewery model

Under the new law, which takes effect in July, spirits producers will be more like Washington wineries and microbreweries when it comes to distributing and marketing their beverages.

They will be allowed to serve four ½-ounce samples. They also will be allowed to sell 2 liters of take-home spirits per customer per day.

Craft or small-batch distillers, defined as those producing no more than 20,000 gallons of spirits per year, will have to pay the state only $100 per year in license fees, compared to $2,000 a year. Small distilleries producing fruit brandy or wine-derived spirits must pay $200 a year under the new law.

Half the raw materials used in craft spirits production must be grown in the state, according to the law.

That works great for Dry Fly, which relies on Eastern Washington grains to make grain mash for its gin and vodka, which first hit liquor stores, restaurants and bars in October.

But it’s terrible news for distilling hopefuls such as Marc Bernhard of Everett, who testified against the craft distilleries bill with a group of fellow distilling prospectors with the newly formed Washington Distillers Guild.

Bernhard wants to bring in raw materials from around the world.

“They basically took Dry Fly’s business plan and made it into law,” Bernhard said of the Legislature. “We urged them to adopt Oregon’s law, which basically treats everybody the same.”

Bernhard, who works for Boeing in Seattle, said he’d like the freedom to use out-of-state neutral grain spirits, also known as pure grain alcohol, instead of buying grain, making it into a beer or mash and distilling it himself.

Like many craft distillers, Bernhard sees grain alcohol as his canvas and botanicals and other ingredients as his paint. He grows some of his own herbs in Everett, including wormwood for absinthe, but he plans to import juniper berries from Italy or Bulgaria because they’re more fragrant and higher in essential oils than domestic products.

Bernhard, whose main passion is authentic absinthe, also plans to distill gin, vodka and, if he can partner with a local winery, brandy. He’s looking for a site in Everett or Woodinville. He plans to import a traditional copper pot still from Portugal.

“Washington is making it a lot more difficult than it needs to be,” he said of the new law. “It’s not going to make Washington the kind of place where a lot of people are going to want to come and set up their distilleries.”

Osenbach at Whidbey Island Winery said selling spirits directly to retailers and restaurants would make distilling much more attractive.

That might be asking too much under the new state law, however, which won’t change how spirits are distributed to bars, restaurants and retailers.

Washington’s liquor board will still run such spirits through its Seattle warehouse and liquor stores.

It will also continue to enforce state taxes and retail pricing structures. However, if all goes as planned, distillers such as Dry Fly won’t have to ship the liquor they plan to sell and sample for customers to the liquor board warehouse in Seattle.

They would document their sales with paperwork instead, a step that would help distilleries keep their products on hand and save on transportation costs.

Opportunity for farmers

Though winemakers and brewers are obvious candidates for starting distilleries in Washington, local agriculture advocates hope to see farmers get in on the action.

In June, the Mount Vernon-based Northwest Agriculture Business Center will host micro-distilling workshops for farmers.

Crops that are slightly damaged or not quite good enough for grocery store displays can be ideal raw materials for distilled spirits, said Maryon Attwood, special projects coordinator for the center.

“We think this is a great first step,” Attwood said of the law. “We are hearing from a lot of producers interested in finding out how to do this.”

Potato farmers in Skagit County have shown a particular interest in making vodka. Berry and tree-fruit producers are other good distillery candidates, Attwood said.

“Consumer interest in buying local and farmer-initiated products are all big national trends right now that will help this kind of artisan-oriented industry,” Attwood said. “Selling a bottle of brandy or vodka for $25 to $30 a bottle is a big motivation. It provides new opportunity to be profitable.”

Veteran Washington winemaker Berle “Rusty” Figgins Jr. said he will open Dynamic Alambic Artisan Distillers in Mattawa this summer, selling apple brandy, grappa, sambuca, limoncello, absinthe and, eventually, brandy.

“I’m leaving the wine business behind to do the next big thing,” Figgins said. “For 10 years, I’ve admired the guys from Cognac who grow grapes and distill that wine and age it into fine brandy.”

Figgins also plans to open the Ellensburg Distillery to sell a cream liqueur similar to Bailey’s Irish Cream and, eventually, a whiskey.

Peter Alden, who grows certified organic potatoes at Alden Farms in Monroe, said he’s leery of getting into the liquor business, partly because of the paperwork involved and partly because of the large investment required to acquire distilling equipment.

“An operation of our size, it doesn’t do a whole lot for us,” he said. “The only way that it would work is if there was a group-type of operation where growers were bringing potatoes in from a bunch of different farms. It would have to be a community thing.”

Alden also resents the government’s cut, which in 2006 amounted to about 75 percent.

“It’s a big revenue maker for the state,” he said. “It’s a tremendous markup.”

A waiting market

Though the logistics of starting up a distillery are daunting, interest in Washington-made products is going strong, said Nick Webster, who owns Il Bistro Vino in Everett with his wife, Angelique.

The Websters serve more than 100 vodkas at their restaurant in addition to wines from around the world. That includes Dry Fly vodka.

“It’s a great product,” Nick Webster said. “It’s very exciting to have a vodka from Washington state.”

Tom Bowers, who writes a food and drink blog for the Spokesman-Review newspaper in Spokane, described Dry Fly’s vodka as aromatic with fruit, floral and caramel overtones, plus a smooth, clean, just slightly sweet flavor appropriate for cocktails other than martinis.

Webster describes Dry Fly vodka as not overly distilled, a feature that allows the wheat-derived character of the spirit to shine, clearly differentiating it from potato vodkas or flavored vodkas.

That’s exactly the kind of distinctly local flavor the Dry Fly guys have been trying to capture with their products, Fleischmann said.

“We wanted to take the product out of the ground and put it in the bottle,” he said. “The wheat is a beautiful wheat.”

Dry Fly is poised for serious growth.

New equipment arriving from Germany will help the distillery double production in the next six months. Soon the company will start shipping vodka and gin to Montana and Idaho.

In 2010, Dry Fly plans to introduce bourbon and a single-malt whiskey, which require aging.

“Those are resting nicely in oak barrels,” Fleischmann said.

Reporter Sarah Jackson: 425-339-3037 or sjackson@heraldnet.com

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