The artisan whiskey industry has a big secret—many of the ‘small-batch’ distillers are actually buying their product from a large factory in Indiana.
Read the promotional materials for the Rancho de Los Luceros Destilaría and you form an image of a supremely artisanal effort. The distillery creates “small batch heirloom spirits handcrafted in New Mexico.” Each batch of their rye whiskies, vodka, and gin is “individual and unique,” and “each bottle is hand bottled and hand marked with batch and bottle number.”
These are the standard selling points of the craft-distilling movement, with its locavore lingo, terroir talk, and handmade hype. But, in the new crowd of micro-distillers, it is now standard for the alcohol being sold to come not from their own distinctive stills, but from a hulking factory in Indiana.
Lawrenceburg, Indiana (not to be confused with bourbon-locale Lawrenceburg, Kentucky) is home to a massive brick complex that cranks out mega-industrial quantities of beverage-grade alcohol. The factory, once a Seagram distillery, has changed hands over the decades and was most recently acquired by food-ingredient corporation MGP. It is now a one-stop shop for marketers who want to bottle their own brands of spirits without having to distill the product themselves. MGP sells them bulk vodka and gin, as well as a large selection of whiskies, including bourbons of varying recipes, wheat whiskey, corn whiskey, and rye. (They also make “food grade industrial alcohol” used in everything from solvents and antiseptics to fungicides.) Their products are well-made, but hardly what one thinks of as artisanal. And yet, much of the whiskey now being sold as the hand-crafted product of micro-distilleries actually comes from this one Indiana factory.
Upstart spirits companies selling juice they didn’t distill rarely advertise the fact. But there are ways to tell: whiskey aged longer than a distillery has been in business is one of the telltale signs that the “distiller” is actually just bottling someone else’s product. KGB Spirits, the company behind the New Mexico “destilaría,” was founded in 2009; but its flagship Ceran St. Vrain straight rye whiskey comes with an age statement of 15 years in the barrel. Or take Breaker bourbon, the “first bourbon produced in Southern California since Prohibition.” The Buellton, California company behind the brand, Ascendant Spirits, wasn’t started until 2013. Yet, they brag their “ultra small batch bourbon” is aged 5 years. So how do you open a distillery one year and have 5- or 15-year-old whiskey to sell the next? Not by making it.
“I have purchased hundreds of barrels of rye and bourbon from them,” John Bernasconi admits when asked about the Indiana factory. A principal in the New Mexico company, Bernasconi says that purchasing whiskey from MGP and bottling it is “a means to develop a brand and help fund the next step” of actually distilling a unique product. It may be a sensible enough business strategy, but as whiskey writer Charles Cowdery points out, “There’s no reason to think anyone knows how to make whiskey or can learn how to make whiskey based on buying whiskey.” Cowdery has been railing for years against the proliferation of what he calls “Potemkin distilleries,” many of which own shiny new copper stills to wow visitors, but actually sell factory-made spirits they’ve acquired in bulk.
High West hopes to make the transition, at least in part. The Park City, Utah distillery has been celebrated for its well-aged rye whiskies and its bourbon-and-rye blends, all of which come from the Indiana factory, as owner David Perkins readily acknowledges. High West makes some un-aged spirits and they are currently aging some whiskey of their own, but they have no plans to stop using the whiskies available from Lawrenceburg. “Since MGP whiskey is [more than] 80 percent of my revenues, it might be silly to wean myself off of that,” Perkins says. “I don’t think my employees would like the pay cut!”
Part of the problem is the competition. MGP has plenty of aged whiskey ready to go in the bottle right now. An upstart distiller has to buy a still and learn how to use it; then buy all the ingredients and actually ferment and distill them; buy barrels and build or lease warehouses in which to put them; and then sit on the investment for years. Todd Leopold, master distiller at Denver’s Leopold Bros., has managed to do it. But how much easier, he says with disdain, for those who just buy whiskey off the shelf and market it. “All that they do is hire salespeople, make up a BS story, and boom, they look like a distillery,” Leopold says.
Dozens of new brands are packaging whiskey bought in bulk from Indiana. But it isn’t the only source. Some recently launched whiskey brands, such as the much-hyped WhistlePig Rye (which touts the product as “hand-bottled” on a Vermont farm), get their product from a factory distillery in Canada. Others are picking up cast-off barrels from high-volume Kentucky “macro-distillers” who occasionally find themselves with more whiskey than they can sell under their own labels. But Cowdery warns that the newbie “distiller” shouldn’t count on finding brilliant whiskies in the barrels being shed by the big brands: “They’re not getting rid of their best stuff.”
The Indiana distillery, by contrast, does sell its best stuff, because MGP Ingredients doesn’t have any brands of its own. Originally, the rye that was made there had a particular purpose—as a component to “flavoring whiskey” in the Seagram’s Seven Crown blend. But it turns out that the rye in MGP’s warehouses, when not used for blending, is very good whiskey all on its own—one more reason why the industrial product is behind so much of the “craft” rye revolution.