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Spirited disruption

The American craft distilling industry is experiencing profound growth, and Colorado is one of its spirited success stories.

In the past 10 years, the number of active U.S. artisanal distilleries has spiked from 60 to about 400; Colorado went from zero to 46 in just a few years.

“Colorado has probably set the gold standard for support of craft in the U.S.,” said Penn Jensen, executive director for the newly formed trade organization, the American Craft Distillers Association.

The ACDA brought its inaugural conference to Denver March 13, coinciding with the second annual DSTILL. The weeklong spirit celebration, running from March 10-16, featured a series of workshops, presentations and sipping socials, including the trademark showcase with 45 craft distillers pouring their potions for the sold-out 1,200-person event at the McNichols Building.

“DSTILL is the rising tide that lifts all ships. It puts Colorado’s distilling at the forefront,” said Chuck Sullivan, co-founder of Something Independent. “When you start to peel back the layers of distilling, you’ve got the doers, the small business people, the entrepreneurs, people willing to put their lives on the line and say, ‘Let’s do this!’”

The week kicked off with a “First Pour” at the Green Russell Monday evening and followed up with a moderated panel at Wynkoop Brewing Co. Tuesday to unpack the relationship between craft distillers and bartenders. By midweek, a trifecta of “Meet the Makers” workshops focusing on rum, whiskey and gin scattered thirsty fans around Denver.

“Cheers to the American dream!” said Jake Norris, former head distiller at Stranahan’s Colorado Whiskey, as he raised a glass at Ste. Ellie with a roomful of craft connoisseurs. Norris revealed a beaker-full of his new A.D. Laws Four-Grain Bourbon — set for public release late this summer — out of his new Laws Whiskey House project.

Though not quite on par with the size and scope of the Great American Beer Festival, the development of the craft distilling movement, driven mainly by small businesses, seems apt in a state known for its microbrew scene.

“I think the ‘go local’ movement has a lot to do with it,” said Rob Masters, president of the Colorado Distillers Guild and head distiller at Spring44 in Loveland.

The state also maintains a lenient legal framework compared with others, particularly for the distribution of alcoholic beverages, when it comes to self-distribution to bars, restaurants and consumers. 

“Colorado has a very favorable climate for legislative and legal allowances,” Sullivan said. “It allows for distillers to be viewed as licensed manufacturers.”

Another reason for Colorado’s success in the craft distilling game, according to Masters, is the ability to establish tasting rooms. He says that many have garnered sizable followings as small-town tourist hubs statewide, benefiting the business behind the booze along with local communities.


“Tasting rooms have the potential to generate up to 50 percent of the revenues,” Sullivan said. “For a small guy trying to carve out market share in an increasingly crowded space, it’s a good source of revenue and it contributes to the essence of the brand.”

However, federal and state tax structures seem to play favorites to craft brewers over spirit makers.

“Even the smallest distillers are taxed at the same rate as the big producers, such as the Grey Gooses and the Jack Daniels,” Masters said. “We’re taxed by alcohol content within the final product. Brewers and wineries both have a tiered system based on production numbers where the small companies pay a lower rate per alcohol than the larger ones. In distilling, we all pay the same regardless of size.”

Also on deck for discussion: the definition of what constitutes “craft.”

“There’s craft and then there’s crafty,” said Jensen, and a similar sentiment was echoed by Norris at Wednesday night’s whiskey tasting. The ACDA’s executive director referred to Blue Moon, a Molson Coors product as a crafty example in the world of beer, where large quantities are brewed by the behemoth manufacturer.

“There’s nothing craft about it,” Jensen said. “It’s factory-made. So we have to ask ourselves, how do we protect the boundaries of craft from the inroads of opportunities and those who want to take advantage of a burgeoning premium market?”

According to Jensen, the current standard for “craft” is 100,000 proof gallons removed from bond annually from all sources. The board of the ACDA has the ability to change the by-laws and thereby the definition, if the need arises.

“People like the concept of hand-crafted, getting something that was made by someone they know or could know, as opposed to the same old brand from some giant company. The entire growth of craft as a phenomenon of entertainment and dining out has been very significant,” Jensen added. “It has pushed the premium level of spirits way up.”

And Jensen attributes this resurgence of artisanal products and experiences, at least in part, to the most recent economic downturn.

“Post-Recession and in the downturned economy, upper crust restaurants managed to maintain their active followings,” he said. “People would spend money on things they knew they were going to enjoy. With craft spirits, people like the expansion of knowledge, that it’s conversational and an adventure. They like the concept of hand-crafted and are willing to support it.”

Sullivan hopes that  DSTILL becomes to Denver what South by Southwest is to Austin.

“It gets to this core spirit of Colorado,” Sullivan said. “It’s a celebration. There’s music and innovation and ideas and conversation and food and agriculture. The growth for craft is steep.”

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Gigi Sukin

Gigi Sukin is an Associate Editor at ColoradoBiz. She can be reached at gsukin@cobizmag.com.

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