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Posted: March 19, 2014

Spirited disruption

DSTILL draws national craft crowd

Gigi Sukin

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

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