The Wall Street Journal - Wednesday, May 5, 2004

The Hard Stuff That's Hard to Get

The long wait is over -- maple-sap vodka is a reality.

Taking a page from the success of microbreweries, microdistilleries, the mom-and-pop operations that distill high-end gin, whiskey and other spirits in small batches, are moving into the nation's liquor cabinets. Back in 1990, there were only about five microdistilleries -- now there are nine times that many, according to the American Distilling Institute.

Microdistilleries are distilling booze with some offbeat ingredients. Duncan's Spirits Inc., started by a former anthropologist in St. Johnsbury, Vt., who studied Southeast Asian hill tribes, makes one vodka from 100% maple sap and another from milk sugar. Across the country, Bardenay Distillery Restaurant in Boise, Idaho, sells a sugar cane-based gin. Essential Spirits Alambic Distilleries in Mountain View, Calif., meanwhile, makes a beer-brandy hybrid called Bierschnaps.

Triple Eight's orange-infused vodka ($28.88) made from corn instead of rye

While microdistilleries generate only a fraction of the $45 billion U.S. spirits market, they occupy a rarefied slice of the market. Duncan's maple vodka, for example, is tagged at $32 to $35 a bottle, which is pricier than even elite mass-market vodkas like Grey Goose and Belvedere. Next year Triple Eight Distillery of Nantucket, Mass., will begin selling Notch, a single-malt whiskey similar to Scotch that has been aged for five years -- for $88. That is more than double the price of top-shelf Scotch like Glenlivet and Glenfiddich.

For many drinkers, the word "micro" conjures up microbreweries, which exploded onto the beer scene in the early 1990s. Microbrewers, most notably Boston Beer Co., maker of Samuel Adams, offered a folksy appeal to drinkers who prided themselves on experimentation. Big players like Anheuser-Busch Cos. later began rolling out their own specialty brews, and that segment of the industry continues to grow.

Now, small-scale distillers are hoping to pull off the same feat with the hard stuff. Like microbreweries and boutique wineries, they are trying to tap into the consumer perception that booze produced in smaller quantities is more refined.

Bryan Rose, a 23-year-old philosophy student in Boston, says he drinks Triple Eight vodka because it is distilled through organic corn instead of potato or rye. "It's got a character of sweetness that is not in any of the other vodkas that I've had," he says. The company also makes an orange-infused vodka.

The small distillers are riding the coattails of the liquor industry, which is bustling thanks to the cocktail culture permeating the nation's bars and restaurants. Sales of nine-liter cases, the industry standard, rose 3% in 2003 to 158 million, according to Distilled Spirits Council, a trade group. As the economy has improved, consumers have embraced high-end scotches and vodkas, as well as some of the pricey spirits now being made by the microdistilleries.

Big spirits companies are keeping a close eye on the trend-sensitive microdistillers. Scott Ortega, an executive with Allied Domecq Spirits North America, a unit of Allied Domecq PLC, says: "They are definitely fodder for new innovation for larger companies."

Simply obtaining the permits to start a microdistillery often takes years, as owners have to get municipal, state and federal approval. Like most spirits companies, they work through wholesalers to land their bottles in local liquor stores, bars and restaurants. But they often have trouble getting the attention of large wholesalers. And, the laws surrounding selling spirits over the Internet and through the mail are complex -- in some states, it's illegal.

That forces the microdistillers to get creative. In Idaho, for example, the state is the only entity that can sell liquor. So Bardenay has to sell its products to the government, and then buy that booze back to stock its full-service bar. "The distillery loses money, but the bar makes money," says Kevin Settles, who left a hard-cider business to open Bardenay in 2000. The company sold 700 cases of vodka last year and is planning to open a second restaurant-distillery in the next couple of weeks, he says.

For now, Bardenay is selling only in Boise, but some other distillers are reaching a wider swath of customers. Hurricane Rum, for instance, a bourbon barrel-aged spirit made by Triple Eight, is sold in four East Coast states, including Connecticut and New Jersey.

Microdistilling, a longstanding tradition in Germany, Austria and other parts of Europe, was popular in the U.S. prior to Prohibition. Jorg Rupf, co-owner of St. George Spirits, was largely responsible for helping to jumpstart craft here in the early 1980s, with eau de vie, a clear, un-aged fruit brandy.

One way to find out which microdistilled spirits are available in a particular area is the American Distilling Institute (www.distilling.com), which serves as a clearinghouse for the mini-industry. You can also ask your local liquor store -- if it doesn't stock the spirits, it may be able to get them through its distributor. E-mailing the distillers directly is another way to find out about availability.

Write to Christopher Lawton at christopher.lawton@wsj.com