Northern Colorado in middle of distillery boom

<!– –>
•  
• Tweet
• 
  –
  A
  A
  A
  +
  

<!–

–>

LOVELAND – On a shelf behind the counter in Loveland’s Dancing Pine’s Distillery sits a small 3-liter still that looks almost like a toy model.

However, the Spanish still from Spain is no toy. It is the equipment that helped launch the rapidly expanding craft distillery that hopes to have its spirits in 15 states by year’s end.

Since launching its first rum on Sept. 3, 2010, Dancing Pines has found it hard to keep up with demand for its their various spirits that range from whiskey to brandy.

Dancing Pines is part of a new wave of distilleries cropping up in Northern Colorado – many in Loveland – in what is a growing industry across Colorado and the country.

Total economic activity contributed by distilled spirits in 2008 was $115 billion, or 30 percent of total economic activity from all beverage alcohol.

The U.S. beverage alcohol industry generated $91 billion in wages and more than 3.9 million jobs for U.S. workers, according to the Distilled Spirits Council of the United States.

Distilled spirits exports exceeded $1 billion for the fifth consecutive year, reaching a projected record of $1.34 billion in 2011. Total spirits exports grew 16.5 percent over the preceding year, while American whiskey, 69 percent of total exports, grew 13.6 percent, according to the council.

Yet, small local craft distilleries such as Dancing Pines are still rare within the spirits industry.
The majority of the industry is dominated as majority of the spirits industry, similar to the brewing industry, is dominated by a few large companies such as Diageo, the world’s leading premium drinks business with brands that include Ketel One vodka, Baileys and Captain Morgan.

“To find something crafted in a distillery like this is unique,” said Kristian Naslund, co-owner and distiller of Dancing Pines, while sitting in his distillery full of barrels and bottles. “Majority of spirits are owned by a few companies. Bacardi is a huge company they own everything.”
Starting a Distillery

Naslund, a former firefighter with the As a firefighter with the Monument Fire Department, started reading books, visiting distilleries and hobby distilling in his three-liter still.

Around 2001 on a hunting trip near Eagle, Naslund made some apple brandy and one conversation led to another and the idea of starting his own distillery was born.

It would take nearly a decade of planning, saving and work, but Naslund’s dream came true. He now operates the distillery at 1527 Taurus Court with his wife and father.

“It’s a lot different making 500 gallons than a half a liter,” he said.

Naslund estimates they have invested about $200,000 in the distillery to date, but notes they paid off all debts and simplified their lives before launching the distillery.

While Dancing Pines made a small profit in its first year, Naslund said they have reinvested everything back into the business and he only makes a quarter of what he used to.

At the same time, Dancing Pines passed its five-year projection in its first year. Working in uncharted territory, Naslund said they take it six months at a time now.

“If you are starting a distillery, plan on working a lot, being broke and changing hats often,” Naslund said. “I am a distiller, janitor and marketing. I do bottling, PR and everything else you can imagine.”

Jason Houston, 35, of Longmont is still working to open his new art house and distillery called Still Cellars.

Houston has been working on the distillery for a year and has been in his location at 1115 Colorado Ave. in Longmont for about six months.

“My ultimate goal is to create a comfortable tasting room and art house where people can come and relax and enjoy fine spirits,” Houston said.

Still Cellars will produce certified organic grain whiskey and vodka to start. Houston said he would like to incorporate local Colorado apples and other fruits into the distilling process.

Houston said he has his state and local license and is waiting on his federal license to open in an estimated six months.

A technology designer for Namaste Solar, Houston has funded the distillery along with his wife through savings, credit cards and a loan he plans to take.

He plans to invest about $75,000 in the distillery and has already put in about $20,000 to date.

“Pretty much by starting on a small scale with smaller equipment and less of it,” he said of the smaller budget. “Other than that, it’s mostly doing stuff ourselves. Between the two of us we have a wide skill set.”

On the flipside Jeff Lindauer, 50, is in the process of opening a multimillion-dollar distillery in Loveland.

The 7,000-square-foot Loveland distillery, at U.S. Highway 287 and Carpenter Road, will have an annual production capacity of 250,000 cases and is projected to create about 250 jobs by 2014.

Lindauer said he is looking to make an impact in the $3.4 billion premium spirits market that is 98 percent import now with vodka and gin made from Colorado Rocky Mountain spring water.

“This is a full time job. I’m living the dream of a true entrepreneur. That’s the first time I’ve done that. It’s 18 hours a day, six-plus days a week, all my time and money,” Lindauer said.

The distillery is getting its bottling line this week.

Lindauer said he self-funded the distillery until it attracted some outside investors. He also noted that he put a lot of research and did his homework before jumping into the business.

“It’s definitely not a turnkey scenario,” he said. “It requires a fair amount of discipline and rigor to get through this process.”

Distilling on the rise

Colorado is well known for craft beer and now with distillers such as Stranahan’s Colorado Whiskey, Peach Street Distillers and Leopold Bros., the state is gaining a reputation for spirits.

JoAnne Carilli-Stevenson, executive director of the Colorado Distillers Guild, said there are 26 distilled spirits permits currently issued by the Alcohol and Tobacco Tax and Trade Bureau for Colorado, or TTB. Many of those distilleries are still in the planning stage, she said.

Carilli-Stevenson cited two reasons why distilling is on the rise in Colorado: Craft brewing is well-established, setting the stage for local wineries and distilleries and a resurgence in the art of cocktails and the cocktail lifestyle.

“It will be a slow change just like in the craft brewing industry,” she said of craft distilleries carving out a niche in the spirits world.

Distillers face a double-edge sword in Colorado. On one hand, the distribution laws are in favor of distillers enabling them to sell and distribute their own products. At the same time, it is hard to break into the business. It is illegal to distill without a permit, but the permit process can be very time intensive.

Naslund said that to do business he needed a federal license, two state licenses, had to register with the Food and Drug Administration and secure a slew of county licenses. His federal application with the TTB was 4 inches thick.

Overland Distillery, a Loveland distillery contracting with Dancing Pines to make Absinthe, had to send samples of its batches to the TTB for approval since there are strict regulations for Absinthe of less than 10 parts per million of thujone, said Overland President Amanda Pawelski. Five of the batches were rejected before Overland found the right balance of thujone.

“It was just crushing,” Pawelski said. “You put so much of yourself into the product, especially craft, to have it rejected for any reason was crushing.”

Houston is in the middle of trying to get his federal license and said the process takes patience.

“The permitting process is a fascinating one in and of itself. You don’t hear anything, or any idea how much longer it will take,” he said. “It’s a common experience for distillers.”

To apply for a permit the distiller needs a location, which can get even more complex.

Naslund said he initially wanted to open in downtown Loveland, but distilleries must be located in an industrial zone, which pushed his operation out east.

Naslund and Pawelski said Loveland is attracting more distilleries than Fort Collins because there is more industrial land available in Loveland.

“Fort Collins is very much a brewery town, and Loveland is becoming the distillery town,” said Pawelski.

Once all the red tape has been cleared, Colorado’s distribution laws are good for business, said Carilli-Stevenson.

While other states may differ, Colorado distillers can sell their product directly to the public through their tasting rooms and can self distribute to restaurants and liquor stores.

Naslund, who uses a distributor, said the unique distribution law is good but can make it hard for smaller operations to get noticed.

Distilled spirits by the numbers:

– The U.S. beverage alcohol industry was responsible for nearly $388 billion in total U.S. economic activity in 2008.
– Total economic activity contributed by distilled spirits in 2008 was $115 billion, or 30 percent of total economic activity from all beverage alcohol.
– The U.S. beverage alcohol industry generated $91 billion in wages and over 3.9 million jobs for U.S. workers.
– The beverage alcohol industry contributed almost $21 billion directly to state and local revenues across the country during 2008. Of that amount, distilled spirits accounted for more than $8.3 billion or 40 percent of this direct revenue.
– In 2008, beverage alcohol’s total contribution to state and local revenues was more than $40 billion.
– Distilled spirits are one of the highest taxed consumer products in the United States.

Source: Distilled Spirits Council of the United States

This story written by David Young, Fort Collins Coloradoan.

(Copyright © 2012 Fort Collins Coloradoan, All Rights Reserved)

Sponsored Links

What’s this?Paid Distribution