Indiana Is in the Midst of a Distilling Boom
Alcohol and Indiana haven’t always mixed -- they’re not even really shaken together. Indiana distilleries in particular have had a clunky time sidling up to the bar, kind of like a nerdy kid trying to buy a drink now that he’s finally 21.
“Indiana and alcohol has always had an awkward relationship,” said Jeff Wuslich, co-founder of Cardinal Spirits, which opened in 2015. “I always joke that we're like in the 'friend zone' when it comes to alcohol in Indiana. We're not like 'really together.’”
Prohibition ended in 1933, but it wasn’t until 2013 (that’s 80 years, folks) that Indiana distillers got the rights to legally launch their craft spirit businesses. Just three years ago, the Indiana Legislature created the Indiana Artisan Distiller’s Permit, which allowed distillers in Indiana to sell directly to consumers. The permit launched a small industry of craft distillers throughout the state, which are now aiming to become tourist destinations in their own right.
Since the permit process opened, six distilleries and tasting rooms have started operations: Bloomington’s Cardinal Spirits, Bear Wallow in Nashville, Indiana Whiskey Company in South Bend, Huber’s Starlight Distillery in Borden, and in Indianapolis, Broken Beaker Distillery, and Hotel Tango Artisan Distillery.
“See where the product is made, meet the guy who distilled it, and then try it in a cocktail. That is a very unique part of the Indiana law,” said Travis Barnes, president of Hotel Tango, which he opened with a bunch of his law school buddies in 2014.
That little word “artisan” is very important. With it, distilleries are able to to sell direct to the consumer as opposed to through a distributor or at the grocery store.
“The artisan moniker, that little word, allows us to sell by the sample, by the bottle or by the cocktail,” said Barnes. “So you can own a federal distilling permit in Indiana and sell [liquor] through distribution, but you cannot sell it directly to a consumer.”
But it’s not that simple. The Indiana State Legislature still has strict limitations on distilling, Wuslich said.
Distiller’s day at the bar
Stringent limitations came along with the creation of the Indiana Artisan Distillery Permit. Applicants had to be a winery, brewery, or distillery for three years prior to be able to sell directly to the consumer. They also had to file applications within a six-month window between July 1st and December 31st, 2013, in addition to already possessing a federal permit before the end of 2012.
"I'm going to leave that to the infinite wisdom of the Indiana Legislature," said Barnes. "It is my understanding that there were a few folks that thought if they opened [permits] up to everyone forever, it would ruin the moral fabric of the great Hoosier State and there would be a distill on every hill.”
After that initial six months, there was a permit application lockout on January 2nd, 2014. Distilleries who wanted in on the artisan permit would have to wait another three years before being able to sell on-site.
“That’s where the law school part came in, as we were able to navigate that federal bureaucracy in time to get the state license,” said Barnes.
These stiff stipulations -- which are unlike laws from any other state -- create a tremendous barrier to entry for new distilleries.
“There were about a half-dozen of us that got grandfathered in throughout the state,” Wuslich said. “Since then, there have been a few additional people that distill without getting that permit, and they have to sell through wholesale (like at a grocery store).”
But Indiana distillers’ ire goes back further. The state has as long history of boozy bureaucracy.
Indiana pulls the short straw
During Prohibition, there were only seven lucky distilleries that were still allowed to operate, most of them for “medicinal purposes.” Of the seven, six were in our neighbor Kentucky and one was in our neighbor’s neighbor, Tennessee. Even after prohibition ended, Kentucky pretty much had a monopoly on the whiskey industry for 70 years.
While Kentucky gets the bourbon glory, Indiana is essentially “ghostwriting” the production of other companies’ spirits. The epicenter of this production is an 1847 distillery in Lawrenceburg, IN.
“People may be surprised that a lot of companies associated with ‘craft brands’ are really getting the alcohol from a pretty large facility in Lawrenceburg, Indiana,” said Wuslich.
Originally purchased by Seagram’s in 1933, the facility colloquially known as The Old Seagram’s Plant changed hands a few times in the early 2000s, and was eventually bought by MGP Ingredients in 2011. MGP’s biggest customer is Diageo, an umbrella company that produces about 50 different liquor brands (none of which are its own). The brands are big names that you know of today.
Throughout the Old Seagram Plant’s life, the primary liquor produced has been straight rye whiskey, which gets later bottled as big names like Bulleit, Templeton, and High West. Bourbon is also made there and sold to Cougar bourbon, which is bottled in Australia. Seagram’s Seven Crown Whiskey and even Tito’s Vodka come from Lawrenceburg.
"Without throwing anybody under the bus, if you look at Tito's bottle. It says it's made in Austin, Texas, but turns out every drop is made in Lawrenceburg, Indiana," said Barnes. “But that's a standard industry process, and proves the high demand.”
But this type of production is hardly craft, especially since the MGP location is one of the largest producers in the world. But that's been Indiana's contribution to distilling for a long time. And, after that, there really is only one guy known for the distilling activities in Indiana.
The grandfather of craft distilling inspires a law
“As far as small and craft distilling, Ted Huber of Huber's Orchard and Winery, and his Starlight Distillery is kind of the grandfather of Indiana distilling,” said Wuslich.
Huber -- whose family has been in the winemaking business for over 100 years -- started a brandy distillery in the early 2000s, and it had a specific license that only allowed distillation of things grown on the property. Lucky for Huber, having enough land to grow on that wasn’t an issue.
Huber also helped spearhead the change in distilling laws and the creation of the Artisan Distillery Permit. As the result of his lobbying, the News-Tribune reported, at least 60 percent of all artisan spirits must be fermented and distilled from raw materials grown on-site.
“I think Ted’s done a great job of nudging the legislature in the right way to open these laws up for Indiana,” said Barnes.
Still, the artisan moniker has limitations.
“We are not allowed to have satellite locations, and we are tapped at 10,000 gallons per year that we can sell from our location,” said Barnes. “Distribution through the federal license does not have a limit.”
But business is good, both distilleries noted. Hotel Tango wrapped its second year, and Cardinal is heading into its second. On top of that, a law passed just this summer allows distilleries to sell on Sundays -- just like the competition.
“We lobbied really hard for that last year. And what we were looking for is parity with wineries and breweries,” said Wuslich. “This was something we lobbied for because especially since a lot of our distillery locations are tourist-driven.”
The distillers want to get the visitors who come to town for events like the Indy 500 to take a tour and get excited to try local spirits. If visitors come on a Sunday, the distilleries must awkwardly explain why so-called “blue laws” prohibit sales.
“It's been heart-breaking when you got folks coming in from out of state wanting to buy a bottle and we gotta turn them down. For us that is a huge piece of our marketing and advertising,” said Barnes. “Now, when you see a bottle on somebody's back bar, and you ask where it's from, they can tell you ‘I got that in Indianapolis!’ That's a big help for us.”
Both distilleries said that it’s too soon to tell the impact of Sunday sales, but they’re hopeful. Wuslich said Sunday sales have already started to match Saturday sales.
Pouring for the future
“We feel lucky that the Indiana legislature has created the industry for us. I mean, this industry is heavily regulated, so the laws limit what can be done,” said Wuslich.
Distillers are looking ahead to the expansion of Indiana distilleries, and are taking advantage of the opportunities a license affords. Cardinal is launching a new gin and bourbon this month, as well as a new Black Bear Bierschnaps and a Nochino -- a walnut liqueur.
Hotel Tango is adding new spirits like orancello to its list of offerings, and took home three awards at the 2015 New York International Spirits Competition.
“I encourage folks to go out and try and support this new artisan craft movement,” Barnes said. “The products are better quality, they're made with Indiana corn and produce and you can really see and taste the difference in each bottle.”
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