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What Exactly Defines a “Craft” Spirit?

craft-spirits-1 “Craft spirits” have gone from obscurity to ubiquity over the past several years. But what exactly defines a craft spirit? With money and reputation riding on the answer, American distillers are struggling to to reach an agreement. Wayne Curtis breaks down the issues:

“Well, here we go down the rabbit hole,” whispered an experienced distiller seated next to me.

I was attending the first American Craft Distillers Association (ACDA) meeting in Denver last March, and the discussion had just circled around to how to define “craft.”

The problem is, as one distiller put it, “Every producer wants the definition of craft to describe what they do.” That applies to someone growing heirloom grain in fields just outside the door of their distillery, as well as someone buying grain neutral spirits from a billion-dollar commodity vendor, running it through a charcoal filter and labeling it as “handcrafted vodka.”

As liquor store shelves get more crowded, the debate is certain to become more divisive.

“Craft spirits” have gone from obscurity to ubiquity in approximately three seconds, with new brands cropping up daily. Some 600 craft distillers are now operating across North America (up from a few dozen a decade ago) and one study has projected that the numbers will double over the next six years.

What’s behind the boom? According to a recent Nielsen survey, Gen-Xers and Millennials may be at least partly responsible. They list “craft” and “local” among the reasons they choose the liquors they do. In short, they’re looking for the Etsy of liquor—smaller brands made by actual people using old-school methods.

“There’s an overlap between what craft spirits offer and what Millennials are looking for,” said Tom Mooney, president of the ACDA at a recent Wine and Spirits Wholesalers Association panel discussion. “This is a fortuitous experience—of Millennials coming of age and craft sprits coming of age and hopefully staying together for life.”

So, with a whole generation of potential buyers at stake, how does the industry define the “craft” in craft spirits?

You could ask the feds to clarify, except they don’t really care. The word “craft” is unregulated in advertising and labeling. Pretty much any producer can call itself a craft spirit.

Another informal definition a craft distillery is this: it’s a place where the owner actually flips the switch that starts the still running in the morning. Craft is carried out by people, the thinking goes, not by corporations. Craft has a face. The understandable concern is that major liquor conglomerates, like Diageo, will further poach on the term “craft,” thereby rendering it all but meaningless.

And pretty much everyone does. That includes Diageo, the world’s largest spirits producer. “We’re going to be the number one craft distiller in North American whiskey in the U.S.,” Larry Schwartz, president of Diageo North America, said at an investor meeting last year announcing a new craft whiskey line.

Given that distillers are drawn to the word “craft” like bros to brew, many in the industry see a certain urgency in agreeing upon a definition. Simplifying things somewhat, the debate tends to revolve around three criteria: size, ownership and production methods.

Size

Craft: it sounds small doesn’t it? Possibly it involves elves living in the base of a hollow oak making spirits in copper stills not much larger than a crockpot.

Right now, there is a general consensus on craft size and it allows for somewhat better economies of scale than a crockpot. The Small Distillers Affiliate Program run by The Distilled Spirits Council of the United States (DISCUS) is open to those who make 40,000 cases a year or fewer. (For comparison’s sake, Bulleit, Hendrick’s Gin and Woodford Reserve each sell between 200,000 and 300,000 cases annually.)

This is roughly in line with craft distiller definitions at both ACDA and theAmerican Distilling Institute (ADI); both offer full membership to those who sell fewer than 100,000 proof gallons a year, which is about 42,000 cases, each containing nine liters of liquor, depending on proof.

But defining craft by sales or production runs rankles some. For starters, this guarantees the excommunication of many pioneering craft distillers as they grow and expand. Or the cap is nudged upwards as the industry grows, weakening the term.

Tito Beveridge, founder of Tito’s Handmade Vodka, said during one forum that he’d spent more than a decade trying to get DISCUS to create a craft spirits category in order to address some of the concerns of the small guys. But by the time they finally got around to it, he didn’t qualify. He’d grown too big.

Tito’s ships around 1.2 million cases a year. Yet the company still uses traditional pot stills—albeit a battery of them—which distinguishes it from other large-scale producers using more modern technology. (Patron Tequila, which sells more than two million cases a year, takes a similar approach.)

So, size matters. But the overall annual output may matter less than the size of each production run in defining craft.

Ownership

Another informal definition a craft distillery is this: it’s a place where the owner actually flips the switch that starts the still running in the morning. The thinking goes that craft is carried out by people, not by corporations. Craft has a face.

The understandable concern is that major liquor conglomerates, like Diageo, will further poach on the term “craft,” thereby rendering it all but meaningless.

To counter this, ADI requires members to be independently operated, although it allows non-craft distillers to own a minority stake. ACDA has a similar provision—you’re disqualified as a voting member if your distillery is majority owned by an entity that produces more than 100,000 proof gallons yearly elsewhere.

As for having the owner run the stills, Ralph Erenzo of Tuthilltown Spirits points out that this is quaint, but unfair. After years of running the stills himself, he’s grown to the point where he can now take some time off and hire others to flip the switch. Should that disqualify him? Not “if it doesn’t change the soul of our product,” he says.

Production Methods

This definition seems simple: if you don’t ferment and distill, you’re not a craft distiller. The idea here is to prevent those who are often called “independent bottlers”—bulk buyers who rebottle—from claiming to be craft producers.

But this turns out to be anything but simple. Take the example of gin—a product commonly made by start-up distillers who are looking to enter the market without aging spirits.

Gin is often made starting with a neutral spirit purchased in bulk from an industrial supplier. It’s then redistilled with hand-selected botanicals to yield the final product. Most in the business agree that the craft behind gin comes in the selection of ingredients and the redistillation techniques. Likewise with liqueurs, amari or other flavored liquors—the base is often a non-craft spirit. Thus, the craft doesn’t involve the actual making of any alcohol.

Further complicating things, several small distillers note that they do both—make gin from bulk-purchased ethanol, but also make their own rum from molasses or whiskey from local grains. Is it a craft distillery or not?

Whiskey has been dogged by other complications. First, ostensible craft distillers at times purchase aged whiskey by the barrel, rebottle it and claim it as their own. Whistlepig Rye, for instance, long coasted on a perception that it was a Vermont product when, in fact, it was sourced from a Canadian distillery. The brand’s owner recently publicly acknowledged the sourcing, which most saw as a step in the right direction toward transparency.

Then there’s the issue of blending by independent bottlers who purchase aged whiskey by the barrel then blend it to create something new. Some of the whiskeys sold by High West, Old Scout and Redemption fall into this category, although all producers are given credit for being transparent with their approach.

“It is truly craftsmanship to take somebody else’s stuff, modify it, make it your own and take it to market,” says spirits consultant David Pickerell.

ADI has created a separate category of “certified craft blended spirit” to designate these spirits. To qualify, the bottler must be independently owned and producing less than 100,000 proof gallons. But it also has to produce spirits that reflect a blender’s vision and the process “cannot be limited to simply blending down high-proof spirits with water, or by only adding coloring, flavoring, or blending material.”

When it comes to how liquor is produced, agreement on what’s craft remains feral and elusive. Broadly speaking, though, there’s agreement that, as one distiller puts it, “what walks out the door must be markedly different than what walks in.”

Caveat Emptor

The rabbit hole, as beer brewers learned long ago, is deep and lacks illuminated exit signs.

After attending three recent conferences where the topic was discussed, I’ve come to think that producers would do well not to worry all that much about defining craft. (Indeed, this may already be yesterday’s battle, and the industry may be moving on. I’ve seen “folk” and “artisan” starting to take its place.)

But I would argue that advocates for craft distilling should focus more on educating consumers about what’s behind the production of their favorite spirits, and push for more transparency among themselves. The more buyers know, the more they can make their own reasoned decisions about what’s “local” or “craft.”  Today, many don’t even know the right questions to ask their bartenders or liquor store managers.

Change also comes from within. Distillers can encourage consumers to pay attention to whether labels declare “bottled in” or “distilled and bottled in,” which will further encourage independent bottlers to be forthcoming on their labels.  And the more information on the label, the better. “My goal now is truth in labeling,” said Bill Owens, head of ADI. “The truth should be on that label.”

I agree. Mexico mandates that tequila producers include a number on the label indicating where the product was distilled. Why shouldn’t America emulate this model? Perhaps the mass market will take time to pay attention, but sophisticated consumers will take notice, and they’ll tell their friends.

“Craft is a lot like pornography,” said Tuthilltown’s Ralph Erenzo in Denver. “I know it when I see it.” Ultimately, consumers drawn to craft should define what they’re seeing on their own.

Whether America’s craft distilling industry—however it comes to be defined—helps them figure it out, remains to be seen.