Updated: May 3, 2019
There's no denying that the United States has experienced a significant increase in the microdistillery industry within the past ten years. Currently, there are over 2,500 “craft distilleries” across the US. There are quotes around "craft distilleries" for understandable reasons as some distilleries are not fully functioning distilleries. When you think of the inside of a distillery, you might think of the iconic copper still, or the vast amount of barrels held in a rick house. However, what goes on in the day-to-day business of a distillery is the distinguishing factor in identifying a craft distillery from something called a merchant distillery.
A craft distillery is what most people believe every distillery to be. They buy the grain or fruit and mill, mash, ferment, and distill everything in-house, and then out comes a beautifully made craft spirit. Unfortunately, a significant number of distilleries across the US do not do this. As one might think, it is immensely more expensive to buy the equipment to be able to distill from grain in-house. This is where the term merchant distillery came about. Those who wanted to start a distillery in the heat of this industry's economic boom without breaking the bank had another option besides becoming an outright craft distillery. It's possible to buy an already distilled product from a bulk alcohol distributor and then finish and bottle the product themselves. Not that there's anything wrong with this method of running a distillery, but what is typical for distilleries today is not to disclose this information to the public. Not only is it distrustful for the customers, but it also takes away the charm behind running a craft distillery. At a craft distillery, the prices per bottle are dependent on many factors including the cost of the base product, an employee's time and pay, the utilities to run the equipment, and the long list continues! When a merchant distillery prices their bottles, those little details aren't applicable, so the price inevitably ends up being lower. It's cheaper to buy in product and bottle it as opposed to creating the spirits from scratch. So what ends up happening is when a craft distillery has direct competition with a merchant distillery, people end up wondering why one distillery's spirits are cheaper than another. This is one of the most significant differences you'll find between distilleries.
Now you may be wondering how you as a customer can distinguish the difference between a merchant distillery and a craft distillery. One way is to do a side by side tasting and decide for yourself which you prefer. However, if you're not interested in popping bottles and spending the money, there is a way you can find a craft distillery's spirits right in the store. It's not surprisingly all about reading the fine print. By understanding the label and looking for key phrases, you can confidently walk out of the store with a craft microdistillery product. Usually, at the bottom of the label either on the front or the back of the bottle, there will be a line that says either “produced and bottled by..." or “manufactured and bottled by”and then the distillery's name, or "distilled and bottled by...". If the label says anything other than “distilled and bottled by..." then it's a merchant distillery, Whiskeys get a little more specific for craft distilleries, where they read "distilled, aged and bottled by...". If the distillery doesn't establish anywhere that they distill and age their own product, they probably don't. It's as simple as that.
The moral of this post is marketing can get tricky, taking away from the craft spirits industry. We're not here to shame anyone for liking specific products that may be from a merchant distillery; we just wanted to share our perspective on the industry coming from a family-run craft microdistillery. We feel it's important to educate the public on the spirits industry in any way we can because it is indeed an exciting business, but like many other businesses out there, not everyone is in the industry for the good of the public. Deception is not a marketing tactic, and we want everyone to see the transparency behind running a craft distillery, and what we do versus other microdistilleries. Below are a couple links to articles further discussing this issue between craft and merchant distilleries. Being a craft distillery versus using crafty marketing tactics is more important to us. Understanding whether you are supporting a grain to bottle distillery versus a bottling company makes all the difference in the world in the spirits industry.
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