Colorado is a kaleidoscope of craft distilling. Every aspect of the spectrum of craft distilling has a model here, from world and national brands to local favorites and corner distillery pubs. Stranahan’s has the rags-to-riches legacy of going from a crazy idea to a major acquisition. The state is home to Leopold Brothers’ sterling reputation, Breckenridge Distillery’s controversial and rapid rise to the top, small-town players that have beaten the odds, like Deerhammer, and new-to-the-scene distillers that are turning heads.
While Colorado brands do have their fair share of spin, distillers here have been forced to make innovations to adapt to an ever-changing industry. Like most states, it has a mix of advantages and unique challenges, and there has been no shortage of ideas to make the most of the unique circumstances that define the distilling community in this state.
Advantages Accelerate Innovation
The combination of Colorado’s tourism industry and a liquor code that is friendly to craft producers has been advantageous to most distillers. The state allows up to two tasting rooms per license. These unique licenses allow direct-to-consumer sales for both on-premise and off-premise consumption. Regardless of their size, most producers take advantage of this. These range from tiny pockets at the front of an industrial condo to stunning showcases like The Family Jones. A tasting room can endow a start-up with an immediate cash injection and create a brand experience that consumers will talk about for years to come.
Taking advantage of this situation is easier said than done. While the state’s main industry is tourism, there is a lot of competition for those tourist dollars. KJ Wood is one distiller who saw this as an opportunity. He adapted the initial business plan to try to take advantage of the state’s tourism. Taking that leap meant moving KJ Wood Distillers 360 miles out of Denver to the mountain town of Ouray. The change was not without its challenges.
K. John Wood relates, “In hindsight, I should have closed down production and really paid closer attention to how the business model would change. Being on a main street with over 400,000 tourists passing your door not only changes production schedules, it changes marketing, staffing and ultimately brand development. The seasonality, the more remote location, and the access to the greater Colorado market have all made for what is effectively a complete rewrite of the business plan.”
Another driving force behind Colorado innovation in distilling was the early presence of a respected cocktail scene in Denver and Boulder. Well-curated bar programs like Williams & Graham, Green Russell, Linger and Bitter Bar pushed local distillers to make sure the quality of their spirits were on par with respected national brands. These bar programs were not going to put your spirit in a cocktail just because it was local — and not just because you had a quaint story to go along with it, either. If you wanted to be in a cocktail on the list, you had to navigate distribution and clandestine agreements as well as provide a top-notch spirit.
Recent legislative changes have added another business model as an option to craft distillers. The Distillery Pub License allows for the advantages of a tasting room while also having the freedom to sell beverage alcohols from other producers, including beer, wine and other distilleries’ spirits, along with a full restaurant menu. Similar to the Colorado Brew Pub License, the drawback is a cap on distribution. Given time, this option will no doubt result in more industry innovations and perhaps even franchises.
Challenges Forced Innovation
Despite the relatively friendly liquor code and craft-friendly culture, distilling in Colorado is not without its challenges. Municipal fire code enforcement has rewritten more than a few business plans, especially in the Denver and Fort Collins areas. The constraints some of these modifications have put on working capital have resulted in resourcefulness and innovative thinking.
Colorado’s high elevation and semi-arid climate create unique challenges for distilling and aging spirits. This has forced a plethora of innovation as well. Do you allow evaporation to occur more quickly? Or do you use climate control and mimic traditional barrel-aging climates? Does the frequent change in barometric pressure really affect the spirits? How does boiling temperature at elevation affect mashing and distilling? Everyone has a different take on this, and they’ve all answered these questions in their own unique and original ways.
If you ask most Coloradoans what their drink of choice is, they aren’t going to list a cocktail. Colorado is a beer state, with nearly four times as many breweries as distilleries. Each year thousands make the pilgrimage to Denver for The Great American Beer Festival. This environment has reinforced the need for innovation as well. Attempts to tap into this market are seen in the variety of bierschnaps, hopped whiskeys and even pumpkin cordials.
Most Colorado consumers are very informed about beer but are just beginning to learn the basics of spirits. The need to close the gap on consumer education has pushed distillers to innovate methods for increasing tasting room visitation and educating each customer they come in contact with. Consumers don’t need a class to make good use of an IPA, but when you are hoping to generate repeat sales of a New West gin or a barrel-poof rye, they might need a cocktail class, and this is exactly what some tasting rooms have done.
Brewers Get Involved
At the same time, the highly talented brewing community has brought its own innovations to the table. The Heart Distillery is a prime example of this. While the single still and hand-bottling operation look very similar to many startups, the massive 60-barrel fermenters do not. Zach Weakland started the distillery in connection with the brewery that he started from the homebrew shop and hop farm, which he built connected to his parents’ garden shop in Windsor. Weakland uses the existing infrastructure at his High Hops Brewery to handle mashing and fermentation, which is then transferred to the small licensed footprint of The Heart Distillery. All of this requires careful navigation of state and federal regulations. The somewhat arbitrary enforcement of these codes also requires ingenuity, but with an established taproom and customer base on-site, it’s worth the effort. Currently, patrons have to consume distilled spirits in one part of the facility while beer can only be enjoyed in another part. Plans are in the works for a future common consumption area where customers will be able to enjoy both beer and spirits anywhere on their covered patio.
The knowledge base professional brewers bring to the table is very valuable as well. Like many brewers, Weakland finds the endless possibilities distilling offers intriguing. “Just not being tied to a shelf life opens a lot of possibilities,” Weakland said. If you already know how to ferment, you’re one step closer to making premium spirits. Brewers are leaving the beer industry for employment in distilling or to open their own distilleries with the expertise they learned along the way.
That is the case with Longtucky Spirits. Two friends who moved to Colorado and got brewery jobs now find themselves at the helm of a small distillery. They find their customers are used to the variety of beers accessible at a tap house. Howard Wallace explains, “Our bar is right downtown, and people want a lot of different stuff. So we’ve released about one new product each month since we opened a little over a year ago.”
Crowded Markets, Distribution Co-Ops, Expanding Portfolios
As the number of distillers grows, so does the battle for shelf space. This has forced innovations in the variety of products as well as the means of distribution.
Nels Wroe at Dry Land Distillers is trying to establish a place in the market with unique products and a mid-century-modern tasting room. Challenges to sourcing raw agave gradually led him down the path to the prickly pear cactus, which is smoked and distilled into a mescal-esque spirit. Seeing the problem of standing out when everybody tries to be different in the same way, Dry Land has no plans to make a vodka and avoids typical Colorado-themed packaging. They’ve innovated a tasting room model by partnering with a new restaurant for a speakeasy-style entrance, just nearing completion. “It’s a challenge being open in the middle of construction, but we’re hitting our targets.”
Colorado also allows for self-distribution by producers. While this has its benefits, it creates challenges as well. Local producers have brainstormed ways to overcome this by partnering with other distillers and working on distribution co-ops. Recent changes to laws governing sales of spirits in grocery stores will no doubt require innovative thinking and adaptability.
No explanation of Colorado distilling would be complete without understanding the allure of the Rockies. Nobody moves to Colorado for business advantage; people move here because it is such an incredible place to live. Coastal states have views for people that are ¼-mile from the coast. Colorado has views for everyone within 50 miles of the mountains. Of course, if you are in the mountains the views are breathtaking. But if you are driving along Interstate 25 at sunset, on the plains of suburbia, as the sun falls behind the silhouette of the Rockies, the views are just as incredible.
The climate in Colorado makes it difficult to ever leave. While the state receives plenty of snow to enjoy all of the winter sports in excess, this is balanced with relatively mild winter temperatures. The summer heat is easily tolerated due to extremely low humidity. Not to be missed is the fact that this is one of the sunniest states, with over 300 sunny days a year. This is a contributing factor to the state’s reputation for happy and healthy residents.
Everywhere you look in Colorado, there is inspiration. Local producers have taken advantage of this: aging on unconventional wood like aspen, proofing with water sourced from a private mountain spring, using native plants as botanicals in spirits and growing heritage grains for whiskey production. When you come to Colorado, you can’t help but be energized. The air is different here, thin and crisp. The sky is bluer here; at a mile high, we are closer to it. The growing season is shorter, forcing everything to struggle just a bit more. The sun is brighter. The water is cleaner. The smiles are brighter.
All of these factors contribute to the local mind-set, which is “work hard, play hard.” This concept can’t be missed in Colorado. In the cities, mountains and plains you will see people fitting in their playtime regardless of the season.
Carve Out Your Niche
The craft-distilling community as a whole continues to be in an upswing, but how do you carve out your niche in an increasingly crowded market? This question isn’t unique to Colorado. As in many places, distillers have been forced to adapt to market and legislative changes. They’ve shown ingenuity in overcoming a variety of obstacles. Colorado is a place to balance fun and hard work.
Most distillers that have been active for five or more years have found themselves a far cry away from their original business plan or at least the whimsical concept that they first had. Whether you are brainstorming ideas for your initial business plan or finding your passion for distilling waning due to challenges and the daily grind, Colorado is sure to spark your creativity and rekindle your fervor for distilling.