New distilleries that make aged spirits always face the same problem: How can they build their brand and business before their own spirits are ready? Some distilleries have the patience and resources simply to wait, laying down whiskey or other spirits for years and not releasing it until it is ready. Others, especially in the early days of the craft distilling movement, survived and thrived by making vodka, gin and other unaged spirits. Some experimented with very young whiskeys, often aged in small barrels. But a great number of craft distilleries, including some of the most successful, started out by purchasing aged spirits in bulk from elsewhere until their own spirits were ready. Now, years after opening, some of those companies have fully made the switch to their own spirits.
Brand Building with Brandy
“There’s this super exciting moment when your big, bright, shiny copper stills get delivered to your distillery,” says Joe Heron, founder of Louisville, Kentucky-based Copper & Kings Distillery, which has played a critical role in the revival of American brandy. “It’s probably one of the most exciting moments in a distillery’s life, but can be tempered very quickly by the realization that you’re actually going to have to bring a product to market that has enough volume to be practical.” Unaged brandy wasn’t going to cut it, so the company started sourcing aged brandy. “We actually started out by calling up all the brandy distillers from the ADI directory. That’s how we got into the American brandy business.”
Copper & Kings’ initial releases were made entirely from sourced brandy, purchased from distilleries in six or seven states. But the distillery laid down brandy to age from the beginning, which proved fortuitous: Its own brandy began to mature just as aged brandy available on the sourcing market started to dry up. “After a few years, it was very hard to find any aged brandy at all, anywhere. And by then, it was no good for us buying two-year-old brandy. We already had a lot of our own.”
Once its own distillate reached four years old, Copper & Kings began to incorporate it into its blends in steadily increasing proportions. Deciding how much to use, and at what age, wasn’t easy. “Like all barrel-aged maturation, you’re trying to project volume years in advance,” Heron says. “We didn’t decide to stop using our sourced brandy one day. We layered our own four-year distillate in as an increasing percentage over time, the young into the old, to create a consistent thread so there are no dramatic changes in flavor. You want it to be so gradual that you hardly notice it.” Eventually, the distillery stopped using sourced brandy entirely, except for some small limited releases. “We’re five and a half years old. It’s pretty much all our own now.”
It’s clear that the patience paid off. “I am in love with our brandy,” Heron says. “Between our pot stills and our grape blend, the brandy is very uniquely ours. And we use bourbon barrels for aging, which makes a big difference. Copper & Kings is very fruit-forward and has a rambunctiousness that’s more similar to bourbon or whiskey, but with an unctuous voluptuousness.”
Economically, the distillery could never have gotten where it is without sourcing. “You just can’t make enough money from unaged spirits. To be in the aged brandy business, we had to source.” But sourcing and laying the groundwork for the eventual transition was not a silver bullet. “When we first started, even quite old brandy was very cheap. But we were buying that and laying our own brandy down in barrels for four years at the same time. It takes a lot of money.” And if the distillery hadn’t had a plan for transitioning to its own distillate, it would have been left high and dry when the aged brandy market dried up.
Blending Indiana and Montana
Headframe Spirits in Butte, Montana, also got its start by sourcing spirits and also planned from the beginning to transition to its own whiskey over time. Unlike Copper & Kings, they sourced their initial stock from a single distillery — LDI, now known as MGP, in Lawrenceburg, Indiana. “For us the switch was a multiyear process,” says founder John McKee. “We had planned it out, but the brand grew pretty fast, and we had to change up that schedule because we weren’t putting away enough to meet new demand. We had hoped to make the switch in four years but ultimately did it in about six.”
Like Copper & Kings, Headframe blended in more of their own distillate over time, finally completing the transition around two years ago. “We continually increased the ratio of our products to MGP until we hit a point where our on-hand whiskey could meet our demand forecast,” McKee explains. From a marketing perspective, Headframe was always totally transparent. “The message had always been, ‘Look, it’s a blend. It’s more and more ours every year, and pretty soon it’s going to be all ours.’ So it was pretty easy to just celebrate with our customers and accounts when it became 100% our own juice,” McKee says. By the time the switch was made, Headframe’s whiskey was entirely their own straight bourbon, all aged in 53-gallon barrels.
McKee loosely matched his bourbon distillate’s profile to the sourced stock. “If you run anybody’s whiskey through a GC [gas chromatography machine], you can determine, within 80%, their mash bill, their fermentation regime, even what type of yeast they’re running. So we looked at what they were sending us and understood how it was being made. We knew that we could not exactly reproduce that, but certainly got close.” This made the transition to the distillery’s own whiskey essentially seamless. “No one except our most ardent fans, or me, could even tell the difference.” For McKee, the very nature of bourbon makes the transition easier. “I know everybody really desperately wants their bourbon to be a unique unicorn, but it’s just not. There’s only so much playing around you can do between the limitations on grain and cooperage.”
For McKee, the real experimentation comes not from bourbon but from single malt: “We really opened the distillery to make a single malt. The very first barrel we laid down eight years ago was our single malt. There’s just so much creativity in a malt, and American single malt is finally getting a little traction as a class.” Sourcing its bourbon has allowed Headframe to take its time with its single malt, without ever sourcing. “It was always going to be ours because I really wanted to do something special,” insists McKee. Montana, after all, is one of the top barley-growing states, making it an ideal environment for single malt. “We’ve done new and used casks, low- and high-proof distillates, finishes, Sherry butts,” says McKee. “What we really saw in malt was this ability to get really creative, and I’ve just never felt that you could do that with bourbon.” After many years of preparation, Headframe released its flagship single malt whiskey this March — just in time for the pandemic. “As the state begins to open back up, we’re taking it to the market in a more aggressive way, so everybody knows it’s ready. They knew we’ve wanted to sell this for years.”
A Different Approach
Blending in one’s own spirits into sourced stock over time and gradually increasing the proportions is not the only approach to sourcing. Blaum Bros. in Galena, Illinois, took a different tack: They sourced MGP whiskey but never blended it with their own, instead releasing the sourced whiskey as its own brand until their own whiskey was ready.
“To be honest, we never had any intention of doing any sourced products,” says co-founder Matt Blaum. “It was never really even something we had talked about. We were new and naive and thought we’d be able to keep the lights on with vodka and gin and things like that while we aged our whiskey the way we wanted to age it.” But when a broker approached Matt and his brother Mike with some mature MGP whiskey, they fell in love with it and, after trying samples from many places in the warehouse, made a purchase. “It just kind of fell across our lap,” Matt says. “That’s when we came to the crossroads. We had never planned on doing anything sourced, so we wanted to be very open and overt with the fact that we didn’t distill it.”
Their solution was to name the brand Knotter Bourbon, pronounced “not our bourbon.” Blaum Bros. also took pains to ensure that customers understood the bourbon was sourced. “Aside from the name, Knotter Bourbon, we have several places on the label that say it’s not our product. It isn’t ours, we didn’t distill it. We were very overt with it at the distillery as well. Our bartenders and our tour guides talked about the name Knotter Bourbon and why we named it that.”
Blaum Bros. only purchased from MGP once, and recently released its final bottling of Knotter; it has no plans to source again. “It was really a means to an end. Everyone thinks we’re crazy because we’re not continuing on the Knotter Bourbon line, but a sourced product is just not something that we ever planned to do.” Although unplanned, the decision to source turned out to be very fruitful. “It put our distillery on the map and gave people brand recognition. So it was an integral part of our growth,” Blaum says. “But we’re perfectly comfortable now being in a spot where we have all our own products.”
Having a successful sourced brand in a distillery’s early years is not just a matter of extra cash: It can provide the means to scale up production. Blaum admits that, “without the sourced products, we would not have been able to fill up as many barrels as we have.” By the time the distillery released its own whiskey last year, it was all at least four years old, entirely aged in full-size barrels. The sourced brand also allowed the distillery to hold some barrels back to get even older.
While they can and often do pay off, sourced bourbon brands aren’t guaranteed victories. As demand for older MGP whiskey has boomed, Knotter Bourbon has become a highly sought-after collector’s item, but it initially struggled to get traction. “It was a shelf turd for the whole first year it was out,” Matt says. “Some people bought it and saw it was really good stuff, but it was in that weird transition period when there was a lot of negative press about sourced juice.” Even getting it placed was initially an uphill battle. “At the time, liquor store owners and bar owners were saying, ‘Oh, it’s sourced? It’s from MGP? We don’t want it.’ And where it did get in, it just sat. And then all of a sudden, one day it was cool to drink MGP again and everybody fell in love with it.”
That sudden popularity came just as Blaum Bros. was preparing the launch of its own flagship whiskeys. “A lot of people said we should just use the same label to keep that brand recognition. It was a big discussion,” says Blaum. “We could’ve used the same bottle and design and just changed the name from Knotter Bourbon to Blaum Brothers Bourbon. But at the end of the day, we wanted them to be two separate things and we wanted our distillate to stand on its own two feet.”
The distillery’s extreme transparency paid off. “Because we were really slamming it in people’s face that Knotter Bourbon was sourced, people started to pay attention and say, ‘Okay, why is that?’ And then they learned that we’re making whiskey the hard way. Big barrels, long aging time and doing it our own way. And that led people to jump on board and follow the ride. We really started to acquire quite a fan base.”
The distillery’s customer base tends toward highly educated whiskey consumers, which is just how the Blaum brothers like it. “It goes in line with who Mike and I are. We were both whiskey fanatics and appreciated the craftsmanship and work that went into them. So when we decided to open our own distillery, that’s where we were coming from. The people who are a little more educated on whiskey and appreciate the work that goes into it are people after our own hearts. It’s really gratifying now that we’re at the point that the bourbon and the rye are both flying off the shelves, because it means we did something right along the way.”
There’s no single right approach to sourcing whiskey. But distilleries that have seen success have a few things in common: They have specific goals and an understanding of how sourcing can get them there; they implement a long-term plan to reach those goals and they adjust or pivot from the plan as circumstances change and opportunities arise. And, critically, they are not only transparent about sourcing, they take a sense of ownership in it. “We aren’t ashamed of our sourced releases. Sourced brandy is part of what we stand for,” says Joe Heron of Copper & Kings. “We blended them. We aged them. We nursed them into being. It’s like adopting a child or rescuing a dog. It may not have been yours originally, but you have the same intensity of love for it.”
