TOPO distiller Scott Maitland isn’t trying to be contradictory. He just happens to have found his way into an industry with a lot of rules and baggage that he has no use for. He also happens to be the kind of person who would rather confront bad rules and inconsistent enforcement than be content to carve out his little corner of a broken system.

His impatience for anything that strikes him as nonsense has put him in the middle of conflicts between the North Carolina Alcohol Beverage Control (ABC) Boards and the state’s craft distillers. If you are a distiller in North Carolina, chances are you’ve heard or read the name Scott Maitland as a strong advocate for direct-to-consumer sales and as a driving force behind the 2017 “Brunch Bill,” and chances are you have formed some opinion of him, for good or ill.

And chances are he’s got an opinion of you, too. He easily gets worked into a passion when he’s talking about his business, his city, or the politics of distilling in North Carolina. You should see how much of my notes are marked “off the record” after spending a couple hours with him.

Maitland is tall and clean-cut and talks with emphatic movements of his large hands. He’s the kind of guy you’d expect to pontificate precisely as he does. Put him in a suit and drop him at a distributors’ convention and you might mistake him for one of the old boys’ club, but Maitland doesn’t want to be part of a club. He wants to be part of a community.

You Can’t Put a Chain There

Three years in the Army taught Maitland to “never let somebody stupid be in charge of me again.” He was advised to go to law school if he wanted to become a small business owner, so he enrolled in UNC Law School with the idea that he would start his own firm one day.

By the time he graduated, he had determined he did not want to practice law — but he did want to stay in the Chapel Hill area. When he heard the city planned to put a TGI Fridays in the heart of downtown, at the top of the tallest hill, he knew what he had to do.

“I just couldn’t stand the idea of our town being dominated by a chain restaurant,” he explains.

If you get this about Maitland, you can begin to make sense of all the rest. It’s a statement that encapsulates his personal history, his core values, and his vision as an entrepreneur. He’s all about community, authenticity, and asking a lot of questions.

Maitland tells of discovering in high school that his hometown of Whittier, California, used to be the largest exporter of citrus fruit in the country. The citrus industry used to define them, but then that all shut down. “Instead, we’ve got shopping centers and chain restaurants,” he complains. To run a national brand, you have to have broad appeal, but to Maitland, that means inoffensive, homogenous, and bland.

“What is it that makes life interesting?” he cries, winding up one of his monologues (give him some runway and he will use it all, working himself up to a final exasperated exhalation before jumping to a new topic). “What makes one city different than the other? What makes culture cool to experience? It’s the fucking differences, right?”

Not one to sit around waiting for someone else to do what needs doing, Maitland jumped into action. In 1996, he opened Top of the Hill Restaurant and Brewery, defending the hill from the chains and creating a new, local meetup location right where the UNC campus meets the rest of the city.

Scott Maitland
© Brad Fruhauff

Distilling Solves a Problem

Maitland landed on distilling as a solution to a brewery problem. He originally planned to build a production brewery, and to can his beer. During his planning, he saw that he’d have to have a decently large distribution footprint to make it work, which meant he’d need a large brewery. He also knew that would mean he would be able to make more beer than he could sell for the first several years. His solution was to build a distillery so he could keep the brewery operational year-round and still make a marketable product.

One thing led to another: He landed on soft red winter wheat as the base grain for his whiskey and vodka. Then he discovered that soft red winter is the only wheat that grows in North Carolina, and in fact, he could source all his ingredients from within the state, which meant he could keep things even more local.

In the mid-2000s, he started hearing from restaurant staff that organic was big. It turned out an employee’s uncle had converted his farm to organic but needed a buyer. Maitland wound up contracting to buy 75 acres for four years to help keep the farmer solvent. He says because of this “brute force” approach, the North Carolina Department of Agriculture credits TOPO with single-handedly creating the organic wheat market in the state.

It turns out another unintended consequence of going organic is that TOPO has been helping protect the state’s pollinators, essential parts of the ecosystem. As he’s learned from Research Triangle crop scientists, GMO farming tends to work in monocultures, while pollinators thrive where there is greater biodiversity.

As Professor Scott Sees It

So, we’ve got community investment, a restaurant and brewery and distillery, an organic wheat industry, protecting pollinators — that’s a lot to digest, and I’m giving you the Reader’s Digest version as it is.

It may not surprise you to learn that for over a dozen years, Maitland has also been teaching entrepreneurship at UNC’s Kenan-Flagler Business School. Following a line of inquiry to the unexpected places it leads is a great quality in both a professor and an entrepreneur, after all. It also doesn’t hurt to have strong opinions and a will of steel.

Rather than weave all the many nuggets of industry insight Maitland has to offer into the space I have, I decided to forgo convention and opt for a grab-bag approach. Permit me, if you will, to present the view from the top of the hill as Scott Maitland sees it.

[N.B.: The following is a paraphrase of Maitland’s perspective.]

The ABC System in North Carolina

Unlike most control states, North Carolina franchises its ABC stores to 171 county and municipality boards. The monopoly is structured to favor short-tail distribution. There’s no incentive for the other boards to care what’s happening in Chapel Hill. So now I have to go to each of these boards and try to convince them to carry a product that’s just more work for them. I’m out of luck as a small businessman, and the consumer loses because they don’t have as many choices.

Monopolies are always at risk of corruption by their nature, though I used to distribute to 11 states and I’ve had private players try to shake me down. But at least in Virginia, say, where the state controls the stores, too, a local brand can more easily get statewide distribution.

Governments are going to look at the situation and say, “Let’s divvy up the pie.” Business people say, “Let’s grow the pie.”

The least we can do is expect local boards to play by the rules if they want us to play by the rules, too. Half the fights I get into with the ABC Boards have to do with holding them to the rules. And the craziest part is we’re making it better for them. When we get to do more to market to our consumers, then they’ll come to the ABC stores already sold on the product. But now you have to have it there for them.

I get frustrated with some of the other distilleries, though. They’re either content to work within the system or they’re happy to let me go out and take all the hits, but then they complain to me for not getting as much as they wanted. Look, I’m on their side. Our first law allowed us to sell one bottle per customer per year out of our distilleries. The ABC Boards didn’t like that we were now “competition,” and I had distillers complaining it was only one bottle. Then we got it to five bottles, and they complained about that. I said, “Sen. Gunn’s our champion on this, and he said he could get me five, so I took it.”

As of October 2019, though, we can sell unlimited bottles, and, in fact, we effectively created microdistillery restaurants, though that kind of got forgotten when the shut-downs happened in March 2020. After a decade of these fights, the ABC Commission, at least, has been seeing more of the value of all these local distilleries.

Valuing the Craft

Sometimes I tell people that if you want to make money in distilling, don’t start a distillery, start a marketing agency. I don’t care if you want to source GNS from somewhere, but it does irk me when everyone’s claiming to be hand-crafted but only some of us are actually beginning with fermentation.

For me, distillation is a mechanical process of separation. Fermentation is where you get to exert a lot of control — what ingredients go in, the yeast. We got our yeast from our first brewer, who was from Shepherd Neame in England. Your customers come into your tasting room, and they expect you’re making it all right there on-site.

Let’s just be up-front with our customers about what we’re doing. I can’t blame the customer for not knowing that this brand over here isn’t really a legacy brand or that one over there isn’t really hand-crafted. They’ve been sold all these stories, and it’s too much work for them to trace everything to its origins. But we as distillers can just be transparent and honest with them.

Freeloaders in any situation piss me off, people who benefit without putting in the work or even helping with those that do. It’s like the story of the Little Red Hen. Someone’s out there doing the work, and then when you have something good, suddenly everyone shows up and wants a piece of it. You do your work and I’ll do mine, and let’s be honest about what we’re doing, and now we can have a real local culture and community.

Tradition and Innovation

Tradition is great, but let’s ask, “Hey, why do we do it this way?” Lots of our “traditions” come from laws or economics that maybe don’t matter so much anymore. Like, FDR passes a law in 1938 requiring new oak barrels, which effectively means we’re going to use new American white oak. Okay, but now so much American bourbon tastes the same; it’s the homogeneity, again.

At TOPO, we look for what we can do differently. So, first, we are one of maybe two distilleries using both a column and a pot still. We’ll do the stripping run in the column, then take it to the pot to finish. This means we can pull out the heads, which is where you can get some undesirable compounds, including methanol, which they’re finding can turn into formaldehyde and is showing up in American whiskey. Then we can finish in the pot.

I used to think whiskey and I didn’t mix, and in fact I started the distillery believing I wouldn’t drink my own whiskey. What we’ve discovered, though, is that when you remove the heads, people aren’t feeling sick in the morning over it.

Now let’s look at wood aging. The big guys are using chips to accelerate aging, and they’ve been using chips in wine forever. So, we contacted a winemaker and he sent us the chips he uses for an oaky chardonnay, and we ran through several trials and came up with our Eight Oak whiskey. And we don’t hide it; in fact, we put the eighth chip right in the bottle, which is a high-toast vanilla and gives it a nose I really like.

And, frankly, the logical extension of this is you don’t need the wood barrels, just the chips. So I can scale up my Eight Oak without having to suddenly have a source for all these barrels.

Carl stills at TOPO

A Theory on Barrel Aging

And I have a pet theory about why we put booze into barrels at 125 proof. This is based on all these proof tests I was doing years ago when I was the only guy around with an Anton Paar alcohol meter. People would send me samples, and every one was testing 5%, 6%, or 7% off from their estimate, but never more than 9%.

Get this: Gunpowder mixed into liquor will ignite at 114.7 proof or higher. Say you’re in Trinidad and this guy says he’s from Scotland and wants to sell you some whiskey. You can run this little test with his product and know you’re not getting screwed. So if I’m making the stuff, I go into the barrel at 10% higher and have that margin of error, because the worst thing that could happen is we send it out and we can’t sell it.

Principles of Entrepreneurship

I tell my students you need two things: customer validation and fundamentally sound economics. Are the customers there, and can you make money? The irony is, in a control state, it’s hard to get that customer data. Most boards don’t even collect it. But you want to get a read on where the customers are, who they are, how they think, and how they buy things.

By sound economics, I mean a model whereby you can sell your product for more than you spent to make it. Simple as that. Nowadays I feel like I’m pitching some quaint old-fashioned idea because everyone wants to be the next Facebook or Amazon and they want to be that right now. I tell them, Facebook started out at one college, then targeted other Boston-area customers. Amazon didn’t make money for twenty years. Most of us don’t have that kind of runway.

On the Future of Distilling in North Carolina

It’s all about that B2C conversation. That’s why I still do distillery tours — it’s one of my only ways to talk directly to my consumer. We saw this with our beer, too; you have to have that tasting room.

In North Carolina, we have to take advantage of these new laws that allow us to sell food on-site as well as bottles. The money is in direct to consumer, not distribution, so you have to make your distillery a destination.

Top of the Hill Distillery exterior
© Brad Fruhauff
© Brad Fruhauff