That local liquor from the distillery down the road might not be so local. Chances are the brown liquor comes from industrial factories in Indiana, Kentucky or Tennessee and the vodka comes from large ethanol producers.

Those factories churn out millions of gallons of hooch every year, and they feed the nation’s exploding craft distilling industry. Ever wonder how a brand-new distiller is offering 8-year-old whiskey? It is buying it.

And many of those upstart companies are more crafty than craft, laboring to conceal the source of their liquor with provincial names and marketing that taps the wildly trendy locavore movement.

Ears burn when Rory Donovan talks about distilleries that hide the origin of their hooch.

“This whole thing is like comparing an air-guitar player to a real guitarist,” said Donovan, co-founder of 9-year-old Peach Street Distillers in Palisade. “One of them is pretending to be the other.”

Peach Street, he said, “did it the stupid, hard way,” laboring for years to craft the right bourbon and then waiting years for it to finish in oak-staved barrels.

Donovan said he understands the financial reasoning that drives up-and-coming distillers to buy liquor, but he is unwavering in his disdain for distillers who hide it.

“There’s something that does feel good when these charlatans are exposed,” he said, panting into the phone after spending an afternoon welding in his distillery.

Worst-kept secret

A pair of class-action lawsuits filed this month against craft distillers has exposed what many consider the worst-kept secret in craft distilling: Despite the marketing, most liquor is factory-made.

For several years, Iowa’s Templeton Rye distillery promoted its $35 whiskey as “small batch” and “made in Iowa.” Tapping its small-town roots, the distiller peddled its Prohibition-era recipe as the favorite drink of Al Capone.

In fact, the whiskey was made from a stock recipe in Indiana’s MGP Ingredients factory, which distills whiskey for dozens of brands. The lawsuit accuses Templeton of duping consumers into spending more for its whiskey with an untruthful tale.

Another class-action lawsuit filed this month in California targets Tito’s Handmade Vodka, arguing the Texas-based distillery cannot be hand-crafting — “in an old fashioned pot still” as the label says — the 15 million bottles of vodka it sells annually.

“The vodka was made, manufactured and/or produced in massive buildings containing 10 floor-to-ceiling stills and bottling 500 cases an hour using automated machinery that is the antithesis of ‘handmade,’ ” reads the lawsuit filed by a California real estate broker.

Not disclosing the source of pure whiskey on a bottle’s label violates federal regulations.

The Alcohol and Tobacco Tax and Trade Bureau — or TTB — requires the state of distillation to be named on whiskey labels, unless the whiskey is blended. The regulation is part of the byzantine rules that have governed whiskey since the Distilled Spirits Tax of 1791 sparked the infamous Whiskey Rebellion.

Today, a modern-day whiskey revolt is fermenting, with whiskey fans laboring to differentiate distillers who actually make the liquor and those who simply package it.

It’s a task true craft distillers have been reticent to do in recent years, said Chuck Cowdery, author of “Bourbon, Strange: Surprising Stories of American Whiskey.”

“When the real craft distillers are critical, somebody will always chime in and say you are trying to run other people down to build yourself up,” Cowdery said.

So whiskey fans and the hordes of bourbon geeks who flock to online forums like straightbourbon.com are taking up the fight.

It requires sleuthing to uncover distilleries that source their bourbon.

The outfits that are aboveboard — like Park City, Utah’s High West Distillery — clearly label who made their bourbon, acknowledging they need to sell something while their own creation ages in oak barrels.

Other outfits might briefly mention that their whiskey was made with Midwestern grains but amplify the fact it was cut with local water.

Searching a federal database for Certificate of Label Approval often reveals the source of some whiskeys.

Cowdery has drawn a bead on Double Diamond Distilling in Breckenridge, which he says sells far more of its popular Breckenridge Bourbon than it can make yet does not disclose the source of the bourbon it imports from other states.

“They are in violation of labeling laws,” he said. “Yes, they can get away with not following those laws because enforcement is lax, but it’s still illegal.”

Repeated calls to the federal TTB were not returned.

Double Diamond owner Bryan Nolt said his team — led by the respected master distiller Jordan Via — distills its own bourbon but sometimes blends it with whiskey from another location. He declined to name where he sources his bourbon for blending, calling it a “proprietary process.”

“Talking to our peers in the industry, there are a lot of folks freaking out about label details,” Nolt said. “We are pretty sure we are compliant with TTB guidelines, but like everyone else, we’re making sure everything is compliant.”

Historical dominance

Sales of American spirits are soaring, and whiskey is fueling the ascent.

Whiskey exports topped $1 billion for the first time ever in 2013, pushing liquor exports beyond $1.5 billion. Whiskey sales grew 6.2 percent in 2013 to more than $7 billion, according to the Distilled Spirits Council.

For the first time in decades, all whiskey categories saw growth in 2013, ferrying the woody spirit back to its historical dominance in the U.S. market. Bourbon and “Tennessee Whiskey” are the workhorses, with sales climbing more than 10 percent in 2013, to $2.4 billion.

And those workhorses are multiplying.

Steve Ury, a California attorney who tracks whiskey makers on his Recent Eats blog, counts more than 300 whiskey distilleries in the U.S., up from 190 a year ago and 35 in 2009. The TTB today permits 66 liquor producers and bottlers in Colorado, up from 38 in 2012 and 18 in 2011.

Most of those new whiskey producers, Ury said, are buying their aged whiskey.

“It’s a real problem,” said Ury, who said labels reading “produced by,” instead of “distilled by,” often signal that a distiller is buying, not making, its liquor. “This is a big issue in the whiskey community, and I’m sure we will see more lawyers filing lawsuits soon.”

Jamie Gulden, the co-founder of Fort Collins’ Feisty Spirits distillery, bottled his first whiskey 18 months ago. It was indeed a small batch. It would have been easier — and cheaper — to mix it with whiskey from afar.

“That’s a different mode,” he said. “I wish the guys who did that would be more upfront about it.”

Masking the origin makes it tough for discerning consumers, but perhaps worse for craft distillers whose locally made products are more expensive than the bulk-blended bottle.

“The liquor world is rife with marketing scams,” said PT Wood, co-founder of Wood’s High Mountain Distillery in Salida. “If you are trying to be a product guy and not a marketing guy, you are at an instant disadvantage.”

Rob Masters, founder of Loveland’s Spring 44 Distilling and president of the Colorado Distiller’s Guild, has never concealed that he imports his whiskey from Kentucky and mixes it with local spring water.

“To me this is about being honest,” Masters said. “There are a lot of blood, sweat and tears in this industry. I see it becoming a bigger problem if the general public or the consumer gets a bad taste in their mouth for craft spirits in general.”

Mark Kleckner, the co-founder of Basalt’s nascent Woody Creek Distillery, is taking the craft mission to the next level by growing the potatoes he uses in distilling his vodka. His whiskey is still aging.

It’s easier and cheaper to buy whiskey from Indiana or Kentucky, he said, but “we wanted to stick to our guns.”

“A majority of whiskey sellers out there are buying product from someone else. It’s not a bad thing. But they need to be honest,” Kleckner said. “When I see distilleries opening in a strip mall and they don’t have any equipment, they are very clearly buying their spirits. I hope the public will see through this and notice the quality or lack of quality. I think we are on the cusp of a major paradigm shift in the distilling industry.”

“Big on education”

Todd Leopold is another distiller taking the long road to whiskey.

At a new facility in industrial north Denver, his family is forging a list of first-evers for the Leopold Bros. brand.

The well-respected distiller has designed the country’s largest malting floor, where 700,000 pounds of barley will steep and sprout each year, seeding his nearly 50 varieties of liquor. In the country’s only pagoda-topped malting kiln, which Leopold designed using an 18th century book, hot air rising from below a steel mesh floor will cure that germinated barley.

Everything is open, so visitors on regular tours can learn how their liquor is made.

“We are big on education here,” Leopold said.

He could buy his barley already malted and cured. He could buy whiskey and bottle it under his label. He could, like nearly every other vodka distiller, buy natural grain spirits and convert it speedily into his own vodka.

“What fun is that?” said the 44-year-old, stirring a wooden vat brimming with a bubbling brew below open windows, where breezes ferry pollen and beneficial bacteria in from the garden’s peach trees and lavender bushes.

Bob Leopold, the patriarch, is in the garden weeding. Brother Scott is directing a tractor-trailer delivery. A team of distillers is bottling Georgia Peach Whiskey, hand-writing the batch number on each bottle.

The 44-year-old master distiller, who started out two decades ago brewing beer, easily veers between scientist, historian, engineer and distiller as he explains the facility he’s crafted. Detailing the many intricacies of his plan, he asks a few times if it’s OK “to geek out for a minute.”

Those guys who buy their whiskey don’t bother the Leopolds.

“Those are marketing companies. We are a manufacturing company,” he said. “Worrying about what other people are doing is a slippery slope. We make whiskey. We are so lucky. It’s hard to do what we do and be upset.”

Jason Blevins: 303-954-1374, jblevins@denverpost.com or twitter.com/jasonblevins

Colorado liquor producers and bottlers licensed by the TTB:

3 Hundred Days Distilling, Monument

10th Mountain Whiskey And Spirit Co, Gypsum

39 North Spirits, Eagle

808 Distillery, Eagle

Altitude Spirits, Boulder

Anvil Distillery, Longmont

Axe and the Oak Distillery, Colorado Springs

Black Canyon Distillery, Longmont

Bear Creek Distillery, Denver

Big Fat Pastor, Loveland

Black Bear Bottling Co., Colorado Springs

Boathouse Distillery, Salida

Boulder Distillery, Boulder

Colorado Gold Distillery, Cedaredge

Copper Muse Distillery, Fort Collins

Dancing Pines Distillery, Loveland

Deerhammer Distilling Co., Buena Vista

Distillery 291, Colorado Springs

Double Diamond Distilling, Breckenridge

Downslope Distilling, Centennial

Feisty Spirits, Fort Collins

Gargoyle Enterprises, Denver

Geek Spirits, Boulder

Golden Moon Distillery, Golden

Honey House Distillery, Durango

J and L Distilling Co., Boulder

JF Strothman Distillery, Grand Junction

KJ Wood Distillers, Berthoud

Lee Spirits Co., Colorado Springs

Leopold Bros, Denver

Local Distilling Inc., Golden

Mancos Valley Distillery, Mancos

Mile High Spirits, Denver

Montanya Distillers, Crested Butte

Moonraker Distilling, Denver

Myles Brothers Spirits & Distilling, Paonia

Mystic Mountain Distillery, Larkspur

Old Town Distilling, Fort Collins

Pat’s Backcountry Beverages, Wheat Ridge

Peach Street Distillers, Palisade

Peak Spirits, Hotchkiss

Private Label Distillery, Aurora

Proximo Distillers, Denver

Pure Distilleries, Colorado Springs

Rest & Relaxation, Fort Collins

Rising Sun Distillery, Denver

Roundhouse Spirits, Boulder

Sangre Distilleries, Westcliffe

Sek Distilling, Loveland

Shot Shooter International, Denver

Stoneyard Distillery, Gypsum

Spirit Hound Distillers, Lyons

Spirits of the Rockies, Pueblo

Spring 44 Distilling, Loveland

State 38 Distilling, Golden

Still Cellars, Longmont

Still House, Denver

Syntax Spirits, Greeley

Telluride Distilling Co, Telluride

Tesouro Distillery, Longmont

Trail Town Distillery, Ridgway

Two Guns Distillery, Leadville

Vidas Margaritas, Greeley

Wood’s High Mountain Distillery, Salida

Woodshed Distilling, Pagosa Springs

Woody Creek Distillers, Basalt

Zephyr Spirits, Boulder