Some Oregon ‘Craft’ Whiskeys Distilled in Out of State Factories

Some of the small-batch artisan whiskeys sold by distilleries in Oregon's emerging craft whiskey industry are not actually distilled in Oregon.

Multiple start-up producers and distillers bottle whiskeys made partially from large batches of out-of-state spirits in order to alleviate the expenses of starting up a distillery in Oregon. This also ensures the company has a product on the market while waiting for the first batch to mature.

Rather than distilling the product in house, multiple Oregon distillers like award-winning Big Bottom Distilling, Indio Spirits, source their whiskeys from MGA Ingredients, a mass supplier of food and alcohol derivatives based in Indiana. While the process of sourcing whiskey is common, the practice is at odds with the craft brand promoted by proprietors of artisanal spirits, according to industry insiders, such as Los Angeles Whiskey Blogger Steve Ury.

“What makes it different today is that some of these companies imply in their marketing materials that they made the whiskey themselves when that's not true,” he said.

For example, Portland based Indio Spirits Distillery and Tasting Room, which distills none of its whiskies, blends and ages distillate -- the product obtained from grain mash used to make alcohol -- from MGA ingredients. Indio’s product is made on site, but not from scratch.

Indio’s James Oliver Rye Bootlegger’s Special whiskey comes with the story of James Oliver happening upon a steaming copper sill of whiskey in a cornfield, learning the art of whiskey-making, then venturing to the great Northwest.

The whiskey is bottled, aged and blended in Portland, but distilled in Indiana, which the company makes clear. Indio’s Snake River Stampede and James Oliver American whiskeys are bottled in Oregon, but it’s unclear where the whiskey is distilled.

“We use found spirits,” said Mark White, a distiller at Indio Spirits, who blends and ages whiskeys on site. He said the most challenging part of the operation is obtaining the distillate.

“It’s a hard thing to do, and a costly thing to do, a lot of people turn to large distilleries,” White said.

Startup costs

The investment in setting up a distillery is high, and takes several months to work through the paperwork, Matt Mount, co-founder of Merit Badge bar catering, and former staffer at House of Spirits Distillery, said.

“There’s so much capital that’s needed to create a longstanding brand,” he said. According to Mount, two of five grain-to-bottle distilleries in Oregon went under.

A distillery cannot begin producing until all related permits are approved, and distilling a batch of whiskey from grain to bottle took two years, at House of Spirits, Mount said. As a result of the lull, some small upstart companies outsource the distillant, and blend it or age it on site.

“If you look at a distillery that’s only been around for a year and they have a straight whiskey you know it’s going to be outsourced,” Mount said.

The practice is common. “People are very up front about it,” he said.

Mount argues it is still fair game for distilleries to call themselves craft, even if a key ingredient of the product is mass-produced off site.

Additonally, the fire and safety protocols required for distilling spirits is rigorous, which ups the costs and regulations of an operation. Home distilling, unlike cider, wine or beer, is not permitted.

“Distilled spirits are highly flammable and the process is more like producing gasoline than it is like producing beer or wine,” the Oregon Liquor Control Commission License Investigator Dan McNeal said. Any spirit made before obtaining a license is to be dumped out under federal regulations, McNeal said.

Labeling

Bull Run Distilling, which sources whiskey while waiting for the product made in-house to mature, discloses its Temperance Trader Whiskey is “conceived in Bourbon Country but born in the Northwest Territory.”

According to federal Alcohol and Tobacco Tax and Trade Bureau guidelines, the label on a bottle containing spirits must indicate where the product was bottled.

Whiskey companies are required to disclose where the product was distilled, but the laws can be difficult to enforce.

A lawsuit against Iowa’s Templeton Rye arose when a longtime customer learned the company was not using the bootlegger recipe it marketed, but rather, MGP’s mass-distilled product from Indiana, following an expose by the Daily Beast.

No Craft designation

Craft spirits are not designated by any guideline or regulation, meaning there is no legal jurisdiction to qualify a spirit as “craft” or “not craft.” The Oregon Liquor Control Commission does not have a designation based on the size or output of the operation, said McNeal.



“Like a lot of guys do around town, they re-distill, there are not a whole lot of people doing grain-to-bottle distilling in Oregon,” White said.

White said Indio Spirits used to distill all of its products, but over time, the volume of sales outpaced production.

The amount of time it takes to bring a product to market holds Indio back from distilling in house, White said.

In Oregon, there are 89 locations licensed for manufacturing, distilling or tasting, but each distillery can have up to six locations. Ury compiled a list on his blog cataloguing whiskey brands and distilleries to educate consumers on where their whiskey is coming from.

The Northwest's premier spirits tasting event, TOAST, kicks off Saturday, March 7.

Related Slideshow: 6 Hangover Cures from Top Portland Bartenders

Enjoy this post? Share it with others.