Distilleries producing economic benefits along with spirits

Three years ago, Ohio Department of Commerce officials predicted that an easing of restrictions would trigger growth in the emerging craft-distillery industry, which would in turn create jobs, generate tax revenues and open new markets for Ohio agricultural products.

Turns out they were right.

The half-dozen distillery owners throughout the Miami Valley say business is strong, and the economic benefits spinning off from those sales are growing.

Before the new law took effect in March 2012, the number of licenses available to micro-distilleries was capped at three statewide. “It just didn’t make sense to limit the opportunity,” former commerce department director David Goodman said at the time. “These are small companies producing unique products with local or niche audiences in mind.”

So the cap was lifted, as was a ban on sampling spirits in a distillery tasting room and on purchasing spirituous liquor from a micro-distillery. The new law put strict limits on the amount and number of samples that a visitor can consume, and capped purchases to two bottles per person, but distillery owners said the removal of the outright ban against those activities was crucial to their success.

Three years later, the number of small-production distilleries in Ohio has grown from 3 to 29, with nine more applications pending, according to Matt Mullins, spokesman for the Ohio Department of Commerce Division of Liquor Control. “That means more jobs, more money in the economy, and more tourism,” Mullins said.

It also means more tax dollars flowing into the state’s coffers. A portion of the cost of every bottle of liquor sold in Ohio — or produced in Ohio and sold elsewhere — goes to Ohio via taxation. This region’s largest distillery by volume, Buckeye Vodka in Dayton, has paid or generated more than $2 million in state taxes since it launched in 2011, according to co-founder Jim Finke. The company now has 12 employees, has expanded its distribution to West Virginia and Kentucky, and is considering further expansion into more states, Finke said.

Buckeye Vodka also spends about $200,000 a year on marketing, mostly with local companies. The vodka brand has enjoyed double-digit percentage growth every year since it was launched, and this year, Finke expects to sell more than 12,000 cases.

“We continue to look for ways to keep the dollars we spend within our community and the state of Ohio,” Finke said.

The economic impact of the region’s smaller distilleries is more difficult to measure in dollars, but does spread through other Ohio businesses and agriculture. Consider:

• S and G Distillery/The Spirits of Yellow Springs in the Millworks Business Center in Yellow Springs sources its raw ingredients from local farms, according to partner Kerry Scheuner. The raspberries and blackberries for the distillery’s European-style fruit-based liqueurs, as well as the 18 pounds of honey that went into the first batch of rum liqueur to be released as “Honey Do,” came from Pitstick Farms in nearby Bath Twp. Pat Pitstick, co-owner of Pitstick Farms, said the distillery has become an important customer, and she welcomes the boost to her business. The distillery is expanding both its production space and its tasting room, and is adding a new still, Scheuner said. “We can’t keep up with demand,” she said.

• Stillrights Distillery in Bath Twp. near Fairborn, which sells bourbon, rum and moonshine spirits, launched less than a year ago, and hasn’t generated the type of job growth that Buckeye Vodka has: Its three employees are its three founders.

But co-founder Brad Measel said the distillery purchases all of its wheat from a farm near Clarksville in Clinton County, and the molasses for its rum from a distributor in the Trotwood area. It crosses a state line to get its corn from an Indiana farm, but is looking for an Ohio producer that meets its criteria.

• At the Indian Creek Distillery in Bethel Twp. in Miami County, Melissa Duer and husband Joe Duer are producing and selling their Staley Rye Whiskey from the same copper-pot stills Missy’s great-great-great-grandfather Elias Staley distilled rye whiskey during the early 19th century. Her great-grandfather George Washington Staley hid those same stills from federal agents nearly a century later during the height of Prohibition.

That sense of history is a magnet for visitors with a sense of history. “We get many people who come from out of state,” Missy Duer said. “Tourism is key to our success” — and it also results in tasting-room bottle sales, which Duer described as “brisk.”

The Duers purchase the grains used for their whiskeys locally: the rye comes from a farm near Versailles in Darke County, and corn from a Miami County farm, Duer said.

• The Belle of Dayton in the Oregon Historic District near downtown Dayton buys its bottles from a Lancaster, Ohio producer and the molasses for its 1775 Colonial Reserve Rum from a Trotwood distributor. “We can order a much higher grade of molasses because we can avoid paying the shipping cost,” said Belle of Dayton co-founder Murphy LaSelle. Most of the distillery’s grains come from out of state, “but we’re pushing to get more of our ingredients from local farmers,” LaSelle said.

• Aaron Lee — founder of Buckeye Distillery at 130 W. Plum St. in Tipp City, which is not related to Buckeye Vodka, produced in Dayton — was so pleased with the change in state laws that he hosted a grand opening of sorts three years ago just to celebrate his ability to sell his fruit-infused liqueurs (cherry, blackberry, raspberry and apple pie) directly to the public. The new rules allow him “to better interact directly with the community and to educate them on our spirits,” which now include a Dragon’s Breath Hot Pepper Vodka. While he buys his fruit flavorings from out of state, Lee said he buys his bottle labels locally.

Ryan Lang, president of the Ohio Distillers Guild and co-founder of Middle West Spirits in Columbus, said despite the lifting of some restrictions in 2012, Ohio remains behind other states in its regulatory treatment of craft distilleries. Lang said he and other distillery owners are seeking legislative approval of proposals that would level the playing field with wineries and breweries. And that would benefit other sectors of Ohio’s economy, Lang said.

“The majority of our Ohio Distillers Guild members source nearly 100 percent of their raw materials from micro-climates surrounding their distilleries,” Lang said. “Our supply chains are intertwined in the local agriculture of Ohio.”

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