GROWTH — THEN COVID

Flux: Cayce Kovacs talks about opening a distillery in Comfort and COVID-19 challenges.

Originally, Cayce and John Kovacs were going to invest in a distillery that two of their friends planned to build.

The couple liked their idea of producing liquor from the prickly pear cactus, the ubiquitous Texas plant.

The friends abandoned the idea, but the Kovacses figured they could develop the distillery themselves. In July 2014, they opened Hill Country Distillers in Comfort, 42 miles northwest of San Antonio.

For a decade, the Kovacses had run a factory in Alliance, Ohio, that made commercial roofing materials, sold mostly in Texas. But they grew tired of the construction trade’s ups and downs.

Both Kovacs already lived in the Texas Hill Country and thought they could be pioneers in the Texas distillery industry, with the help of changes to state law in 2013.

“I always thought that alcohol was a pretty steady gig,” said Cayce Kovacs, 61. “You drink alcohol when times are bad, and you drink alcohol when times are good. In the back of my mind, I thought that it would be a pretty level business to get into.”

The 2013 law revision allowed Texas distilleries for the first time to sell cocktails and bottles of liquor in their tasting rooms.

“So we saw that as an opportunity to get in on the ground floor, so to speak, of what was going to be kind of a new industry in Texas,” Cayce Kovacs said. “We were permit No. 34 in Texas, a state where distilleries were few and far between.”

The couple found a closed winery in Comfort. The property had a turn-of-the century cottage that now serves as Hill Country Distillers’ tasting room. Cayce Kovacs thought it would work nicely for tastings because of its homey atmosphere.

Hill Country Distillers, which opened on July 3, 2014, had grown for six years until the COVID-19 epidemic.

The couple sell bottles of liquor at the distillery and through distributors that, in turn, sell their booze to restaurants and liquor stores.

The following transcript of an interview with Cayce Kovacs has been edited for brevity and clarity.

Q: How did you find this location?

A: We were looking around the Hill Country and we stumbled onto this winery, which had been closed for three years and was not for sale. But we located the owner and approached her about our interest and told her what we wanted to do. We were able to negotiate what we considered a very fair price for the location. I liked the tasting room. We just took all of the wine stuff down and made it more homey. This was built in 1910. I grew up in a house built in 1919. So it kind of reminded me of a nice, comfortable little home. I wanted people to walk in and feel comfortable.

Q: So was your initial liquor distilled from the prickly pear? What did you start producing after that?

A: We first had the prickly pear, whose flavor profile is between a tequila and a vodka. We use it in cocktails in which you would use either vodka or tequila. So it’s very versatile. Our second product when we opened was our jalapeño liquor. The winery owner left bottles of unopened jalapeño wine. So we distilled some of it and decided that would make a very interesting product. So we came up with our jalapeño mash recipe. It’s the flavor of jalapeño, but there is no heat to it because we ferment the hot peppers and then we distill the liquid. In our second year came our gin. We were going to have a Prohibition party, and people started telling us we needed to make bathtub gin. So we had to look it up. What the heck do we need to do to make gin? We Googled it and decided to use local juniper berries, mixed with our cactus mash. Later on, we introduced four fruit liqueurs: lemon, lime, orange and grapefruit. And then we do a coffee liqueur.

Q: What has been your biggest challenge running a distillery?

A: The more you can produce and put out, the cheaper it is per unit. But there’s a whole lot of marketing money that has to be spent in this industry. Say you’re going to have a tasting at the Witte Museum or Fiesta in San Antonio or an event in Houston or Dallas where there’d be two or three thousand people or more, and you get to sample your products. Well, you have to spend money to get out there, to rent a table, to pay hourly workers. It’s a lot of marketing money that we didn’t realize we needed to spend to get our alcohol out there and get it known. What we’re trying to do is get

“We had high hopes for 2020 before March,” says Cayce Kovacs of Hill Country Distillers, “but then COVID-19 closed our tasting room.” She started the distillery with her husband, John, in 2014.

Jerry Lara / Staff photographer

repeat buyers. It’s one thing for somebody to come in our tasting room and taste my product, and they like it and they buy a bottle. I really want them to go back home and go to the liquor store and buy it again at the liquor store. So that’s where you need the repeat sales. If they buy me as a novelty one time, I’m not going to make it.

Q: Has the business been successful?

A: We sell 6,000 bottles a year of liquor. In previous years, we would have broken even, but we had to buy bigger tanks and reinvest in other things. Like most businesses, even if you were making some money, typically, then you need to roll it back in. We had high hopes for 2020 before March, but then COVID-19 closed our tasting room. We normally sell a third of our bottles at the tasting room. We didn’t reopen until August. After August, we had a slight increase — 10 to 15 percent of bottles sold by our distributor to liquor stores and restaurants — but overall business was down by more than 30 percent.

Q: Did visitors return to the tasting room after you reopened?

A: Well, September was good. October was even better. But November was not. November was our lowest November we’ve ever had. I don’t know if it was the election — it was very contentious and it brought uncertainty about the future. I think that probably had something to do with it, or the COVID numbers going back up. I guess a combination of things. We’ve got a decent amount of traffic — like, say, 60 to 70 people coming in on a Saturday — but they’re concerned about their economic future. They’re not spending quite as much as before. The average sales are $50 compared to $75 before the pandemic.

Q: Do you have special events to draw people to the distillery?

A: Comfort has two big celebrations a year that draw lots of business to our distillery. We were closed for the first event, the Fourth of July celebration. The Saturday after Thanksgiving is what we call “Christmas in Comfort.” We have thousands of people come to the community that day. We normally have a big parade. They shut down the main street and have vendors and everything. Well, we couldn’t have the parade because of the pandemic. And it also ended up being cold and rainy all day. So just that one day was a big hit, both pandemic and weather-wise.

Q:

How many employees do you have?

A: We had five — three full-time and two part-time. One of our distillers retired, and we didn’t replace him. We now have four employees. We received around $30,000 in federal stimulus money, which helped keep everyone employed.

Q:

What are your hopes for the future?

A: We really need to hopefully get back to normal. I don’t want a new normal — I’d really like to get back to the old normal. Just back to being able to hold events, being able to go out and market your product. People not living in fear of being exposed to the disease and stuff.

Q:

Are you looking to significantly expand your operation?

A: Not really. Right now, we’re in about 20 percent of the liquor stores in the state and about 1 percent of the restaurants. If I could get in 60 or 70 percent of liquor stores and even just a quarter of the bars, oh, my goodness — I’d be tickled pink. So that’s all we had ever hoped and planned for — to be big in Texas. You know, if it went into some neighboring state, fine. Our goal was not to be Tito’s

(the first Texas distiller to sell vodka internationally).

Jerry Lara / Staff photographer