SPIRIT QUEST

CRAFT BEER MAKERS HAVE BEEN VERY SUCCESSFUL IN TAKING MARKET SHARE AWAY FROM THE MAJOR COMPANIES. NOW IT’S TIME FOR CRAFT DISTILLERS TO DO THE SAME

Craft beer makers have been very successful in taking market share away from the major companies. Now it’s time for craft distillers to do the same.

It pays to know the law if you’re going to get into the distilling industry. And if you want to know just how bizarre those laws can be, it pays to make the trip to Toronto Distillery Co. Ltd. and talk to co-founder Charles Benoit for a few minutes. Although the distillery he set up with Jesse Razaqpur is only two years old, he’s already taken on the Liquor Control Board of Ontario — and won — has another case in the works against the Canadian government, and will probably keep trying to knock down ridiculous regulations until the making and selling of whiskies and other grain spirits is less of an archaic process.

How weird are Canadian laws? It was illegal up until this century to have a still in Canada unless you were a licensed distillery, but you had to have a still to become a licensed distillery. Here’s another one: Canadian rye whiskey doesn’t have to have any rye in it; rye is just a synonym for whiskey — a lax standard of identity that is the subject of Benoit’s pending lawsuit against the federal government.

Then there are provincial regulations designed to make it as hard as possible for would-be distillers to make money. For example, getting a listing in the LCBO, one of the world’s biggest liquor buyers, is very difficult, but Ontario decrees that a distillery can’t have a retail store unless it has a 5,000-litre still, a massive piece of equipment, or a still that can put out 150 litres of absolute alcohol per hour, the equivalent of what a full-fledged ethanol plant produces. That one Benoit managed to beat despite only having a 500-litre still by pointing out the law doesn’t say what kind of liquid has to go into the still, so he could put in 150 litres of alcohol and pump it out the other end to meet the requirement. “It really goes against the intent of the policy, but screw that,” he says. The arbitrary nature of such laws really gets him going. “If the Ministry of Transportation tweets that you can only receive a licence if you were born on an even day, people would flip out,” he points out. “The growth of craft distilleries will really test the viability of controlled jurisdictions.”

That test is coming. The craft distillation industry may be well behind its craft beer counterpart in successfully taking big chunks of market share from the world’s major booze companies, but it is growing by leaps and bounds. One of the reasons it hasn’t captured as much attention yet is, of course, the very nature of distilling: it’s less of a volume game than beer and distillers can’t sell direct to licensees to get some quick cash flow like brewers can. Indeed, aside from the arcane regulations, cash flow is a distiller’s biggest issue if it is making aged spirits.

Toronto Distillery got around that issue by making unaged spirits, including whiskies made from organic rye, corn and wheat, as well as a gin and a beet spirit. All of them are surprisingly tasty, especially if you believe a good whiskey can only be an old whiskey. Benoit, who is particularly proud of the beet spirit, doesn’t buy that argument, but agrees that distilling isn’t a quick way to make a buck. “Distilling is one of those 10,000hours things,” he says. “You just have to have extraordinary patience to keep on plugging away at it and be one of those artist perfectionists. That’s not how I would describe myself, but Razaqpur is exactly like that.”

Benoit, for his part, brings some other skills to the table, having done some legal work for the American Distilling Institute while working as a lawyer in Washington, D.C. He spent a lot of time with craft distilleries down there and decided to be the first since 1933 to open up such a business in Toronto. There are, however, a few dozen across the country, and although every province is a little different, their tales are often similar. One common thread is that the government should not be selling liquor.

“The government should not be in the booze business,” says Patrick Evans, the owner of Shelter Point Distillery in Campbell River, B.C., about two-thirds up scenic Highway 19A on Vancouver Island. “They should be taxing it accordingly, but having liquor stores and things like that? I kind of wonder why is it alcohol? Why not lumber? Are they going to be selling meat and potatoes next week? Cars?”

The role B.C. plays as a partner is important, Evans says, because it seems like the relevant legislation is changing every six to eight months, forcing distillers to constantly readjust or tweak their business models. Nevertheless, the distillation business is exploding in the province. Shelter Point was