With permit changes, state distillers tasting growth
Changes to permit structure may brighten future for state’s spirit makers
Connecticut distilleries say they hope to see additional business this year now that the permitting structure has given them more options.
While the extent of growth remains uncertain, that hasn’t kept business owners from planning for the best when the craft café permit goes into effect July 1.
“It will help us move our bottom lines and viability because now we’ll be able to give consumers coming in for a tour a full experience,” said Tom Dubay, Connecticut Spirits Trail president and CEO of Hartford Flavor Co., which makes Wild Moon Liqueurs.
It’s been several months since Gov. Ned Lamont signed a law out of the 2019 state legislative session streamlining the beer and alcohol industry and creating a new permitting structure that would pave the way for distilleries to serve drinks out of their own taprooms.
Many are still waiting on the final wording of the permits, but distillers across the state are optimistic about the incoming benefits.
“I wish it had come up sooner, but it’s something that we will embrace strongly, and I think it will allow us to attract people,” said Robert Schulten, owner of Fifth State Distillery in Bridgeport.
Schulten was part of the earlier stages of his industry’s pursuit of parity with breweries, which have seen explosive growth since lawmakers greenlit the craft beer market in 2012.
Data from the national Brewers
Association estimates that craft beer contributes $753 million to the state’s economy.
Distillers have maintained that the craft spirits market could thrive similarly, given the chance.
“It will give (distilleries) a fighting chance to survive,” Schulten said, adding that creating a taste room or bar setting in a distillery would help distillers become destinations worth visiting — and revisiting.
“As interesting as I may be on a tour, there is no reason to hear me twice,” Schulten said. “It would be nice to have regulars coming in.”
Like other distillers in the state, Schulten said he is preparing for July. While he hasn’t ruled out expanding his operation, the Fairfield resident said he will start by cordoning off a part of his 3,000-square-foot facility for people to come and enjoy drinks.
Building a following
Building a clientele can mean the difference between longevity as a distiller and fizzling out in the earlier stages, the professionals said.
“Early on, you’re not going to have any distribution, but if you can create a destination and start to grow your brand organically from the destination, that’s great,” said Jack Baker, co-owner of Litchfield Distillery, which has been in business for five years.
Aside from being self-funded, Baker said he and his brothers came into the industry with a background in the beverage industry from their family business, Crystal Rock bottled water.
“We have a big advantage from that standpoint,” he said. “If I started out with no business experience and no funding at all, it’s a really tough learning curve.”
For existing distillers, Baker said the new permits will provide another revenue stream to add to their operation.
It’s been almost five years since lawmakers allowed distilleries to sell bottles in their tasting rooms, but unlike breweries, customers haven’t been able get more than a two-ounce sample at the businesses.
Dubay and his industry peers have maintained that this has hindered their market’s growth and sustainability.
“Here in Connecticut, we want to make sure that we can do the same and grow the way that other states’ distillers grow. We think the permitting … will help us in that regard,” he said.
The state’s distillery industry is roughly where the brewery market was eight years ago when larger regional brewers like Two Roads Brewing Co. opened their doors.
Taprooms played a crucial role in helping brewers develop their local clientele and appeal beyond their distribution
market, industry analysts said.
Incentivizing growth
Some distillers say the new permitting regulations will serve as incentive for aspiring operators to set up shop.
“The ability to have a more diversified revenue stream is always a good thing,” said Ted Dumbauld, owner of SoNo 1420 American Craft Distillers in Norwalk.
The Norwalk distillery already has a tasting room but Dumbauld said he can’t monetize it in the current regulatory environment.
With the ability to serve cocktails, Dumbauld said distillers could become profitable faster.
“That by itself will hopefully create another revenue stream for folks like me in the state that in the past have had our hands tied as a result of the current regulation,” Dumbald said.
Achieving critical mass appears to be the goal among distillers, according to Dubay, who said he expects to see growth in Connecticut’s industry moving forward.
With more than 100 breweries in the state and counting, he said the equivalent for distilleries would be a couple dozen.
“If we were to get up to around 20 distilleries in our state, that would be awesome because across the major cities you have three to five (breweries) that are around that center point,” he said.
Connecticut has less than a dozen active distilleries and has had roughly 10 operations in the state for the past five years, according to Dubay. That number has dwindled slightly in recent months with the closures of Waypoint, Onyx, Mine Hill and Maple Lane distilleries.
Dubay said he has met more people who want to start their own businesses as well, including Continuum Distilling, which opened in Waterbury in January.
“I feel encouraged that we’ve got creative people,” he said. “With the law changes, it’s just going to be a carrot to people to make their ideas a reality.”