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Thread: Collaborating with a Distillery

  1. #1
    Join Date
    Mar 2011
    Location
    Hamilton, NY
    Posts
    40

    Collaborating with a Distillery

    Hi Folks,

    Under the new Farm Brewery law here in NY, we have the ability to carry (in our taproom) farm distilled spirits from any farm licensed distiller. We are looking to collaborate soon with a farm distiller on a single malt whiskey and we are looking for some feedback on how it might work in both our favor. Here is what we were thinking the process would look like.

    1. We the brewers, make a single malt wort with all NY state male and pasteurize for the transport.
    2. We sell the wort + our Labor + overhead (+ a profit??) to the distillery.
    3. They ferment and distill the wort and age in barrels at their facility.
    4. We stay involved through out the year(s) for tasting, label production, and final bottling of the whiskey.
    5. We buy bottles back at wholesale from the distiller and sell in our taproom for a profit.

    I guess my questions are...

    1. Does this seem like a legitimate way to go about a collaborative process?
    2. Do you think it is fair for us to make a profit on the wort?
    3. Are there any other suggestions you may have to make this a fair process for both of our businesses?


    Thanks all!
    Cheers,

    Matt Whalen
    www.goodnaturebrewing.com

  2. #2
    Join Date
    Jun 2013
    Location
    Birmingham, AL, USA
    Posts
    71
    if you're wanting to make a distilled spirit in the Scottish tradition, it's "whisky". There's no E in Scottish

    (sorry, bugbear of mine)

  3. #3
    Join Date
    Oct 2005
    Location
    Salt Lake City, UT
    Posts
    451
    I'm a distiller, and I can think of several ways to make that work in everyone's favor.

    A good resource for finding farm-based distillers (who may even provide the grain for the batch) is the ADI forum, which you can find at www.distilling.com and click the forum link. I'd think you'd get plenty of interest, and there are several threads running that address the TTB requirements for third party distillling.

    Of course, the other way to do it is to set up your own distillery :-D Maybe on a farm?

    Sounds like fun!

  4. #4
    Join Date
    Mar 2013
    Location
    Keller, TX
    Posts
    94
    The TTB or NY's ABC might have an issue with how you get into that arrangement. Lots of possible problems for both facilities. I'd definitely try to obtain a formal opinion from both agencies before getting too deep into the idea.

  5. #5
    Join Date
    Oct 2005
    Location
    Salt Lake City, UT
    Posts
    451
    Actually, this is very close to the structure that several distilleries are using.

    Brewery makes wort, sells to distillery. Distillery makes spirit with wort, ages, and bottles under their own formula and COLA. It then goes to the state distribution facility, whether it is a control state or not.
    Then the original brewery is free to buy it under whatever structure that particular state requires. Very few states will forbid a buyer from buying all of one particular production run or label for their own sales.

    Whether or not your state laws allow your taproom to sell spirits by the drink or by the bottle is up to you and your municipality.

    This type of "contract distilling," where a non-distillery party "owns" a given barrel or barrels of spirit is a hotly contested topic on the distilling forums, but it is done in several places. Technically, the DSP owns all of the spirit in bond during aging and maturation. Then it is bottled in bond on the same premise, and goes to a bonded warehouse. Easiest would be a private label agreement, where the name of the brewery is on the bottle along with a statement of who distilled it. Then the brewery can buy as much as it wants and sell it on their own premise, provided the local laws allow such a thing (they do NOT where I am right now)

  6. #6
    Join Date
    Mar 2013
    Location
    Redwood Valley, CA. USA
    Posts
    14
    James, the new model in New York Farm distillery is exactly that, a farmer provides a value added commodity, which it can produce and sell retail to the public, even at farmers markets I believe.

    I would love to see this model in California. I would definitely make rounds in the San Francisco area.

  7. #7
    Join Date
    Mar 2011
    Location
    Hamilton, NY
    Posts
    40

    Cool Thank you all for the help!

    Quote Originally Posted by mendodistilling View Post
    James, the new model in New York Farm distillery is exactly that, a farmer provides a value added commodity, which it can produce and sell retail to the public, even at farmers markets I believe.

    I would love to see this model in California. I would definitely make rounds in the San Francisco area.
    This is exactly what we plan to do and it is fully legal to do so under current farm brewery/distillery law. We are also aloud to sell out of our taproom.

    Really I am just trying to figure out what would be a fair partnership between the distiller and us. We have already partnered with a great local distillery and we are just hashing out logistics. Thanks again everyone for the help.
    Cheers,

    Matt Whalen
    www.goodnaturebrewing.com

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