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 October 8, 2010

Have a cocktail, support local agriculture

Sometimes the folks who sit around figuring out how to raise state revenues actually come up with a plan that’s a win all the way around. Consider the recent national growth in micro-distilleries (also called craft or boutique distilleries), in which Colorado is becoming a major player. It is not as if restaurants, bars and liquor stores were short of spirits or that “Mad Men” spurred a grassroots movement that rose up and demanded small-batch vodka. It was about taxes.

“State governments were looking for ways to help agriculture,´ said Scott Leopold, CEO of Leopold Bros., based in Denver. “Potential distillers were looking for lower fees so they could start up their businesses.”

An artifact of Prohibition, the license fee for manufacturing distilled spirits in this country has been disproportionately high compared to fees for brewing beer and making wine, and home distilling remains illegal; no moonshining allowed. Over the years, the high fees prevented small distillers from entering the market and effectively eliminated an opportunity to tax them. It took more than 70 years after the repeal of Prohibition for states to get smart and to come up with a small-producer license fee.

“In Michigan, where we started distilling, the fee went from $10,000 a year to $500,” Leopold said. “Here in Colorado, lower licensing fees have not only allowed small distillers to get into the market, they have also benefited agriculture.”

He pointed out that a Palisade peach grower on the Western slope can sell only perfectly formed fruit to grocery stores, but distillers aren’t so picky.

“We want the juice,” he said. “Peaches that become our peach liqueur or peach whiskey also become a high-value product that the state can then tax.”

And tax it does. Leopold said that a third to half the cost of a bottle of spirits off the liquor store shelf is taxes. But for that reason, the state gets a triple win for promoting craft distilleries: It helps agriculture, it supports small business, and it can collect more taxes.

Kristian Naslund, who with his wife and father own the Dancing Pines Distillery in Loveland, is one of the newest small distillers in Northern Colorado to welcome the licensing hat trick.

“We are moving into the market with gradual production,” he said. “We have released our first white rum and our chai liquors. This fall we will release a spiced rum and an espresso liqueur. We are aging a white whiskey in 15-gallon barrels.”

Naslund, who is putting his handmade Spanish copper still to good use, has been pleased with the response to both his rum and liquor.

“Brian Jones at Henry’s Pub here in Loveland has been generous with letting us bring tastings into the pub,” he said. “Elijah (Nugent) the bartender has already created two drinks with our products: the Special Mojito with Dancing Pines Rum and the Chai Manhattan. The Bombay Bistro in Boulder ordered our chai liquors as soon as they were available.”

Symbiotic relationship

The distilling of spirits seems to have been the missing link in the libation equation. Not only are distillers seeing their products appear on the top shelves of bars, but brewers of beer and distillers of spirits are finding ways to complement each other.

“We have developed a nice symbiotic relationship with Leopold Brothers,´ said Bryan Simpson, media relations director at New Belgium Brewing Co. in Fort Collins. “They have barrels, and we have beer.”

Beer before it has been hopped and carbonated – called “wash” – serves as the basis for making malt whiskey (as distillers do in Scotland and Ireland). The barrels that have been used for aging whiskey give beer brewers the means to create wood beer, a tricky process with outcomes less predicable than with stainless steel vats.

“The barrels provide an oxygen-rich environment, which makes the beer sour,” he said. “The small batches we can do in the wood barrels give us a chance to play around without much loss. The process is thousands of years old, but not common now.”

La Folie, a sour brown ale, was New Belgium’s first wood ale.

“It’s very intense,” Simpson said. “Our second, Eric’s Ale, is less intense and re-fermented with peach juice. It took silver in the American-style sour-ale category at this year’s Great American Beer Festival.”

While 200 small distilleries nationwide – up from 100 in 2007 – does not really amount to a great surge in artisanal spirits, there are enough players in the market doing interesting things to attract critics, who can provide a perspective that goes beyond declaring that if it is local, it must be good. Chuck Cowdery, author of “Bourbon Straight: The Uncut and Unfiltered Story of American Whiskey,” maintains a blog discussing the spirits world. Just as consumers have had to learn the difference between organic and natural, cage-free and free-range, and all the other little semantic pairings that hitched a ride on the allure of healthy eating, those who aspire to admire specialty craft alcohol have some things to learn.

“Quality all over the map, and the movement is still trying to figure out what ‘craft’ means for them,” Cowdery said. “The assumption has been that if you’re small, you’re craft.”

He added that the eagerness of people to support small, local producers is one of the exciting forces driving this movement, but that it has also led to some exploitation by the unscrupulous. In addition, a lot of the small operations are undercapitalized and struggling to survive.

“A winnowing and maturing process is under way,” he said.

Meanwhile, it is going to be some fun not only to sample the creations of local distillers, but also to bask in the knowledge that every sip is good for agriculture and the economy. Those who would like to sample a pour or two from the local spirit market can do some additional good by attending the benefit for Operation Smile on Saturday, Oct. 16, from 7 to 11 p.m. at the New Belgium Brewery with Leopold Bros. (www.operationsmile.org/newbelgium). Salud!

Nordy’s comes to Old Town

The wait is over: Nordy’s Bar-B-Que & Grill has opened its Old Town Fort Collins location. Even before diners determine a winner in the Northern Colorado Barbecue Wars (actually, the diners are the winners), Nordy’s has distinguished itself with a physical feature that will endear it to diners in the cold, cold winter months: a revolving door. No more blasts of frigid air on the seats in the front of the restaurant. A nice, warm touch.

Jane Albritton is a contributing writer for the Northern Colorado Business Report. She can be contacted at jane@tigerworks.com.

Sometimes the folks who sit around figuring out how to raise state revenues actually come up with a plan that’s a win all the way around. Consider the recent national growth in micro-distilleries (also called craft or boutique distilleries), in which Colorado is becoming a major player. It is not as if restaurants, bars and liquor stores were short of spirits or that “Mad Men” spurred a grassroots movement that rose up and demanded small-batch vodka. It was about taxes.

“State governments were looking for ways to help agriculture,´ said Scott Leopold, CEO of Leopold Bros., based in…

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