Iowa distillers prep to sell drinks in-house

Topped with dark metal and a gray, wood-paneled base, the new bar for Cedar Ridge Winery and Distillery is a sign of changes to come.

The Swisher-based distiller and others around Iowa have started preparations to sell cocktails on-site starting July 1, a practice that a recently passed bill would permit. The legislation, distillers said, finally puts them on par with their Iowa beer and winemaking colleagues, as well as with spirit-producers in states such as Illinois.

'Iowa did not allow that. We, meanwhile, produce more grain, more corn, than any state surrounding us. We should be leading the industry, not following the industry,” said Jeff Quint, the owner of Cedar Ridge. 'Finally after many years of effort we got this law updated.”

Gov. Terry Branstad is scheduled to sign the bill this coming Tuesday, but distillers haven't waited to add new bars, seating and make other renovations.

Quint said he pulled the trigger on Cedar Ridge's new bar when he saw there were enough Senate votes.

'They were literally out here the day the Senate voted on the bill,” Quint said.

In Le Claire, Mississippi River Distilling Co. is counting down the days - literally - to July 1. The distillery posted a sign with a pull-off calendar to mark down until the law changes.

'There's 58 days right now,” co-owner Ryan Burchett said Thursday as he was about to sign a construction permit.

Mississippi River plans to install a 19-foot-long bar and more seating. It'll be a shift from the tasting bar they now have that is meant for visitors to grab a sample and walk away.

Iowa Distilling Co., based in Cumming southwest of Des Moines, already had planned a renovation, but expanded the scope when the legislation was approved. Owner Kyle Doyle said the distiller will put in walls with cutout windows that allow customer to see the distilling process.

'That experience is one of the things that differentiates us from big-name brands,” said Doyle, who purchased Iowa Distilling in November.

Cedar Ridge mostly has finished its changes - they started two weeks ago - but still plans to install four to five taps to serve local beer.

In addition to permitting distillers to sell cocktails and license changes, the legislation would:

l Permit distillers to sell up to nine bottles of their alcohol per person per visit, up from two bottles.

l Let 'native distillers” produce up to 100,000 gallons a year, up from 50,000.

l Allow beer brewers to sell wine by the glass in their taprooms. Wineries already can sell beer by the glass.

l Allow brewpubs to sell beer growlers without having to go through a wholesaler first.

'This is really about providing an equal playing field for all manufacturers. It was becoming apparent that some had a lot more privileges,” said Robert Bailey, spokesman for the Iowa Alcoholic Beverages Division.

Cocktail sales may not drastically boost bottom lines directly. A ripple effect, though, such as from broader brand recognition, may, Burchett said.

Burchett said he spoke with distillers in other states who said cocktail sales doubled their retail business 'almost dollar for dollar.”

'That's huge. The other thing is, it increased their presence in their local markets significantly,” he said.

Being able to sell a case of product, instead of just two bottles, also is significant, Doyle said.

'I think building that brand within the state is going to be the biggest attribute that selling cocktails is going to (add), but selling more liters a day is going to help the bottom line more,” he said.

‘Stay here with us'

While they are rejoicing the change, Burchett and Doyle acknowledged that operating a bar comes with a learning curve. For example, Burchett said Mississippi River's distillery isn't currently designed to keep people for much longer than a tour and tasting.

'Now, we want to get people in and get them to stay here with us,” he said. 'We still have a ton of question marks to figure out in the next 60 days.”

The main focus, Doyle said, will still be on making spirits.

'We're a distiller first and then a bar second,” Doyle said.

In fiscal year 2013, Iowa craft distilleries produced more than 13,700 gallons of alcohol and had about $1.7 million in aggregate revenue, according to numbers from the state Alcoholic Beverages Division. By fiscal 2016, that had grown to 25,000 gallons and about $2.7 million in revenue.

Iowa has 14 distilleries right now, 13 of which would be considered 'native” or craft distillers. Templeton Rye is the 14th.

Many of Iowa's alcohol laws date back to Prohibition, with patches applied to address specific issues. The state also operates a three-tiered system, requiring divisions between retailers, distributors and producers.

Last year, Branstad ordered a task force made up of state officials and industry members to review the state's liquor laws.

Distillers have argued for years for the just-approved changes, often meeting opposition from the Iowa Wholesale Beer Distributors Association. This year, the association initially opposed legislation but later changed its stance to undecided.

'We have worked with the distillery industry since the Legislature's adjournment (in 2015) to find a solution that accomplishes what they asked for - a way to promote their product to consumers at the manufacturing site - and beer distributors' desire to provide a narrow, accountable and long-term solution to the problem,” Nathan Cooper, executive director of the distributors association, said in a March statement emailed to The Gazette-Lee Des Moines Bureau. 'From our perspective (the bill) is a reasonable way to accomplish those goals.”

When the legislation, House File 607, passed, it was hailed as an economic development and tourism booster. With Illinois already allowing cocktail sales, some distillers have debated whether to locate in Iowa.

'We've had to think about it. We look out our window a couple hundred yards across the river where you can do all these things,” Burchett said.

Blaum Brothers Distilling Co. was founded by two Bettendorf natives. The founders opened it in Galena, Ill., though, in part because of Iowa's regulations.

For Cedar Ridge, which opened in 2005, leaving Iowa is not realistic, Quint said. But the rule change is important, he said, for an Iowan who wants to jump into the state's distillery industry and deciding where to locate.

Now, Burchett and others expect the state's distilling industry to grow.

'The more the merrier. We'd love to see more of this. These are jobs, this is tourism. ...

We'd be thrilled to see more people around the table,” Burchett said.

l Comments: (319) 398-8366; matthew.patane@thegazette.com