Marion craft distillery wants to add something new to the mix

MARION - The only sound in Josh O'Connell's workspace on a recent Monday was the bubbling and drips from a small distillation setup. He was boiling grapefruit pieces in alcohol and water to extract their flavor, an experiment for a potential new product.

'I'm starting to just build a library of things, of flavors, that will potentially be used in future projects,” said O'Connell, co-founder of Drams & Dashes.

The home of Drams & Dashes - a small office in the front with what could be lab space in the back - is the start of what O'Connell and business partner Brian Rosteck want to become another player in Iowa's craft spirits industry.

Unlike many of their compatriots, though, O'Connell and Rosteck didn't start with bourbon, whiskey or vodka, the mainstays of Iowa's craft distillers. Instead, they began with herbs and spices, specifically a rosemary-flavored liqueur and cinnamon-flavored bitters.

'If you walk to a store's shelves, there's 100 bourbons to pick from. We're trying to bring something new,” O'Connell said.

The company has started with a shoestring budget, he said. They get their neutral grain spirits from Bettendorf, have a labeling machine O'Connell made in his garage and a small, five-gallon still.

A journal, O'Connell's 'book of Cocktail Wizardry,” sits on a table. A nearby shelf lined with equipment holds jars of experimental mixes.

'It's doing a dream on a limited budget,” O'Connell said.

Formerly a bartender at Cobble Hill restaurant in Cedar Rapids, O'Connell said he began making alcohol when he brewed beer at home. His tastes changed, though, and while he was bartending, a sales representative from a spirits company introduced him to a spirit-making contest.

'That kind of lit a fire under me that was like, I don't ever want to be in that position again where I don't know what the heck is going on,” O'Connell said.

One day at Cobble Hill, he made Rosteck a drink with his own version of a crème de cassis, a liqueur made with black currants. The two later talked seriously about starting a business, which Drams & Dashes.

'When Josh mentioned that he wanted to form a business around his expertise, I knew that I wanted to be part of whatever he was thinking of,” said Rosteck, a commercial investment Realtor with Skogman Commercial, in an email.

Their company joins a growing chorus of craft distillers in the United States. There were just fewer than 1,600 craft distilleries across the country as of August, up from about 450 in 2012, according to the American Craft Spirits Association.

Retail sales of craft spirits, meanwhile, grew from $1 billion in 2012 to $3 billion in 2016.

Growth in the craft spirits industry has been influenced by the same forces that drove the local food and craft beer movements, said Alexandra Sklansky Clough, a spokeswoman for the Spirits Association in New York City.

'We as consumers are more and more interested in where our products come from, who the farmers are who are growing those products, what's the story of that brand, who the makers are,” she said.

More than half the active craft distillers are located in just 10 states, including California, New York, Washington, Texas and Colorado.

While whiskey, gin and vodka are among the most commonly made craft spirits, Clough said there is consumer demand for products used in cocktails, such as bitters.

'Consumers are more interested in this local movement, and they're more interested in trying new things,” she said.

Iowa has seen growth among its own craft distillers, recently reclassified as 'native” distillers by the state.

Iowa's Alcohol and Beverages Division counts 25 businesses licensed as either native distillers or alcohol manufacturers. Those licenses include operations such as Drams & Dashes and Swisher-based Cedar Ridge Winery and Distillery, as well as larger makers such as Templeton Rye in Templeton, Archers Daniel Midland in Clinton and Grain Processing Corp. in Muscatine.

The American Craft Spirits Association estimated there were 18 craft distillers in Iowa as of August.

Sales of Iowa micro-distilled spirits came to more than $2.7 million during the 2016 fiscal year, which ended June 30, 2016. That's up from slightly more than $1.7 million in fiscal 2013, data from the Alcohol and Beverages Division shows.

Craft bourbon accounted for more than $1 million, or 37 percent, of the micro-distilled spirit sales in Iowa as of June 30, 2016. Whiskey and vodka made up another 42 percent, combined.

Iowa-made liqueur was 10 percent of those sales.

Even though small distillers can get a boost from customers who want locally-made products, Clough said plenty of challenges remain. Startup costs and government regulations, which vary state-by-state, are at the top.

'The cost implications and the government regulations are two really big hurdles. Our distribution network makes it very hard for a craft distiller,” Clough said.

Craft distillers also need to compete for shelf space against more established makers and big-name brands.

'The liquor stores aren't getting bigger, they're not introducing more products. A liquor store doesn't want to keep something on the shelf that's not going to sell,” she said.

O'Connell said he and Rosteck have put out more than 100 cases of their products since May, primarily the rosemary-flavored liqueur. Some Cedar Rapids-area Hy-Vees and Benz Beverage Depots sell their liqueur and bitters.

Up next, Drams & Dashes will make an unflavored vodka and a horseradish vodka, all through their small still. The owners have dreams of eventually producing bottled, pre-made cocktails, such as for an Old Fashioned or Manhattan.

'We've been fortunate that many local establishments have picked up and created with our products,” Rosteck said. 'We've also seen a nice growth in the retail/home cocktail market as more and more people want to have that craft cocktail experience in their own home.”

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