Local distillers carry on Tennessee's whiskey history

Monday, March 12, 2012 at 12:02am
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(Michael W. Bunch/SouthComm)

In March of 2009, legendary moonshiner Marvin “Popcorn” Sutton rigged the exhaust pipe, climbed into the driver seat of his green Ford Fairlane and hit the ignition. Sutton prized that car. Friends said he called it his “three-jar Ford” as it had been acquired for three containers of his famed Tennessee whiskey.

On that March day, he was staring down the barrel of an 18-month prison sentence and was due to report to jail later that week, the price of getting caught with 850 gallons of moonshine. He never reported. He was found in the car, dead from suicide by carbon monoxide poisoning.

In a strange irony, just months after Sutton died, Tennessee eased its laws on moonshine production. The legislature passed a bill that greatly expanded the areas of the state where distilling is allowed. The new law allowed many moonshiners to go legit with their products and other distillers to start. Since then, there has been a building wave of new distilleries of various types entering the local marketplace, reviving a rich state heritage nearly destroyed by Prohibition.

Tennesseans have always enjoyed their whiskey. According to Tennessee Distilleries: Their Rise, Fall, and Re-emergence by Kay Baker Gaston, at the very end of the 18th century there were some 61 stills in Davidson County, which is pretty amazing when you consider there were only about 4,000 people living here then.

Distilling continued to grow throughout the 19th century, and by 1874, distillers in Robertson County alone were producing some 45,000 barrels of whiskey annually. So large was the corn consumption that despite Tennessee’s rich soil and prime corn growing conditions, demand couldn’t be met, and huge amounts of corn were imported from out of state to keep up with production.

Eventually, however, various temperance movements and Prohibition largely wiped out the industry by the first part of the 20th century. Before the crackdown, Tennessee boasted dozens of distilleries, the largest being Cascade (later known as George Dickel), along with Jack Daniel, Greenbrier and J. S. Brown Distilleries on Wartrace Creek. Distilling for a time was the largest manufacturing industry in the state.

Only two of the above would survive Prohibition, and today Tennessee is known for both George Dickel and what is arguably the state’s most identifiable export worldwide, Jack Daniel’s.

From the repeal of Prohibition in 1933 until the most recent law change, it was exceptionally difficult to get legal approval to distill spirits in the state of Tennessee. Only a few counties allowed the practice, and for a distillery to be approved it had to get a referendum on the ballot and then win a countywide vote. This made it nearly impossible for new producers to start up.

In 2009 all that changed. A bill was drafted that would permit distilleries in any county in Tennessee where there are both operating liquor stores and liquor by the drink, which opens up much of the state. But there was a moment where things didn’t look good for the bill.

“A state senator said to us at one point: ‘Wine is good because Jesus drank wine. But beer and whiskey are bad, because Jesus did not drink those,’ ” Darek Bell of Nashville-based Corsair Distillery recalled. “It felt like we had traveled back in time to Prohibition.”

“At one point it looked like the bill would fail,” Bell said. “An older representative got up and spoke. He said ‘I don’t know anything about this stuff. But if it will help the farmers in my community sell more corn, then I am all for it.’ And just like that, the opinion turned, and the bill seemed to sail through after that.”

With the change came a flood of interest in distilling.

“When the law finally changed, it was like a dam broke,” Bell said. “At one time I had a list of 27 planned distilleries and was speaking to different people five or six times a day. The weak economy destroyed most of these plans. That and a lot of people realized this is not a get-rich quick venture.

“When you have a lot of government red tape and a product that must age for years, you must have patient investors or be well-capitalized,” he added.

Those jumping into the distilling game have come in all sizes.

Major, well-funded players such as Corsair or another new Nashville distillery, Collier and McKeel, are at the forefront, but also smaller startups like Greenbrier are helping to spur the movement.

Bell and partner Andrew Webber already had an operation under way, albeit in Kentucky, before Tennessee law changed. With the new law they were able to expand and bring their operation to Nashville, opening first in the Gulch then moving to Marathon Village. That head start allowed them to get up and running faster than most of the other players.

Keeping the Kentucky facility, Corsair has rapidly expanded, and its product will be available for purchase in 25 states by the end of next month. The brand facility in the old Marathon Motor Works factory boasts large capacity and a swank tasting room, reinforcing the message of many in the industry that distilleries will not only bring a new manufacturing sector to the state’s economy but also be a boon for tourism.

Corsair is noted for its cutting-edge spirits such as its Red Absinthe, vanilla vodka and an award-winning gin. Some other companies are hearkening to the past with their distilling efforts.

Much earlier along in the process are Charlie and Andy Nelson, brothers who are reviving the long-defunct Greenbrier distillery. The Nashville natives are direct descendants of Charles Nelson, who owned Greenbrier before its demise at the hands of Prohibition.

Currently working out of younger brother Charlie’s East Nashville home, they have secured funding from outside investors along with family and friends and are in the process of getting their brand up and running. Not yet distilling their own product, the brothers are bottling an out-of-state liquor under the label Belle Meade Bourbon. This strategy will allow for a revenue stream to keep the lights on during the multi-year wait for whiskey to properly age.

“It’s a long, slow process,” said Charlie Nelson. “It takes a lot of patience.”

He said they’re hoping to have Belle Meade Bourbon on the shelves by the end of this month.

So what does it take to go all the way from grain to the shelves of liquor stores? Even with the new law, legal hurdles can be prohibitive. Speaking to the red tape involved, Williams noted, “Anything you can do in other businesses, you can’t do in this business.”

A variety of permits (federal, state and local) have to be obtained, which can take more than a year, and cost thousands of dollars. Not to mention the sometimes $150,000 worth of equipment and rent you need while waiting for permits.

As part of that process, distillers must have their formula approved and provide extensive information regarding various technical aspects of their process, including details on waste products coming from the distillery and even security measures. A $500,000 bond must also be obtained.

Add to this the fact that the products require aging. Between the time you launch your business and when you make your first nickel of revenue, four years might pass. As all the distillers we spoke to noted, you need investors with patience who are not looking for a short
investment runway.

“While I was out raising money, a lot of investors were looking for quick ways make five to 10 times their money,” Charlie Nelson said. “When I was asked what my exit strategy is, my response was that I want to pass this on to my grandchildren one day. Investors were looking for something more like, ‘We plan on selling to Brown-Forman in five years.’ ”

And finally, to make it to the shelves, a distillery must sign on with a distributor, which is a very delicate aspect of the process. Tennessee liquor distribution, which also includes wine and higher-alcohol beer, is subject to what is known as a franchise law. This law was put in place to protect the franchisee, in this case, the wholesaler. According to local attorney Will Cheek, once a distiller enters into a contract with
a wholesaler, it is very, very difficult to terminate that contract. In fact, he couldn’t recall a single case of  such a relationship being terminated.

So, hypothetically, were a distiller to ever get crossways with the distributor for whatever reason, leaving that relationship would be nearly impossible.

“It’s a harder choice than choosing your spouse. Getting divorced is far easier than breaking up with your distributor,” Cheek said.

This could prove especially difficult for microdistilleries, which might not get as much notice on a wholesaler’s radar. Cheek said the law is structured to protect the wholesalers from big, out-of-state competitors.

“From a distiller’s standpoint, the law is ridiculous. It offers every protection to the wholesaler and almost none for the distiller,” he said.

Cheek thinks distilling can be leveraged into tourism dollars for the state. Kentucky has its bourbon trail,  and he sees no reason why Tennessee couldn’t pull off something similar. Corsair takes this into account with its tasting room and gift shop. Over in Manchester, Short Mountain Distillery is looking to cash in on that as well, bringing veteran moonshiners and their recipes into the light of day with tours of their farm and stills.

But liquor laws are famously convoluted, and they will need to be untangled in the coming years. Regulations about where liquor or beer can be sold, the number of doors a liquor store is allowed to have — or the strange fact that you have to be able to prove you know how to make whiskey but are not allowed to have actually made it before you secure federal permits — all speak to federal, state and local regulation that will eventually need to be sorted out. Corsair has already had an issue with its gift shop and tasting room, determining which items can be legally sold in the same room.

Until then, this intrepid group of distillers will keep hammering away, spreading the tradition to other corners of the state, nationwide and eventually globally.

“Luckily, the common thread is passion,” says Bell. “You would have to be crazy to start a new distillery. Why would anyone compete with some of the giant megacorporate distilleries? Simple: Because they love making spirits. They are passionate about making great products to the point that they are willing to drop out of the rat race, throw caution to the wind, and often precariously investing their life savings into a risky venture for one reason — they love it.”

That sentiment is one seemingly shared by the up-and-coming liquor producers in the state.

“Whiskey is about history and tradition,” said Charlie Nelson. “We are trying to build a solid foundation so that one day our great-grandchildren can take over. It would have been a lot easier to start a hot dog stand. There are ways to cut corners, but it’s something we’re devoting our lives to, and we want to do everything in such a way that would make our ancestors proud.”

3 Comments on this post:

By: Kosh III on 3/12/12 at 6:15

Abolish the restrictions on the production, sale and distribution of beer, wine and spirits.
Isn't the GOP all about abolishing regulations that hamper the job creation of businesses? Less government interference? More entrepreneurship? Free enterprise?

By: geekinstein on 3/12/12 at 9:00

Any product made in Tennessee from Tennessee farm stuffs should be sold in Tennessee with no sales tax and only such tax on manufacturing as it realistically takes to regulate the manufacturing process , clean up any pollution, and a per ounce of alcohol tax to help cover police and related health /abuse costs.. (Beer should be taxed at the same rate as whiskey). Just like regulations on national companies we recruit to the state, regulations on these SMALL companies should be minimal. Its about creating Tennessee jobs and a special native culture.

By: chapter17 on 3/13/12 at 9:13

"bottling an out-of-state liquor under the label Belle Meade Bourbon."

Are you kidding me? This sounds awful.