|Brandy Rand presenting on How the Spirits Industry Works|
I kicked off Friday morning at the Boston Cocktail Summit by sitting in on the seminar How the Spirits Industry Works. Presenting were Brandy Rand, a spirits writer and consultant, and former marketing rep for a number of national brands including Bacardi and Grey Goose, and Sam Rubenstein of Horizon Beverage, a distributor operating in Massachussetts and four other New England states.
Brandy walked through the three tier system of supplier-distributor-retailer that exists in some form in most U.S. states, and it's post-Prohibition era origins. In short? The system was born in order to collect taxes, which today comprise around 55% of the cost of spirits (twice that of beer and three times that of wine). Forcibly interposing distributors in the chain of sales allowed States to collect these taxes at the distributor level rather than from the far more numerous retailers.
Brandy next reviewed the three main State regulator models in the U.S.: control states (where the state government runs retail sales exclusively, or near exclusively); open states, where private licenses are granted to retailers (and suppliers/distributors) in limited numbers according to population levels; and franchise states, which include Massachusetts and Connecticut, where the differentiating characteristic is that agreements between suppliers and distributors for brand distribution are either irrevocable or at least difficult to rescind (in Tennessee, a supplier is locked perpetually in an agreement with a distributor; in other states, a brand can be added to additonal distributors but not taken away from the original distributor; in still others, changing can occur but only in limited circumstances). The franchise state model has come under fire recently because of the fact that it locks in a supplier to a distributor regardless of the distributor's performance in selling the brand (the speakers didn't talk about it much directly, but the controversy is also entwined in the changing landscape of the industry which has led to consolidation of distributors, which once were more plentiful than big name suppliers, while now micro distillers/brewers have shifted the balance to the opposite in some states).
The presenters also went over a number of other state to state differences in liquor laws including different regulations for consumer tastings (onsite versus offsite, or none at all in the case of 6 states including Rhode Island) and laws on Sunday sales of alcohol. For Massachusetts residents, some of the quirks we have include the anti-chain law, which limits the number of retail liquor licenses per person/entity to 3 (expanded to 5 in 2012, 7 in 2018, and 9 in 2020). Massachusetts also bans happy hour sales on alcohol, or specifically any discounted price that is in effect for less than one week (the presenters speculated this might catch some heat once casinos come to Massachusetts and bars have to potentially compete with free drinks). Massachusetts also has a two drink at a time serving limit (no triple fisting folks). Another quirk I had not heard about is the cordial and liqueur license. If you ever see something like a bottle of Sambuca for sale somewhere but no vodka, rum, etc. and are wondering how they are managing that - that's your answer. Interestingly, the cordial & liqueur license is based purely on a minimum sugar content rather than proof.
Some other interesting facts:
- Industry consolidation has led to 5 large suppliers accounting for about 80% of sales: Diageo, United Spirits, Pernod Richard, Bacardi, and Beam.
- 69% of spirits exports consist of American whiskey.
- Notwithstanding the micro brew phenomenon, beer sales have been declining in the past two decades as compared to spirits and wine sales.
- About 25 brands comprise 45% of total sales volumes for spirits.
In closing, it was a very informative presentation, and even managed to capture my attention at 10 am during a conference involving lots of drinking.
After the seminar, I looped back to the Royal Sonesta to visit the two tasting rooms for a spell. In the craft spirits room, I chatted a bit with the rep from Boston-based Bully Boy Distillers and got to sample their excellent upcoming product, their first aged whiskey. I also tried some of the offerings from Vermont's Caledonia Spirits, which included Barr Hill Vodka, a vodka made from honey, and Barr Hill Gin, an excellent floral gin that also used raw honey. The rep from Philadelphia Distilling kindly gave me a sample of an absinthe drip using their Vieux Carré absinthe and talked with me a bit about his new line of bitters, Hella Bitter. Finally, I chatted a bit with the folks from Onyx Moonshine, a Connecticut-based moonshine producer. They had a very tasty pumpkin cocktail (I believe it also had some cranberry in it) which I need to email them to get the recipe for - it was very Fall in New England appropriate.
|A quick photo from the Craft Sprits tasting room|
I didn't have much time in the grand tasting room, but I did manage to stop by the table from Burke Distributing Corp. for a bit. They had a wealth of fantastic products on hand. With limited time available, I went for the Novo Fogo aged, organic cachaça, which was quite tasty (I had never had an aged cachaça); I know in terms of process it's a similar product so a rhum agricole, but I actually found the aged cachaça more approachable, and like a good reposado tequila I could see it being good as both a straight up drink or cocktail ingredient. I also enjoyed the Tempus Fugit Kina L'Avion D'Or Vin Aperitif au Quinquina from Switzerland that was on hand (but don't ask me to remember that full name).
Back again soon with another installment...