Distillers guild to seek licensing fee parity
NEW FLORENCE — Gary Hinegardner, owner of Wood Hat Spirits, started his career as an agronomist for the University of Missouri Extension and then managed a farmers’ co-op. It was in these positions that he saw Missouri corn being shipped throughout the country and internationally.
Missouri has an abundance of the two main elements for distilling bourbon — corn and oak trees. The mash must be at least 51 percent corn and the whiskey must be aged in a new charred oak barrel.
Distillers will now be able to distinguish their product, long associated with Kentucky, as “Missouri Bourbon” thanks to a new state law, as long as the ingredients and barrels come from the state.
“There never was any bourbon labeling before in Missouri,” Hinegardner said. “This is the first time we’ve ever identified that.”
Hinegardner worked for 17 years for Independent Stave Co., a wood barrel maker in New Florence known as New Florence Wood Products. That company ships its product to distillers throughout the country, in particular Kentucky, and throughout the world.
Then roughly six years ago, something clicked for Hinegardner. Bourbon and other whiskeys were being distilled from Missouri-grown corn and aged in Missouri-made barrels, then sold back to Missourians.
Those out-of-state and out-of-country distillers were making their money off the hard work of Missourians and Missouri products.
“The guys in Kentucky. Where are they getting their barrels? They’re getting them from Missouri,” Van Hawxby, owner of DogMaster Distillery in Columbia said. “Seventy percent of the flavor profile that goes into your whiskey comes from barrels. We can put out products on par with, if not more interesting than what people have settled for from these established distilleries.”
Three distilleries have opened within the past six years in mid-Missouri. Hinegardner opened Wood Hat Spirits in 2013, Hawxby opened DogMaster in 2015 and Robert Berendzen opened Woodsmen Distilling in Higbee in 2017. Berendzen also runs the Barrel 53 Cooperage and Stave Mill in Higbee.
All three are part of Missouri Craft Distillers Guild, which pushed for the passage of labeling requirements for bourbon made completely in Missouri. The three distillers have something in common — they obtain most, if not all, of their ingredients locally or within the state.
“Missouri is about local,” Berendzen said. “That’s one thing Missourians thrive on…If people can pick up a bottle that says ‘Missouri bourbon’ versus bourbon, I think it’s going to help.”
Gov. Mike Parson on July 16 signed a bill sponsored by state Rep. Dave Muntzel, R-Boonville, which included a provision on labeling.
For bourbon to have “Missouri Bourbon” or “Missouri Bourbon Whiskey” on its label, the mash, fermentation, distilling and aging process must take place in Missouri.
The labeling rule was attached to Muntzel’s bill in the last moments of the 2019 legislative session.
State Rep. Jeff Porter, R-Montgomery City, sponsored the labeling rule bill in the House, and State Sen. Jeannie Riddle, R-Mokane, sponsored the bill in the Senate.
“I’m excited about it,” Hinegardner said. “We worked on the bill for a really long time and had our fingers crossed up until the last minute.”
The Missouri requirements are more restrictive than those for Kentucky bourbon, because the end product must totally be made with Missouri ingredients and barrels, Hinegardner said.
Craft Distilling has boomed in recent years, similar to the expansion of the craft brewery business in the mid- to late-2000s.
The American Craft Spirits Association started in 2013, the same year as Wood Hat, and started collecting data on distillers three years ago. Anassociation report from September found that sales of craft spirits are up 24%, and the number of distilleries increased by 15% from 2017. The total number of Missouri distilleries is at 39.
“If you look at the (craft distiller) line, it just shoots straight up like the craft brewers did. We’re just now getting at the toe of that slope. We’ll probably add another 100 distilleries in the state of Missouri,” Hinegardner said.
The new labeling rules are also aimed at promoting tourism. The new “Missouri Bourbon” definition will likely draw more people to participate in the guild’s Missouri Spirits Expedition, which maps 33 distilleries, Hawxby said. The label change will also, hopefully, attract whiskey and bourbon enthusiasts around Missouri and out-of-state, he said.
The passage of the labeling rules was just the first step for the guild.
“It gave us an opportunity to meet with some of our leaders and get them to know the industry,” Hawxby said. “Now they know that we are organized… and unified. We’re not just a bunch of random people who make the same thing. That was really beneficial and now we know the process.”
Missouri will rapidly increase the number of craft distillers if they get parity with wineries and breweries in their taxes and other associated costs, Hinegardner said.
“After prohibition, (breweries) got their taxes reduced, and the wine guys 20 years ago, they went and started working on the legislature, and the spirits business hasn’t done anything since about 1932,” he said.
Missouri distillers face greater challenges than other alcohol producers in the state due to higher licensing costs and more restrictive regulation.
Thelicense fee for a domestic winery is $5 per 500 gallons, not to exceed $300, according to the Missouri Department of Public Safety Alcohol and Tobacco Control. Microbrewery license fees are $5 per 100 barrels, not to exceed $250. Liquor manufacturer-solicitors have a $450 license fee, so even small batch distillers, including those making 100 barrels or fewer, still have to pay the flat license fee. Other insurance-related fees and taxes are added to this base, Hinegardner said.
“If you want a winery and you want to raise it up out of your grapes, I think the state license is going to be about $35. If I want to grow my own corn, it’s $1,250,” he said. “We’re trying to reduce some of the roadblocks.”
Modifying fees and other costs associated with starting a distillery to match a winery or brewery would be a good opportunity for Missouri farmers, Hinegardner said. Row crop farmers should have an opportunity to create this value-added product to their farming business, he said.
“That’s kind of what I’m doing here in New Florence. We’re showing people we can do this,” he said.
If farmers added a distilling aspect to their farm, it would help increase their income, he said.
“If you want to do something to add income to the rural community, you change the price of corn, and (whiskey production) really changes the price of corn. A bushel of corn makes $500 of whiskey,” Hinegardner said.
The new legislation is a win-win for Missouri industries like corn growers and barrel makers, because it ties those industries together, Hawxby said. Legislators will be more hesitant to pass a law detrimental to distillers if they know it will negatively impact corn growers, he said.
One part of the Missouri Craft Distillers Guild’s goal in pushing for the legislation is to fight the notion that bourbon has to be made in Kentucky, the distillers said.
“Now, is it going to make the guys in Kentucky upset? Absolutely. They’re not going to like it at all,” Berendzen said. “But it is time for Missouri to be known.”