Hartford Business Journal

14 HARTFORDBUSINESS.COM | AUGUST 19, 2024 Hartford Flavor Company owners Tom and LeLaneia Dubay recently opened their Cocktail Parlour in downtown Hartford, at 54 Pratt St., which serves a farm-to-table menu and its signature distilled products, including Wild Moon Liqueurs and HFC Vodka. HBJ PHOTO | DAVID KRECHEVSKY Entrepreneurial Spirits CT's craft distillery industry has grown, but distribution among key challenges distilleries has grown, the market continues to be dominated by just a handful of large producers. According to the data project, just 43, or 1.6%, of distilleries are respon- sible for 54% of the cases produced nationwide, while 89% of the distill- eries are classified as small and produce just 11% of the cases. Rebecca Harris, co-founder and co-owner of Catoctin Creek distillery in Virginia and a past president of the ACSA, says there is no question that the number of distilleries continues to grow nationwide, but that does not mean the industry is thriving. Average sales per distillery, for example, have been flat the last couple of years. "That's not a healthy industry," Harris said. According to the data project, craft spirits sales overall have more than doubled, rising from $3.7 billion in 2017 to $7.9 billion in 2022. Sales rose 5.3% in 2022 from a year earlier. But the average number of cases per distiller fell 4.1% to 5,191 in 2022 from a year earlier. The sector's growth is largely coming from an increase in the number of distilleries, "not from a growth in the size of existing businesses," Harris said. That may be one reason why, according to the ACSA, that at least 49 craft distilleries nationwide have closed since January 2023. 'Lost some traction' A big issue for distillers is distribu- tion, Harris said. When she and her husband founded Catoctin Creek in 2009, there were approximately 200 distilleries nationwide. "Now we have 2,700 distilleries, but in that same time the number of distributors has consolidated by like a third," Harris said. "Craft spirits specifically — more than wine, more than beer — need to go through wholesalers to get to consumers." While wineries have been allowed to ship directly to consumers nationwide, distilleries cannot. That explains why 69% of sales for large distilleries are outside of their home state, while just 6.9% of sales for small distilleries are out of state, according to the data project. Harris said the ACSA recently conducted a survey of distilleries about distribution issues and the By David Krechevsky davidk@hartfordbusiness.com W hen Tom and LeLaneia Dubay founded their craft spirit distillery, Hartford Flavor Company, in 2014, it was a relatively uncrowded industry in Connecticut. "I think our license was No. 12 in the state in all of history," LeLaneia Dubay said. Since 2014, the number of active craft spirit distilleries has grown. At one point there were 21, but two have since closed and two others, CoreBev and Continuum, have merged. A new distillery, 8th District Distilling Co., is scheduled to open soon in Manchester. A lot has changed in the 10 years since Hartford Flavor was founded at 30 Arbor St., including the enactment in 2019 of a state law that allows distilleries to serve drinks in their own taprooms. That helped spur the recent opening of Hartford Flavor's new Cocktail Parlour in downtown Hartford, at 54 Pratt St., which debuted in July, serving a farm-to-table menu and its signature distilled products, including Wild Moon Liqueurs and HFC Vodka. Overall, the company employs about 20 people, full- and part-time, including 12 at its distillery. "We know we were early on the wave, and we've done a lot of work with the legislature to try to change the laws to make it a little easier to do business in the state," LeLaneia Dubay said. She added that the legislative changes have been positive, because now the company owns a restaurant and can sell at farmers' markets, "which are a huge business," among other changes. That doesn't mean there are no challenges left to conquer. One of the biggest issues the industry faces is distribution, and it's stunted potential growth, experts say. 'Pretty darn flat' Connecticut is not the only U.S. state to see growth in the number of craft spirit distilleries. According to the Craft Spirits Data Project, produced last year by the American Craft Spirits Association (ACSA) and Park Street, an online platform that supports beverage companies, as of August 2023 there were 2,753 active craft distilleries nationwide, up 2.4% from a year earlier and up nearly 10% from 2017. While the number of craft spirits CONNECTICUT'S DISTILLERIES There are 18 active craft spirit distilleries in the state: • Branford Distillery, Branford • Maple Lane Spirits, Preston • Broken Shed Distilleries, Southport section of Fairfield • Mine Hill Distillery, Roxbury • BuonCello LLC, Bethel • Proof and Wood Ventures, New Canaan • Connecticut Distilling, Waterbury • Rum Tropic Distillery, Stonington • Fifth State Distillery, Bridgeport • Sono 1420 American Craft Distillers, Norwalk • Hartford Flavor Co., Hartford • Watercure Farm Distillery, Pomfret • Hickory Ledges Farm & Distillery, Canton • Waypoint Spirits, Bloomfield • John Fitch Distilling Co., South Windsor • Westford Hill Distillers, Ashford • Litchfield Distillery, Litchfield • White Hills Distillery, Shelton Note: 8th District Distilling Co., a new facility, is scheduled to open soon in Manchester. | Sources: distillerytrail.com, ctvisit.com/distilleries, Connecticut Secretary of the State.

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