VA: Despite success, change is inevitable in alcohol industry
The Daily Progress
By Allison Wrabel
June 23, 2016
As the alcohol industry in Central Virginia continues to grow, inevitable changes also are happening.
In Albemarle County, a series of roundtable discussions were hosted as part of its farm winery, brewery and distillery events zoning text amendment process.
According to the project description, the proposed scope of the zoning text amendment is to strengthen the requisite relationship between activities and events at these sites and their agricultural nature, and to clarify how and to what extent activities and events are usual and customary at farm wineries, breweries and distilleries.
“We’re always concerned about these things, but the county’s perspective on this is at least reasonable,” said Jeff Sanders, president of the Monticello Wine Trail and owner of Glass House Winery. “We’re not opposed to them looking into it; we understand the issue.”
The roundtables were the beginning of the process to get input from Albemarle farm wineries, cideries, breweries and distilleries, as well as from residents and property owners. They will host a work session with the Planning Commission in June and a public hearing later in the summer.
“The Monticello Wine Trail, we’re trying to promote quality winemaking,” said Sanders. “It’s not inconsistent with our mission to limit the ability to do certain things to wineries that are doing [those things].”
Sanders said the winery industry in the area is continuing to grow as the Charlottesville area becomes even more of a winery destination. Most of the wineries are busier every year than the year before, he said, and even with new wineries coming in, it doesn’t dilute other wineries’ business.
“We definitely see this tide lifting all boats, or vice versa, so we want everyone to be good in terms of quality wine, good operations, all those sorts of things,” he said. “If that’s true, then we will all do better because of it, because more people will come here.”
Virginia went from having 40 craft breweries in 2011 to 124 in 2015. Much of that growth was the result of state legislation that passed in 2012, allowing breweries to sell full pints of beer without a restaurant onsite.
Duke Fox, the vice president of sales at Starr Hill Brewery, said this allowed many of the smaller breweries just starting out to essentially pay for their development through beer sales.
“It was a key driver in terms of the exploding of craft breweries over the last three to four years,” he said.
He said the change was not as beneficial to Starr Hill as it was to other craft brewers in more densely populated areas, but Starr Hill still gained more ways to build its brand.
“We had the opportunity to directly interact with customers, sample beer on site, be able to talk to them about the brewery — all the things that the wine industry has been able to do for years, we were able to take advantage of that just like everyone else,” he said.
With larger craft breweries opening shop in Virginia, such as Stone Brewing, Deschutes Brewery and Green Flash Brewing Co., Fox said even more attention will be on the state’s smaller craft breweries.
“There’s going to be more and more people looking at Virginia as a leader of the craft beer world, and that’s going to drive more traffic,” he said.
This year in the city, Hardywood Park Craft Brewery from Richmond and the new Random Row Brewing Company are opening. Fox said he doesn’t see anything that’s going to slow people down from opening more breweries.
“The question is, for those guys, how do you seem interesting beyond those four walls?” he said. “If you’re in a brewery tasting room, or even a brewpub, you’re able to control the environment. But that doesn’t necessarily mean that’s going to translate to selling beer in mass distribution.”
Virginia Distillery Company is launching a new tour program in June that includes an interactive museum and video experience.
“The idea really came about after Gareth and I went to Kentucky and did a tour of all the bourbon trail there,” said Maggie Moore, chief experience officer of Virginia Distillery Company. “We wanted to do something similar as far as an educational interactive experience for people who come and visit us.”
Guests will be able to learn about the history of whiskey, coming from Scotland over to Virginia, and then have a behind-the-scenes look at the process and production facility. Tours will end with a tasting of Virginia Highland Malt Whisky, as well as a cocktail sampling in the Visitors Center.
“Obviously, unlike the wineries and the breweries in the area, we’re limited by the amount we can serve, so we were looking for a way we could keep people on site and get them to really know and connect with the brand,” she said.
Gareth Moore, CEO and chairman of Virginia Distillery Company, said they have to be able to share and sample the product to get customers excited.
“One of the things we’ve really been working on is trying to provide a similar experience to what you’re able to do at breweries and wineries,” he said. “I think with the new rules from the recent legislation, being able to expand is the very first step and it shows that the state is recognizing that there’s a growing industry within the state, and that they’re willing to partner with distilleries to help grow the industry in the state.”
Beginning July 1, distilleries will be allowed to serve 3 ounces per person, per day, up from 2 ounces. No single sample can exceed one-half ounce, unless served as a mixed beverage, in which case a single sample may contain up to one and one-half ounces.
Moore said he thinks the key is recognizing that there are certain limitations about being in a controlled state and that’s not something he believes is going to change anytime soon.
“It’s really figuring out how within that structure that we’re able to grow as an industry in the state and I think really looking at Virginia ABC as our partners in that rather than our regulators,” he said. “As we do better, they do better and I think both of us recognize that that’s going to lead to great results for both sides and ultimately the people in the state.”
Last spring, Denver Riggleman and his wife, Christine, owners of Silverback Distillery, worked with other distilleries and former ABC Chief Operating Office Curtis Coleburn to help draft bills that Riggleman said will help distilleries have a level playing field with beer, wine and cider in the state.
“The other bill, which was SB 714 — that one was huge, which would’ve given us parity with beer, wine and cider in the commonwealth,” Riggleman said. “That’s where the beer lobbies really had an issue, because they’re worried about us as competition.”
“I’m not taking about craft beer; I’m talking about beer manufactures and distributors, the big boys,” he said.
Senate Bill 714 did not pass, but it would have allowed any distiller licensee to operate a private distillery store, set its own pricing and keep all the profits for products sold on-premises. Currently, distillery store sales and profits are deposited with ABC.
Riggleman said that he’s going to keep pushing for the parity bill and samples totaling 4.5 ounces, which was what the bill initially proposed.
“Actually, I think it should be unlimited,” he said. “I think people can make their own decisions. We’re very responsible, and if beer, wine and cider can determine if somebody’s publicly drunk I think a distillery could, too. But we have to take it one step at a time.”
Silverback Distillery opened to the public in 2014, and Riggleman said it had almost $1 million in gross sales in their first year.
“Fortunately, we’ve had so much support from the state of Virginia customers, it’s been incredible,” he said. “Our customers are amazing; we have a very loyal fan base.”