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06.2007

Massachusetts Beverage Business

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Article By: Ken Sternberg

It's growing slowly, but organic spirits success seems to be well on track. By year's end, the Massachusetts market will probably have nearly a dozen organically made spirits.

"Organic's all the rage right now. I know the category is growing by the interest from distributors that are looking at it. We've gotten calls from the largest distributors in the country," says Jay Harman, a partner of Cisco Brewers, a Nantucket-based company that brews beer and makes Triple Eight vodka, along with gin and rum. "The clientele in high end restaurants listens when someone mentions something is made with organic ingredients. People are willing to pay a little more," he says. Harman is quick to point out that Triple Eight isn't labeled organic because its water source has not been certified by state officials, although he says the ingredients are all organic. About seven months ago Paul Davis began importing organic spirits into Massachusetts through his company, Maison Jomere. His portfolio includes Juniper Green Gin, Utkins UK 5 Vodka, and Papagayo white and spiced rums from Paraguay. A blended Scotch whisky, Highland Harvest, is expected soon. "I saw an opportunity. I thought organics was coming on strong," Davis says, adding, "Sales for the first four and a half years was like pulling nails. In the middle of 2OO6 it started to grow and I now have commitments for more cases than in the first six years." The absence of charcoal filtering helps make his products so pure, Davis explains. "We go into accounts and ask them to open the vodka and they're surprised by it having no alcohol smell and no excessive burn," he says. "Supermarkets have gotten organically inclined, especially in higher income areas. Organic is a viable movement. Even if it wasn't, we're making a better product. Once people taste our product, they don't leave us," he says. Recently, about 1OO Albertson's supermarkets in California began selling his spirits. "The real deal is this: When you introduce a neutral spirit of any sort you've got to make a compelling case to get that shelf space," explains Phil Cavea, Sales Manager with Alternative Import Export, Davis's Hopedale, Massachusetts-based distributor. "I think this is very much futuristic, a phenomenon I think is going to take off," he says, adding, "You go into Whole Foods Market and see fewer customers wearing Birkenstocks and more people with disposable income who want to buy quality." Later this year, Cavea plans to penetrate markets comprised of large student populations of legal age who have an affinity for organically made products, hoping their fondness for alcoholic beverages and organic products will intersect at the cash register with his spirits portfolio.

Square One, an organic vodka launched in 2OO5, seems to be on a rapid course of growing sales and distribution. "I definitely think our entry in the market is timely because all across the board consumers are trading up," says Allison Evanow, Founder and CEO of Square One. "It's a good time to enter the market if that's where you want to play. It comes down to affordable luxury," she says, noting that the best-selling item at Tiffany is the key chain, a relatively painless way for consumers to enter the Tiffany franchise. "For now, we have a competitive advantage. I believe in organics, the market is ready to take the idea of sustainable, organic kitchens and put it behind the bar," she says. "We're seeing that already. We have a core target market of consumers who buy with a conscience; mainstream vodka drinkers, but with personal beliefs," Evanow states, citing brands such as Newman's Own and Ben and Jerry's. All are of great quality, but with something else to them, she says. "Consumers say 'I'm buying a brand that makes me feel good, that's not hurting the land or workers'," she continues.

A veteran marketing executive who has worked for Cuervo and Domaine Chandon, Evanow says she knew the vodka market was awash with brands. "I really thought about that one hard before jumping into the fray. I saw a flood where people get a distillery to make it, get a celebrity and sell it, with no reason for being. If you pare it down to vodkas made with a sense of purpose, there are not so many," she describes. She found it odd that so much hype is about how many times a certain vodka is distilled. "If vodka equals purity, why are they talking about how it's cleaned up on the back end? If you do it right the first time, you start with the ingredients, you process it organically. You've started with such a light process that you don't have to do all this fancy filtering," she says. With new accounts, "We go and say, 'We totally know where you're coming from. We're not just some rich guy making another vodka. Let me tell you what makes it organic.' Once they put it in their mouth, they're sold," she says. Square One is now in about 2O states and Canada, and Evanow is negotiating with a distributor in Massachusetts.

"People buy it a little for health reasons and a little for ethics, but also because it's a cleaner, purer vodka," explains Matthew Baris, President and Co-Founder of Altitude Spirits in Boulder, Colorado, about his brand, Vodka 14, an organic rye/corn blend distilled in Idaho. His target consumers are similar to other high level spirits: 25- to 45-years-old, well educated and affluent enough to buy what they like. "When I first went out some people were dubious of it. Not now," he says, adding, "People associate organic with quality and nice products. I really do believe there's a profit to be had, a niche to be growing. Right now it's not mainstream, but consumers will demandmore. I'm starting to see people think about it and move in that direction."

"I see a growing trend with smaller distilled spirits that are better," remarks Harold Faircloth III, Partner with Green Mountain Distillers in Stowe, Vermont. His company makes Sunshine Vodka, a whiskey and a maple liqueur, all of them organic. "Sunshine," he says, "is a very clean vodka with no burn at all. A small number of people buy it because of its organic nature; most buy it because of the taste. The market for organic spirits is growing."

"I think we're getting over our love of processed foods and that people are becoming more aware of what they're putting into their bodies," says Matt Chivian, CFO and Scotch Portfolio Director for Classic Wine Imports. Chivian says he expects to bring in 2OO to 3OO cases of an organic Benromach Speyside single malt from Gordon & MacPhail by the end of the summer. "It's something the Urquharts [the family that owns the company] wanted to do for quite a while. Organic is not going away. They saw an opportunity and went for it," Chivian comments. The whisky was made in 2OO1 and released late last year. Two major aspects of whisky production needed to gain organic certification are the barley and the aging barrels, he says. For this product, the barley is grown organically by local farmers and Benromach sources wood for its new barrels from wild growth forests in Missouri. Traditionally, Scotch is aged in used barrels that first stored sherry or bourbon. "The whisky is tremendous and nothing has suffered for it," he says of the organic whisky.

One product that helped blaze the path for organic spirits is Rain Vodka, a vodka made at Buffalo Trace Distillery in Kentucky, which has been on the market for about 1O years. "It's not the kind of story to tell the average bartender, but to those who take their craft seriously and are up to date with what's happening in the field. These folks are intrigued by Rain," says Dave Sardella, Massachusetts State Manager for Sazerac Corp., which owns the brand. "Only a few brands are made for the sole purpose of being a vodka. We source out the corn from one field in Yale, Illinois. We're the farmer's only customer," he explains, noting Rain is certified as organic. "Do I see people going out of their way to get organic spirits? I'm not so sure," he admits. "It's happening in small pockets, not overnight. We're not running a sprint, we're running a marathon," he says, noting that Rain's 2OO6 sales volume increased by 25 percent over that of 2OO5.

"First of all is to gain some mind share. I still run into people who don't know there's an organic vodka available," he adds. "Anytime I see a liquor store near a Whole Foods Market I go there for consumers seeking out organic products," Sardella says. "When I've seen a brand take off, very few times does it have to do with what's in the bottle. It has to do with which celebrity is behind it, who's rapping about it, etc.," he remarks, noting: "Rain is not the kind of brand getting $5-million thrown at it for advertising. It's really been a hands-on process, telling the story of the brand," he says. "We're supporting Rain through bartender education and in-store tastings to get them to recommend it. So many times people equate price with quality," Sardella points out. Rain retails for about $2O a 75Oml bottle.

"I can't think of a single reason why organic spirits wouldn't take off," observes Clif Travers, Bar Manager at OM Restaurant in Cambridge. "When I put the bar together I wanted to do an entirely organic well. The only [organic spirit] distributed in Massachusetts was Rain. A lot of distributors won't pick up organics. I had to give up the idea. People are intrigued by it and want to try it. Our customers are looking for unusual cocktails, anyway," he remarks. The trend toward organic spirits is similar to the trend driving chefs to use organic ingredients, he continues. Both trends are being pushed strongly by consumer interest. "The organic properties are of very keen interest to our clientele," says Jackson Cannon, Bar Manager at Eastern Standard in Boston's Kenmore Square, which he claims is Rain's biggest on-premise account. Because it's made from corn, it has "a great subtle viscosity when blending with juice," he notes, adding that stronger interest in organically made beverages "is emerging in the consciousness of distillate drinkers."

Organically made spirits seem to make sense on all fronts: A large segment of smart, monied consumers who want organics and don't mind paying for them; a rare and untapped market niche; and products that taste clean and smooth. If a restaurant or shop owner ever dreamed of having an opportunity delivered on a silver platter, this may well qualify.

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