Ten years later, Indiana craft distillers look to the future | Heraldrepublican

That has opened the doors to dozens of distilleries and tasting rooms across the state, many of which aspire to become tourist destinations in their own right. To date, regulators have approved more than 70 active permits to allow roughly three dozen distilleries to make and sell vodka, bourbon, whiskey and other spirits directly to the public, according to the Indiana Alcohol and Tobacco Commission.

Some were producing beer or wine before permits for craft production opened up, but many of the emerging distillers only began operating in recent years.

“Distilling has been around in Indiana for a long time, but craft distilling (what we think of in the modern sense) is what really got started here in the last ten years thanks to General Assembly. And since then, there’s been a lot of growth in that market,” said Cardinal Spirits co-founder Jeff Wuslich.

“Now that we’re here, I can help my family with this. We can support local farmers, local manufacturers, local carton and bottle makers, local label printers, and local marketing companies,” he continued. “They’ve created this whole industry and there’s a whole ecosystem around it, which I think is a great success story for Indiana. And there’s still more room to grow.”

During Prohibition, only a handful of distilleries in Kentucky and Tennessee were allowed to operate in the United States, most of them for “medicinal purposes.” Since the end of Prohibition, Kentucky has largely claimed a monopoly on the whiskey industry.

And while Indiana’s neighbors to the south have had a reputation for producing bourbon for the past 70 years, it is the Hoosier State that has long served as the nerve center for the companies’ spirits production.

The epicenter of production is an 1847 distillery in Lawrenceburg, formerly known as “Whiskey City, USA,” just across the border from Cincinnati, Ohio.

The Rossville Distillery was acquired by Seagram’s in 1933 and eventually acquired by Midwest Grain Producers in 2011. After a name change, the current Ross & Squibb Distillery produces dozens of different spirits, bottled under several major brand names including Angel’s Envy, Bulleit Rye, Ezra Brooks, High West, Seagram’s, Templeton, and Tito’s.

It wasn’t until the 2013 legislative session, however, that state lawmakers green-lighted the Indiana Craft Distiller’s Permit, which now allows Indiana distillers to sell directly to consumers, rather than through a distributor or in grocery stores.

Early adopters of the permit include Cardinal Spirits in Bloomington, Bear Wallow in Nashville, Indiana Whiskey Company in South Bend, Huber’s Starlight Distillery in Borden and Hotel Tango Artisan Distillery in Indianapolis.

“That word, ‘craft,’ a little moniker, was what really changed things,” said Hotel Tango CEO Travis Barnes. Using Midwestern-sourced grains, the distillery produced 1,275 barrels in 2023 for various spirits, including bourbon, rye, vodka, gin, limoncello and cherry liqueur. Opened in September 2014, it is now one of the largest distilleries in Indiana.

Unlike beer and wine producers, who are allowed to self-distribute, distillers previously had to go through a distributor in order to sell to bars, restaurants and liquor stores across Indiana.

Barnes said the “biggest advantage” of distillation permits is the elimination of a 30% markup taken by distributors.

“That’s a cost savings when we can sell everything we have in our tasting room,” he said. “In some ways, it levels the playing field for an emerging distillery to enter the market.”

Jeff McCabe, co-founder and CEO of Brown County-based Hard Truth Distilling Company, said Indiana distillers have already had “incredible success” and have earned national and international recognition for the quality of their spirits.

Still, McCabe, who is also president of the Indiana Distillers Guild, said there is still “a lot of room for companies to grow.” Better marketing is a priority for the guild.

“We have the water, the limestone, the climate, the grain that we need — it’s all here. Over the last 10 years, we’ve been able to build an ecosystem here where we have Indiana farmers growing our corn, our wheat and our rye, and they’re partners in this,” McCabe said. “Now that we have an industry that’s getting the kind of attention that we’re getting, we can use help to promote what we’re doing.”

He pointed to Kentucky and other states that invest “pretty heavily” in marketing support for the spirits industries.

But for an individual distillery to launch a national campaign is “a huge investment.” McCabe said he wants to see Indiana craft distillers working with the state “to promote the industry and more tourism.”

“We have the potential to bring a lot of tourists to the state,” he continued. “Promoting the industry as a whole helps everyone. And it doesn’t just help the distilleries, it helps that ecosystem – the farmers and all the logistics and everything that goes into making it happen and supporting the businesses. It helps everyone.”

Nearby Bear Wallow Distillery (Indiana’s first retail distillery, which opened in August 2014) has already doubled the size of its Nashville building. Owner Susan Spagnuolo said the biggest challenge for the small distillery right now is the ability to ship spirits.

“Wineries in Brown County, right across the street from my house, can ship, but the state doesn’t allow distilleries to ship, even after 10 years,” he said. “I’m in an area with higher tourism. We have people coming from all over and coming back to where they live and saying, ‘Hey, I loved your Gnaw Bone bourbon. Where can I find it?’ And I have to tell them to go back to Indiana.”

Spagnuolo said direct-to-consumer shipping, an option for Indiana beer and wine producers, would allow small-scale distillers to sell more products and help attract more visitors to the distillery’s tasting room. Current law requiring distillers to ship through a distributor squeezes profit margins and excludes many small producers, he said.

“Alcohol tourism has changed a lot and there is more and more of it,” Spagnuolo said. “Before, you would go to Kentucky to get bourbon. Now, people come to Indiana every day and enjoy visiting different craft distilleries across the country and appreciating what is unique about each place.”

Barnes agreed, emphasizing that for Indiana to emerge as “a hub” for bourbon and other spirits production, “it’s going to take a little more support from our government.”

“I know Kentucky is already ahead of us, but Indiana has an equally long tradition of distilling spirits,” he said. “Without a little help from the legislature, the governor’s office or the chamber of tourism, it will continue to remain stuck at this level.”

That means more “daily changes” to the law and “spreading the message that, ‘Hey, there’s more than corn in Indiana’ — and, oh, by the way, the corn juice we’re making here is really good, so come and buy it.”

“This is going to continue to grow,” Barnes added. “Either Indiana invests or it falls behind Kentucky.”

On the legislative front, “there will always be things we want,” McCabe said, “but we’re in this for the long haul.”

Changes to Indiana’s alcohol laws often require multiple legislative sessions—several years—to come to fruition.

McCabe said the guild is particularly looking to increase distillers’ access to markets and “simplify regulations.”

“The laws and regulations for beer, wine and spirits are very different. There are some really significant differences between what you can and can’t do,” he said. “So why not simplify that, make it simpler for the people who have to regulate the business and simpler for the people who have to operate those businesses?”

Among ongoing discussions with lawmakers are requests for more festival permits (which allow distillers to host public tastings and sales outside their tasting rooms) as well as lobbying for direct-to-consumer shipping, though McCabe said “that’s a longer road and will take longer to do.”

Barnes said he also wants to see spirits “treated the same as wine or beer” in Indiana.

“If someone goes to the Hotel Tango website and wants to buy a bottle of bourbon, whether they’re in Indiana or outside of Indiana, we should be able to do that,” Barnes said, though he acknowledged that laws in other states might still prohibit the shipping of alcoholic beverages. “For us to be able to ship, even just in our own state, would be huge.”

He also hopes that state laws can be relaxed to allow distillers to collaborate on making spirits.

“Today, basically everything has to be produced at the brewery in order to be sold in the tasting room,” he said. “Well, what if we made a half barrel of Hotel Tango and a half barrel of West Fork and created a new product? Why can’t we sell it in our tasting room? There’s historical precedent for that and I also think it would build camaraderie in the industry. Brewers are allowed to do this all the time, collaborate on things. I think we should be able to do that, too.”

Cardinal Spirits’ Wuslich praised Indiana’s craft distilling industry as “an incredible success story of good public-private policy,” but echoed calls for “more parity” with breweries and wineries.

“I would love to see the products we make in Indiana have national and international recognition that can compete with those from Kentucky. I would love for people to understand that when you think of making great whiskey and great spirits, you think of Indiana on that list,” Wuslich said.

“I would love to see us continue to develop partnerships with our agricultural industry in Indiana, so that it becomes a true symbiotic relationship, where they grow products for us to use in our distilleries and get to consumers, and so that everyone can really see all the amazing products that we grow and produce here,” he added. “It’s going to take more time and work, but I think we can achieve a really healthy, competitive environment where we can bring all of our spirits to market.”