Distilling Craft
Distilling Craft
Sustaining Momentum
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We talk with Karen Hoskins about the evolution of her distillery - Montanya Rum - in Crested Butte, CO and how her passionate commitment to sustainability manifests in daily operations. Later in the episode we talk a bit about green building and process technologies that can be built into a distilling facility.
You're listening to Distilling Craft, Episode (8): "Sustaining Momentum". Today, we're going to be talking with Karen Hoskins from Montanya Distillers in Crested Butte, Colorado.
Podcast PromoDistilling Craft is brought to you by Dalkita, a group of architects and engineers who specialize in designing craft distilleries across the U.S. More information is available at our website www.dalkita.com. [ d a l k i t a.com]
Colleen MooreHello everyone. Welcome to Distilling Craft. I'm Colleen Moore. Hey, just a quick thing before we start today's show - while we're hard at work, lining up new interviews and producing new shows, and you are so kindly waiting on us, we're going to reissue a couple of our episodes from season (1) with some previously unreleased material mixed in. Today, we revisit Episode (8) from Season (1) with Karen Hoskins. Karen is the president and CEO of Montanya Distillers in Crested Butte, Colorado. She has also launched a company called Zoetica, with a mission to change our nation's dependency on single use trash. Later in the show, our radiogenic part-time distiller, DJ, talks about energy efficiency and utilizing sustainable materials in a distillery. Welcome to the show, Karen.
Karen HoskinsThank you.
DJ for DalkitaThe reason I wanted to bring you on is, we will talk about some of the sustainability issues with your distillery. I know you have made a real big push to be as sustainable as possible. Can you give us a brief overview on why you think that's important, to get us started?
Karen HoskinsAbsolutely. I think, from my perspective, it's not a business related activity at all. It's not something that I do to have a better business or to be more popular with my fan base or anything like that. It's really about what I personally believe. And I personally believe that many of us are living on this planet in a way that really over-utilizes all of it's resources, and really leaves a huge trail of trash, carbon, and emissions of all kinds. I think, it's really true in the craft distilling world. So, for me, what I was doing personally, was taking a look at every single thing I do in my own life, and that naturally extended to what I do as a business owner. And that worked really specifically toward wanting to address every single thing that we leave behind in the process. And, also wanting to address every single thing upstream of our company. So really taking care of the entire supply chain from what we bring in, to what we send out and, how it impacts every level of sustainability. So I could go on for days about all the various things that we do, but we can get more specific, I'm sure, based on your questions.
DJ for DalkitaI know you have a fairly unique challenge in that, you make rum up at 9,000 feet in Crested Butte and sugarcane isn't exactly growing in your backyard. How are you dealing with sourcing ingredients? What's going on there?
Karen HoskinsWell, it was an interesting realization for me in my research. So I had assumed that most rum distillers were quite close to their sugarcane supply. It's not true anymore. Most rum distillers are bringing sugarcane from Brazil, Paraguay, Uruguay, India and Fiji. So a lot of rum distillers are actually really far from their sugarcane source. That was the first 'Ah-Ha' moment. The second 'Ah-Ha' moment for me was that, the biggest ingredient in rum and any spirit is water. And I am close to my number one ingredient, I'm so close and I have really what I think is some of the best water in the world, up here in the Rocky Mountains in Colorado. And a lot of the world understands and knows that. So it's not something I even have to really market, they just assume it. For me, it was a matter of looking at my ingredients; where do they come from, and how can I get them from as close as possible, and from as sustainably minded a company as possible. So the water was easy, it comes from an aquifer 350 feet under our distillery. We pump it into our distillery to use to proof our spirits to 60% of what's in that bottle is beautiful snow melt and spring water that's been filtered down through 350 feet of rock and natural filtration. Which means we don't actually have to reverse osmosis filter, we don't have to do a lot of the filtration that most companies do to get the water into the bottle that they want. It also never goes into a municipal water source. So it's never fluoridated or chlorinated with any sort of additive chemicals, which makes a huge difference to the final taste.
DJ for DalkitaThat's really cool that you don't have to deal with treating your water. With bringing in the sugarcane, I know at one point in time you were bringing it in from Hawaii back when you were down in Silverton - are you still doing that? What is the story with your sugarcane?
Karen HoskinsSo we made a really large shift, about four years ago and it was really important to the company. I don't think I recognized, at the time, how important it was to the company. But we were bringing sugarcane from the Hawaii Cane and Sugar company, HC&S. Since then they have ceased all operations, literally, they don't grow any commercial sugarcane on the five islands of Hawaii, anymore. And they don't process any sugarcane on the five islands of Hawaii, anywhere. So, I guess, I did sort of have an inkling of that might come down the pike. But it wasn't the real reason that we made the switch. We made the switch because I wanted to certify that our sugarcane was all American grown. Unfortunately, HC&S couldn't certify that because I was buying it out of the commodity market in California. I wasn't buying it directly from them in Hawaii, and having it shipped directly from them in Hawaii to me. So by the time, it got to the commodity market in California where I could buy it and not have to pay the Hawaii to California leg of shipping separately, they wouldn't certify that it wasn't mixed up with Mexican sugarcane or other incoming supply chains. So, it really harshed on my concept that we were an all American Rum, and that we could track our sugarcane back to the original growers and producers. So we abandoned that relationship about four years ago. The coolest part was that, a couple walked into my distillery in Crested Butte, Colorado and they said, "We're sugarcane growers in Louisiana. Why don't you guys use Louisiana sugarcane?" I realized that when we started the company in 2008, it was Katrina, and I just assumed that getting sugarcane from Louisiana would be both hard and whether impacted and transportation impacted, if there was a hurricane. I didn't realize that sugarcane just lays down flat in the field and lets the hurricane do its thing, and then stands back up again later. So it can be absolutely harvested and grown post-hurricane. So, I've educated myself a lot. I definitely came into it not being as much of a geek as I am now. But it turned out that this sugarcane supplier was also a hundred percent bio mass powered, that they would sell direct to me from the growers Co-op and from the mill on their own property, which allowed me to certify and track our supply chain and to feel incredibly good about the company, the diversity within the company, the sustainability practices, their scrubbers, their machine harvesters, which keep there from being a terrible labor component as well.
DJ for DalkitaWhat are you buying from them? Are you buying white sugar? Are you buying molasses? What is your actual ingredient?
Karen HoskinsWe use both. We basically use every single thing that comes out of a pressed stock of sugarcane, except the fiber solids of the cane, which is called Bagasse and the water. We take molasses, but it's unrefined molasses. So, most sugarcane products go from the mill to the refinery. In the refinery, they do everything possible to make the sugarcane look really uniform; No flux of bagasse, no flux of anything, no inconsistencies. Unfortunately, the side effect of that is that it takes out a lot of flavor. So we're able to buy molasses and crystallized raw sugarcane, unrefined, and get that unrefined product shipped directly to us from the mill. So 12% of our fermentations is molasses, and 88% is crystallized raw sugarcane. It's nothing you'd ever be able to buy in a store, but it's also not that fake kind of crystallized sugarcane that you get in the store, which is often refined white sugar, painted over with brown molasses. And it's gone through six layers of refinement that we don't need to make rum, we don't actually want because it takes a lot of the great natural flavor out.
DJ for DalkitaSo with that 12% molasses you are using, are you doing that for a nutrition or are you doing that for flavor or what's your thinking behind that?
Karen HoskinsThe thinking is really that molasses has a tremendous amount of flavor. It captures a whole component of the flavor of sugarcane that isn't in the final raw sugarcane ingredient. We want the rum to benefit from everything that was in that sugarcane plant to begin with. And when we take out the molasses, we lose a lot of those malty components of the beautiful flavor of raw sugarcane i.e. The actual plant and the stalk itself. So, we reintroduced the malty flavors and we also reintroduce the fact that molasses has a touch of sulfury component. And while that's not my favorite aspect of rum, it is part of what people are very familiar with, with the flavor of Rum is a slightly, just an interesting component of sulfur. And if you take that out completely, it stops tasting like a rum. It can taste more like a whiskey or more like a Reposado Tequila. And so it's part of what people associate with good rum.
DJ for DalkitaI don't want to rum too far from sustainability, but where are you getting your yeast from, to create that flavor profile you're looking for?
Karen HoskinsIt's funny, because yeast is probably the only thing that we do at Montanya Distillers that I don't talk about publicly. It's only because we talk about exactly where sugarcane comes from, what stills we use, where our water comes from, how we make the rum, and so the yeast is really the one proprietary thing we have. Anybody could make Montanya Rum if they were using our same yeast strain. I can tell you that it's very robust because we're fermenting at 9,000 feet, up in the mountains, in a much cooler set of temperatures than the Caribbean, where yeast just wants to populate and wants to succeed. It's a little harder to have yeast succeed up at this elevation. So, we use a really robust strain. It's an American strain of yeast, but it's the one thing I don't advertise because there are - believe it or not - a lot of people out there who would like to duplicate what we do. And I get a lot of questions from other rum distillers: "How can I do what you do?"
DJ for DalkitaI would absolutely believe people are trying to duplicate you guys. Although I have to say you are a little bit higher than every other distillery in the country. So I wouldn't worry too much about them replicating your flavor profile. Speaking about that, I read an article recently about how you took a trip down to South America to study other high altitude rums. Can you talk about how you went down there, and used that to help get your distillery up and going?
Karen HoskinsIt's actually ended up being multiple trips. My love of the spirit of rum goes back more than 30 years, and I've spent a lot of my life trying different rums and in many cases visiting the distilleries where they were made, long before I thought about having a distillery of my own. The very big moment at which I started thinking that having a rum distillery in the mountains of Colorado suddenly seemed possible, was in Guatemala. So, the Ron Zacapa folks in Guatemala have long talked quite extensively about how they take their barrels up to 7,000 feet in the mountains outside of Zacapa, Guatemala and they age at those high elevations. And the benefits of that aging are, that there are temperature fluctuations throughout the day and night, and that moves a lot more rum around in the barrel. And it gives more of the rum, the access to the benefits of the American White Oak, or the French Oak, or whatever it is that you're aging in. When I learned about what Ron Zacapa was doing in Guatemala, that was a really big moment of this, that we could not only do this in Colorado, but we could probably do it, in many ways better. We have higher elevation, we have better mountain spring water. I'm still very inspired by what Ron Zacapa does and I don't pretend to know that I could do it better. But the other thing that they do is, they use the raw cane honey, which some people believe that it is a really legitimate thing and other people don't. But like extra virgin olive oil, the first press of the sugarcane brings out some of the most complex and deepest flavors of the sugarcane. So if you use the first press, then you're likely to have some of the loveliest flavors. That's just something that we've really been inspired by and have worked hard on, is to learn from what they've done in Guatemala and Columbia and even Panama. These mountainous traditions of rum, which a lot of people don't even know exist, but they're very long established, and some of the rums I love the best.
DJ for DalkitaTalking about your barrel aging program, can you talk a little bit about the sustainability there? Barrels aren't always the most sustainable part of the distillery. The trees that are harvested are sometimes older and they aren't necessarily replanted at a sustainable rate. Can you talk a little bit about what you've done to ensure that your barrels are sustainable?
Karen HoskinsWell, I would say the good news is that we don't use a single primary barrel. We don't use one barrel that is in its first-use, ever. So as long as there are whiskey makers, rye makers and bourbon makers using primary barrels, "A" barrels - there's a lot of nomenclature around that - then there's always going to be a supply of barrels for us to recycle for them. And that basically means that they decant that barrel of their whiskey or their rye and they send it to us in Crested Butte, or we have a truck show up and pick it up, and then we will reuse it. And then the beauty of our rum is that we can first age our Oro or Exclusiva in it, and then age our Platino in it, for one to two cycles. So we can get three to four aging cycles out of a single barrel where whiskey, bourbon can only get one. They always have to, by law, use new oak. So we feel like, we are actually the best recycling program in the craft spirits world. And then, we send it off when we're done with it to a beer maker. We have a number of relationships with different brewers in Colorado typically, although we've sent them as far as California and Boston. And we make sure that they get a whole other round of use from a brewer, and then typically they end up in someone's garden as a planter, or at a wedding reception as a podium, or whatever. And so our goal is to be part of making sure that that barrel and the wood that was sacrificed to create it has as long a lifespan as possible.
DJ for DalkitaOne of the other passive ingredients in making spirits is our glass. How are you handling the sustainability aspects of your glass? As we all know, it's not necessarily manufactured in the most environmentally friendly manner. How are you handling that in your sustainability approach? Are you using recycled glass, preferential sourcing? What do you guys do it?
Karen HoskinsI would say this has been probably one of the larger challenges that I've puzzled through over the years for a lot of reasons. One is that there are glass makers who meet some of the highest environmental standards and there are glass makers who do not. So many of my peers in the industry are buying large lots of custom glass from China. They're bringing over container loads and storing them because they want to have the exact glass, that has their logo imprinted inside the glass, or it's very unique to them. And I totally understand that. But I could not do that because Chinese glass makers and meet some of the lower standards of emissions and carbon related issues. But also then, you put it on a container ship and you ship it all the way to a port city, and then you have to put it on a train to get it to Denver, and then you have to put it on a Semi to get it to Crested Butte. By then, it doesn't matter where it came from, you've lost every element of good sustainability. So then a lot of the really beautiful glass makers are in Europe and Eastern Europe. I looked at many pieces of a beautiful glass for our bottles, that were made in Europe. But then, same problem; you have to ship it all the way to Colorado, and then half the time I'm filling it up in Colorado and shipping it back to Europe to sell it in the EU, which again, didn't make any sense. So we've done a lot of different things. We haven't been able to get 100% of our glass made in the U.S, but we do buy a lot of glass that's made in the U.S. So that is the shortest pathway with the highest environmental compliance of any glass maker in the world. And then the glass that we do import, typically comes from just south of the border, either in Mexico or in Columbia, and it's all coming on trucks. So it's better, but again, it's still not perfect. But the other that we did is, we eliminated a step of having our glass silk-screened. So most of my fellow distillers send their glass from the glass maker to the silk screener, they have all their label information silk screened onto the bottle and then they have it shipped to their distillery, which adds another step. We use FSC certified paper labels, in an effort to take that step out. But it's not perfect, and I wouldn't pretend that it is. I just think we've attended - we have a goal of having a hundred percent American made glass by sometime in 2018. We're collaborating with our glass company on that because they're committed to helping us do that. So, we're keeping moving in that direction.
DJ for DalkitaVery cool. So one of the things you are fortunate to have there in Colorado is, that you can have a tasting room. Are you able to do any recycling out of your tasting room, your glass bottles? What does your sustainability program for recycling look like for your bottles, your glass in your tasting room?
Karen HoskinsWe did do that for a period of time. We had a program where you could bring your bottle back and we would soak the label off, commercially clean it, and then put it back into our production line. It turned out that it didn't really work very well. We found that we had some cloudy glass when we were bottling. We have a little bit of a labor shortage here in Crested Butte and it just wasn't a good job for anyone to stand there and scrape paper labels off of bottles. So, we ended up getting rid of that program. But we do make sure that 100% of our glass from our tasting room makes it directly to glass recycling. But also, we've created through the TTB, in a compliance specific way, a way of using glass for our tasting room that we can then refill. So we bring glass in from our bottling line, filled with rum that we can serve in our tasting room, but it's labeled in exactly the way the TTB needs to see it, it's still 750 milliliters. But we're able to decant it in the tasting room to make our infusions, to make a lot of our different products, without having to use our bottle.
DJ for DalkitaInteresting. That's very cool. Out of curiosity, have you looked into recycled bottles, recycled glass? Do you know what the market looks like out there?
Karen HoskinsI have not found an option for that, in spite of looking. I would say that it hasn't yet hit the glass market in the craft spirits world or in the short run spirits packaging world, unfortunately. But, I don't think it's out of the question, for sure. Especially, if we were to think about as we grow higher volumes of glass and being able to do special ordering of our own.
DJ for DalkitaSo a couple episodes back, we did a good episode on cooling and using geothermal to keep your energy usage to a minimum. What are you doing for an energy program at your distillery? Are you doing anything to save some of your heat or keep things cold in a more reasonable way? What kind of energy program are you running?
Karen HoskinsWell, our energy program at Montanya is fairly complex in terms of sustainability. You're specifically asking, I think, about how we start our fermentations, how we heat water. I'll address that specifically, but I'll also preface that by saying that we are 100% wind powered. So all of our electricity, which runs our pumps, our tasting room and all of our various different equipment - our crane that gets our barrels in and out of the distillery, etc - All of that is being powered by the wind. And then we are also a 100% carbon offset. So our stills are natural gas fired, and we're partnering with the company to provide enough carbon offsetting, to more than offset what we emit from our natural gas distilling. But also, the water that is in our condensers is clean water that is being warmed by the distilling process. We time that, so that we take that water and use it to start our fermentations. Or we start our fermentations - If we can't do that for some reason with water that has been heated - by our carbon offset program. So, one of the greatest beauties of being at 9,000 feet in Colorado is that our ambient temperatures are really conducive to fermentation. We don't have to do a lot of heating, chilling, cooling, wort chilling, all of that, which any distiller in the Caribbean or in lower elevations is doing a lot of, and using a lot of energy for. We don't have that problem. So we're able to recycle warm water to use things that need warm water, and we're able to use tap water, run through copper coils, to chill our fermentations. If in a rare event they do get over-warm, all we have to do is just run our tap water, which is like 43 degrees on any given day in Crested Butte, because of where it's coming from. We can run that through a copper coil and it will cool off the fermentation with no need to chill that water.
DJ for DalkitaI guess you could just open the doors, probably six months a year, and then it would drop the temperature in that room fairly considerably.
Karen HoskinsWell, that's one thing we can do. But then the other thing, that's maybe even more significant is that we can heat our facilities. So our tasting room is in this mountain town, which, this year we got 11 feet of snow in the month of January, we're a ski town. Imagine, just envision in your mind's eye, how incredible it is to walk in our space at four o'clock in the afternoon after a long cold day of skiing, and find that the whole space is just warm from two stills cranking all day long, pumping out rum. And literally people just come, and want to feel that heated space. So that's something if we were at sea level, we would be doing everything to get rid of that terrible heat. They distill outside on a lot of Caribbean islands just to not have to deal with the heat. We're actually recapturing and reusing that heat, because it's something that is really valuable, highly valued in the mountains of Colorado.
DJ for DalkitaYeah, that'll warm you inside and out. I want to circle back just a little bit. You were saying your distillery is a 100% wind powered. I know for my distillery, we just checked the box of the power company and said, "Yes, I want to use wind energy. Charge me, slightly extra." Is that what you did, or did you go a little bit deeper into that program, and actually verify it?
Karen HoskinsI love that question because people really thought I was crazy when I was doing this. Our utility has an option that you can check the box and say we want to buy 100% or some percentage of our power from you. And I just was skeptical about it from the very first day, because it costs like a dollar and I thought this can't be right. So I started looking into it and I realized that their green energy was being provided by a huge utility called Tristate. And that tristate was producing the amount of green energy that was required by them by law, but they were always going to be making their money off of carbon energy. So natural gas produced, electric power plants, other types of power plants, coal fired. So their incentive to be green was going to always be secondary to their incentive to make money off of their carbon producing electricity. So I started looking around for companies that were generating 100% power from green sources, and that their number one priority was always going to be to create power from green sources. And I found a company that I've been working with, they're called Arcadia Power. They generate a lot of wind and solar in Colorado, but also in other states. And I can guarantee that when I use their pipeline of electricity, that it's a growing resource, that it's ideally going to start shifting the balance of how much is coming from green sources, and that I can guarantee that I've bought actual green energy.
DJ for DalkitaSo I just get a little over excited at the beginning of this interview, and I blew right through the, what do you make and where do you distribute it questions. So, let's circle back to that, since we're getting near the end. What rums are you actually making right now?
Karen HoskinsWe make three rums. We make Montanya Platino, which is a light rum. It's aged for a year in American White Oak. But then we filter the color out of it, the color that comes out naturally from the barrel, so it's a perfectly clear rum. And then we also make Montanya Oro, which is also aged for one year, but with no carbon filtration. And then we make a Montanya Exclusiva, which is aged for three full years; two and a half years in an American White Oak barrel, and finished for about six months in a French oak barrel from Sutcliffe Vineyards in Colorado, which typically has held Port and Cabernet Sauvignon.
DJ for DalkitaWhere are you distributed? We were talking about going to Europe, but where else can we find you?
Karen HoskinsWe send rum to about 44 states in the U.S, Although some of them are buying a lot of rum and some of them are buying just a little, so it makes it kind of hard to find it in your local liquor store. But we ship rum to everywhere, from New York and San Francisco to Fargo, North Dakota and Houston, Texas. Our biggest market in the U.S. is definitely Colorado. So you can pretty much find us anywhere in the liquor stores and the bars of Colorado. I forgot to mention that with our glass program in Europe, we ship bulk rum over to Europe and have it bottled in Spain, that way we don't have to worry about the carbon impact of that glass going all over, hell and gone. Then we bottle in Spain, and then we have a distributor. Well, we really have a broker in Europe who's selling to distributors throughout the EU, the UK,, and even as far a field as Scandinavia. We've shipped around to Singapore, and New Zealand, and Ireland, those are not our biggest contracts, but we do believe that our EU business will exceed our US business in 2018, the way it's going.
DJ for DalkitaIf you were going to start your distillery over again, what would you do differently?
Karen HoskinsThat's a good question. It's a hard one to answer because I never can really evaluate how some of the hardest times have also been some of the most defining times of our brand, and what makes us who we are, and just pushing through. I would say one of the things I wish` could have been different is facilities, for us. We started the company in Silverton, Colorado and it took us about three and a half years to come to realize that we couldn't grow it there, for a lot of different reasons. Facilities being high on the list, but also compliance, and just really small Colorado Mountain town. And so we relocated to Crested Butte, about six and a half years ago. The first building that I had my heart set on was this incredible space that was the old powerhouse of Crested Butte and it was right downtown. And it just turned out to be a really tough building. It was more than a hundred years old and it didn't have a great basement or crawl space. Every time we got the plumbers, we thought we should be putting them in Hazmat suits to go down in this slimy little crawl space. And I had reason to believe that the building wasn't a healthy building, it wasn't hard to make rum there, but it was hard to access our infrastructure for repairs or for expansions. So people thought we were crazy for moving out of that building, because it was so beautiful inside and we had created such a fun atmosphere. But the building that we're in now, well we have two buildings; one is our barrel house and it's where we do our bottling and shipping and receiving, and then one is our downtown location where we ferment and distill and have our tasting room, bar and restaurant. And, it's the perfect combination. It's been really amazing in terms of giving us the ability to interface with our customers, but also having this backside with four cliffs and things that make life easy for us. So I wish that it hadn't taken us five years to get to where we are now, because there's a huge amount of cost involved in moving and re-certifying a new location, and redoing all of your maps and permits and everything. And I know, I probably could have made money sooner if I hadn't done all of that. But at the same time, if I had tried to build the perfect building from day one with the rate at which we grew, I think I probably might've put myself out of business. So who knows, it might've been the best thing
DJ for DalkitaWell, for the record, I loved your Silverton, CO location.
Karen HoskinsThank you.
DJ for DalkitaWhere do you see the industry going in the next 5 to 10 years?
Karen HoskinsI think, there is hopefully going to be a conversation about distribution. I have come to understand that there really isn't a great distribution model for craft spirits existing in the world. We've got really awesome big distributors who can get our products to the buyers within a day or two, and it's amazing to have people to be able to write one check for 60 different things that they ordered, I understand all of that. But that sales rep going in to talk to a bartender in the new location, they just can't make time to talk about Montanya Rum. It's the reality of their lives. I can't really hold that against them, because if it were me and I had 175 products in my portfolio that I had to talk about, I would be talking about the ones that we're putting the most bonus money into my pocket. It's just the reality. So, then you have these smaller, more boutique houses, that have been focused historically on wine maybe, or beer, and they're dabbling in craft spirits because they know there's a lot of growth in that. And they're wonderful, they'll talk about your spirits all day long, but customers get frustrated if they can't get it in a couple of weeks, or their rep doesn't come around off often enough, or they're out of stock because they didn't order into their warehouse often enough. There are problems in every quarter of distribution for craft spirits. So, I dream of the world in which there are houses that are just focused on craft spirits and they have manageable size portfolios, but they also have amazing networks of distribution. Maybe they collaborate with larger distributors or whatever. But I wish there were a more perfect model, and I'm hoping that is the direction that's going to happen over the next five years.
DJ for DalkitaThat would make life very much easier. What would be your advice to a new distiller who came to you and said, "Hey, I've got a limited budget, what should I focus on?
Karen HoskinsWell it's interesting that you say that, because I'm in the process of writing a book about that exact topic, because I wish that the book had existed when I started. People hold a lot of information very close to their chests. Other distillers don't necessarily want to share their secrets, and distributors don't want to give you the playbook, so I really felt like I was wandering completely blind for the first almost 10 years now. I'm a little more informed now after nine and a half, almost 10 years. So, I'm writing a book about all the advice that I wish someone would have given me in understanding the industry. I think the main thing I would say is, spend a good bit of time understanding the three tiered system and understanding where you want to ultimately fit your distillery in the long term. I never really sat down and said, "Hey, I want to be one of those distilleries that distributes nationally, that distributes internationally, attracts the attention of William Grant & Sons, gets bought up, 10 years in for $120 million". These things are happening, as you know, on a very regular basis. And I think, it just didn't exist when I started Montanya. Though there weren't those kinds of transactions, so I didn't have that to aspire to. But I also didn't ask myself if I just wanted to focus on Colorado, for the first 10 years, and then maybe dabble in other states or other regions. I just have really kept kicking the can down the road in small increments. So, I think, there's a real benefit to being strategic from the beginning, because all the decisions that you make have to be really focused on that strategy. It's very easy to spend a lot of money supporting a strategy that you don't even have. I really want to have distribution in Minnesota, and then someone would be like, why? I don't totally know and I don't really have any money to open that market, so I'm not going to hire a separate rep or broker to talk about my company there. And, so we're just going to founder in that market for a long time with a small distributor. So I just wish I'd been more strategic earlier on, but I just didn't have a clue what I was doing. And one of the things I do now, to try to address that in a small way, is through a company called Ladies of American Distilleries. I coach other women who are either entering the industry, or coming up in the industry, and I donate my time to help them to be more strategic from the beginning than I probably was. I do it also for other distilleries that aren't led by females, I feel like this helps me to both, address the lack of diversity in the industry, which is colossal and flabbergasting, and also to give back or pay it forward or just provide a little bit more of a positive environment within the industry itself.
DJ for DalkitaThat's awesome. Well, thank you so much for coming on the show. I very much appreciate it.
Karen HoskinsI am glad to be here, and thanks for taking an interest. It was fun talking with you.
Podcast PromoToday's episode is brought to you by the team of architects and engineers at Dalkita. Dalkita has been serving the craft distilling industry for over 13 years, and are committed to production facilities that work. Now let's get back to the show.
Colleen MooreSpecial thanks to Karen for taking the time to talk with us today. Up Next, our field reporter, who wants to be a distiller one day, and his homily on energy efficiency and utilizing sustainable materials.
Field ReporterSo the easiest way to start off talking about this is with water usage. Water usage isn't an issue for every distillery, there's lots of parts of this country that have virtually unlimited amounts of water. And so for them, trying to save water will end up costing them electricity and be less sustainable, because they're using more power. That isn't true for everybody. So I'm going to walk you through an example from a distillery here in middle of the country. They're not the wettest place, they're not the driest place, and hopefully it will be applicable to everybody. So we're going to talk about a fairly large distillery. Let's say, they've got a 5 million BTU boiler, needing about a million BTUs during distillation. So after they've calmed down for their heat up, they need about a million BTUs to keep it going. They need about 850,000 BTUs to cool that energy back down, and produce a room temperature distillate. In order to provide 850,000 BTUs of cooling, we need about 22 GPM of, let's say, 50 degree river water. Now what that works out to is, they're going to be using almost 8,000 gallons during their six hour distillation. We can replace that with a 70 ton chiller, which is a fairly large chiller, it'll cost about 53 grand. So now we're going to spend 53 grand, what are we getting back here? Well, in middle of the country, let's say water is costing us about a third of a cent per gallon, and about a half cent per gallon is going to be spent on sewage to dispose of that water after we've heated it up. So add that all together, we end up at just shy of a penny a gallon i.e. 0.8 cents per gallon. And then we're going to have to spend some energy to provide this cooling that we need. And that's going to work out somewhere around $4.80 an hour. When you subtract that energy from the water costs, basically by running a chiller, we're going to be saving about $6 an hour. With that $6 an hour, it's going to take almost 9,000 hours to pay back your chiller, or about 1500 distillations. That's not a lot, if you look at the lifespan of your chiller. We're talking about six years, if you're distilling once a day. If you're distilling three times a day, we're looking way less than that. So if you're a big distillery using that million BTU per hour still, which is probably right around the neighborhood of a thousand gallons an hour, that's where we're looking for payback time. Now money is not free. So if we say that 53 grand we spent on the chiller costs us 8% interest. If we're only distilling once a day, we're actually going to push it all the way out to about eight and a third years to pay it all back.
DJ for DalkitaBut we're talking probably 20-25 years lifespan on the chiller. So for the second half of that chillers life, you're making probably that same 53 grand back. Now, if you're running a lot, you're doing three times a day, you're really moving out the product, your payback drops all the way down to three years, 2.8. At that point in time, you've got 20 years of making good money, again about 50 grand every three years. So we're going to be somewhere in the $350,000 positive. Now if you're a smaller distillery, we can obviously run a smaller chiller. We can use some of the methods we talked about on that cooling episode, but we can really make you money by not dumping water down the drain, even in places where it's not that scarce. So it's worth sitting down and doing this calculation for your distillery, looking at your estimated water usages and saying, "Hey, maybe I can save some money here, or you know, it's not practical", and of course there's always the real concern of, could I get 53 grand upfront to begin with? If not, well that's the downside of all this. Sometimes it takes money to make money, this is one of those things where that's very true.
Field ReporterThe next thing is thermally sustainable. We spend a lot of time in this industry, heating things up and cooling things down. It's very wasteful that we're going to heat something up and then immediately cool it back down. So trying to look at ways that we can conserve that heat, and then move it to the next thing we're going to heat up is great; both from an environmental standpoint and from a cashflow standpoint, because you're paying for that natural gas or that electricity that we're using to heat and cool things. The Mash is obviously the start of the process, you're going to heat up your mash. Even if you're doing a wash, maybe you're heating it up to dissolve your molasses, and then we need to cool it back down to a pitch temperature. There's a lot of systems out there where we can run that mash, through a heat exchanger, and then either use that to heat up water into a hot liquor tank that we're going to use to start our next mash, or maybe we're going to recycle that water to cleaning. And so looking at where can we take this heat, what can we move through here so that we don't have to heat something else up. A great classic example is the still; So it takes a lot of energy, almost as much as it does to do the entire rest of the distillation just to get your still up to temperature. This is one of the downsides of the whole batch process thing. So what a lot of people do is they look for ways to preheat their wash prior to distillation, so that we can minimize that extra heat. So if you run an exchanger off your Mash Tun, prior to your fermenter with a wash coming in, we can get a couple of extra degrees in there. Run that over your still, not only does it take less time to heat up, but you also are using less energy to heat it up. Your wash and low wines are great places to dump as much energy as you can, because not only will it allow you time-wise to produce more product, but you'll spend less energy on your still. And to be fair, most stills are not designed around being thermally efficient. If you think about that pretty still, with all the copper showing that everybody sees, one of the things that we love about copper is that it passes temperature through it very easily and very evenly. The downside is if you're looking at copper and it's actually the body of the still, it's radiating heat out into your room. Stainless steel's a little bit better, insulator is the wrong term, but it's a better insulator than copper is. And even better than the people who are wrapping insulation around their still, to make sure that the heat they put into that still stays in there and is just there to heat their wash. These are all things you can do to speed up that cycle time and save you a little bit of money. On the fermenter, this is a system I've been kind of working on and I've done a couple of installations of it, one of which was at my own distillery. And basically what we're going to do is, we're going to run a loop around your distillery, and this loop is going to be a hot water loop, and we're going to run it through a heat exchange whenever it's cool enough and use that to pull heat out of the fermenter, the Mash Tun, the still, whatever. And then heat that loop up, whenever we need hot water in the distillery, Say we're filling a fermenter with hot water, we then pull out of that loop. It's similar to having a hot liquor tank except now it's a smaller volume that you can use for a whole bunch of purposes rather than than a big tank sitting in the floor. This is mainly useful for either small distilleries, distilleries who aren't fermenting or mashing on a real regular basis. If you're doing, let's say you've designed your distillery for one day a week mash, one day a week/distill, well you don't want to save that hot water for a whole week and try to have some super insulated tank. So this is a way you can just run a loop, keep it warm. Maybe now you have warmer, washed down water, but it makes it a place you can dump some energy, and still be a little bit better at it. The first thing we probably were taught when we were younger with being green, recycling. There's a million different things that can be recycled, and finding them is not necessarily hard. This is the probably the easiest thing to talk about.
DJ for DalkitaSo bottles. We all use a ton of glass. And now if you're talking about being as green as possible, maybe you're buying bottles made from recycled material, but the easier place to talk about it is a recycling program at your distillery. So if you're fortunate enough to have a tasting room and you can pour your own product, their at your distillery, those costs can decrease considerably if you were able to recycle those bottles. And if you can get your servers to be a little bit careful and you can recycle those labels too, then you can really save some money. If you can think about decreasing the cost of every bottle sold in your tasting room by $3 a bottle, for most of us that is starting to talk about, 10, 20, 30% of the cost of that bottle, and now all your margin in the tasting room just went back up.
Field ReporterSo, what you need to do is make sure that you have a good container that bottles can be placed into, not thrown into, so that they don't break. Obviously, you're going to need some kind of inspection program. Make sure there's no chipped rims or anything, really wrong with the bottle. Clean it out, make sure the label is in good shape, and all of a sudden now that bottle and the cork top that you were using, can just be refilled and sat back out the door. For places, particularly the distilleries who are really fortunate to be running distillery bars, you can typically add 20 to 30% to your total margin in your bar. And if that's the focus of your operation, now you're talking 20 to 30% over the top for total cash-flow. It's a wonderful thing to do, and really it doesn't take more time for your bartender to carefully place a bottle into the recycling bin, than it does to just throw it in the garbage can. Other things we can talk about recycling are, barrels. If you're using rum, yeah you're buying used barrels. When you're done with the barrel, used it two, three times, now you can sell it to somebody else. Barrels are great because we can also make barbecue wood out of them, make planters out of them. And again, most of these things are an additional source of revenue for a distillery. There's something that I've seen some people doing, I haven't done myself and you do need a slightly different license for, is making fuel at your distillery. Your heads will work fantastic in an ethanol fireplace. Ethanol burns very cleanly, typically it doesn't require a chimney or a flue, so if you have an ethanol fireplace out in your tasting room, you can have a great big fire, and not need to deal with the chimney and all the other ends of having a fireplace in your tasting room. And then, you can just get rid of your heads by dumping them in your ethanol fireplace. What I've heard about, is people then selling ethanol fireplaces out of their distillery, and then selling the fuel for those ethanol fireplaces. If you're producing a lot of heads, this is a great way to move product out the door and now you don't have to worry about the disposal of those chemicals. It can end up being a fairly great thing for you. The last thing I want to talk about is probably the most complicated thing, and that is bio gas or Anaerobic degassers. So this isn't applicable to everybody. This is mainly for everybody out there who is making whiskey or brandies. So we need a lot of solids in order to run these programs, and I mean a lot of solids. You can take your stillage and dry it out some, you know you need some wet, but it needs to be mostly solid. Take that sludge, and now we can basically ferment it one more time, but this time do it anaerobically again. And we can use different bacteria that will actually get rid of the rest of the solids, this will actually generate methane this time out, and we can capture that methane and burn it and use it for our boilers and heating the distillery, whatever else we're doing. Obviously this is most applicable to say farm distilleries, or people who are a little bit farther out in the country. They're not going to let you build one of these in downtown Manhattan, but it's a way to cut your disposal costs, your sewer cost, or dump cost, whatever you're doing with the stillage. If you're selling it to a farmer, maybe it's a break even proposition, but if you're having to pay to dispose it, it's a way we can that cost and at least use it to decrease some other costs. These are not cheap to set up. We're typically looking, somewhere on the cheapest systems, about 20K. If you're looking at actually capturing of gas and turning this into a bio gas power plant, 100K, 150K. It depends a lot on your operation, how much solids you're producing and how much gas you really want to get off of there. There are a bunch of other ways that we can be sustainable, but I think that's enough for today.
Colleen MooreAre you interested in filing a report with us? Well, we're actively seeking professionals to give us the low down on the technical aspects of distillery operations for our listeners. Contact us via our website with your pitch. Do you have feedback on this show? Well, send us an email to (distillingcraft@dalkita.com). Of course, if you want to find out more about this specific episode, go to our show notes on our webpage i.e. Dalkita.com/shownotes. Remember, you can subscribe to this podcast at Apple podcasts, or however you get your podcasts. Our theme music was composed by Jason Shaw and is used under a Creative Commons Attribution 3.0 license. And finally a special thanks to the Dalkita team behind this production. And the man that puts it all together, our sound editor, Daniel Phillips of Zero Crossing Productions. Until next time, stay safe out there - I'm Colleen Moore
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