Ready Or Not

Mark Shilling of Uncle Billy's Spirits in Austin, TX talks with us about their line of Ready to Drink Cocktails that launched as a brand extension to a much loved local brewery. We discuss the research and development of their flavors, plus talk growing pains, distribution strategy including a decision that was painful upfront but will give them the best shot at a successful product line. Safety Soapbox: Injuries to the fingers, wrists and hands.

Transcript

 Episode Identifier  [00:00:00]: Welcome back to season two of the Distilling Craft podcast. You're listening to episode (3): "Ready Or Not". The first of two episodes on Ready to Drink Cocktails. 

Dalkita Promo [00:00:14]: Distilling Craft is brought to you by Dalkita, a group of architects and engineers who specialize in designing craft distilleries across the US. More information is available at our website www.dalkita.com 

Colleen Moore [00:00:31]: This is Colleen Moore from Dalkita, your host for episode number [00:3] of the Distilling Craft's second season. Thank you for downloading and listening today. We've got a couple of interesting episodes for you coming up on Ready to Drink Cocktails. I was lucky enough to land, not one but two interviews with craft cocktail producers coming at the same topic from two different directions: 

1. One a bartender spirits writer and craft cocktail enthusiast in LA. 

2. The other is a brand extension from a much loved brewery outside of Austin, Texas.

Two takes on the same topic. But before we get started with that today, have you joined our podcast listeners club? We're putting together a monthly Roundup of the episodes and also including additional information and resources on the topics that we cover, all packed up into one word, searchable, email delivered, hot and fresh to your inbox. Be sure to get your copy with all of the other cool kids by signing up at our website, www.dalkita.com/show notes. Now, it's time for "The safety Soapbox".  

Colleen Moore [00:02:02]: Today's topic is hand safety and preventing injuries to the fingers and hands. From box cutters to scissors, mallets to pipe wrenches, our hands come in contact with a variety of potentially dangerous items every day. How we handle these tools may seem pretty easy and self-evident, but there are lots of personal protective equipment options available. Plus, there are precautions people can take to ensure hand safety in the work environment. According to the Bureau of Labor Statistics, more than 1 million workers are sent to the emergency room each year because of serious hand injuries from lacerations and cuts to burns broken bones. These injuries are pretty costly for employers. In 2011, The National Safety Council estimated the cost of hand injuries and the actual results are pretty surprising. The direct cost of laceration or a cut can be $10,000. Stitches often cost $2,000. And if you sever attend in that can be more in the range of $70,000. It's important to note these numbers don't count for the indirect costs like time away from work and lost productivity due to the injuries. The good news is, is with the right tools, resources, and education, many workplace hand injuries can be prevented. Everyone is potentially at risk regardless of gender, age, industry, all employers should take steps to protect employees from even minor bumps and bruises. Less experienced workers or people new to the workforce are actually at a higher risk for injuries in a distillery, whether it's due to less on the job experience or a heightened sense of pressure to complete tasks quickly take special care with your less experienced workers and make sure that your new hires feel comfortable speaking up about safety concerns and create a comfortable work environment where questions are both welcome and encouraged, that goes for your existing employees too. Safety training is an important step for all of your employees, but especially those younger workers or those new to the industry and unfamiliar with the common and potentially hazardous machinery and tools in the environment. 

Colleen Moore [00:04:28]: The most common types of hand injuries are lacerations, or a deep cut, or tear in the flesh, crush injuries that occurs when a body part, in this case, the hand wrist or arm gets caught between two objects, maybe heavy equipment and another hard surface like a wall or even the floor. Avulsion fractures or detachments, this one's pretty serious. An avulsion fracture happens when a bone is moving one way and attendant and ligament is moving the other direction. A common evulsion injury occurs when a ring or a piece of jewelry gets caught on a piece of machinery and pulls a small piece of bone that's attached to a tendon or ligament away from the main part of the bone. Detachments often occur in the same way, but they're typically a lot more serious and often involve entire fingers or hands becoming separated from the body. 

Colleen Moore [00:05:29]: Puncture injuries often involve sharp objects like nails or tacks. It could be a sharp piece of machinery, a needle, a knife. Punctures occur when one of these objects penetrates the skin and causes a wound, that's typically deeper than a cut or scrape. 

Colleen Moore [00:05:52]: Fractures, that's one pretty much everybody knows. It's a break in a bone. In this case, it would be a bone in the hand or wrist. It's often caused by trips, falls, crushes fractures occur in the wrist, they typically have to be immobilized and often require weeks to months of recovery time. At one of the nation's largest occupational medicine and workman's compensation providers, more than half of the hand injuries they see in their clinics is due to open wounds like lacerations or cuts, but they also commonly see dislocations sprains as well as pretty superficial injuries like bruises, abrasions, and blisters. 

Colleen Moore [00:06:36]: Hand injuries can occur any time. However, too often, they occur when employees are distracted and not focusing on where they are or what they're doing. It's really important for employers to eliminate as many distractions in the workplace as possible, especially, in worker areas where there's heavy machinery or power tools. So remind your employees to stay alert and focused and offer them plenty of opportunities to take regular breaks, sit down, stretch, take a walk, so that they can stay engaged and focused on their work. 

Colleen Moore [00:07:11]: Hand injuries are common and are often blamed on distraction or lack of education, may be disregard for safety procedures. And while negligence and inattentiveness are definitely reasons for injury, there's also an opportunity to increase the preventative equipment that we provide for them and resources like training. 

Colleen Moore [00:07:34]: In 2015, a survey of over 400 safety professionals across industries within the manufacturing sector were asked to identify the top reasons why hand injuries occurred in the workplace. And surprisingly, a majority of the respondents believed that the lack of personal protective equipment like, cut resistant gloves were the reason behind the hand injury rate. 

How can employers prevent hand injuries in the workplace? 

Colleen Moore [00:08:05]: Preventing hand injuries in the workplace doesn't actually have to be time consuming. And here are our top three tips for preventing finger and hand injuries in the workplace: 

Colleen Moore [00:08:17]: 1. Provide personal protective equipment for your workers. PPE, such as gloves, in this case, helps hands be protected from cuts, lacerations, chemical, and thermal burns, electrical dangers, and more. So when you're selecting the type of protective glove for your employee, consider its use and environment that it will be used in. Not all gloves are made equal. It's important to think about the types of chemicals involved, grip requirements, thermal protection, abrasions, and resistance requirements, and the duration of contact, so how long is someone going to have to wear these gloves. And as someone who has never met a disposable glove, that wasn't way too big, also consider appropriate sizing and comfort for all of your staff to further encourage them to use this first line of safety in their job. Also, consider how much of the hand needs to be protected. Is it only the hand or does the entire forearm need protection as well? 

Colleen Moore [00:09:22]: 2. Set expectations through a training program. Simply, establishing and enforcing a set of rules and a set of expectations for workers can help make workers aware of the dangers and help prevent injuries. So, offer education about the tools and machinery that are frequently used in your facility. Implement a training program to help the employees get to know equipment features and the location of important things like, the emergency off switch. A training program can also help highlight danger zones on equipment, such as potential hotspots or pinch points. And it's a good opportunity to point out where that personal protective equipment would be useful and where it's expected in the production process. Something as simple as a checklist can ensure that the training is consistent for all staff members. And remember it's not a one or done situation, you need to revisit your training frequently. Ways to do that could include: hanging a list of safety tips and workplace expectations in areas that are heavily trafficked, like break rooms or staff lounges, or even a page on the time clock that the employee has to move out of the way in order to punch in. Remember, keep it fresh. Nobody wants to read the same cute safety poster 365 days in a row while eating a sad salad for lunch in the break room. 

Colleen Moore [00:10:50]: 3. Have an open door policy. This speaks to having a good safety culture within your business. Open and honest communication between employees and their supervisor is key when confronting safety issues. Your employees are the eyes and ears of your company when they're on the production floor and they've got valuable feedback, so make sure you listen to them. 

Colleen Moore [00:11:17]: That's it for our safety soap box this week. We've gathered some additional resources on this topic, ao for more information on hand injury prevention, check out the episode page on our website, www.dalkita.com/show notes. 

Colleen Moore [00:11:38]: Today, our guest is Mark Shilling along with being the past president of the American Craft Spirits Association. He's also a political consultant and the reluctant, but very capable leader of a line of RTDs from Uncle Billy's Brewery in Barton Springs, Texas, which is just outside of Austin. He's the man, the myth, the legend behind Uncle Billy's canned cocktails, which is our main topic today. Welcome to the Distilling Craft podcast. How are you Mark? 

Mark Shilling [00:12:05]: I'm great. Thanks for having me. I do have to interrupt real quick, and make one small correction uncle Billy himself is the actual man myth and legend. I'll tell you a little bit, uncle Billy is, or was a real, an actual person. 

Colleen Moore [00:12:23]: Tell me a little bit more about uncle Billy. He sounds like a character. 

Mark Shilling [00:12:27]: Uncle Billy, if you're familiar with Austin, Barton Springs is just south and west of downtown. It's our famous natural Springs, where people go to enjoy the natural cool waters right across the street from where we are having ACL festival this week. And uncle Billy is "William Barton", who was the pioneer settler who bought and lived on that property back in. It was the 1870s or 80s- I don't know exactly. The way that the name came about, Uncle Billy's was originally started in 2006 as a brewery and barbecue place. The guy who started up was doing some research on Austin, and found the story about William Barton turns out he was known by friends, family, and neighbors as uncle Billy. And oddly enough, he found enough information about him to know that he was a fan of beer and barbecue, so that is how Uncle Billy's came to be named as such. And Uncle Billy's is right across the street from Barton Springs. 

Colleen Moore [00:13:57]: But you seem to have had a pretty colorful past. It all seems to be geared towards legislative stuff, even from your Texas chemical council days. And then later on, your SHILLING - Public Affairs day, it seems to be pretty much geared towards getting legislation across. Can you tell us a little bit more about, I guess your quote unquote day job? 

Mark Shilling [00:14:21]: How I got to here? 

Colleen Moore [00:14:23]: Yeah. How did you get from there to here? 

Mark Shilling [00:14:25]: It's funny, I started out in school as an architecture major. It was great. I loved it. I had been training for it for a long time and I got to Texas A&M, and I started going to class and I suddenly had the realization that it's not all about fun and design, that you have to do math as well. And math has been my evil nemesis, my white whale, whatever it might be. So, I decided to make a switch and I ended up with a political science and history degree, which means no real marketable skills with that. 

Colleen Moore [00:15:17]: You talk to people pretty good. 

Mark Shilling [00:15:18]: In retrospect, I've learned that liberal arts degrees are hugely helpful. I would probably give somebody with a liberal arts degree, an edge over somebody with a more specific degree, if there wasn't other actual experience. Because what I've found is, people without liberal arts degrees really tend to struggle with writing and communicating, and some of the critical thinking skills that go along with putting words together in meaningful structures. Anyway, I ended up graduating thinking I would go to law school, and ended up running a campaign for a guy while I was taking my tests and getting ready and whatnot. One thing led to another, he won his campaign, I came down to Austin, worked for him at the capital. One time, I recall, years later, sitting talking to a lobbyist in the office and saying, "Do you really like doing this? I can't. I would hate doing this. I would never want to be a lobbyist". And then, it just kinda happened. And, there I was and I spent the next, well, I still do it. So the next 30 years in some capacity lobbying working not so much on campaigns, but really on legislation, and issue campaigns and things like that. But that is, in a way, my introduction into distilling as well, because when I got the idea to start up revolution spirits in probably 2009 or so, in my research and poking around trying to get it all together, I found that there was an effort being undertaken to lower the federal excise tax. It was very interesting to me because, that's my background. I thought, "Well, you know what? Here are a bunch of distillers who might be really good at distilling, but they clearly don't have the background I have in doing this of thing". This is where I will choose to give back to the industry that I hope to become a part of. So I made some calls and got to know Ralph Lorenzo and [00:17:57], and a few other folks who were really the genesis of that effort and started working on it. And holy crap, nearly 10 years later we're still working on it. But that was really how I parlayed my background into this business. Not realizing that the time with architecture, the time representing the chemical industry, so many other bits and pieces of my former life actually fit together in this in some way. The chemical industry, I didn't realize that I already had some basic understanding of how plants and processes work. When I started looking at how do you distill something? Well, holy crap, it all comes together. I've had some familiarity with this before already. So, I guess, that's really the long version of how I got from architecture to politics to booze. 

Colleen Moore [00:18:59]: Nice. I figured it was just a downward slide. You're very hopeful and wanting to create things in the world, and then that all comes crashing down, you go into politics, and then that is a murky mess. And so then, you just went for the booze. 

Mark Shilling [00:19:17]: Yeah. I mean, the politics definitely drives you to the booze. I tell this story a lot, I was at a meeting with clients, it was an energy related meeting, in Louisville with clients. And that was where I had my first taste of Polk County's finest Moonshine. One of the guys there had brought some of his family treasure. And it was the first time I'd ever had any Moonshine that was actually really well made. And that got me to really thinking about the whole bit. So politics drove me to booze 

Colleen Moore [00:19:55]: Booze saved you 

Mark Shilling [00:19:57]: Well, that remains to be seen, but hopefully. So, I came home, startup revolution spirits, moved on to that to doing some other projects and some consulting work, and started out consulting for Uncle Billy's, I guess about a year, year and a half ago, nearly two years now. And one thing led to another. I was not too distant past named president of the spirits company. And that's what I'm doing right now, in addition to all the other consulting things. Hopefully, we'll grow that into a meaningful operation and I'll get happy. 

Colleen Moore [00:20:50]: How is it going? Give us an idea of scale. 

Mark Shilling [00:20:54]: It's hard. Right now, the scale is really small. This business is hard anyway. But, leading into this, going from making spirits that you put into bottles to making spirits, or in this case, cocktails that you put into cans, there are some similarities, there are a huge number of differences. So, it's not like there are a lot of folks who have gone this way before. We've had to learn and make up everything as we go, and we're still tweaking and refining and trying to get it right. 

Colleen Moore [00:21:33]: So trial and error, and trial by fire, those are the two main methods that you're using to develop your RTS. 

Mark Shilling [00:21:43]: And, in terms of scale, right now, we share a space with a brewery, and what is essentially a restaurant. We have a tiny amount of space to work with, and we're in the process of moving into a new facility. We're separating the Spirit's component, the distillery out from everything else. So this is an interesting time to be having this conversation because, we're right in the middle of a whole bunch of transitory things. But, we'll go from our maximum capacity right now, I would say is about 600 cases a month. Not very much. Once we are set up in the new facility, we should be able to easily grow into about 30,000 cases a month without adding additional staff or shifts or to some degree equipment. There's a lot of opportunity. I mean, we could even go from 30,000 a month to 60,000 a month just by adding a little bit of equipment and maybe an extra shift or something. So, the upside is huge, but right now, we're in the process of change of location permits, looking at what equipment we can move over versus what we're going to have to purchase and add. Just got some information back from the fire marshal yesterday on what his expectations are. They're so far not as challenging as I thought they were going to be, but that may just be that we haven't gotten far enough along in the conversation yet. 

Colleen Moore [00:23:36]: He hadn't turned the page yet to see 

Mark Shilling [00:23:40]: He requested more information and after he gets the more information or actually comes out to the site, I suspect things might change a little bit. 

Colleen Moore [00:23:47]: It's good though, because working in the consulting side and with the fire code and the building code all the time, on our end, like that's the part that we deal with at Dalkita. We've seen all manner of reactions. So 10 years ago, when you were doing revolution spirits, it was more of- we don't even know what that is. I guess, you can put it in. And then the pendulum swung the other way for about five to six years where they were like, hell no, not over my dead body. Moved away, we don't want it here. And so now I feel like it's coming. It's swinging back. Maybe the regulations are catching up with what people are trying to do. So, it's always good to hear that the fire marshal didn't freak out upon first mention of a distillery in their jurisdiction, so that's good. 

Mark Shilling [00:24:42]: Well, what's helpful, we're moving out to an area, actually, not too far down the road from revolution, but it's an area where there are quite a few distilleries. 

Colleen Moore [00:24:54]: Is it dripping springs out there? 

Mark Shilling [00:24:55]: It is dripping Springs. It's theFitzhugh Road area. And the fire marshal is relatively new. My understanding is he's new to fire marshaling. So, I think, he's got a lot of distilleries out there that he can learn from. But, also, there's going to be a wide variety of processes and setups, and all of the different details that go into different types of production facilities. So, hopefully, by the time, we get him out there, he will have been beaten down a little bit by all the other guys, and be ready to work with us. 

Colleen Moore [00:25:40]: Just come prepared and that gets you at least 75% of the way there. 

Mark Shilling [00:25:46]: Well, I'm trying to be overly detailed and prepared on everything. And of course I don't know that my background as a firefighter is going to be helpful with this other than having an understanding of what somebody is going to be looking at and looking for. I have some experience it's certainly not anywhere in that realm of what he's going to be looking at. 

Colleen Moore [00:26:14]: Right. And the code's different too, I think, even from just a general firefighter in the firehouse doesn't necessarily have that code knowledge that you have to have to get that fire marshal position. And so the code is its own language for sure. And so they expose you to other things inside the code and you have to fit within tables and diesel fuel and ethanol are regulated the same in the fire code. 

Mark Shilling [00:26:48]: Well, the interesting thing in Texas outside of corporate limits, with the exception of a few specifically statutory areas, we don't have building codes and zoning like, most states do. So, it's really the fire marshal is our only guy out there, that we're going to be working with. And, in some ways that can be good, in some ways I think it could be more challenging because, if I were him, I would feel like I have a heavier burden to be extremely thorough, and maybe a little bit over regulatory in what I'm looking at since there's nothing else there. 

Colleen Moore [00:27:34]: We've definitely seen that happen in other areas of the country, Portland was that way for a hot minute or two. And, they definitely got a new fire marshal and he went in to look at his first distillery and was like, "Oh my gosh this whole city's going to burn down if we have this many distilleries that look like this". I think, it's really great. I always tell people foster that code official relationship right up front come in there, be prepared, ask questions, but give them your approach to solving the problem. Don't just go in and say "Regulate me", cause they won't like that. 

Mark Shilling [00:28:20]: I'm hopeful that he will appreciate, and with all the folks I work with, I try and instill a sense of even if the fire marshal's not coming out, have a good idea of how you're going to respond to an incident, whether it's a fire or a spill or any sort of health and safety thing that might happen. And I get it most people don't think about that. They come from a certain background that they might be bringing something to the table other than actual distilling, but they're there, they've started the business cause they want to make a product. And, they're not necessarily thinking in great detail about all the other things that you have to do, have to think about. It pays so many dividends to think about those things up front, prepare for them up front, and be ready for something if it happens. 

Colleen Moore [00:29:19]: “An ounce of prevention is worth a pound of cure.” 

Mark Shilling [00:29:23]: Absolutely. 

Colleen Moore [00:29:24]: All the stress that goes along with the cure because those are difficult situations usually. 

Mark Shilling [00:29:30]: Nobody wants to get up, walk into the distillery and flip the switch and blow up every morning when they go to work. 

Colleen Moore [00:29:38]: No, that is not what you sign on for, right? 

Mark Shilling [00:29:41]: Right. 

Colleen Moore [00:29:42]: You want the rockstar part of it, not the pyrotechnic part of it. Okay, tell me about Uncle Billy and how you started. It sounds like they may have approached you and said we want to do a canned cocktail. 

Mark Shilling [00:29:57]: Sort of, yeah. Like I said, started out as a brewery and a barbecue spot in 2006. And then in 2017, well actually, I should say a brew pub. I don't know about other states, but in Texas we have interesting division between a production brewery in a brew pub. A brew pub being a place where you can sell mixed drinks and not distribute for the most part. And, it sits in the retail tier rather than the manufacturing tier. So, they switch their permit to a production brewery permit in order to start distributing the beer. When they did that, they lost their mixed beverage ability and decided to add a distillery to add that back in. And that's when I got the call and I went in and helped them develop that. Along the way, the original idea, which is something I'd still like to figure out how to do, and I know other folks are talking about this is, to create a kegged cocktail of some sort that could be sold through distribution, to bars and restaurants. Obviously, because of standards of fill limitations and things like that, you just can't do it. But, we were playing around with concentrates or ways to sell something in 175 liter plastic bottles that could then be kegged at the location. And that was the genesis from distillery to canned RTDs. It just made more sense to go that direction. And when this first came up, my response was, "Eh, I don't know." Every time I've looked to cans, every time I've talked to other distillers about doing RTDs, everybody had gone through the math, the machinations, and all that, so it's really an entirely different business model. It's not an easy fit for the distillery. And most everybody decided not to go that direction. Well, they really wanted to do it. And at the same time, suddenly cans became a thing- you know, cut water 

Colleen Moore [00:32:38]: Cans became cool again. 

Mark Shilling [00:32:39]: Cans became cool. And I think a lot of it has to do with craft beer, making such a greater variety of interesting things, pushing beer drinkers to get outside of their more traditional boxes, being willing to try flavors. Canned wine is now a thing that you can get, that is pretty good quality stuff. Two, three years ago, it didn't exist. So, all these things came together at the exact bright moment, like, well, since we have a brewery, since we know how to can, maybe it's not that much different for us, let's do it. And that's how it started. If it had been a traditional distillery only, I probably would have pushed harder against that. But, we had all the things that we needed really to put it together. 

Colleen Moore [00:33:36]: So, have you learned how to run their canning line? 

Mark Shilling [00:33:39]: No. We use mobile canning there because of the space considerations. Uncle Billy's was and is probably going to be moving to a different location, doing some offsite canning as well with another brewery. But, we were doing mobile canning and I still don't understand the contraption. We're looking at purchasing our own canning line for the new place, but I think we'll probably continue with mobile for a little while as we get set up and figure out what we want to do. But, everything about it is different. It's foreign. Introducing carbonation. Well, if you've been making bourbon or gin or something like that, it's a whole new thing. And luckily, I've got a team, couple of guys, who have some experience on both sides and really understand the mechanics of that stuff that can make it happen. 

Dalkita Promo [00:34:44]: Distilling Craft is brought to you by Dalkita, a group of architects and engineers who specialize in designing craft distilleries across the US. More information is available at our website www.dalkita.com Now, let's get back to the show. 

Colleen Moore [00:35:03]: Welcome back to the show. Today, I'm talking with Mark Shilling of Shilling Crafted in Uncle Billy's spirits. 

Colleen Moore [00:35:11]: So as far as spirits go, did you help them develop their other products, like the bourbon whiskey, vodka, bar and Springs vodka, muddy water, coffee liqueur? 

Mark Shilling [00:35:21]: Yes. By develop, if you mean source for the vodka and the bourbon, you know, I am an unabashed proponent of complete transparency. We buy the bourbon from MGP. Honestly, if you're making a canned cocktail, it doesn't really make sense to make your own stuff just for that, the expense, the lack of efficiencies. Same thing with the vodka. We were working with a local distiller originally, to bring in their vodka, but he couldn't produce enough for himself plus what we needed. So, we've moved away from that. If in the future we decide to bring in a still and start making some of our own stuff, that might change, but for right now for a canned cocktail, it just doesn't make sense. The muddy water, on the other hand, it is MGP bourbon, but we actually developed the- By the way, in case it wasn't clear, it is a bourbon based coffee liqueur rather than vodka rum or neutral, which is what most of them on the market seemed to be. But, we did develop the coffee liqueur with that MGP base. 

Colleen Moore [00:36:43]: Are we going to see the muddy water coffee liqueur, since it's a bourbon based product? Are you going to, I don't know, make amped up Manhattan perhaps in a can? 

Mark Shilling [00:36:56]: I cannot answer that definitively at the moment, but I will tell you that the way that the three products that are currently in cans came to be in cans was through experimentation and observation in our tasting room. And what we did, Josh Mabry, who is our, cocktail wizard, created six vodka based and six bourbon based cocktails for the tasting room menu. And over a period of time, we tracked the most popular ones. And, we chose to start with the vodka base. And so we picked the top three sellers over, I forget what period of time it was, but maybe three or four months worth. And they were clearly top sellers over the others on the list, and so that's how we chose them. We have top sellers on the bourbon side as well, and working through, I mean, there's no question that long term we intend to release more products, both in cans and possibly in bottles and maybe some other interesting things that are neither, yeah, special releases or other things relative to making the home bar more easy and accessible for a lot of people, who are on the go, things like that. So, to answer your question, we are looking at putting some version of a muddy water based cocktail in a can. I don't yet know what that will be. And even if I did know what it would be, I probably wouldn't announce it yet until we had like a whole plan for launching it. But, I will say, there definitely will be some bourbon based cocktails and we are certainly interested in other bases for cocktails as well. 

Colleen Moore [00:39:00]: Like gin, perhaps. 

Mark Shilling [00:39:02]: Gin absolutely. Maybe agave if we can figure out how to do something that that works, that we don't have to have done in Mexico. 

Colleen Moore [00:39:15]: I know that you are very much into agave spirits and mezcal and tequila, even maybe a little bit, right? 

Mark Shilling [00:39:24]: Little bit, yeah. 

Colleen Moore [00:39:27]: It's a thing you like it. You're known for it. 

Mark Shilling [00:39:31]: We are close here in Texas to where a lot of those things grow and are made, so we have a lot of geographical-- what's the word I'm looking? There's a word for this. 

Colleen Moore [00:39:50]: Geographical and cultural similarities. 

Mark Shilling [00:39:54]: That's not the word. There is an actual word, but anyway. And obviously, we like those things. They're interesting. And they're cool. And I think, we'll probably look for opportunities to experiment with that as well. 

Colleen Moore [00:40:12]: Yeah, that sounds interesting. So, I have a theory though. I think that your Lady Bird Lemonade is in the mix, just because of the name. I mean, lavender infused lemonade is good on its own, but I do think the name totally helps you sell that. 

Mark Shilling [00:40:31]: Well, I don't know if that's the case and interestingly enough, as a part of our transition, we are going to be adjusting our labels and our names a little bit. And those names work really well locally, but we've found that they're not necessarily working as well. We're not distributed other than a few places outside of Austin yet, but once we get significantly outside of Austin potentially into other states don't really think that those are going to be the appropriate names. So, you might see those go away and you might see the cans, which are beautiful, will remain very similar to the way they look now, but they'll be a little bit different as well. 

Colleen Moore [00:41:19]: I definitely like, and just so our listeners know what they look like. So the Uncle Billy is on every product that they make. They may even be on each of the beer bottles. But for the canned cocktails, each one has a different theme. So on the Lady Bird Lemonade, for instance, he is standup paddle boarding and on the cucumber sipper, I think that might be a fun run, but maybe he's swimming, I'm not totally sure. And then the mimosa looks like he's relaxing with the chicken 

Mark Shilling [00:41:55]: Well, I think what's going to happen on those is all of those are going to go away. And what you're going to see will be more of a cameo of Uncle Billy upfront. It'll be a little bit more consistent from can to can. 

Colleen Moore [00:42:15]: Gotcha. And, really the consistency in these labels is that it's the same profile, but I do like the suggestion that it's something to take and go do something with. I think that's a good connection to make that there are cocktails on the go, that you can take them with you. 

Mark Shilling [00:42:33]: Well, that's what we're finding. I mean, the folks who are most interested in these are people who are on the go, they're on the move. They don't have the time to come home and spend 30_45 minutes getting out all their stuff and fixing a cocktail before they sit home, sit down and relax at the end of the day. They want something that's premium. That's a real cocktail in a can. Not to knock those other guys. But an entirely different taste experience when you're drinking a cocktail made with real spirit versus a fancy zema, 

Colleen Moore [00:43:15]: A malt liquor based product. 

Mark Shilling [00:43:18]: Right. 

Colleen Moore [00:43:19]: Explain the name of mimosa and let talk to me about orange juice, because I have a feeling I'm an orange juice snob, because I've never had a canned orange juice that was good. So, tell me about your orange juice. 

Mark Shilling [00:43:34]: In all these products, there's a combination of natural juice or syrups. For example, the mimosa, we use a coconut syrup. We use orange juice and pineapple juice. And the name mimosa is going to change also, cause we decided that it's not really very indicative of what's in the can. The mimosa is like a mimosa, but it's really not. And so that name will change. Same color and general look will be the same. 

Colleen Moore [00:44:14]: The look and feel if you will. 

Mark Shilling [00:44:15]: Yeah. The cucumber sipper, we have been actually buying cucumbers and juicing them. 

Colleen Moore [00:44:25]: That sounds so fun. 

Mark Shilling [00:44:27]: It is not fun. It is hard. I think we have found a source for actual either cucumber juice, or essence that we can use, so it will still be natural flavoring, but that has been a really, really challenging one. On the one hand, it sounds really cool to do everything straight from scratch, like your grandmother in the kitchen baking bread or something. But, if you want to make a product and make it high quality consistent, and at a scale that you can be commercially sustainable, it just doesn't work. So, trying to find the right balance between that and and not going into the realm of artificial flavors and all of those things and making sure it's still a premium cocktail. And so we want to be very careful about making the right thing. 

Colleen Moore [00:45:27]: We answered where you got your ideas from. They're all consumer favorites. Is there one of them that's leading the pack for you? 

Mark Shilling [00:45:37]: I would say of those three, the lavender lemonade is number one. The cucumber sipper is generally right behind it. I'd say within a half a length or so. And then the mimosa is a little bit further back. But then compared to all the others that we've tried, they're all far and away the favorites. 

Colleen Moore [00:46:00]: Did you see the hard Seltzer trend coming? 

Mark Shilling [00:46:06]: No. In fact, I'm surprised that it has remained on as long it has and, I hate to be that guy cause I'm banking on it with Uncle Billy's, but at this point I don't really think I have a real solid comfort level about whether this is a fad or whether it's really going to stick around for a little while. And I think a lot of that depends on the quality that we see in all of the new products coming out, whether they're malt-based or spirit-based. Everybody is getting into RTDs right now, and the spirit based RTDs seem to be a lot more local or regional. I think a lot of that has to do with distribution laws. For example, in Texas, we can't sell spirits in grocery stores. So we're at a clear disadvantage to the white claw of the world. Clear disadvantage in distribution, not in quality, of course. 

Colleen Moore [00:47:18]: Yeah. Your heads and shoulders above quality, I'm very sure, because I have a case of white claw. 

Mark Shilling [00:47:25]: I'm so sorry. 

Colleen Moore [00:47:26]: I know. I keep offering it to people I'm like, would you like to take this whole case home? That's fine. You like it sure. Take it. 

Mark Shilling [00:47:34]: I think white claw and things like that are probably really great for people until they've had something that is an actual cocktail to compare it to, and then suddenly the eyes open wide and like, "What am I doing here?" 

Colleen Moore [00:47:55]: They see the error of the ways. The epiphany, if you will. 

Mark Shilling [00:47:59]: Yeah. So, hopefully, everybody else that's out there doing this will be putting out some really high quality stuff, and we'll be able to maintain and make it an ongoing not a fad. 

Colleen Moore [00:48:14]: What about tax structure? Are there more favorable tax setups or environments out there? 

Mark Shilling [00:48:20]: You have to look at your state excise tax structure because, unlike the feds, I think, most states tax based on the wine gallon, not the proof gallon. And there are some states that if you're under a certain alcohol percentage, then there's a discount that might make an RTD feasible. But in some states, the amount of tax you're going to have to pay on that versus your white claw, your other malt-based can, you're just not ever going to be able to compete in that place. One other thing I want to say is, the whole idea of cocktails being healthy is nonsense. It really is. I mean, cocktails are not healthy. Alcohol is not healthy. And, if you're buying any product, whether it's white claw or anything else, because you think it's low calorie and low sugar and low this and better for you, then you're buying a lie. We had this struggle in developing the Uncle Billy stuff and wanting to chase that. And I don't think it's smart. I think tha transparency, call it what it is, if you want to drink a cocktail, this is a cocktail not a health drink. 

Colleen Moore [00:49:50]: It's not a health drink. It's not a kombucha. It's not a hard kombucha, that's an idea 

Mark Shilling [00:49:57]: That does not make me. I have no interest in that. 

Colleen Moore [00:50:02]: He's like denied. 

Mark Shilling [00:50:05]: Somebody will do it. No doubt. 

Colleen Moore [00:50:06]: I'm sure they will.. It'll be from boulder too. So, your facility's currently moving out of the brewery and you're going to get your own space. What size facility are you moving into? How many square feet? 

Mark Shilling [00:50:28]: I I'm trying to remember if the entire thing is 10,000 square feet or just the production area. It's actually very good size. It's going to give us a lot of time to grow into it. We could have easily done what we are planning to do right now with half of that space. We found the right building, and the right spot, at the right time, at the right price, for the most part. I mean, we'll have to do some work to it. 

Colleen Moore [00:51:07]: Are you leasing or did you buy it? 

Mark Shilling [00:51:09]: It is a lease and we'll have an option a little bit later on, I think, five years in. 

Colleen Moore [00:51:17]: To purchase? 

Mark Shilling [00:51:19]: Yeah. 

Colleen Moore [00:51:20]: That's cool. And so it's an already existing building that's often where a lot of people that are starting up new distilleries or new ventures are stuck. They're like, should I get a piece of land and build my own building? Or should I use something that's already here? And there's totally different sets of problems, but probably the same number of problems to deal with. 

Mark Shilling [00:51:43]: Right. And I think, it just depends on your individual case. You gotta weigh both sides and see what works best for you. In our case, we knew we wanted to be in this general area. If we wanted to buy some land and build our own place out there, it's just not really feasible. So then the next question was, can we find a building that meets the minimum standards that we need, that we can easily do the renovations and upgrades to get it where we need it to be? Is it big enough that we can grow into it over time and not grow out of it too quickly? All of those considerations. And do we have the right landlord, the right person that's going to work with us on all the things that we need to do? And, do we fit into the neighborhood? In this case, we do. 

Colleen Moore [00:52:40]: Which is big, yes. So, it's a distillery. So in Texas you are allowed to have distillery tasting rooms, correct? 

Mark Shilling [00:52:52]: We are. I think that if you're in a state that allows tasting rooms, you're crazy not to have one. Even with the limitations we have in Texas, in this case, it is basically two bottles per person every 30 days for off premise. For us, you translate that into milliliters, it's basically a four pack. But we can also sell cocktails to drink on premise as well. There's just too many reasons to have a tasting room, and they're not all just revenue based. I think in Texas, it'd be fair to say that a well run tasting room could be 25% of your annual revenue until you get big enough that you're distributing outside of the state or something. But using that to build your marketing, in our case, same as currently using that as an incubator for new cocktails that will eventually go into cans. 

Colleen Moore [00:54:05]: It's research and development. It's invaluable. Otherwise, you're creating things in a vacuum, and then you throw a finished product that you've poured tons of time out onto the market and it goes flop and you don't know why 

Mark Shilling [00:54:22]: Toss it out there and hope for the best, at least this way, you have a chance to test it out in a small manner, get some feedback. In fact, our current cans, we have continued to tweak them a little bit along the way. One of the things that we did, we had a discussion about it. We're serving this from the bar over ice, do we want what goes in the can to be exactly what's coming out of the tap? Or do we want to change the makeup a little bit, not knowing is somebody going to buy this can and drink it directly out of the can or are they going to pour it over ice? 

Colleen Moore [00:55:04]: Where did you land on that? 

Mark Shilling [00:55:06]: Well, we landed on directly out of the can, and then spending some more time talking to folks and observing, we decided that that was not the right thing to do. So, we've gone back and what we've recognized is most people are taking those cans and poured them over ice. 

Colleen Moore [00:55:27]: So then, they end up with a product that's not to spec, shall we? 

Mark Shilling [00:55:31]: It's not to spec, it's certainly not the same thing that they think that they had at the bar, even though it is. 

Colleen Moore [00:55:40]: I don't know how you would address that other than having instructions on the can that says best poured over ice or drink it straight out of can, one of the two. 

Mark Shilling [00:55:48]: People are going to do whatever they're going to do. And I think, we've made some observations. We could be completely wrong on that. Maybe our sample size is not big enough, but I think it'll be fine either way. Maybe one of those cases where we're getting too much into the weeds about-- 

Colleen Moore [00:56:11]: Experience the last 18 inches, right? How is it going to go from the can into their mouth? 

Mark Shilling [00:56:17]: Right. How many people are going to recognize a change in 3% change in ABV, or a slight change in sugar content or something like that. 

Colleen Moore [00:56:31]: So do you have any other tips that you want to share with people that could be thinking about adding an RTD to an existing spirits lineup, or you would just prefer them to stay out of the game and let you take over the world? 

Mark Shilling [00:56:46]: Wow. That's hard. I would love to have a monopoly with something somewhere, so that I can retire one day. But if you are thinking about getting into this part of the business, just be really thoughtful and deliberate and do your homework, and know what you're getting into and know that it's different from what you've been doing. Can you afford a canning line? If not, is there a mobile Canor that is within 300 miles of your location? Not every place has that available. And if you're going to start out a small scale, your cost per can is going to be high until you get to a place where you've got some economies there. And, look at your tax structure, do the numbers up front and make sure that, by the time, that can gets to a shelf somewhere that it's not $3 or $4, a four pack higher than all the rest of the competition, 

Colleen Moore [00:57:48]: But then, you say it's local and that automatically gets them to buy it, right? 

Mark Shilling [00:57:54]: It works for a little while, but eventually somebody else comes along and knocks you out of that spot. 

Colleen Moore [00:58:01]: Yes. The only constant is change, right? 

Mark Shilling [00:58:03]: Yep. Change and taxes. 

Colleen Moore [00:58:07]: So what was your major roadblock or pitfall a pothole, if you will, that you ran into with Uncle Billy's bringing the idea of a package product to market? What was your biggest hurdle? The thing that kept you up at night? 

Mark Shilling [00:58:24]: Some combination of the formulation and labeling process, because TTB- they may have now in the last nearly 10 months since we went through this, but I don't think they had seen a lot of spirits formulas for RTDs. We had a tremendous amount of trouble even with the formula person and the Cola person talking and trying to work out between one saying we could do one thing and the other disagreeing with them or something like that. I feel like that is starting to get more worked out. I think the proposed rules in the modernization rules for chapter five or sub part five go a long way to helping that, whether or not those will be adopted anytime in the next 28 years, who knows? 

Colleen Moore [00:59:32]: The way that government moves it's glacial, I think. Change is glacial. at a glacial pace. And society is moving at T-100 internet space speed. And so those are at a disconnect, I think. 

Mark Shilling [00:59:51]: Well, talking about speed, another challenge that we've had, that I would probably put up there near the top, a lot of retailers are also moving at glacial speed. And in many cases, you'll go in, they don't know where to put a canned RTD. Sometimes it's with the beer, sometimes it's with the mixers, sometimes even within a chain, one store has it in one place and one store has it in another place, and they haven't quite figured out what to do with it. 

Colleen Moore [01:00:26]: Yeah. That's interesting .They do have in my local target. Our target now is able to sell beer and wine, they do have a section for hard seltzer between those two things. 

Mark Shilling [01:00:41]: Would you put a spirit based cocktail in the same place as a hard seltzer, or would you put somewhere else? 

Colleen Moore [01:00:47]: It would be on the other side- it would be like beer, cocktail, wine, hard seltzer, and I would maybe even not give that refrigerated space 

Mark Shilling [01:01:00]: I'm not even sure if people know what hard seltzer is or what it means. 

Colleen Moore [01:01:05]: Right. I think, dependent on product to product, but yeah, so I won't be unhappy to see that trend go away, but I would be surprised if that stuck around, but I don't know, millennials are killing mayonnaise and keeping Walt Disney a world alive, and now they're doing this hard seltzer, so who knows what the future holds. 

Mark Shilling [01:01:32]: Well, whatever it holds, hopefully there will be folks like us around to fill those niches 

Colleen Moore [01:01:39]: And steer them towards the better things. So, are you self-distributed or do you have a distributor? 

Mark Shilling [01:01:48]: No, we have no self-distribution in Texas. 

Colleen Moore [01:01:50]: That's not allowed in Texas. 

Mark Shilling [01:01:52]: That's not allowed. And, that's also another challenge that we've faced, and it's no different than a lot of small producers. And our first distributor was small and really challenging to work with. And we have now, just in the last couple of weeks, like I said, transition time, everything is happening all at once, we have signed on with a much larger, much more well-known distributor. So, we are exchanging one set of issues for another. But it's a set of issues that I'm happy to have. 

Colleen Moore [01:02:28]: It's a different set of problems. It's a good problem to have if you will. So, what does your selling look like? 

Mark Shilling [01:02:36]: How do you mean? 

Colleen Moore [01:02:37]: So do you just say, "Great, you're our distributor, here's our product go sell it?" Or are you having people go to the different accounts to promote the product, taste the product, sample the product? 

Mark Shilling [01:02:51]: It's a combination of those. And we have purposefully not really pushed the account sales too hard, cause we want to get moved into the new location and get up and running. 

Colleen Moore [01:03:07]: That's fair. You don't want to have the supply problem. 

Mark Shilling [01:03:09]: Right. There's nothing worse in this business than having an empty spot on a shelf that goes to somebody else. Cause once you lose it, it's that much harder to get back. So, we made the decision, it was a hard decision because I feel like we could have moved a lot more product, a lot faster. But, we made the conscious decision to keep it really local and confined until we get moved into the new place, and then we can go out with a solid plan and conquer the rest of the state, and then of course the rest of the world. 

Colleen Moore [01:03:46]: So what does your work week look like with all of these different irons that you have in the fire? Are you five days a week on Uncle Billy's or are you doing it? 

Mark Shilling [01:03:56]: Every day is different and some days and weeks it's almost all that. And some days or weeks, it's spread around a lot. I'm one of those people that works pretty much every day, including Saturdays and Sundays for some portion of the day. I work when the work is there and take breaks when I can afford to. But I've got three distilleries under construction I'm working on, and a couple of other projects in various states. Some weeks somebody needs a lot more time and some weeks they don't. So you just work through it. 

Colleen Moore [01:04:39]: You like variety? I 

Mark Shilling [01:04:44]: I do. I would get bored I think doing too much of the same thing every day. 

Colleen Moore [01:04:50]: Well, it's been good talking to you. Do you want to give out any of your social media links? So, if people have questions on FET, how they can get involved, more great band recommendations or perhaps good reading lists from you, where should they go? 

Mark Shilling [01:05:06]: Probably the easiest thing is email and it's just "mark@shillingcrafted.com". Exactly how it sounds. I'm on Facebook under "Shilling Crafted" and LinkedIn under "Mark Shilling". And actually not that hard to find. I think the ACSA website still has the links to all the board members. I'm a former board member, but I think I might still be on there as a former president or something, but I'm not hard to find. 

Mark Shilling [01:05:40]: Mark's an interesting guy, be sure to check out our special mini episode with Mark all about federal excise taxes and how you can get involved right from the comfort of your own distillery. It is more important than ever that you contact your representatives to advocate for making the FET break permanent, or at least an FET reduction get a continuance on that. If this piece of business does not make it through Congress by the 31st of December, the clock will strike midnight on new year's eve and on January 1st, the FET rate resets to the same amount from two years ago, which equates to 400% increase from today's rate. It is the worst throwback. No one wants a 400% increase on their tax bill. For many distilleries, that could be the funds for an expansion or tasting room staff or a salesperson to move product, or even a new distiller. ACSA will be coordinating another day of action this week on Wednesday, December 5th, 2019, you cannot afford to sit on the sidelines for this. If you are spirits industry adjacent, the bottle makers, barrel providers, label manufacturers, designers, the distillers need your help to push this piece of business through Congress. We'll have information on this episode's page on our website to help you identify your senators and representatives plus ways to contact them. Make sure you get involved, even if it's just sending an email or leaving a message. All of the efforts count to move the needle and get congressional staff to notice this issue, and re-add address it with our elected officials. In other news, we are leaving this Thursday on our 18 state adventure through the Southeast and Midwest United States. We've got the Texas itinerary lined out and taken care of, but we are still looking for your recommendations for anything worthwhile in Southern Louisiana, perhaps your favorite spots in New Orleans, anything in Southern Mississippi, central Alabama, central and coastal Georgia, Charleston, South Carolina and central Florida. Be sure to reach out with your tips for food, distilleries, favorite camping spots, or even really awesome roadside attractions. I'm actually pretty excited to see what places have made a place in your hearts and minds and where we should visit 

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Colleen Moore [01:08:20]: Of course, I would be remiss if I didn't mention that a giant thank you goes out to YOU for downloading and listening to this episode of our podcast. Don't forget to like, share, subscribe even if you like just a tiny bit of today's show. It really helps out with our shows vital statistics. If you want more information about this show, go to the show notes on our website, www.dalkita.com/shownotes where we will have links to the people, places and things mentioned today. There is even a real live transcript of the show to share with all your friends and you can post a short comment for our team to obsess over dissect, and even infer your tone and judge your grammar. Our theme music was composed by Jason Shaw and is used under creative comments, attribution 3.0 license. The final shout out goes to the man that puts all of this together, our sound editor, Daniel Phillips of zero crossing productions. Until next time, seriously guys stay safe out there. I'm Colleen Moore from Dalkita, and this has been the Distilling Craft podcast. 

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