Earlier this month, Stephen McCarthy, president and founder of Clear Creek Distillery in Oregon and one of modern America's distilling pioneers, delivered the keynote address of the American Distilling Institute's annual meetings. Because of work and family commitments, I couldn't make it to Portland for the meetings, but ADI president Bill Owens was kind enough to send on McCarthy's April 6th talk.
Unedited and in its entirety, here's Stephen McCarthy on his own background as a distiller and the future of American small distilleries.
I think it is important for you to realize what you are trying to do: the changes you represent and which are represented by your colleagues who came before you in the wine world and in the beer world-not to mention coffee, bread, vegetables, cheese to name a few-are profound.
I watched all this happen, starting in the 1950's and what I saw was probably representative of what happened and is happening all across the US.
My story and the story of my region are like yours.
I grew up in Roseburg, Ore., pop. 4500, before TV came to town and before I-5 was built. Portland was four hours away on a two-lane road in a station wagon with four brothers.
Roseburg had an active agricultural economy, with lots of fruit and vegetables, some livestock (mostly sheep, I think) and turkeys, and the remains of a prune industry in the form of "prune dryers," tall, oddly shaped barn-like structures that had heaters that dried the Italian Blue Plum into prunes.
We also had a built-in cultural bias against anything that was grown or made locally. People that went west in the dust bowl years, picked crops in California in the depression, and worked in the Oakland shipyards in WWII came to southern Oregon in the late 1940's to find work logging the native forests. I believe they didn't "think local" because they were not sure where they were. Several good local cheese makers gave up in the 1950s or early 1960s (does anyone remember Langlois cheese?). There was a terrific melon from Dillard, Oregon, an elegant cantaloupe from an ideal microclimate. We grew terrific pole beans, good strawberries and very good walnuts. I don't think much of that is left.
Another branch of my family had been growing apples and pears in the Hood River Valley in Northern Oregon since 1909. The family lost the orchards in the Great Depression, and maybe another time, depending on how my mother wants to spin the legend. After World War II my dad started buying back the old orchard property, although the original orchards were pretty much gone. In the 1970s we started buying other nearby orchards, and we have been buying in small and large batches, ever since.
I pretty much stayed out of farming and ran the industrial side of the family. My dad had a small company making hunting and shooting accessories. He wanted out, and sold it to me for a dollar down and a dollar a week. It worked out well, I made two or three good decisions and it grew like crazy. And so I thought I was hot stuff, a marketing genius. I was unimpressed by what I saw of fruit marketing. Or fruit growing, for that matter. The local fruit growers were pretty well wedded to chemicals, and odd varieties of apples and pears were being driven out by an industry devotion to the Red Delicious apple. And of course, if you went to a local grocery, even in the fall harvest season, the fruit you encountered was right off a truck that had come from a warehouse a hundred miles away. Small fruit growing regions - and Hood River Valley at 15,000 acres of orchards was very small - had a hard time attracting capital and management and marketing talent to compete here in America, let alone in the world market.
The other thing I should mention is that it was my good fortune to spend a lot of time in Europe, starting in 1960. There, I developed an interest in good French regional wine, which led to an interest in almost any wine from Europe, and that led to an interest in everything else from Europe that I could eat or drink. Eventually I came to appreciate that the people I met ate and drank only what they grew - what they had. Their genius was taking whatever they could grow and making something wonderful out of it. Poor land that could only support goats led to chevre. Undrinkable ugni blanc wine led to cognac. Small, crummy apples in Normandy led to Calvados. And so on.
Eventually I learned that the Williams pear, which the French, Swiss and Germans made into the fantastic Williams pear schnapps or eau de vie of poire williams was the same as our Bartlett pear. The Bartlett pear was the principal ingredient of fruit cocktail, which was what my generation had been raised on. But as the fruit cocktail died a well earned death, the market for the Bartlett pear swooned. And that's how I got into all this. I set out to rescue the Bartlett pear market, save orchard farmland from development for tract homes, provide myself with a decent supply of good poire williams, which was impossible to get in Oregon at that time, and maybe make a buck or two.
I have done most of that. I started with an empty warehouse in an old industrial neighborhood in Northwest Portland. My hope was that because the Bartlett and Williams pears are the same, and the still I bought was the genuine European item, and the techniques were simple, that I could eventually learn how to make good poire williams.
I expected it would take years to get something I could take to market. But my first still load, in the fall of 1985, was good. That first taste was good. Pear growing, pear ripening, pear crushing, pear fermentation and pear distillation seemed almost intuitive. We had a lot to learn, of course. There is a difference between making 500 gallons of pear mash, and making 60,000 gallons. Last year alone, my distillery bought 500,000 pounds of Oregon pears, and another 500,000 pounds of other Oregon fruits-blue plum, yellow plum, apple, cherries, and so on.
And Roseburg, where I grew up and which I left decades ago, is now a hotbed of imaginative, innovative winemaking. And small distilleries are popping up in Douglas, Josephine and Curry Counties. No longer just poison oak, sheep and scrub oak grow in those valleys and on those pretty hills. Rows of hot weather grape varietals, miraculously correct for the microclimate, produce fruit that produces unusual and wonderful wines. The scrub oak, actually Oregon White Oak, or quercus garyana, is now made into barrels for aging wine and my whiskey. An hour south, Rogue Creamery Blue Cheese is made and sold, and they can't make enough each year. I don't know if the Dillard melons are back, and I know the pole beans are not, but now even modest restaurants in Roseburg proudly list "local" cheese and "local" wine. A huge cultural change has taken place.
And so, in a way we are taking back our country, exercising control over what we eat and drink. I think we are retuning to a nation that actually makes things. This is a huge accomplishment. You are a big part of it.
But we are just beginning.
As we go forward, I would like to point out some important issues that we face and that we must resolve:
1) Quality. I am concerned about quality, but in a way I am not so concerned about quality. Capitalism will work its wonders. The wine writers will keep writing and the sommeliers, and the bartenders, and all those smart retailers out there, and there are a lot of them and they ARE smart, will keep tasting, and those distillers who measure up in the most important contest of all-the one where the bartender or retail buyer or distributor sales manager says, "OK, we'll put it in"-those distillers will prevail. The best thing about capitalism is that the data is always clear.
My sales strategy was always
a) top quality product (without this you are road kill)
b) good packaging
c) fanatic customer service, especially for the distributors and the retail buyers
d) painfully low prices
If you can do all this you have a chance. That is all. You have a license to go out there and let fly. Good luck. And no complaining.
2) The big guys. NABCA, DISCUS, and WSWA may not always be our friends. Bill [Owens], I suspect you have done a lot in this area, but we need a sophisticated Washington, DC presence to tell us when the 900 pound gorillas are not thinking good thoughts about us. And I am not convinced that asking for a TTB tax break for small distilleries is the best way to position ourselves in the upcoming skirmish. That tax break might be very expensive. There are no deals in DC without a payback.
3) Shipping: the anti alcohol people have made a big effort to severely restrict winery direct shipping. I have seen this in Oregon. There may be an unholy alliance between NABCA, the anti alcohol people, and WSWA. Many state Alcoholic Beverages Commissions' bureaucracies do not have the sophistication to see through this, nor the cohones to withstand the political pressure. I have tried not to muddy the waters by raising the issue of spirits shipping. Let's let the wine people win it for wine, and then see what we can get out of the deal, rather than handing the other side a nice weapon with which to bludgeon us.
4) Nomenclature. This one is the most important, as I see it. Good eau de vie with no compromises is expensive to make. But it is also very good. And like the best distillates and the best wines from all over the world, a market for very good and very expensive eau de vie exists. We have found it. But the customer who will search out good New Zealand white wines, SE Washington merlot, or an exotic Whiskey, wants to know exactly what it is, what is in it, where it was made, by whom. And then he or she will pay. The basis for the success of Oregon Pinot Noir lies very much in a system of strict nomenclature. And likewise with the AOC system in France, and the DOCG system in Italy. When you pick up that bottle of expensive Bordeaux, you know what is in it and who made it.
Right now the spirit world is in disarray. Bulk, industrial vodka from god knows where is being sold as "Oregon Vodka" "Made in Oregon" even though the only thing from Oregon that is in it is some local water, to bring down the proof for bottling. I have had important figures in distribution in the US ask me why the nomenclature for artisan spirits is so flakey. My best distributors remind me that they like to buy things with a real provenance. There is a place in the industry for rectifiers, just as there is for negotiants in the world of French wine. But there should be a place, with clear, easy-to-understand nomenclature, for those who are actually making what they sell. This means, to me, that the spirits in the product are made from a previously-non-distilled substrate, on the premises. There are analogies in the beverage world that will work well. If you see the words "Produced and Bottled by....." and the geographic designation "Willamette Valley" on a bottle of Oregon Pinot Noir, you know what it is.
We have to work this out. Some nomenclature is now clearly misleading and some of my brethren are not being totally truthful.
Bill Owens, you have made a contribution to this industry that is hard to overstate. So, by the powers vested in me by NO ONE AT ALL, I hereby designate you to lead the effort to untangle this issue.
And, now, I thank all of you very much for the chance to meet many of you yesterday at the distillery, and for the chance to tell my story, and now I think it is time for all of us to get on with what looks to be a very wonderful day.