Twelve years ago, Ralph Erenzo moved two hours up the Hudson River from New York City to Gardiner, N.Y., to open a rock-climbing resort along the scenic Shawnagunk Ridge. In 2004 he started turning out Baby Bourbon, the first whiskey distilled in the Empire State — legally — since Prohibition. After bourbon, his Tuthilltown Distillery started turning out a uniquely American single-malt whiskey: Hudson Whiskey Single Malt is a woody aqua vitae with an intense earthy flavor that comes from its time spent in new oak barrels, rather than Scotland’s traditional sherry or bourbon casks. How Erenzo went from the business of bouldering to barreling is a story of equal parts private American entrepreneurship and public American obstinacy.
Start with the land: In 2001, Erenzo bought 36 acres of land in the Hudson River Valley. His plan was to open a rock-climbing resort near the Shawnagunk Ridge rock-climbing area he’d been coming to with his son for years. He’d made a successful career in Manhattan building rock-climbing gyms and related businesses, and was intent on opening a hospitality business in the valley’s world-class rock-climbing area. His land included a stretch of the Shawnagunk Kill, a stream on which lay Tuthilltown Gristmill, a National Historical Site that had been producing flour for 220 years.
But Erenzo’s dream was slowly strangled by the strictures of local government. His land was zoned for agriculture, and required a range of zoning exemptions before it could be used for the commercial purpose he envisioned. A few uncooperative neighbors were able to bottle up his ambition by preventing the town government from providing the variances he needed.
Yet his entrepreneurial ebullience was undimmed, so he asked a friend from the local zoning board what other businesses he could run on the property. The zoning officer said, “You have to have an agricultural use — how about a farm winery?” But Erenzo, “not much of a wine guy,” found a better idea, his son Gable says. In the process of researching farm-winery licenses, he found out that New York State was creating a license for “farm distilleries,” which can produce small amounts of spirits from local agricultural products.
As Erenzo was deciding what to do with the land he’d purchased, Brian Lee, an audio and broadcast engineer, had his own idea for retirement: running the Tuthilltown Gristmill on Erenzo’s property. But after one season of milling, Lee found that labor, especially in a historic grist mill, grinds down all, and decided that running a two-century-old gristmill was no way to enjoy his golden years. As Gable explains, Lee agreed to be a partner in the distillery, and two weeks later, “took out a second mortgage on his house to buy our first still.”
Since Prohibition, federal and state regulations and corporate lobbying had kept the costs of the relatively simple spirits business extremely high, protecting the largest producers and drowning the competition. Before the Volstead Act, there were more than a thousand distilleries in New York State; in 2001, there were none. A New York license to produce high-proof alcohol would ordinarily cost tens of thousands of dollars. But in 2002, Albany recognized the economic-development opportunities that boozy small businesses could produce, and passed a law allowing distilleries to purchase a license for just $1,450 that would permit them to produce up to 35,000 gallons of liquor per year.
In 2004, the first barrels of booze rolled out of Tuthilltown — a vodka made with scraps of apple from a local apple-slicing plant. Meanwhile, Erenzo and Lee kept lobbying for the further liberalization of New York’s distilling laws. Albany loosened the laws in 2003 and 2004 to allow smaller distillers to share equipment and premises with existing, larger farmer distillers. (Indeed, when I visited Tuthilltown’s bottling room, workers were rolling labels onto bottles of vodka by hand for another brand, Renegade Vodka, which was then using the facilities.) Result: There are now 28 distilleries in New York.
In 2007, the legislature passed a law that allowed distilleries with the proper licenses to make direct sales to customers and offer tasting on the premises (Tuthilltown now can do both). The profit margins are so much higher on such activities, Erenzo explains, that for Tuthilltown or another distillery, they can account for as little as 5 percent of sales, but up to half the business’s profit. A 2012 amendment to the law now also allows farmer distillers to sell their products at farmers’ markets and fairs.
There was one catch (or so it seemed) in these licenses: Distilleries operating under them have to buy most of their agricultural supplies from within New York State. While some free-market conservatives may grumble at this idea, at least it’s a noble effort to help the Northeast’s struggling farms, one could argue. But for Tuthilltown and others, it’s actually unnecessary. Tuthilltown buys as much as 90 percent of its supplies not just from within the state, but from within ten miles of the mill.
What do they distill for their Spirit of the Hudson Vodka and Half Moon Gin (named after Henry Hudson’s ship)? “Every two weeks, we buy 800 gallons of cider at top dollar from an orchard three miles up the road,” Erenzo explains. “We buy everything he can make; he can’t keep up with us.” What about the corn for their bourbon? There are 60 acres of top-quality heirloom corn now being grown within miles of Tuthilltown’s whiskey stills. Erenzo says they’ve basically revived the local farming industry, and diversified it, too: “The heirloom varietals were not grown around here, so we bought the seeds and brought it to the farmers.” They’re “much lower yield, but very rich in the oils and sugars we’re looking for.” Profit margins are much higher for Hudson Valley farmers when their product ends up getting poured into a 375-milliliter bottle that sells in Paris for $85.
But there’s one product they haven’t yet been able to get in New York: the malted barley that goes into their single-malt whiskey. Barley for malting is normally grown above 45 degrees latitude — New York’s northernmost border, with Quebec. Because the main ingredient in Tuthilltown’s single malt has to be imported from Canada, New York doesn’t let the distillery sell it directly to customers. It’s worth getting hold of, though: With a sweet, vanilla aroma, the single malt offers a woody, spicy flavor with hints of honey. It’s a distinctly made-in-America single malt — offering some of the refinement and complexity of a world-class scotch, but with the bold oak character of American whiskey. And as with the heirloom corn, Erenzo thinks he can get New York farmers to start growing barley soon enough, too.
Some of the single malt’s character comes in large part from yet another federal regulation: A 1938 law mandates that all American whiskey must be aged for a certain period of time in new oak barrels. (The story goes that the lumber lobby wanted a steady market for oak, but no one quite knows.) Traditional single-malt whiskey, like that made in Scotland, is aged in casks that have already held another liquor, such as bourbon or sherry. New casks impart much stronger, bolder flavors to whiskey than used ones.
Alcohol aging in a charred wooden barrel acts as a solvent on its container, breaking down various compounds in the wood and absorbing the sugars and other molecules. Each variation in the density or water content of wood, each knot and imperfection, adds unique flavors to a barrel of whiskey. A blender of single-malt whiskey combines varying amounts of the same whiskey from different barrels, each with its own distinctive flavor notes, to get the profile he wants. In order to stand up against the strong flavor influences of oak, Tuthilltown, like other American distilleries, takes care to keep its spirit stronger and more flavorful throughout the production process.
For instance, after the malted barley and water, single malt’s two main ingredients, have been mixed together in a “mash,” Scottish distilleries will filter out the solid clumps of wheat that remain, but American distillers leave them in. When the mash is pumped into large fermentation tanks, where yeasts break down the barley sugars into alcohol, the presence of more solids helps ensure that there is more flavor to balance out the strong influences of the new oak.
Ever innovating, though, Tuthilltown and other American distilleries plan to start experimenting with Scottish-style used casks in the near future. This year, Tuthilltown will produce close to 70,000 gallons of liquor, but will sell just a fraction of that; much more is going into barrels to age than is being bottled and sold. Today, in addition to gin, vodka, and single malt, Tuthilltown turns out rye whiskey, unaged corn whiskey, a range of bitters, and bourbon; brandy made from heirloom apples is soon to come. Erenzo explains that, like Tuthilltown itself, the small-scale spirits industry is in its infancy, “where craft brewing was 20 years ago.” Their growing business blends a spirit of entrepreneurship and innovation with sustainable agriculture and buying local. Americans of any political label can toast to that.
— Patrick Brennan is a William F. Buckley Fellow at the National Review Institute.