Dave Phinney Debuts New Spirits Venture

FILED OCTOBER 4, 2016

You may recall, wine brand building guru Dave Phinney recently sold off his former businesses - Orin Swift Cellars to E& J Gallo and Splinter Spirits Group to Vintage Wine Estates. But Dave isn't retiring happily to the countryside anywhere. No, WSD has learned Dave is launching a craft spirits company called Savage & Cooke.

Savage & Cooke will initially focus on brown spirits-- bourbon, whiskey and rye--and tequila. Toward the end of the year, S&C plans to launch the Ayate brand, a tequila created in partnership with the Ramirez family in Mexico, and is aiming to release some of the as-yet-to-be-revealed whiskey products in the spring of 2017.

In the long run, S&C will distill, age and bottle a range of brown spirits, and in order to do that, they will build a distillery on Mare Island in California. The plans include a 30,000-square foot production space, a tasting room, patio, rooftop deck and offices. It is scheduled to open in the fall of 2017.

"Our goal is to make spirits in the same way that we do wine, from soup to nuts. We will start by using grain that is grown on our property in Solano County which is less than 40 miles from the distillery, mill it on site, monitor every state of the distillation process and then age the spirits in our wine barrels," says Dave.

TAX PARITY BILL GAINS MAJORITY SUPPORT IN CONGRESS

The American Craft Spirits Association has announced there is now majority support in both chambers of Congress for the legislation aimed to increase excise tax credits for producers of all sizes [see WSD 06-07-2016].

"The other thing that's really exciting about [the pending legislation] is the beauty and the glory of all three branches of beverage alcohol working together and in unison. We were sitting around in [NY] Senator Schumer's office last week; you had big beer, little beer, big wine, little wine, big spirits and you had little spirits. Everyone was sitting at the table asking for the same thing," says ACSA president Paul Hletko.

Now that the legislation, known as the Craft Beverage Modernization and Tax Reform Act, has majority support in the Senate and the House, here's what the road to law looks like per ACSA exec Margie Lehrman: (1) continue to solicit more support and educate Congress on the goal of the legislation; (2) find the right vehicle to attach the legislation to--most likely a broader tax bill; (3) then work through the legislative process.

Congress isn't in session anymore, but Margie says the search for the aforementioned vehicle for the bill will begin as early as December.

OUR/SEATTLE DISTILLERY CEASES OPERATIONS

Pernod Ricard subsidiary The Absolut Company has closed up shop at its Our/Seattle facility. You'll recall, the Our/Vodka project was the company's answer to the locavore movement in which it would partner with entrepreneurs in multiple cities, build them a distillery, give them a recipe to create with local ingredients, and hand over the keys to let them run the business [see WSD 01-13-2016].

Our/Seattle was the second city to get an Our/Vodka distillery up and running in 2015 via a partnership with Thom Jones and Mike Meckling. But "things just didn't turn out as we had hoped," Our/Vodka chief Asa Caap tells WSD.

"It takes a heavy investment to build a distillery and set up a business. It also takes a lot of work to get it running. We know this from the other cities but in Seattle things were tougher. The marketplace got very crowded, some regulations changed and regardless of our efforts, we just couldn't make it work, so we had to close down," she continues.

Asa says the Our/Vodka project will move on and focus its energy in the other cities where the businesses are growing in a healthy way, and the Seattle distillery is for sale if someone is interested. "It really is a top notch distillery so it would be great to see someone local take it over."

INCREASED COMPETITION FORCED VENTURA LIMONCELLO OUT OF BUSINESS

We hate to be the bearer of more bad news, but California-based Ventura Limoncello has also shut down, as of September 30, "After putting our life and soul into producing the best citrus liqueurs we could make for the last nine years, we are forced to close due to lack of raising additional capital or identifying a partner," per a statement in The Spirits Business.

The distillery was founded in 2007 by James Carling and Manuela Zaretti-Carling. Its products include Ventura Limoncello Originale, Ventura Limoncello Crema and Ventura Orangecello Blood Orange. In 2015 the company noticed a dip in sales and an increase in competition along with an increase in pricing at the retail level. And the California's Craft Distiller's License legislation, which Ventura founders pushed for, was supposed to allow the company to open a tasting room to help improve sales through direct purchase. However, Ventura claims that "late language change" to the legislation made it impossible to open a tasting room.

Thus, the inability to open a tasting room "combined with additional slowing sales and losing distribution in a few key markets caused us to evaluate the viability of continuing our brand," continued the statement.

THE BIGGER PICTURE. We don't want to sound the alarm here, but we believe the craft spirits business is broaching a tipping point, making it more difficult for many distilleries, like Ventura, to stay in business without a partnership or boost in capital. In addition to the companies looking for capital, we're starting to get wind of more small brands folding. Recall, our recent report that six distilling companies in Washington had folded in the first half of the year [see WSD 09-07-2016]. That's not to say the entire category won't continue to grow--there are new distilleries aplenty--but we do believe the makeup of the spirits category will look significantly different in two to three years.

More on this topic as it continues to unfold.

WSD BRIEFS:

VINTAGE WINE ESTATES SECURES RIGHTS TO MARKET TWO MIDDLETON FAMILY WINES, Clayhouse and Buried Cane. Vintage Wine Estates will take on all national sales and marketing for the brands, effective immediately. "We have been looking to expand our presence in Paso Robles, California and Washington State," says chief Pat Roney, adding, "Clayhouse is a stellar addition to our current Paso Robles portfolio, and we are thrilled to have Buried Cane as our inaugural Washington State wine." The current Clayhouse and Buried Cane winemakers will remain in place.

WIGLE WHISKEY TO RELEASE 10 SPIRITS OVER HOLIDAY SEASON, including Fuzz Peach Brandy and Bottled in Bond Deep Cut Rye Whiskey. The peach brandy is aged 12 months in used whiskey barrels and bottled at 80 proof. While the whiskey is aged for a minimum of four years in new, charred oak barrels and bottled at 100 proof. Both will be available in limited quantities starting in December.

MICHAEL DAVID WINERY ADDS TO ITS FREAKSHOW BRAND. The 2014 Freakshow Red joins the Freakshow Cab under the same label. It is a blend of syrah, petite syrah and souzao. Freakshow Red will be available nationwide for approximately $20 a bottle.

WSD SUMMIT SPONSORSHIP OPPORTUNITIES. WSD will be accepting a limited number of sponsorships for our 2017 Summit at the Hotel Del Coronado in January. For more info on pricing and opportunities, please email rena@winespiritsdaily.com.

Until tomorrow,
Your Editors

Emily Pennington - emily@winespiritsdaily.com
Sarah Barrett - sarah@winespiritsdaily.com

"Nothing is as obnoxious as other people's luck." -- F. Scott Fitzgerald

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