~ In This Report ~

#1: St. Augustine Distillery's co-founders are expanding rum production—and opening a second distillery for tourists 🛍️

#2: A Georgia rum is proclaimed the state's best distilled spirit (across all spirit categories) 🍑

#3: Drinkhacker reviews Popi's Finest Rum from MISCellaneous Distillery (Mount Airy, Maryland) 👴🏼

#4: Behind-the-scenes details on Constellation Brands' minority stake in Montanya Distillers 🤝

#1: St. Augustine Distillery's co-founders are expanding rum production—and opening a second distillery (plus, a brief aside on the Craft Beverage Modernization and Tax Reform Act) 🛍️

St. Augustine Distillery—makers of St. Augustine Pot Distilled Rum—just made a significant investment in new fermentation tanks, mixing tanks, and a variety of other equipment in order to expand rum and whiskey production.

While it's always good to see distilleries making more rum, this particular case stood out because of a detail included in the Jacksonville Business Journal's coverage of the expansion: St. Augustine was able to fund this expansion partially because of the $200,000 in tax savings it secured thanks to the Craft Beverage Modernization and Tax Reform Act.

In case you've missed the headlines, that's the very same legislation set to expire at the end of the year unless a permanent version is signed into law. In a nutshell, the legislation massively reduced the excise tax rate distillers pay on the first 100,000 proof gallons they produce in a year from $13.50 per gallon to $2.70 per gallon.

Since almost all true craft distilleries produce way less than 100,000 proof gallons per year, it essentially reduced all of their excise taxes.

So yeah, it's pretty important for craft distilleries (and those who support them) that the Craft Beverage Modernization and Tax Reform Act is made permanent before the end of the year. As St. Augustine Distillery CEO Philip McDaniel said:

“This is a monster issue for us...It’s really critical for us and other craft distillers because it affects our bottom line. If congress doesn’t get this bill passed by the end of this year, the tax credit will go back to the $13.50 [tax rate.]”

Fortunately, there appears to be significant bipartisan support for the legislation. According to The Spirits Business, it has 315 co-sponsors in the House of Representatives and 73 in the Senate.

Still, there are plenty of things that could derail the positive momentum. There are higher priority issues on the legislative agenda. There's a potential government shutdown looming. Oh yeah, and an impeachment probe!

Craft distilleries are basically in the unenviable position of having to ask the dog from the "This Is Fine" meme if he can stop what he's doing for a sec and give them a hand.

But back to St. Augustine.

Co-founders McDaniel and Mike Diaz are not only expanding production—they're also opening a second distillery called City Gate Spirits Distillery in St. Augustine.

City Gate is independent from St. Augustine Distillery and specifically designed to market to tourists. It's in the heart of downtown, nothing is priced more than $25, and yes—there are a lot of flavored spirits, including three 60-proof flavored rums:

There is, however, an important condition with this tourist-minded distillery: It can't have distribution. All sales have to happen at the distillery. So why go to all the trouble? The Jacksonville Business Journal had some insight:

“While the deal may limit the business on paper, McDaniel said it has the potential to be benefit the business for two reasons: exclusivity and cross-promotion. By limiting where the distillery’s products can be sold, a certain 'exclusivity-factor' is added to those products. Meanwhile, by catering to a different audience and producing different products, McDaniel hopes to compliment [sic] the pre-existing St. Augustine Distillery’s business model.”

The cross-promotion angle is particularly interesting. As long as City Gate itself can be profitable, it's easy to imagine it funneling tourists toward St. Augustine Distillery who otherwise might not have gone out of their way to visit a maker of premium (and non-apple pie-flavored) craft spirits.

It'll make a fascinating case study either way!

#2: A Georgia rum is proclaimed the state's best distilled spirit (across all spirit categories) 🍑

It's an age-old question with spirits competitions: did a spirit win because it's truly exceptional...or because it was merely the best entry in a weak field?

I'm usually hesitant to write about spirits awards for that very reason. Without knowing which spirits (or even how many spirits) were judged for a particular category, it's difficult to discern an award's significance.

However, when Independent Distilling Company announced that its Barrel Aged Rum won the "Best Distilled Spirit" award at this year's Georgia Trustees Wine and Spirits Competition, I couldn't help but take notice. While I may not know the identities of every spirit it was judged against, I do know that it competed against whiskies, brandies, vodkas, and gins, and still managed to come out on top.

That might not be a surprise to you and me, but I promise it is to imbibers who still don't know that rum is every bit the fine spirit whiskey is.

This is a case in which a win for one rum distillery is a win for the whole category.

As for Independent Distilling's winning rum, it starts with a base of Grade A molasses that goes through a long fermentation before its distilled in a 100-gallon copper pot still. It's then aged in both new charred American oak barrels and used bourbon barrels. Each batch is blended from barrels that have aged between 18 months and four years and proofed down to 85 proof before bottling.

#3: Drinkhacker reviews Popi's Finest Rum from MISCellaneous Distillery (Mount Airy, Maryland) 👴🏼

This review is somewhat puzzling.

It gives the rum an A- as an overall grade—obviously a high mark—but the review itself read as lukewarm to me once it got past the tasting notes:

“The nose offers a slightly agricole-like character, earthy and herbal, with a sultry, leathery undercarriage. Dark brown caramel and some graphite notes pop on the nose as well. On the palate, the rum’s sweeter elements take hold, offering a seductive layer of dark chocolate, plenty of caramel, and toffee. At 50% abv it’s (perhaps unnecessarily) hot, the alcohol dulling a finish the nods at herbs and a lingering spice component.

“Popi’s is probably a bit much for straight sipping — tempering with water wasn’t very effective in my tasting — but would play well in cocktails where more power is required. In the rum world, those aren’t hard to find.”

The review notes that rum is just one of many spirits produced at MISC, but based on the conversation I had with co-founder Meg McNeill at the Miami Rum Renaissance Festival, I believe they are serious about making quality rum.

(I've mentioned before that this is often not the case at distilleries with wide portfolios, so it's important to note there are exceptions.)

Our conversation also included a quick and enjoyable taste of Popi's Finest Rum, which, for what it's worth, I don't recall finding overly hot like the reviewer mentioned.

#4: Behind-the-scenes details on Constellation Brands' minority stake in Montanya Distillers 🤝

Look, I know I've mentioned Montanya Distillers quite a bit here lately, but what am I to do when founder Karen Hoskin keeps providing interesting insights into corners of the American rum world the public doesn't often see?

This time, thanks to an interview with just-drinks, we get a glimpse into what it's been like since Constellation Brands acquired a minority stake in the Colorado rum distillery, and what exactly Hoskin plans to do with the influx of capital and resources.

The interview is paywalled, so I thought I'd smuggle in a couple of interesting tidbits for you.

Karen Hoskin on the terms of the deal and the nature of Montanya's relationship with Constellation Brands going forward:

“I'm not at liberty to disclose the details! I remain the majority stakeholder and I remain in the driver's seat. They have the ability through our agreement to exercise a seat on the board, but they haven't requested it yet.

“It didn't turn the key to a whole distribution network worldwide for me that Constellation runs. It opened the door to a lot of amazing people in the back room who have incredible skills. They have only one mission, and that's to help me achieve my goals with all the resources they can leverage in my direction. My success will be their success.”

On the biggest benefit the relationship has had so far:

“The biggest thing is the creation of a hybrid salesforce. One of the largest expenses for any new distillery is putting people in market, feet on the ground. If every individual brand has their own rep, then the buyers, the liquor stores and the bartenders have to meet with every single one. That isn't what they want to be doing, they've got jobs to do. They would rather have someone come in with a portfolio.

“So the ventures division of Constellation has a portfolio of venture companies. There are 13 of them, I think, at this point. We're developing a sales force together, where we have one person who represents six or eight of those brands in the market, works with the distributor, gets the product out there. It's a much less expensive proposition than me hiring someone full-time.”

As I mentioned back in September, keep an eye out for Montanya's upcoming release, a 4-year-old rum called Valentia. There should be more details on it soon!

It will feature the new bottle design all Montanya expressions will switch to going forward.

(By the way, I loved hearing Karen describe how Constellation's assistance in the development of that glass bottle design brought a new set of specialized skills to the table: “One of the first things they did for me was a market study on a new glass bottle I wanted to launch. I don't know how to do market studies: I have a degree in comparative religion!”)

Who says Humanities degrees are useless? Not this well-rounded English major.