If you like drinking craft whiskey, rye and bourbon, there's some bad news for you.
That bottle of rye you just bought, with the fancy label and an elaborate tale about the company's history, most likely telling a story about how their brand used to be Al Capone's favorite illicit libation?
According to an article from the Daily Beast, it's all a ruse. A sham. A cruel charade. A hollow shell. That bottle of "craft" rye (or whiskey, or bourbon) probably came from a mass-market distillery in Lawrenceburg, Indiana that is owned by MGP Ingredients. Here's how the process works.
The Lawrenceburg factory, which was once a Seagram's distillery, mass produces large amounts of alcohol: bulk vodka and gin, and lots of whiskies, wheat whiskey, corn whiskey and rye. They also produce alcohol for antiseptics and other "food grade industrial" products. They sell the mass quantities to craft whiskey distilleries, who then attach their own labels and backstories to it, and sell it. This is especially helpful to those craft whiskey companies who don't actually own a still, or can't distill on their property. Lots of companies buy from MGP Ingredients because of that very reason.
It's easier to buy the alcohol you need and re-market it than it is to go through the process of buying and installing a still. In addition, MGP has gotten so brilliant at this process that they recently won Whisky Advocate's Distiller of the Year award. One easy way to tell if a company is outsourcing their distilling is to check the age of a whiskey against the company's founding date. A craft distillery founded in 2010 can't physically produce a 15-year whiskey today; it would have to have been bought from a wholesale group, like MGP.
Some companies, however, wear their outsourcing on their sleeve. Illinois bottlers, the Blaum Bros., advertise the playfully-worded Knotter Bourbon by including a label on the bottle that says they didn't distill a drop of its contents.
All of this is savvy business marketing, but in the end, it's the act of creating the whiskey that's important as opposed to buying it and re-branding it. It's easy to buy something and flip it; it's a lot harder to actually make the stuff by hand and age it in a barrel yourself. Starting a craft distillery, or brewery, comes with lots of hidden costs that the public doesn't think about a lot.
Startups have to buy a distillery, learn how to use it, buy ingredients, ferment and distill those ingredients, buy barrels and a warehouse or a factory to put those ingredients in, and then wait for the product to age. Buying from MGP cuts out the middleman.
So, if you're enjoying a nice, craft whiskey this season, keep in mind that it might have come from Indiana. And there are no signs of the MGP slowing down.