07 Jan Startup Stories of Spirits Entrpreneurs: CATOCTIN CREEK

This post originally appeared on FoodableTV.com Becky Harris, a former chemical engineer, had been a stay-at-home mom for 10 years when her husband Scott had an idea to start distilling spirits. At that point, Scott had spent 20 years working in government contracts. When he told Becky about the idea, she thought he was crazy, so she decided to write a business plan to talk him out of it — and almost succeeded. Becky noted that there were less margins, higher taxes, and more regulations compared to other products they could produce. The husband-and-wife duo realized they could make it work only if they took their 20 years of savings and invest it into equipment, and if Becky would work for free. “If you are going to take a chance, it was as good a time as any,” says Becky. They began in 2009. Surprisingly, getting through all of the regulatory processes took less than a year. And while some traditionalists might assume a man is better suited for production and a woman is more fit for marketing, Becky and Scott nixed the stereotype, flip-flopping these roles based on their personal strengths. Once they got started, the question was not how to distill but how to make money doing it. Through both luck and preparedness, they started Catoctin Creek, the first legal distillery in Loudoun County outside of D.C. since Prohibition. Pronounced Ka-TOCK-tin, the name is derived from the Indian tribal name “Kittocton,” which means “place of many deer” and describes a range of mountains and the creek which flows into the Potomac River. Catoctin Creek started with one unpaid employee in 2010 and today has five full-time and 20 part-time employees. Becky and Scott source from local growers and ferment and distill onsite to make Roundstone Rye® (rye whiskey), Roundstone Rye® 92 Distiller’s Reserve, Mosby’s (unaged rye whiskey), Rabble Rouser® (straight rye), Watershed Gin® (American style), and four brandies (apple, grape, peach, and pear). They are certified organic and produce one of the nation’s only lines of organic spirits. All of their ingredients are free of synthetic chemical pesticides and fertilizers, and the water used in the distilling process is filtered for purity. The distillery also has a solar plant that offsets approximately 85 percent of electrical usage in the distillery. The products are also certified Kosher and vegan.

Challenges of the Job

According to Becky, finding a good location was the first challenge. Loudoun County wanted them to set up near Dulles airport in an industrial area but the couple envisioned a farm where they could work. Located in the heart of Loudoun Valley, the town of Purceville — home to approximately 7,000 people — was very receptive. However, there was a local town law that said no wine, beer, or spirits could be manufactured there. Luckily for Scott and Becky, the town has made the legal change to allow alcohol production, and Catoctin Creek was able to set up their distillery and a tasting room. Another challenge to the job, Becky says, is the regulation in distilled spirits. “Even as a small company, we are subject to the same reporting as massive companies. This means we have to be well organized to handle the demands of reporting,” she says. “And we have to carry inventory, which is a lot for a young company that is independently funded.”

First-Year Lessons

“It’s important to be very disciplined about what kinds of new products to add to the mix and how many to do,” says Becky. It’s the simple economics of what they are doing. “A brewery makes 300 gallons of beer and can sell right out of the tanks, without labeling or bottling. A distillery makes 300 gallons of beer, distills it and gets 10 percent, or 30 gallons of spirits. Once in the barrel, we lose another 10 to 30 percent of liquid. In the end, we get a couple hundred bottles from which Virginia gets 57 percent of every bottle sold. We have to recoup investment from what is left.” By being disciplined, Becky and Scott have been able to make Catoctin Creek grow and expand each year. Another big lesson for Becky was understanding that the rules between wine, beer, and spirits are completely different. “From day one, there have been issues like label approval, packaging concerns, and initial investments that small breweries do not deal with. Breweries have more latitude and taxes are substantially lower. I have to explain many times to customers why I cannot sell them a cocktail or let them taste all eight of our spirits on one visit. As per the law, they are only allowed four tasting per day.” Creative Inspiration “It’s all about flavor from beginning to end,” says Becky. “We make spirits that we like personally.” Catoctin also honors tradition, making rye as it was the main spirit in Virginia before Prohibition and making brandy, also a Virginia tradition, with local fruit. The goal at Catoctin Creek is to make spirits that are “approachable and accessible for both the seasoned drinker and those new to the category.” What’s Becky’s favorite cocktail to feature their spirit in? “Sazerac! I love my sazeracs! We do not make absinthe here, but a friend in Walton, New York makes an absinthe called Delaware Phoenix and with my rye whiskey, it is the perfect Sazerac.” Another favorite cocktail is a Vieux Carre made with the 1757 Virginia Brandy, made with locally grown grapes in a collaboration with local wineries.

Advice for Spirits Entrepreneurs

“This is an awesome industry,” Becky says. “People who work in hospitality in bars and restaurants are some of the coolest people, and there is so much passion. But there is a huge list of things that are hard. Most importantly, plan double the amount of money and time you think you need.” Becky and Scott Harris have learned a lot of lessons since they first began, but continue to see growth and success. When Catoctin Creek started six years ago, there were six distilleries in Virginia. Today there are 35 distilleries in the state. “With the changing landscape of distilleries coming in, it is just harder to do it now. The bar to entry is getting higher.” As the interest in craft spirits grows, Becky says, “you have to have the best flavor, the best connection with customers, and diversity of markets.” And Catoctin Creek has been doing that, expanding their domestic distribution to New Jersey and California, as well as international markets like Australia and Europe.