Here is what is really driving growth in craft spirits
Despite what most people think, alcohol is not an amusement. Technically speaking, it’s a food or a drug, but it might be better described, in modern computer terms, as a utility. The problem is, we just don’t treat it like one.
Before we get into the heart of this matter, it might be worth taking the time to walk through a brief history of beverage alcohol in general and distilled spirits in particular. Many people don’t care to think about the world in prehistoric terms, choosing to consider it only within the context of the modern industrial era and the built environment in which we live, a perspective that can often lead to misinterpretations and false assumptions in our fundamental understanding of the situation. So a quick recap may help provide us with a common frame of reference.
Spirits are produced by taking grain, fruit, or vegetables that have undergone fermentation and distilling those liquids in order to remove diluting components like water, for the purpose of increasing their alcohol content. According to Wikipedia, the term spirit refers to a distilled beverage that contains no added sugar and has at least 20% alcohol by volume (ABV). Essentially, it involves taking beer or wine and running it through a still.
Anthropologists debate which was the primary driver for the development of agriculture, bread or beer. The “Indiana Jones of alcohol”, Patrick McGovern, believes it was beer: “It’s easier to make, more nutritious, and has a mind-altering effect.” Fermented beverage, he claims in an interview with National Geographic, was the impetus behind hunter-gatherers first settling down to domesticate grain.
Alcohol is beneficial to humans, particularly prehistoric ones.
This is because it kills harmful bacteria, and our forebearers learned that important lesson through direct experience. They saw that the person drinking right from the stream got sick and died, but the guy drinking fermented beverages lived to be much older, and probably happier too.
In addition to their physiological benefits, fermented beverages also helped early peoples overcome significant economic constraints. Stored grain, fruit, and vegetables would often spoil prior to being used or, more importantly, before the next growing season. But fermented beverages kept much longer. Earlier humans were nothing if not pragmatic, and it didn’t take them long to recognize the utility of converting a significant portion of their harvest into fermented beverage for storage.
By the time Europeans began settling the American continent, this practice had become highly evolved, but it’s utilitarian roots remained firmly embedded in daily life. Laborers drank beer or cider for breakfast before heading out to work. Farmers distilled their excess grain into whiskey, which greatly extended its shelf life and, being value-added, was more profitable. Beverage alcohol was woven into the very fabric of our society, serving a variety of economic, prophylactic, and societal needs.
Prohibition completely severed our connection to this long, and largely positive, cultural history.
With the rise of the tavern and the bourgeoisie, our relationship with alcohol had begun to degrade. Drinking became associated with recreation and irresponsibility, and, as clean water and advanced food storage techniques became widespread, our understanding of beverage alcohol’s practical ancestry was lost. Spirits were now considered a superfluous luxury, if not downright wicked and destructive. What was once known as the water of life came to be called the devil’s brew, leading America to embark upon its noble experiment.
Another consequence of Prohibition was consolidation. The 18th Amendment had effectively destroyed the country’s production capacity, and while the 21st Amendment repealed outright prohibition, it placed control of alcohol in the hands of the states, many of which erected significant legal and financial barriers to spirits production. A nation that had once seen thousands of distilleries scattered across it was now reliant upon a select few.
This signaled the end, in America at least, of beverage alcohol’s agricultural heritage. Beer and spirits came from a factory, like our cars and tennis shoes. Once necessities, they were now considered luxuries. They certainly weren’t food. And we ceased treating them as such.
Of course, this phenomenon wasn’t confined to beverage alcohol. After World War Two, our entire relationship to food changed, with a preponderance of the national cuisine becoming processed, packaged, and often pre-prepared. As rates of obesity and alcohol abuse around the world clearly attest, it’s difficult to maintain a healthy relationship with anything so far removed, and as our relationship to food grew more estranged, so did our connection to the factors involved with creating it.
Centralization is only cost-effective when there is cheap energy to fuel it.
In reality, there is no intrinsic value in centralization, especially when it comes to food. It’s interesting to note that the rate of consolidation in farms across the US largely mirrors that of distilleries and breweries. It’s just as interesting that the behavior of these two curves changes significantly at almost exactly the same time.
In 1973, during the Arab-Israeli War, members of OPEC, the Organization of Petroleum Exporting Countries, placed an oil embargo on the United States. Prices at the pump skyrocketed, the effects of which rippled through the whole of society. Consumers in search of more fuel efficient automobiles turned to Japan, opening American eyes to the wealth of inexpensive, and high quality, manufactured goods available there. The end of industrial manufacturing as the force driving America’s labor economy had just begun.
It was an epoch that spawned not only the back-to-land and environmental movements but that of craft brewing as well. At the same time as newly arrived do-it-yourselfers began experimenting with foraged berry wine in the rural outreaches of Vermont and Washington State, their more entrepreneurial counterparts were reviving the neighborhood brew pub. With the founding of The New Albion Brewery in 1976, a true renaissance in American beverage alcohol production was born.
Our modern civilization runs on oil. Barring the anomaly that was the Great Depression, when crude reaches $100 a barrel, unemployment climbs to 10%. In 1982, the year in which the number of breweries in the US went from shrinking to increasing, the percentage of unemployed was 10.8, the highest it had been since the 1930s.
Nothing promotes drinking better than having nothing to do.
And when a group of out-of-work friends start tossing back beers together, it doesn’t take long, if they’re at all enterprising, for them to arrive at the conclusion that they can cut out the middleman, and maybe even make a few bucks, if they simply start brewing themselves. This is where the impetus behind the meteoric rise in the number of craft breweries, an increase of 6200% since its low in 1982, is to be found.
Despite the boom in brewing, distilling spirits, however, remained uniquely taboo. Hobby distilling was technically illegal and craft or micro-distilling largely unknown. Of course many in the South had maintained the time honored tradition of making moonshine and, in pockets of the country’s grape and apple growing regions, people continued turning excess produce into brandy, through which its value could be more readily preserved, just as their ancestors had. But it wasn’t until the founding of St. George Spirits, notably also in 1982, that the paradigm in spirits production started to shift, albeit at a glacial pace.
Change is Slow.
Slow Food began in Italy as a resistance to the industrialization of Italian cuisine, specifically the 1986 opening of a McDonald’s near the Spanish Steps in Rome. Founded by Carlo Petrini and others in 1989 with the release of the Slow Food Manifesto, it was the first formal expression of a sentiment that had building since the 1960s and the publication of Rachel Carson’s Silent Spring. This new movement, however, went beyond the very valid concerns surrounding the detrimental effects of widespread chemical use, challenging what its supporters saw as the underlying agent in the decline of our species’ relationship with its environment: Fast Life.
Even as much as the pace, their concern was with the makeup. Once industrialization and commodification took hold, cultural appropriation and homogenization soon followed. This decline in diversity threatened the very web of life, the thinking went, and ecological resilience along with it.
What’s more, it’s boring.
Beverage alcohol suffered greatly from this malady. At the height of brewing’s consolidation, the pinnacle of innovation was the 1975 launch of Miller Lite. At the time, pale lagers dominated the American market, the only alternatives being European imports. Spirits followed a similar, if slightly different trend. While quite a few labels graced the liquor stores shelves and backbars, the majority of the spirits contained in those bottles were produced by a mere handful of monolithic facilities. Most of the variation in taste was the result of additives and flavorings, more than any differences in process or terroir.
Then came the Nineties. With the economy booming, the food movement gaining traction, and young Americans thirsting for change, micro-brewing took off like a rocket. Soon it seemed as though there was a brewery in every town, each offering its own diverse assortment of expressions. While this growth can more aptly be attributed to economic conditions than the evolving palate that most credit, the fact that people were ready to embrace something different cannot be denied. Even the unassailable fortress of protections surrounding spirits began to crumble, with small, independent distilleries popping up around the country throughout the early Aughts.
Enter 2008, and the highest oil prices the world has ever seen, soaring to a record $145.61 a barrel for Brent Crude in July. By October 2009, unemployment in the US had hit 10%, and craft distilling exploded.
Between 2008 and 2009, the number of micro-distilleries in the United States nearly doubled. The factors that drove this growth were threefold: a wave of changing regulation opened the door, a large number of people found themselves unemployed, and it was costing a whole lot of money to ship what was essentially water.
Nature favors decentralization.
A distributed network will always outperform a centralized one, unless, as it relates to production, the cost of moving the raw materials in and shipping the product out can be subsidized, either by cheap transportation to market or through efficiencies gained by automation or the division of labor. In the case of beverage alcohol, which is predominantly water and relatively simple to process, this is nearly impossible to achieve. As oil prices crept skyward, consumers demanded greater variety, and capital and labor funneled into craft, the artificial climate propping up the highly centralized beverage alcohol industry — namely monopoly, legal protections, and cheap diesel — began to erode.
In addition to opening America’s eyes to the breadth of character that beer could exhibit, the other effect that the micro-brewing boom had was to fundamentally alter our perception of what a drinking establishment could be. Micro-breweries had more in common with public houses and restaurants than they did with their larger industrial cousins. Finally, beverage alcohol was coming full circle. Its humanity had returned.
At the local brewery, alcohol is more about community than getting drunk.
In traditional cultures, alcohol is consumed with meals or shared among family and friends on special occasions to celebrate an achievement or mark a rite of passage. Beverages are often low in alcohol content, and drunkenness largely frowned upon. With the advent of the modern micro-brewpub, where consumption was often legally constrained and customers intimately familiar with the process of turning grain into beer, Americans were suddenly reconnected with this lost heritage.
Craft is about occupation.
This, more than taste or novelty or any other factor, is the reason for the rise of craft and the motivation behind its growth. It isn’t a trend or a segment, it is resumption at a community level of the fundamental practices upon which human civilization is based. It is a process of re-diversification, of creating resilience, of re-instilling our society with the values and skills that first allowed us to rise from the mud. To treat it as a commodity or an industry or a marketing gimmick, or to ignore the factors that are actually driving its formation and expansion, is to miss the point. Craft precedes all of that. It isn’t a qualifier. Craft is a culture. It’s a way of life.
At least it is here at MicroShiner.